Agronomist Notes
Happy New Year everyone! I enjoyed the holidays and I hope you did too. 2009 is shaping up to be an interesting year. Canola prices have been climbing, if only momentarily, and fuel and fertilizer prices have been dropping, if only momentarily. Urea prices have been quoted in the $460 to $560 range with phosphorus dropping to $800 a tonne and holding. I’ve heard one input retailer say the price of urea will go up the next go round. I hope that producers who’ve held off purchasing fertilizer will lock in their needs now as the risk of upside price movements is likely stronger than the downside.
In this issue of Beyond Agronomy News we’ll look at biochar, a sustainable soil amendment that can significantly enhance yields and reduce fertilizer inputs. Next, we’ll look at the unusual practice of using sugar to reduce glyphosate phytotoxicity and stimulate soil microbes. (No, these are not turkey-induced hallucinations!) Also, we’ll discuss some thoughts I had on grain marketing over the holidays. We’ll end with the new and improved market news section outlining weekly updates on grain market fundamentals, technical signals and international crop weather news.
I apologize for the length of this first edition of the year. I had a lot to get off my chest after a three week break from writing! Have a great week.
Agronomy
What is biochar and how can it improve crop production?
Biochar is a fine-grained charcoal that is high in organic carbon and largely resistant to decomposition. It is produced by burning biomass in low oxygen conditions where CO2 is not released. It promotes microbial growth, improves water holding capacity, nutrient availability and is a stable source of organic carbon. It was originally discovered in the Amazonian rain forests where the soil is known as Terra Preta or “dark earth” as a result of ancient civilizations slashing and burning forests to clear farmland.
Biochar has a number of production and environmental benefits. Environmentally, the use of biochar as a soil amendment has shown to reduce nitrous oxide emissions by 50 to 80 percent, reduce phosphorus runoff into surface waters and reduce leaching of nitrogen into groundwater. The upside to agriculture is that it can significantly improve yields while reducing the need for conventional fertilizers which is why it caught my attention. In the picture at the right, notice the size of the plants; the larger one was growing in biochar.
It is undisputed that biochar is much more persistent in soil than any other form of organic matter that is commonly applied to soil. Therefore, all associated benefits with respect to nutrient retention and soil fertility are longer lasting than traditional organic matter additions like compost or manure.
Extensive research and trials show that biochar amendments result in measurable improvements of all the key parameters that make soils productive:
- Biochar increases the cation exchange capacity (CEC) in soils.
- It enhances soil microbial functions. The porous structure of char forms a safe haven for microbes that make nutrients available to crops.
- It improves the nutrient retention capacity of soils by preventing leaching and erosion; this allows farmers to use organic and inorganic fertilizers in a cost-effective manner.
- Biochar improves the water retention capacity of soils; the porous structure of the material holds water and prevents the moisture from evaporating.
- It increases the pH of acidic soils; depending on the soil, the effect can be similar to that of lime additions.
Crop trials with biochar amendments combined with organic and inorganic fertilizers in highly weathered, acidic tropical soils have shown impressive yield increases that can be sustained over years. In some cases productivity showed an 840% increase compared with non-amended soils that only received fertilizers.
Bottom line: There is a great deal of research going into biochar production globally and I see it as an exciting opportunity to improve crop production, reduce fertilizer inputs and get paid to store soil carbon. We all know that soils become more productive as the level or organic carbon (organic matter) increases. Biochar may be the sustainable organic matter addition we’ve been looking for. There’s no reason we can’t produce biochar in Canada. Funny thing is, the rest of the world is talking about it, but I haven’t heard a peep about it here. If you’re curious enough to know more, visit the sources below, particularly the YouTube link. SL
Biochar on YouTube: video http://www.youtube.com/watch?v=nzmpWR6JUZQ
Article and photo source: http://biocharfund.com//index.php?option=com_content&task=view&id=14&Itemid=37
Article source: http://www.biochar-international.org/
Sweeten up next spray season
I spend a significant amount of time sifting through masses of agronomy information from around the world and seeing how it may apply here. Sometimes I go even further and implement some of those practices on my own farm or on those I work for. Last fall, I came across an interesting agronomic practice that might be worth looking at.
