Agronomist Notes

It’s the second week of January and we’re back in the full swing of things. The commodity markets are no exception with rally after unexpected rally. I’ve heard several people forward contracting November canola in the range of $11/bu. Incredible! The high commodity prices are reflected in certified seed prices so be sure to secure your supply soon.

The carbon credit market has heated up again with many companies approaching crop input retailers and producers to sign contracts. My advice to clients thus far has been to take a cautious wait and see approach. The number of carbon trading companies is growing and competition always a good thing. At this time, I think we can start comparing the offerings of a few companies, mind you, without rushing to sign any deals.

In this week’s newsletter, we’ll take a look at nitrogen use efficiency and the products that may offer us a solution to this emerging challenge. We’ll also take a quick look at the role of plant breeding and drought tolerance as there’s exciting new research on this topic. Finally we’ll finish with market news, which just keeps getting better every day.

Have a great week.
Steve

 

Agronomy

Crop Nitrogen Supply and Uptake
Nitrogen is the typically the most limiting nutrient in crop production today. Crops take up nitrogen from the soil in the form of nitrate nitrogen (NO3-N) and ammonium (NH4+N).

Crops obtain nitrogen from:

• inorganic nitrate nitrogen and ammonium nitrogen in the soil solution or attached to soil particles,
• ammonium and nitrate nitrogen released from breakdown of soil organic matter, manure or residual N from legume crops during the growing season,
• applied nitrogen fertilizer, and
• rainfall associated with lightning.

Most of the N stored in the soil is found in organic matter. One per cent of organic matter represents a thousand pounds of N per acre, but less than 1 per cent of the N tied up in organic matter is released each year. Soil micro-organisms are responsible for releasing the N. Several factors influence the activity of these micro-organisms including: environmental conditions, particularly the carbon to nitrogen ratio in plant residue; soil temperature; soil moisture; and organic matter content. Normally only 10 to 20 per cent of the total N required for high crop yields is supplied by N released by soil organic matter decomposition. Fertilizer must supply the remaining N.

Full article: http://www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/agdex149?opendocument

Nitrogen: The Inefficiency of It All
The huge jump in nitrogen fertilizer costs has forced me to think differently about the way we apply nitrogen. We have come a long way from the days of broadcast and incorporate to today’s direct seeding one-pass systems. However, there’s still much to be learned about improving (NUE) nitrogen use efficiency. For example, for every 10 pounds of nitrogen we apply today, our crops will see roughly 6.5 pounds. The remaining 3.5 pounds is lost in the system through microbial tie up, denitrification and leaching. This inefficiency works out to a loss of $16.80 per acre based on 80 lbs/N per acre at $0.60 a pound! That’s the bad news. The good news is that there are products in the pipeline to help provide a solution.

The use of urease inhibitors began as a solution to reduce N losses when broadcasting urea on pastures after ammonium nitrate was discontinued. It turns out that products like Agrotain and Super Urea have a lot more to offer the one-pass seeder in terms of improved nitrogen use efficiency. With that, let’s discuss some of the processes that lead to nitrogen losses.

Nitrogen Conversion Processes
Nitrogen in the form of nitrate is subject to losses through denitrification and leaching. These losses can be prevented if nitrogen is kept in the ammonium form. Ammonium is a stable form of nitrogen that locks itself on to clay and organic matter, where as nitrate floats around in the soil water. The conversion of ammonium to nitrate is done by way of nitrosomonas and nitrobacter bacteria. One of the challenges with improving NUE is finding a way to suppress the nitrifying bacteria that convert ammonium to nitrate.

Today’s one-pass seeding systems promote the rapid build up of bacteria because all the crops nitrogen requirements are placed in the soil at once, when crop demands are minimal. A high nitrogen environment then stimulates the rapid build up of bacteria around the fertilizer band. As the bacterial population grows, the conversion of ammonium to nitrate happens quicker, especially in early spring when there is limited nitrogen demand from plants. This rapid conversion puts the nitrogen at significant risk to losses.

