Midwest Crop Tour Findings: Day 2

The second day of the 2009 Pro Farmer Midwest Crop Tour found a Nebraska average calculated corn yield of 158.82 bu. per acre, up 11.9% from year-ago. The average number of ears in 60-foot of row jumped to 83.59 (up 5.2% from the 3-year-average) and the average grain length was at 7.37 inches (up 7.9% from the three-year average). Another contributor to yield was a drop in the average row space to 30.91 inches -- a 1.5% drop from the three-year average. The only thing working against the increase was a 0.75% drop in the average number of kernel rows around the ear.

    Western Tour leader and Pro Farmer Editor Chip Flory said, "In Nebraska City tonight, I asked the roughly 150 growers at the meeting to challenge our findings. In fact... I asked the growers to "fight with me," or at least challenge me, regarding our findings from this year's Crop Tour. I even begged the growers to fight with me. None of them did... a few of them even worked up the nerve to speak into the mic and say, "It's there."

On soybeans, the average number of pods in a 3'X3' square came in at 1,238.9, 6.5% higher than the three-year average. Most importantly, the crop has got some moisture to finish, and some great potential to be USDA's Aug. 1 estimate of 49 bu. per acre in Nebraska, says Chip. "But, Nebraska has proven it's really tough to push above 50 bu. per acre in the state. To push much higher than 50 bu. per acre, the finish on the crop will have to be really good," he says.

The Indiana crop in general is further along than last year, but that didn't take a whole lot. Still it is a crop that probably is too far down the road for the hefty showers to really provide a benefit, says Eastern Tour Director and Pro Farmer News Editor Roger Bernard. "It will ease plant stress and will allow the plant to keep more of the yield potential that we measured. But it still is a crop that is behind."

    In Indiana we measured 157.35 bu. per acre, down 4.0% from last year's 163.82 bu. per acre. That decline was not too surprising, as several fields in Indiana had less-than-stellar yields, says Eastern Tour Consultant, Mark Bernard. Our ears in 60 foot of row were down slightly, but grain length -- at 6.09 inches -- was down nearly a half inch from last year. "Given the fact the Hoosier state has been dry the past several weeks and now temps had started to rise, we found tip back or poor pollination evident on nearly every sample. And the kernel rows bumped past 16 after being below 16 last year," says Mark.

For soybeans, we measured 1194.92 pods in a 3 ft. by 3 ft. square, down 8% from year-ago on the Tour. And the pod counts in Indiana weren't horrible, but they weren't spectacular. Bean pod counts in a 3 foot by 3 foot square ranged 384 to 2016 pods, with an average of 1069 pods.

    "We would have liked to have seen pod counts stronger, but we have seen improvement as we have traveled west," says Roger Bernard. "Two samples out of Benton county were the largest on our route so far today. A common thread that continues in Ohio and continues into Indiana is bean fields look very healthy, as we aren't seeing very much insect or disease pressures. Rains are still a key need. If the beans get another rain, they will help them along, but it too late for drought-stressed corn."

Like the crop in Ohio, the Indiana bean crop has had some moisture stress.



Nebraska Estimated Yields Shock on Crop Tour

As the routes converged on Nebraska, scouts were continually surprised by what they found. Problems were few and ears were many with the Nebraska fields. The Nebraska CornHuskers really earned their name today. The estimated yields from Crop Tour were up 17 from last year’s estimates, says Chip Flory, director of the western leg of Crop Tour. .
 
Numbers for the corn crop in Nebraska:
    * Ear count is 83.59, which is up 5% from last year.
    * Grain length is 7.37, which is up 7.9% from last year.
    * Kernels around is 15.94, which is down 0.35 from last year.
    * Estimated yield is 158.82, which is up from 141.82 from last year.

Numbers for the soybean crop in Nebraska:
    * Pod count in 3’ is 804.78.
    * Soil moisture is at 4.02.
    * The growth stage is 4.66.
    * Pod count in 3’ by 3’ square is 1,238.90.