Kip Cullers, the current world record holder for soybeans at 154 bu/ac (10.3 T/ha), does a number of things to help him achieve record breaking yields. The most interesting practice is the addition of sugar to the spray tank. Yes, that’s right, sugar. Before your next sweet craving strikes, let’s talk more about Mr. Cullers.
Kip feels that applying sugar has two benefits. He says the use of 2 to 3 lbs of sugar per acre combined with his RoundUp herbicide reduces the yellow flash in his soybeans. He believes that adding sugar helps protect the soybeans and "softens the blow" when applying Roundup.
Second, he feels that applying sugar helps to feed the microbes in the soil by giving them a highly degradable source of carbohydrate or energy. Normally, soil microbes get their sugars from plant roots which trade the plant's excess sugar for the microbe's excess nutrients. A common practice in organic farming systems is to spray sugar or molasses on plants to stimulate the microbial populations living on the outside leaves, stems and flowers of the plants. The stimulation of the microbes often stimulates the plant's immune system so that the plants essentially become protected from disease and from insects.
We know that spraying RoundUp on our RR canola can sometimes cause yellowing or stunt the plants for short periods of time. I don’t see why we can’t trial a sweet idea like this one next year. What do you think? I researched a company in Alberta called www.back-to-your-roots.com who sells Brazilian organic sugar for $65 per 55 lb bag. That works out to $1.18 a pound or $3.54 an acre at a 3 lb/ac rate. At that price, I’d be interested to try it at my place where I’ve applied compost. SL
Information overload leads to poor grain marketing decisions
I think you would all agree that the amount of market information we digest on a daily basis has not made our grain marketing decisions any easier or better. In fact, I would argue that the constant bombardment of information has clouded our ability to make smart choices. Often times we read conflicting market opinions that lend even more confusion to the decision-making process. For example, how many times have we heard analysts say that canola prices climbed one day because oil went up only to have canola prices fall the next day while oil continues to climb? So, do we really need to follow the price of oil, corn, US dollar, Canadian dollar, soybeans, soybean oil, ocean freight rates, Baltic index, index funds and technical charts to understand that $600 a tonne for canola is a profitable price level?
I’m not a grain marketer, I’m an agronomist. Whenever I have the conversation about commodity prices and marketing grain with my clients, I often ask them what their gut is telling them. I believe that most farmers have reliable gut instincts that get clouded by too much information. Here’s an example of what I mean:
There was a study done by a lady who sold jams at her store. She wanted to know if a greater selection of jams would lead to higher sales. She decided to place a selection of 30 jams in one display case and just 6 varieties of jam in another. The end result was that the display case with 30 varieties of jam had sales of 3% while the display case with only 6 jams sold 30%, ten times more. Conclusion: the problem with having too much information is that it clouds our decision making process and we tend to do nothing.
Jam purchases are usually a snap decision and I would argue that so is pricing grain. We watch the price of grain climb to a profitable level and then we start to find reasons why the price may go up or down. We scrutinize all the things that could influence price like the price of oil, corn, US dollar, Canadian dollar, soybeans, soybean oil, ocean freight rates, and everything else under the sun and we end up waiting. In the meantime, we miss making that snap decision and it costs us $10 a tonne, then $15, then $20 and finally we sell in a panic at $25 a tonne less than what we could have, had we acted on our first gut instincts.
I know that hind sight is 20/20 and I’m not looking to harp on why we didn’t price our wheat at $380 a tonne or canola at $600 a tonne last spring. That’s in the past and what my friend Bruce calls “the price of tuition.” What I’d like to do moving forward with this newsletter is provide you a cross section of some market fundamentals, technicals and profitability. I’ll leave the analysis up to you and your gut. SL
Market News
Fundamental Analysis
World Production in Million Metric Tonnes
|
Production |
Ending Stocks |
|||||
|
2007 -08 |
2008-09 |
Change |
2007-08 |
2008-09 |
Change |
|
|
Rapeseed |
48.4 |
56.0 |
16% |
3 |
5.2 |
68% |
|
Barley |
133.2 |
153.7 |
15% |
18 |
27.9 |
54% |
|
Wheat |
610.6 |
684.0 |
12% |
119 |
147.3 |
23% |
|
Corn |
792.3 |
785.9 |
-1% |
128 |
123.8 |
-3% |
|
Soybeans |
220.9 |
234.7 |
6% |
53 |
54.1 |
2% |
As of Dec 11, 08. The next USDA S & D report is due out Jan 12th.
