Agronomist Notes

The most common question these days is whether we should seed more barley and less spring wheat. The lack of wheat movement this winter has a number of producers questioning why they grow hard red spring wheat at all. However, I must strongly caution any major shifts away from wheat just because the price of barley is near $3.50/bu right now.

It’s the old adage. “The best cure for high prices is high prices.” I realize we live in a different market where hedge funds control 80% of the direction and more money is spilled into commodity markets everyday. That’s fantastic news, but what is driving our markets upward today can drive our markets downward tomorrow.

I’m not a market analyst but it seems plain to me that whenever we chase price, we end up disappointed. See the article in today’s Market News section called “Great Mysteries in Commodity Trading.”

My advice: stick to your crop rotations and do the best job of managing your inputs to create the lowest cost of production you can. Arm yourself with grain marketing information from advisors, daily newswires and the Internet. Finally, surround yourself with intelligent people who provide the most value to your operation.

Agronomy

Better Management Boosts Wheat Margins - European Union

These principles can be applied to our situation in Canada.

Learned From Past Experience

The best producers have used the impact of low cereal prices to focus on their management and now that prices have risen, they are in a better position then ever before with higher yields and lower production costs.

The top 25% of growers increased wheat yields from 9.9 t/ha in 2005 to 10.2 t/ha in 2006, reduced variable spray costs from £14.49/t to £13.90/t in 2006 and trimmed fungicide usage from £5.94/t to £5.67/t over the same period.

The data showed the best managed farms achieved gross margins £160/ha higher, had yields some 1.3 t/ha more and spend over £3 less per tonne of production on sprays.

Quality Beats Soil and Size

The figures clearly show that the biggest determinant of an arable unit’s profitability is not its soil type or farm size but the quality of its management inputs.

Using the right products at the right time at the right dose rates and not stretching spray intervals, all have a major impact on farm profitability.

No one factor is responsible for one farm’s exceptional profitability and another’s average performance, but making sure you understand your crop’s requirements and acting in as timely and accurate manner as you can, will make all the difference.

Source: UK Farming online

Farmer-Reported Crop Variety and Yield Information

AFSC collects crop variety and yield information from about 14,000 insured Alberta farmers to distribute as Alberta Management Insights (AMI) reports. The reports include a risk area seeding summary, a risk area top yielding crop varieties report, and variety comparisons for stubble/fallow and stubble/irrigation. You can now generate AMI reports on Ropin' the Web by entering your legal land description and selecting the report you wish to view.

Click here for farmer-reported crop variety and yield information

Fertilizer Application Information

Are you wondering how much fertilizer can be placed with seed? Do you need information about potassium or phosphorous fertilizer application? Ropin' the Web has fertilizer application information available for many crop varieties; below are a few of the resources available online.

Fertilizing Irrigated Grain and Oilseed Crops

Fertilizing Irrigated Soft White Spring Wheat

Phosphorous Fertilizer Application

Potassium Fertilizer Application

Seed Placed Fertilizer - FAQs

Fertilizer Requirements of Irrigated Alfalfa

Fertilizing Grass for Hay and Pasture

Cereals for Silage

Cereal crops provide a lot of options that allow producers to balance silage yield, quality, harvesting and storage. Producers must look at species, varieties, mixtures and stage of cut as ways of controlling silage quality.

Factors to consider when selecting a variety for silage: http://www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/fcd11212

Alberta Air Drill Clinic & Seeding Ready Seminars

The manufacturers of direct seeding equipment to participate in this unique opportunity to work with farmers in achieving optimum performance from their air carts and air drills We’ve asked them to bring their equipment, their engineers and their technicians to train current and potential owners on key maintenance points, air cart specifications and air drill specifications such as leveling, depth setting & opener performance under various soil conditions.

Full details: http://www.reducedtillage.ca/events.aspx

Market News

CWB Cash Advance Rates Approved

The following cash advance rates have been approved for the upcoming CWB Advance Payments Program (APP), which will start April 1, 2007: wheat - $80; durum - $86; barley - $50. A maximum of $400,000 is available for cash advances, with the first $100,000 interest free. CAIS can be used as security on production not covered by crop insurance.