 This estimate is significant because, historically, Crop Tour’s estimates are below the USDA final. After the tour today, scouts are saying the corn is more mature than yesterday, and it looked better. Many scouts noticed an improvement in dryland corn, especially, as well as the irrigated corn. The scouts visited 202 fields today, which is an increase from last year.  Some things scouts noticed that weren’t positive were the volunteer corn and beans in the fields, as well as the grasshopper infestations in the bean fields. Looking at the effects out of the field could be big.  These numbers may pressure the market, says Flory. But, demand is building.



Western Iowa Looks Good. Real Good!

Look out eastern Iowa. The western part of your state, normally hit by dry August weather and brown corn struggling to make yields you’d typically laugh at, is ready to eat your lunch this year. Samples taken today during day three of the Pro Farmer Midwest Crop Tour uncovered some astounding potential. In this part of the Hawkeye state, 2009 corn and soybean yields could put your yields to shame.
 
Field after field of corn with 200+ bushel yield potential were reported by the crop scouts tonight, and the rumors of an outstanding western Corn Belt were confirmed…if the weather cooperates as this potentially record-setting crop finishes out the growing season. Crop scouts, like western tour consultant Terry Johnston, say the crop was generally good throughout the tour stops today, but it gradually improved as the tour moved northward to tonight’s stopover in Spencer, Iowa.
 
Chip Flory, Pro Farmer editor and leader of the western leg, announced that the numbers from this leg of tour indicate huge potential yield compared to previous years. This tour, that included only Iowa districts 1, 4 and 7. District 1 (northwest) averaged 184.97, District 4 (west central) averaged 189.79 and District 7 (southwest) averaged 183.53.
 
While not the official Iowa Crop Tour figures, which will be released on Thursday night in Austin, Minn., the indications are that the western 1/3 of the Hawkeye state may provide some balance to the less-than-enthusiastic attitude being reported from the eastern part of the state. In this region, farmers are staring a bin buster straight in the face. No other way to put it.

The Reasons
A ramp up in plant populations is the primary reason for the increased yield potential, Flory says. “We decided we could push the yield, so we decided to plant a little more. It's paying off.”
 
Of course, adequate moisture and a good growing season have had an impact. Veteran crop scout Dick Oberly says “I’ve never seen anything like this.” As the blockman (he’s in charge of the adjustors) for Rain & Hail crop insurance in the southern Minnesota the past 21 years, he’s seen some bad situations every year. “Overall the crop was very consistent. I didn’t see anything that was bad that I very honestly expected in some of the areas. Normally, the rule of law, you don’t expect to see a crop that’s superior in nature in every area. You don’t expect to see field after field of an outstanding crop. I saw it today.”
 
Oberly saw corn that was more mature in the southern part of his route that started just south of Glenwood, Iowa, and went just east of Atlantic to Lake City and through Fonda before finishing up south of Spencer, indicating confidence in southern yields. As the group he led moved north, the crop gradually showed increasing potential, but it lagged in development with most corn being in the milk and onlhy some being in the early dough stage.
 
“I’ve never seen anything like it in crop district 7 (southwest Iowa) and I travelled the exact same route we did last year,” said Jay Merryman from Marshalltown, Iowa, who toured the area just east of I-29 from Hamburg, Iowa, to Spencer. Though he was less enthusiastic than he expected about some areas. “We averaged over 200 bushels on our samples and three weeks from now it will be free from frost. As we worked the numbers in crop district 4, I would put them at an eight, maybe a seven because of what USDA reported in August.”
 
Don’t Forget the Beans!
“I scored the beans a 10 all day,” Merryman says, indicating he believes the western third of Iowa has an outstanding soybean crop in the making, as well.
 
Oberly’s group saw some good soybean yields as well, though not as outstanding as the corn crop. But maybe that’s because they saw some great potential in corn.
 
Crop Tour soybean pod counts today were 1159.52 pods in District 1 up 11.1% from 2008; 1214.07 in District 4 up 11.6% from last year, and 1282.7 in District 7, which is up 12% from a year ago levels. A good soybean crop by any measure, though yield is not determined on the tour.
 
