Agronomist Notes

 

I finally made the long journey back to Canada after five challenging and rewarding weeks away. After 48 hours of flying, 20 hours waiting in 13 airports driving 5,000 kms in three rental cars, one ferry, two friendly chauffeurs, one broken camera, one new camera, 25 farm visits, two speaking engagements, three conferences and six newsletters, I was ready for home!! I still have another three weeks of travel to the US and UK this year. Hello carbon footprint! I may go tree planting this summer just to relieve my guilt.

On Saturday I completed my travels along the southern coast of Western Australia near Esperance where I stayed with gracious hosts Simon and Felicity Tiller. One of the most peculiar things about this area is the number of farms that purchase and lease land as often as they change their socks. Picking up a 20,000 acre block of land to rent isn’t difficult either. This area has staggering economies of scale, challenging soils and is slightly isolated which makes it somewhat undervalued for what it can produce. There’s even a local port, shown in the photo above. During my visit I was able to see some large scale farms using controlled traffic and soil remediation projects. I also talked with a precision ag consultant who showed me some interesting variable rate technology techniques.

This week we’ll look at the effects of seeding direction through the eyes of satellite technology. Next, I’ll discuss how precision agriculture and economies of scale are not mutually exclusive. Last, we’ll discuss what’s coming in Federal carbon policy. I’ll finish with fundamental and technical market analysis and world crop weather. It’s great to be home. Now to sort through the pile of accumulated papers! Have a great week. SL   

Agronomy

 

Seeding direction can impact crop growth

I was given a presentation on precision ag from Quenten Knight, a private agronomist and part owner in Precision Agronomics Australia. They provide technical support to farmers by turning raw GIS data into information they can use for variable rate seeding, fertilizing, liming, delving and gypsum prescriptions and mapping. During the presentation, we came across a really interesting slide displaying the difference in vegetation density between a field seeded north-south and east-west. 

If you look at the photo on the right, you’ll see areas of higher vegetation coloured in green and areas of less vegetation coloured yellow and red. In 2007, the entire block was seeded to wheat in a north-south direction. In 2008, the south half of the field, coloured green, was seeded north-south while the area coloured yellow and red was seeded east-west. Both fields were sown on the same day with the same wheat variety and fertilizer rate. The only difference was seeding direction. You can see the obvious difference in crop establishment where seeding direction changed 90 degrees from original direction.

Have you guessed what the issue was? I didn’t. The root of the problem was poor soil moisture at sowing. Seeding north-south with RTK guided auto-steer placed the seeds closer to the stubble where the limited amount of moisture was kept and emergence was excellent. The crop seeded east-west suffered from poor emergence from a lack of moisture between the rows. Interesting, isn’t it! I love riddles like this one. SL

Matching economies of scale with precision farming

One of the challenges I see in the future is finding balance between economies of scale and precision agriculture. I know that farm sizes will have to grow in order to remain competitive in the future. At the same time, I understand that producers will have to constantly chase productivity gains through the use of precision technologies. The unfortunate misconception begins as farms grow larger: the logistics of managing precision technologies become more difficult or downright impossible. I’ve yet to find a farm with economies of scale larger than 10,000 acres that employs precision ag technologies, that is, until recently! Ladies and gentlemen, it can be done and you can have economies of scale and manage precision ag technologies in unison. 

Mark Wandel farms 12,000 acres of wheat, canola, barley and fababeans using variable rate fertilizer, lime and gypsum, controlled traffic and inter-row seeding near Gibson, WA. The variable rate fertilizer, lime and gypsum maps are produced by his precision ag consultant Quenten Knight. Mark also uses controlled traffic and inter-row seeding across every acre. I’ve seen it firsthand and now believe variable rate technology, controlled traffic and inter-row seeding can be used successfully on a large scale. 

Duplex soils like the type Mark farms, which are sand over heavy clay, work well with controlled traffic management. The picture on the left is of a shovel placed into the controlled traffic tramline. The picture on the right is taken off the tramline.