AFSC Spring Price Endorsement

The link below will take you to the AFSC spring price endorsement market prices. Click on "2007 Insurance prices for crops eligible for Variable Price Benefit & Spring Price Endorsement" to find a table of price levels. http://www.afsc.ca/marketPrices.asp

Grain Price Review

CWB Wheat

• The CWB has a strong sales program on the books for #1/2 CWRS (all protein levels).
• The weather is unfortunately playing havoc with rail logistics. When these issues are resolved, movement opportunities should be strong right through until the end of the crop year.
• Wheat export pace has been disappointing year to date. Winter wheat crop and moisture conditions are improving in the US. Both are fundamentally bearish for wheat prices, however with corn fighting for new crop acres to keep up with increased demand from ethanol producers, wheat prices are expected to trend closely with corn until spring seeding is complete.

Feed Barley

• Feed lots have increased their cattle on feed numbers the past few months and this is likely to continue through to summer.
• Crop production with average yields for barley in 2007-08 is 13.1 million tonnes vs 2006-07 of 10.00 million tonnes. StatsCan issues its intended acreage report April 24 and actual seeded acreage June 26.
• Agriculture Canada released acreage and production estimates for the 2007-08 crop year. Seeded acreage projections of barley for in 2007-08 are 11.81 million acres vs 2006-07 of 9.54 million acres.

Feed Wheat

• April and May values are staying firm as end users continue to cover their requirements. This trend should continue another two weeks, and once the end users are covered for April and May they will not be back into the market until June. Producers should consider marketing some of their feed grain at current values.
• If corn seeded acres increase 10 to 12 million acres as estimated, then corn values could continue to decline. This would eventually have an impact on Canadian Feed Grain values. However, if the increase in acres is not that large, values may hold steady to higher for the summer.

Malt Barley

• New crop CWB PRO's were announced late February, values are up considerably over the current crop year with an increase of $35/mt on the 2-row PRO to $240 and an increase of $31/mt on the 6-row PRO to $222.
• At these price levels malt pencils out at a decent return for growers; this price indication should further help increase barley acres.
• Driving these values continues to be the current global shortfall of malt and increased demand especially in China. In addition to this, malt acres are expected to decline further in the United States, which will increase the demand south of the border.

Canola

• Contributing to losses were the weakness in the CBOT Soy Complex, firmness in the Canadian dollar and a complete lack of any new export business.
• Exporters are reluctant to be overly aggressive on their prices ex. Vancouver as a result of the continued logistics issues out to the port.
• Both CN and CP are still trying to regroup from the problems and strike that occurred in the past couple of weeks. Compounding this is the fact that there were several washouts along CP lines causing a back up of several trains and pushing back any additional rail movement by approximately 24 hours.
• With prices sub $8/bu in nearly all locations, producers have shut off the tap in somewhat disbelief that values could have fallen so quickly. This is the first sustained weakness that the Canola futures have seen this year and if this persists we could see producers liquidate their bins in the worry that prices could tumble lower.

Source: AgPro Market Report

Great Mysteries in Commodity Trading

One of the great mysteries in commodity trading is why people stampede into a commodity even when they know everyone else is doing the same things and there is a high likelihood prices will reverse.

Environmental science and policy researcher, Joseph Arvai, who says while the human brain can simultaneously process emotional and empirical information, emotional responses are much stronger in most people than the rational response, provided a good answer.

"People tend to have a hard time evaluating numbers, even when the numbers are clear and right in front of them," Arvai said. "In contrast, the emotional responses that are conjured up by problems such as terrorism and crime are so strong that most people don't factor in the empirical evidence when making decisions."

This is obvious in commodity markets. Strong prices in the weeks before seeding attract undecided acres to those particular crops, often resulting too much area being sown. Barring a weather disaster, the resulting over supply results in significantly lower prices.

Faced with this simple and well known cause and effect of supply and demand, affected growers respond emotionally, saying the trade is once again manipulating markets to steal their profit. Significantly, most farmers avoid using or misuse risk management tools, which would help them, secure a higher average price.

A small percentage of farmers approach seeding decisions differently. One seed plant operator in Saskatchewan leaves the final decision about what to seed on land until after supplying seed to his neighbors. He planted what was left and generally experienced above average returns, tending to more frequently grow crops in lower to normal supply.