Pro Farmer will release its official yield estimates for both corn and soybeans on Friday afternoon at 1:30 CT.



Big Bean Yield Drop Predicted for Illinois
 
After two days of sampling corn and soybeans in Illinois, corn yields are predicted to be a repeat of last year, while soybean yields are estimated to be drastically lower.
 
Scout Reports
Variability and inconsistencies were reported on many of the routes through Illinois.  “From the road, the corn looked spectacular,” says Lou Arens, a crop scout from Iowa. “But, once you walked in, there was nothing there.”  He said they came across some corn fields that hadn’t pollinated and some soybean fields that hadn’t set pods.  Another crop scout, Gavin Koo, from Massachusetts, says their route saw corn yields all over the board. Overall, he says, the corn needs a lot of time. “These fields will need a pretty late frost to get some of that corn home.”  For soybeans, Koo says there route saw pod counts that were quite high. “These farmers are going to be pretty happy when the combines go through.”
 
After 166 Illinois samples, here are the official Tour numbers for Illinois:
Illinois Average Corn Data
Ear Count in 60 ft.: 96.34, down from 98.41 in 2008
Grain Length: 6.47”, up from 6.34” in 2008
Kernels Around: 16.11, down from 16.17 in 2008
Yield Estimate: 167.17 bu./acre, up from 166.94 in 2008
 
Illinois Average Soybean Data
Pod Count in 3’: 607.83, down from 661.01 in 2008
Soil Moisture: 4.08, up from 2.69 in 20008
Growth Stage: 4.61, down from 4.72 in 2008
Pod Count in 3’ by 3’ Square: 1,102.80, down from 1,299.70 in 2008



Traders preparing for Friday's COF report

Trades will have the day today and tomorrow's session to line up for the USDA monthly Cattle on Feed report.  Pre-report guesses have the on-feed number comming in roughly 5.5% below year ago figures.  Placements are expected to be 6.5% higher than a year ago.  And traders are calling the marketing number to be about 5% lower than last year.  Listen to Ag News from the Rural Radio Network at 2:10 Friday afternoon on 840am KTIC for the latest COF report from USDA.  



Groups talking again about sow buy-out

Three U.S. pork producer marketing groups have proposed a sow buyout program and are urging the government's support to help the ailing pork industry.  The three groups include the Producers Livestock Marketing Association, National Farmers Organization and Allied Producers Cooperative. They are asking the U.S. Department of Agriculture to evaluate the market effect of a $200 million federally funded sow buyout program to reduce pork supplies.  Losses are now estimated at $30 per head and are projected to climb to $54 later this year.

Rick Keith, president of Producers Livestock, in a release said, "U.S. pork producers have been increasing production in recent years as they responded to growing export demand. But this year, they've been financially clobbered when H1N1, wrongly labeled swine flu, appeared in Mexico and fear of North American pork hammered those exports ... no one can get the flu [from] eating pork."  A steep drop in lean hog futures of 35% since mid-July and a decline of nearly 34% in pork exports in June have contributed to producers' losses this summer.  Some agricultural economists estimate a U.S. sow reduction of 10% to 12% is needed for the industry to return to profitability, which would require a reduction of at least 400,000 sows.

The buyout plan targets about 500,000 sows, using government funds at $400 per animal for a total of $200 million. The proposal states producers would provide cash receipts verifying that those sows had been sold for slaughter and sign a document testifying to their sow herd count plus promise not to add sows back for a minimum of three years. Random checks by USDA to verify participating producers are honoring their commitment would be required.  "The industry is grappling with downsizing supply right now, and some consideration toward government assistance in reducing the sow herd is warranted," said NFO President Paul Olson.

The three groups emphasize that consideration toward government assistance in reducing the sow herd should be seriously contemplated. "If the federal government can bail out companies that have been badly managed, why can't it assist an industry that is well run, but got unfairly hurt by circumstances outside of its control," asked Olson.  "There are pork producers going out of business today who did nothing to bring this on themselves," he said.