The Role of Urease and Bacterial Inhibitors
Under wet, warm conditions, denitrification and leaching losses from in-soil N applications can be high. Urease and bacterial inhibitors such as Agrotain and Super Urea are designed to slow the conversion of urea to ammonia, and ammonium to nitrate. Urea or ammonia fertilizers remain in the ammonium form longer than untreated forms, thus reducing the risk of losses.

Agrotain
With Agrotain treated urea, the sustained release limits the population explosion of nitrifying bacteria. Nitrogen is released later in the growing season when the plant requires more N and has the ability to access nitrogen in the ammonium form, before the bacteria convert it.  The key with Agrotain is that it is making more N available for a longer period of time, thus reducing losses.

Agrotain Plus
This product is used to stabilize the urea portion of UAN 28-0-0. It may also be valuable as an additive to liquid manure which is high in ammonium nitrogen.

It works by sustaining the conversion of urea to ammonia, as Agrotain does, plus it has an additional stabilizing agent which holds the N in the ammonium form for over a month.

1. Benefits are reduced N losses, no leaching, no denitrification.
2. Provides sustained ammonium feeding during the growing season.

Super Urea
Super Urea is a 46-0-0 granular formulation that behaves similarly to Agrotain Plus.

1. Benefits are reduced N losses, no leaching, no denitrification and sustained ammonium feeding for the plant.
2. Increases the acidity of the root zone.
   1. Ammonium based fertilizers drop the pH in the soil around the fertilizer band. This makes for better nutrient availability, plant health and decreases disease pressure.
3. Takes the nitrogen out of the air cart.
   1. The stabilized nitrogen technology in Super Urea can be surface applied on zero-till land with little risk to losses, while ensuring excellent N availability to the plant.
   2. This will significantly increase the operational efficiencies. 
   3. More acres seeded per fill. Take 150 lbs an acre out of your spring fertilizer blend and see how many acres per fill you get! 
   4. Can be fall applied when N pricing is more attractive.

Super Urea is currently sold in the US. Agrotain International has Canadian registration but at this point has not launched the technology into the Canadian market. The product is in the hands of researchers, i.e. Ag Canada.

As you can see, products like Agrotain and Super Urea have the potential to improve nitrogen use efficiencies in one-pass seeding systems. The bonus is realized when you add the benefits of increased nutrient availability, disease suppression, improved plant health and seeding efficiencies. Keep a close eye on these products and I encourage you to begin your own on farm research projects. SL
Source: Earl Greenhough, Alberta Regional Manager, Agrotain International

Will Biotechnology Replace Nitrogen Fertilizer?
Research in molecular biology has put highly desirable and widely adopted traits for herbicide and pest resistance into crop plants. It is expected that the science will soon impact the rate of progress in yield improve¬ment, and that genetically modified plants may show increased stress tolerance and nutrient use efficiency. What is the likelihood of being able to replace N fertilizer altogether?
Full story: http://www.ipni.net/ipniweb/pnt.nsf/5a4b8be72a35cd46852568d9001a18da/c15813b3e9c41959852572890069dba7!OpenDocument

New Drought Tolerant Plants Offer Hope
Genetically engineered plants have been developed to survive droughts and grow with 70 percent less irrigation water. The discovery offers hope for global agriculture that is already grappling with limited and variable water supplies.

This is an exciting development because it opens the door, not only to producing plants that can survive periodic droughts, but also to reducing the amount of irrigation water routinely used to grow some of the world's most important food and fibre crops.

The research team is hopeful that similar results will be found in crop plants such as tomatoes, rice, wheat, canola and cotton. Upon completion of greenhouse experiments, the researchers plan to carry the research forward into field trials.
Full story: http://www.news.ucdavis.edu/search/news_detail.lasso?id=8439

Market News

The Big Picture on Grain
The wild volatility of grain markets through the fourth quarter of 2007 has extended into early 2008. There are high hopes for the year ahead among grain producers, and I think justifiably so. The market outlook across the board for farm commodities remains bullish, but with many variables subject yet to possible change. Asian food demand remains a key powerhouse feature, which threatens global food supply security. The emergence of the biofuels sector certainly compounds the demand pressures on available grain and oilseed supplies. Varying weather conditions and their influence on both southern and northern hemisphere crop prospects in 2008 adds an uncertain and potentially explosive element to the mix.