The equipment Mark uses is as follows: Caterpillar MT855, DBS air drill 61 feet wide, JD 4920 boom sprayer 120 feet wide, JD 9760’s with 30-foot Honeybee draper fronts with auger extensions reaching out another 23 inches to catch the grain cart on the next tramline. Mark has also attached chaff cyclones to his harvesters to catch weeds and drop them on the tramlines where he can control them with glyphosate and traffic. All equipment runs on 120-inch wheel spacing to minimize the width of the tramlines.

Mark Wandel has set his tramlines in a north-south direction on 30-foot transects. That allows him to run what he calls high traffic tramlines and low traffic tramlines. High traffic tram lines receive seeding, spraying and combine traffic. The low traffic tramlines receive only harvest traffic from combine and grain cart traffic.

One of the limiting factors in any successful reduced tillage system is residue management. That becomes even more important in a controlled traffic system. The uneven spreading of straw and chaff will leave you with wavy crop patterns within a few short years. We fix uneven residue today with heavy harrows to spread the straw but that doesn't work in a controlled traffic system. With that in mind, you really can't spread straw and chaff effectively past 30 feet on any combine, so that becomes the limiting factor to base your equipment size on. If 30 feet is your limiting factor, then all of your equipment must run on multiples of 30 feet. For example, a 30 foot air drill, a 30 foot swather, a 90 foot sprayer, and a 30 foot header would work nicely. In Mark's case, a 60 foot drill, 120 foot sprayer and a 30 foot header works even better. SL

Federal carbon policy may be just around the corner

With President Obama’s budget speech last week, the Canadian Federal Government may have had its wake up call to start quickly moving on Green House Gas (GHG) policy. While President Obama touched on many things in his speech, he did reveal what could only be a well developed agenda for carbon policy. In particular, he noted the anticipated revenues from selling emissions permits that would significantly reduce the federal budget deficit starting in 2012.

Announced in President Obama’s first budget was an anticipated $646 billion in revenues during the first years of a cap-and-trade system to reduce GHGs in the USA. Point Carbon, a well recognized publication in the carbon world, estimates that this would translate into permits to emit GHGs starting at $13.70USD/tonne. For this kind of detail and commitment to be made, the President isn’t just winging it; he clearly has put some thought into it and his credibility on the line. Combine this with the EPA’s move to potentially regulate carbon dioxide as a poison and Congress really hasn’t got much choice but to produce the kind of GHG policy the President has in mind and soon.

Given the recent events in the USA, it comes as no surprise to hear our Federal Environment Minister Jim Prentice is spending some quality time in Washington this week. The pressure will now be on Canada to produce some meaningful GHG policy and sooner than we thought. Following President Obama’s visit, the Prime Minister insisted that Canada had time to delay GHG policy while USA developed its own GHG policy. Looks like the wait may be over.

So what does all this mean for a farmer in Alberta? It supports our position of expecting significant appreciation in carbon prices in the medium term. As a Federal system is developed and implemented, additional demand for GHG offsets or carbon credits is created. Recall that most GHG offsets (tillage offsets are still very controversial outside Alberta and their acceptance is questionable) created in Alberta do not have to remain in Alberta, they can be sold in other markets. It’s just that Alberta has been the highest value market since the creation of the Alberta based regulations to limit the intensity of GHGs starting back in 2007. In addition, the price cap created by the Tech Fund in place in Alberta comes under significant pressure to increase or have access to it reduced. So stay turned, the next few months may prove to be very interesting and have a significant impact on carbon marketing decisions.

Reference: Bruce Love, Preferred Carbon
Disclaimer: The views expressed in this article are those of the author only and are not intended to represent financial advice.