Technical Indicators
I have set up these weekly updates to include market entry indicators to help you improve the timing of your grain marketing. Also, I added market trend indicators to give you a sense of the short and long term market trends.
Canola Chart http://futures.tradingcharts.com/chart.php?cbase=CA&market=RS&cterm=39
Market Entry Indicator
Bollinger Bands: The Bollinger Bands are indicating an overbought market. The market appears overbought, but may continue to become more overbought before reversing.
Market Trend Indicators
RSI Indicator: The Relative Strength Index is showing that March canola is somewhat overbought at 61.23. However, this by itself isn't a strong enough indication to signal a trade. Look for additional evidence before getting too bearish here.
MACD Indicator: MACD is in bullish territory. The long term trend, based on a 45 bar moving average, is DOWN. The short term trend is UP. Momentum (24.80) is above zero, indicating an overbought market. However the market may continue to become more overbought.
Feed Barley Chart http://futures.tradingcharts.com/chart.php?cbase=BA&market=AB&cterm=39
Market Entry Indicator
Bollinger Bands: The Bollinger Bands are indicating an oversold condition. An oversold reading occurs when the close is nearer to the bottom band than the top band. Volatility appears to be picking up a bit, as evidenced by an increasing distance between the upper and lower bands over the last few bars. The market is in oversold territory. And, the market just signaled a 9 bar bearish key reversal adding to the chance for a decline here.
Market Trend Indicators
RSI Indicator: The Relative Strength Index is somewhat oversold at 45.23. However, this by itself isn't a strong enough indication to signal a trade. Look for additional evidence here before getting too bullish.
MACD Indicator: The long term trend, based on a 45 bar moving average, is DOWN. The short term trend, based on a 9 bar moving average, is DOWN. MACD is in bullish territory. However, the recent downturn in the MacdMA may indicate a short term decline within the next few bars. A bearish key reversal off a 9 bar new high here confirms this bearish outlook.
Hard Red Spring Wheat http://futures.tradingcharts.com/chart.php?cbase=MW&market=MW&cterm=39
Market Entry Indicator
Bollinger Bands: The Bollinger Bands are indicating an overbought market. The market appears overbought, but may continue to become more overbought before reversing. Look for some price weakness before taking any bearish positions based on this indicator.
Market Trend Indicators
RSI Indicator: The RSI is somewhat overbought at 64.02. However, this by itself isn't a strong enough indication to signal a trade. Look for additional evidence before getting too bearish here.
MACD Indicator: The MACD is in bullish territory, but has not issued a signal here. The long term trend, based on a 45 bar moving average, is UP. The short term trend, based on a 9 bar moving average, is UP.
Canadian Dollar http://futures.tradingcharts.com/chart.php?cbase=CD&market=CD&cterm=39
Market Entry Indicator
Bollinger Bands: The Bollinger Bands are indicating an overbought market. An overbought reading occurs when the close is nearer to the top band than the bottom band.
Market Trend Indicators
RSI Indicator: The RSI is in neutral territory at 53.04. However, this by itself isn't a strong enough indication to signal a trade. Look for additional evidence before getting too bearish here.
MACD Indicator: MACD is in bullish territory, but has not issued a signal here. The long term trend, based on a 45 bar moving average, is UP. The short term trend, based on a 9 bar moving average, is DOWN. MACD is in bullish territory. However, the recent downturn in the MacdMA may indicate a short term decline within the next few bars.