Cargill reports fourth-quarter and fiscal 2009 earnings

Cargill today reported net earnings of $327 million in the fiscal 2009 fourth quarter ended May 31, down 69 percent from $1.05 billion in the same period a year ago.  For the full fiscal year, Cargill earned $3.33 billion, a 16 percent decrease from a record $3.95 billion in the prior year.  Revenues for the full year decreased 3 percent to $116.6 billion. Cash flow from operations declined 6 percent to $6.7 billion.

"The year was a tale of two halves," said Greg Page, Cargill chairman and chief executive officer. "Cargill posted record results through November. In the second half, earnings slowed considerably as the world economy contracted for the first time in six decades. In the end, the net effect was the second-best year in our company's history."  Page credited Cargill's profitability to four factors. "The company went into the downturn with a strong balance sheet. We acted early to reduce costs and decrease the use of debt and operating working capital. Our trading teams anticipated price volatility correctly in both the run-up and the run down in commodity values. We kept the focus on being a reliable supplier to our customers - helping them meet the challenges of these difficult economic times."

Page said Cargill's business diversity also was a source of strength. "Operating in many industries and in many countries allowed us to cushion some of the downturn by serving areas of growth, particularly in developing economies that experienced smaller declines in their gross domestic products."  Among Cargill's five business segments, fourth-quarter earnings in agriculture services and in food ingredients and applications were up from the prior year, reflecting steps taken by this diverse group of business units to reduce costs, adjust product mix and collaborate with customers on value-adding solutions. The origination and processing segment posted solid profits, though down from last year's very strong fourth-quarter performance. The risk management and financial segment incurred a loss related largely to financial markets activities. Earnings in the industrial segment, which includes Cargill's majority investment in The Mosaic Company, were down significantly from the fourth quarter a year ago.

For the full fiscal year, earnings in the origination and processing segment were moderately below last year's record high. Food ingredients and applications results also were down moderately. The agriculture services segment finished just under the year-ago level. The risk management and financial segment incurred a loss but its energy businesses posted record results. The industrial segment, which includes Cargill's majority investment in The Mosaic Company, pulled ahead of last year due to a strong first half.

Cargill continued to reinvest globally in fiscal 2009. It opened or expanded major processing facilities in Brazil, Canada, China, France, Ghana and the United States that strengthen its global supply chains in canola, cocoa, palm, soy and biofuels. It also increased the base-level spending that keeps the company's plants in top physical condition to deliver safe food, efficient energy and water use, and a lighter environmental footprint.  Page said Cargill expects the effects of the decline in world economic growth to persist for some time. "The path to economic recovery may well be uneven, but Cargill remains optimistic. We will continue to invest to better serve our customers and, wherever we do business, to partner with local, regional and international organizations that share our commitment to improving health and nutrition, education and environmental stewardship."



Deere Reports Third-Quarter Earnings Of $420 Million

Deere & Company today announced worldwide net income of $420.0 million, or $0.99 per share, for the third quarter ended July 31, compared with $575.2 million, or $1.32 per share, for the same period last year. For the first nine months of the year, net income was $1.096 billion, or $2.59 per share, compared with $1.708 billion, or $3.89 per share, last year.

Worldwide net sales and revenues declined 24 percent, to $5.885 billion, for the third quarter and were down 15 percent to $17.778 billion for nine months compared with a year ago. Net sales of the equipment operations were $5.283 billion for the quarter and $16.030 billion for nine months, compared with $7.070 billion and $19.070 billion last year.

"John Deere has completed a solidly profitable quarter in the face of persistent global economic pressure and made further progress advancing its competitive position throughout the world," said Samuel R. Allen, president and chief executive officer. "We have seen continued benefit from strength in the U.S. market for large farm machinery and from our efforts to keep a tight rein on costs and inventories. Deere's construction and forestry business, as an example, is successfully executing carefully designed plans to adjust expenses and asset levels in response to the severe decline in its markets," Allen said.