And finally, certainly not fully appreciated is the increasing amount of speculative investor money which is being put to work into agricultural markets. A significant part of that influence has been the attraction of agriculture as an inflationary hedge to the broader global investment community. The game in ag, as a result, has changed.
Full story: http://www.fcc-fac.ca/newsletters/en/express/articles/20080111_e.asp#10

Crop Insurance Set to Change Across Alberta
Crop insurance in Alberta is about to change. Farmers will receive crop insurance coverage based on what is produced on their own farm, not their neighbor’s. Until now, a farmer’s coverage was influenced by the average yields of other farmers in the same Risk Area.
Full story: http://www.afsc.ca/Default.aspx?cid=696&lang=1

Top Managers: Farm Business Strategies
Business strategies focus on the direction of the business in terms of expansion, maintenance, contraction, etc. Your business strategy should create and sustain a competitive advantage that enables you to consistently earn above-average returns.
Full story: http://www.topmanagers.ca/TopicSubDetail.aspx?DocId=357

Portable Grain Bag Storage System – Malt Barley Losing Condition
The Canadian Malting Barley Technical Centre is advising producers not to store malting barley in large bags. Big plastic bags are growing in popularity as a way to store cereal grains. There are producers who rent land without grain storage and the portable bagging system is a good alternative for them. Unfortunately, the technical centre says that because of the lack of air circulation and the possibility of moisture migration inside the bag, malting barley will go out of condition very rapidly. Producers are being cautioned that storage in large plastic bags will likely result in the rejection of the barley for malting.
Source: Kevin Hursh

CWB Announces Changes for Barley Marketing
Under a new CWB program, farmers will be offered the option of cash-price contracts for their malting barley, plus the benefits of single-desk selling through the CWB. If these contracts were available through selecting companies today, the upfront cash price for malting barley producers would be over $5 per bushel, backed off to west central Saskatchewan, with flexibility to negotiate additional terms directly with the companies. The program announced by the CWB today is called CashPlus and is designed to suit farmer needs and add flexibility in malting barley pricing. It also responds to the malting industry’s desire for improved operational certainty in the aftermath of upheavals in the Canadian malting barley industry during 2007.
Full story: http://www.cwb.ca/public/en/newsroom/releases/2008/010908.jsp

Local Feed Barley and Feed Wheat Prices
The price for feed wheat in the Calgary and Red Deer area remains at $215 to $220 a tonne for January delivery. Feed barley prices range from $206 to $210 a tonne for January delivery. There was roughly 500 tonnes of corn sold into Lethbridge and Calgary last week priced at $220 a tonne delivered. SL
Source: Cash Market Value Newsletter

Watch for Weather in South America
The weather's impact on South American corn and soybean production could provide extraordinary upside potential to grain markets this year. While Brazil's production prospects look pretty good right now, Argentina is on the dry side. There's really not much room for error if production problems do develop in South America. Corn and soybean prices could both continue to climb higher in the weeks ahead, depending on weather events in South America. However, prices could also drop if South American grain production appears likely to meet or exceed expectations. After the South American harvest wraps up, the next big factor in determining grain market prices for 2008 will be what the USDA's planted acreage report turns out to be for the U.S. this spring.
Full story: http://enews.penton.com/enews/cornandsoybeandigest/soybean_edigest/2008_01_10_january_10_2008/display

Malt Barley Concerns in EU
Problems with rejections due to poor germination in France and Denmark are keeping the old crop market very firm in the EU. Buyers are now very concerned that they will be unable to cover their demand for June and July. Who will they turn to if Canada is the only real player with malt barley in the bin? I would expect to see a strong CWB PRO with world malt barley supplies so tight. SL
Source: http://www.gleadell.co.uk/MarketReport.htm

Number of Ethanol Plants
DTN has delved into many sources to compile what we hope is one of the most comprehensive lists available of ethanol plants, including those operating, under construction and even just in the planning stages. The map shows 160 plants in operation, 79 under construction and 323 planned for construction. There are half as many plants under construction now as there are plants in operation. Feed barley prices look to remain bullish with this new demand. Factor in a potential drought in the US and look out!
See map: http://www.dtnethanolcenter.com/images/e0010039/ethanol_plants.html