Glossary of Technical Terms: http://www2.barchart.com/education/learning.asp
International Crop and Weather News Update
Australia: “In general, everyone in the northern district of Western Australia would have achieved yields well above what they would have been budgeting for in late June ‘08. Wheat yields would have ranged from 1.5 to 2.5 T/ha (22 to 37 bu/ac) depending on the amount of summer rain they received in early ‘08 and the life-saving finishing rain received in September.” Cameron Tubby, WA
“We have just finished harvest in the central Western Australia wheat belt. Yields for most crops average except for wheat which was affected by frost and yielded about 65% of expected.” Dave Fulwood, WA
“After patchy rain in the growing areas of Queensland we have received good rainfall. Sorghum is finishing with dryland yields from 5T/ha (75 bu/ac) and up but a large carry over from last year. Winter fallows looking good. Nitrogen fertilizer still over $1000 a tonne. Large areas will plant chick peas. Wheat prices are poor so future wheat acres may be down.” Ronald Thompson, QLD
Ukraine: “In the Ukraine the temperature is around -10oC and there is 30cm of snow on the fields. Crops are in good condition for the winter. Wheat averaged 5 to 6 T/ha (74 to 90 bu/ac) and the barley averaged (90 to 110 bu/ac). The rapeseed averaged 2.5 to 2.8 T/ha (45 to 50 bu/ac). Autumn was rain deficient and the soils didn't constitute enough reserve of water.” Jean Paul Kihm, France
“The winter canola is anywhere from 3 to 10 leaves while the winter barley is at the 3 to 5 leaf stage and winter wheat around 3 leaf. The current temperature is quite cold, -12 degrees C with a thin snow cover. Canola yields this year were below average at around 2 T/ha (35 bu/ac). Winter barley yields were average at 7-8 T/ha (130-150 bu/ac) and winter wheat was average as well at 6-7 T/ha (80-100 bu/ac). Relatively thin snow cover, low temperatures and especially poor canola stage can cause canola winter kill. The wheat and barley look good.” Kees Huizinga, Ukraine
New Zealand: “Harvest in Canterbury, South Island, is just getting under way with some of the dryland crops already being harvested. A late frost in early November caned most of the autumn barley and it was made into silage and so was a lot of the forage brassica. A very dry November followed by half of December has meant most crops will be back in yield. Dryland ryegrass seed crops will yield 500-1000 kg/ha. Dryland wheat should run 5 T/ha (75 bu/ac) and late winter barley should run 5 to 7 T/ha (93 to 130 bu/ac). The irrigated wheat should average 11 to 12 T/ha (164 to 178 bu/ac) with the odd crop at 14 to 15 tonne (215 bu/ac). The irrigated winter barley was not affected by frost and should go 8 to10 T/ha (148 to 185 bu/ac). Wheat is trading at NZ$ 360/t and some barley had traded at $380 not looking to good really but when the first wheat comes off we will have a better idea.” Craige Mckenzie, Ashburton
England: “September and October sown wheat looks good. Later sown first wheats and second wheats are average with a large variation due to waterlogging. These late sown crops are some of the worst I've seen for a number of years even if they are only 10-20% of total area. Oilseed rape is average, some very good and some very poor, again with a large variation due to difficult soil conditions at establishment. 2008 yields all exceptional; 15% up on average, 25% up on last year.” Nick Ward, Lincolnshire
Canada: “Ontario planted a normal amount of winter wheat this past fall and it went in in good shape. Fertilizer prices are finally starting to fall. The retail suppliers are caught between a rock and a hard place. They filled up with high priced fertilizer a few months ago and are reluctant to low their price to reflect the drop in wholesale prices. I am afraid they will have to take a substantial loss to move their high priced inventory as farmers can't cash flow a profit with these high prices. Grains are starting to rebound in price and the basis has improved as of lately.” Jack Rigby, Ontario
Western Canada experienced above average crops for the most part in 2008. In Alberta, we had record canola yields ranging anywhere from 40 to 70 bu/ac (2 to 4 T/ha) and barley yields 80 to 100 bu/ac (4.8 to 5.5 T/ha) along with above average spring wheat yields at 50 to 75 bu/ac (3.7 to 5 T/ha). Spring wheat quality was excellent on average as well as canola. The price of urea has dropped down to $500 a tonne and MAP at $800 a tonne.” Steve Larocque, Alberta
International Weather News: http://www.usda.gov/oce/weather/pubs/Weekly/FCW.pdf