Summary of Operations
Net sales of the worldwide equipment operations decreased 25 percent for the quarter and 16 percent for nine months. Sales included an unfavorable currency-translation effect of 4 percent for the quarter and 5 percent for nine months and price increases of 6 percent for both periods. Equipment net sales in the United States and Canada declined 16 percent for the quarter and 9 percent year to date. Net sales outside the United States and Canada were down 37 percent for the quarter and 26 percent for nine months, with an unfavorable currency-translation effect of 7 percent for the quarter and 11 percent year to date.

Deere's equipment operations reported operating profit of $452 million for the quarter and $1.387 billion for nine months, compared with $818 million and $2.377 billion last year. The deterioration in both periods primarily was due to lower shipment and production volumes and the unfavorable effects of foreign exchange, partially offset by improved price realization and lower selling, administrative and general expenses. In addition, higher raw-material costs affected nine-month results.

Equipment operations reported net income of $319 million for the quarter and $879 million for nine months, compared with $479 million and $1.408 billion last year. The same operating factors mentioned above, in addition to a lower current-year effective tax rate, had an impact on both quarterly and nine-month results.

The company's focus on asset management continued to support its performance. Trade receivables and inventories at the end of the quarter were $6.250 billion, or 28 percent of previous 12-month sales, compared with $7.457 billion, or 30 percent of sales, a year ago.

Financial services reported net income of $102.1 million for the quarter and $217.8 million for nine months compared with $83.4 million and $267.5 million last year. Results were higher for the quarter largely due to benefits from investment tax credits for wind energy projects, foreign exchange gains and lower selling, administrative and general expenses. Partially offsetting these factors were a higher provision for credit losses and narrower financing spreads. Nine-month net income was lower primarily due to a higher provision for credit losses, narrower financing spreads and lower commissions from crop insurance, partially offset by benefits from investment tax credits and lower selling, administrative and general expenses.

Company Outlook & Summary
Company equipment sales are projected to be down about 21 percent for the full year and down about 34 percent for the fourth quarter, including a negative currency-translation impact of about 4 percent for the year and about 1 percent for the quarter. Deere's net income is anticipated to be approximately $1.1 billion for 2009, despite the largest expected single-year sales decline in at least 50 years. Affecting fourth quarter results will be significant production cutbacks that are being made in line with retail demand. The quarter also will include costs for rationalizing operations, as previously announced.

In spite of present economic conditions, the company believes underlying trends remain quite promising for its businesses. "John Deere is well-positioned to respond to the world's growing need for food, shelter, infrastructure and energy with a wide range of advanced equipment and services," Allen said. "Further, we're confident our ability to adjust production in response to dynamic markets will help us come through today's challenging times in a strong condition, ready to seize future opportunities for growth."



USDA Revises Dairy Outlook

USDA released its monthly dairy outlook Wednesday, projecting that the U.S. all-milk price for the fourth quarter of 2009 will range from $12.50 to $13.20/cwt. U.S. cow numbers should also fall to 9.035 million head.vvUSDA expects culling to continue into next year, projecting cow numbers to decline another 65,000 head to 8.970 million in the first quarter. The all-milk price range is expected to climb to $13.55 to $14.55. For the year, the all-milk price is expected to average $14.85 to $15.85 next year, finally approaching break-even for the most efficient producers.  The agency is also expected milk production to decline from 188.8 billion lb. in 2008 to 186.4 billion lb. this year to 185.2 billion lb. in 2010.



Large Manure Spill Near Lester in Lyon County

The Iowa Department of Natural Resources is investigating a large manure spill from a dairy confinement about 2.5 miles northwest of Lester in Lyon County.  Early estimates indicate about 100,000 gallons of manure may have been lost from a temporary transfer pipe while pumping to a manure storage pit. Confinement owner Bernie Bakker reported that he discovered the spill around midnight.  Manure flowed from the piping to a road ditch, into an underground tile line and then into a nearby stream. The stream is a tributary of Mud Creek, which flows into the Rock River.

The spill occurred at the Rock Bottom Dairy when a clamp came off the temporary pipe. Bakker plugged the tile line intake, and dammed the dairy yard and the creek to prevent additional manure from flowing downstream.  He has hired an excavator to pump and recover as much manure as possible from the site and the creek.

DNR staff has confirmed a fish kill, finding several hundred minnows and chubs northwest of the dairy. They traced the manure spill approximately 1.5 miles downstream. Investigators will continue to monitor the situation.  The investigation continues and the DNR will consider possible enforcement action.



AGRICULTURE SECRETARY VILSACK BRINGS OBAMA ADMINISTRATION'S 'RURAL TOUR' TO IOWA

Agriculture Secretary Tom Vilsack Wednesday visited the Iowa State Fair and held a 'Rural Tour' community forum to discuss efforts by the Obama Administration to rebuild and revitalize rural America, listen to local residents talk about how the federal government can assist them, and discuss solutions to challenges facing their communities. This event follows the launch of the Obama Administration's 'Rural Tour' in June.

"To overcome challenges and be successful in a new, 21st century economy, President Obama has asked that we reach out to people in rural communities across the country to listen, learn and facilitate problem-solving," said Agriculture Secretary Vilsack. "It is critically important to hear the thoughts, concerns and stories about Iowa's vision for its future and to collect ideas about how USDA can better serve these communities."

At today's rural community forum, Vilsack discussed how the USDA is working to promote a sustainable, safe, sufficient and nutritious food supply, ensure that America leads the global fight against climate
change, and revitalize rural communities by expanding economic opportunities.??

Secretary Vilsack also highlighted the USDA's American Recovery and Reinvestment Act efforts that are underway in Iowa and across the country, including the following:

USDA's Rural Development has helped guarantee 681 loans worth over $61 million in the state of Iowa through the Single Family Housing Loan program. These loans help residents and producers to have access to the capital they need to keep rural communities strong.

USDA's Farm Service Agency is providing $13.88 million through 239 Direct Operating Farm Loans. These loans help farms purchase items such as livestock, farm equipment, feed, seed, fuel, farm chemicals,
insurance, and other operating expenses.

USDA's Natural Resources Conservation Service announced nearly $23.9 million for 42 floodplain easement projects and more than $2.23 million in funding for watershed operations.

USDA's Agricultural Research Service is providing $10.5 million in funding to assist with critical deferred maintenance projects at the National Animal Disease Center (NADC) in Ames, Iowa. NADC is the largest
Federal animal disease research center in the United States working on major diseases of livestock and poultry. Research done here is solving major animal health and food safety problems faced by livestock
producers and the public.

Through USDA's Rural Development, more than $4 million will be made available for 29 community facilities projects. Community Facility Grants will allow towns across Iowa to purchase critical emergency
service vehicles and equipment, build Emergency Operations Centers and community centers.

Through USDA, the Recovery Act provided for an estimated increase of over $166 million in Supplemental Nutrition Assistance Program (SNAP) benefits in Iowa. Most four-person households will receive an $80
increase in their monthly SNAP benefit. Eligibility limits on jobless adults will be suspended in most areas. The State of Iowa also received $1.33 million in State Administrative Funds.

* USDA is also helping low-income Iowa residents to receive healthy, nutritious meals through nearly $1 million in funding from The Emergency Food Assistance Program. Kids in Iowa also will benefit from over
$823,000 through the National School Lunch Program.

USDA's Rural Development is providing approximately $1.2 million to the City of Elkader to help make improvements with its water treatment plant which was flooded in 2008.

USDA's Rural Development has issued 5 Rural Business and Enterprise Grants to the Maquoketa Industrial Development Assistance Service, Iowa Falls Area Development Corporation, Manson Economic Development Corporation, Central City Main Street, and the City of Tipton for a total of $442,000 to start or expand businesses in rural communities.