Photo Album

1. Ships sit idle for weeks at port in Perth, WA, an unusual occurance.
2. 100 tonne grain cart at Esperence, WA. Talk about economies of scale!
3. View from prop plane above Esperence area, south of Perth, WA.
4. Native ground near Esperance - Condingup, WA.
5. My host Simon Tiller cups a handfull of soil on cleared land near Esperance - Condingup, WA.

 

Market News

Bill Gary’s Price Perceptions comes to Canada

I've been working diligently to get Bill Gary of Price Perceptions to deliver a bi-weekly technical analysis on Canadian grains. Bill Gary is well known for his easy to read technical analysis on US commodities. Well, I’ve managed to persuade him and the first issue arrived on Friday. The technical analysis includes spring wheat, feed barley, canola and the Canadian dollar. Bill Gary is by far the best technical analyst I know and has over 30 years experience in the industry. His information will provide us with a new tool to help improve the timing of our grain marketing. I'm tired of the reactive analysis in our current grain market newsletters— finally, we have a proactive tool at our disposal! Enjoy the read and the education. If you have any questions, just drop me an email. SL

Sign up today for a free trial by clicking on www.cis-okc.com/CanSup.html or calling (800) 231-0477.

Fundamental Analysis

 

World Production in Million Metric Tonne  

	Production			Ending Stocks			Ending Stocks
	2007-08	Feb-09	Change	2007-08	Feb-09	Change	5 Year Avg
Rapeseed	48.4	56.8	17%	3	5.4	74%	4.6
Barley	133.2	154.7	16%	18	28.8	59%	25.7
Wheat	610.6	682.8	12%	119	150.0	26%	138.6
Corn	792.3	786.5	-1%	128	136.7	7%	125.9
Soybeans	220.9	224.2	1%	53	49.9	-6%	54

Updated USDA report February 11th, 2009.

 

Technical Indicators

I’ve set up these weekly updates to include market entry indicators to help you improve the timing of your grain marketing. I’ve also added market trend indicators to give you a sense of the short and long term market trends.

Canola http://futures.tradingcharts.com/chart.php?cbase=CA&market=RS&cterm=39

Support: $399.97
Resistance 1: $406.77
Resistance 2: $413.57

Market Entry
The market is oversold and appears to be finding some support. Confirming this, the market just signalled a bullish key reversal off a 9 bar new low. Look for a bottom in this area.

Market Trend
The Relative Strength Index is somewhat oversold at 40.97, suggesting a possible rally. Supporting this outlook, the bullish key reversal off a 9 bar new low here suggests an upturn in the market.

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 bearish territory. However, the recent upturn in the MacdMA may indicate a short term rally within the next few bars.

Feed Barley http://futures.tradingcharts.com/chart.php?cbase=BA&market=AB&cterm=39

Support: $128.40
Resistance 1: $128.40
Resistance 2: $128.40

Market Entry
The Bollinger Bands are indicating an oversold market. The market is EXTREMELY BEARISH. Everything in this indicator is pointing to lower prices.

Market Trend
The Relative Strength Index is somewhat oversold at 38.45. 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 bearish territory. However, the recent upturn in the MacdMA may indicate a short term rally within the next few bars.

Hard Red Spring Wheat http://futures.tradingcharts.com/chart.php?cbase=MW&market=MW&cterm=39

Support: $6.03-7
Resistance 1: $6.14-7 
Resistance 2: $6.25-7

Market Entry
The Bollinger Bands are indicating an oversold market, but may continue to become more oversold before reversing. Look for some price strength before taking any bullish positions based on this indicator.

Market Trend
The Relative Strength Indicator is somewhat oversold at 38.68. 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 bearish territory.

Canadian Dollar http://futures.tradingcharts.com/chart.php?cbase=CD&market=CD&cterm=39

Support: $0.766
Resistance 1: $0.778
Resistance 2: $0.791

Market Entry
The Bollinger Bands are indicating an oversold market and volatility appears to be picking up a bit. The market may continue to become more oversold before reversing. Look for some price strength before taking any bullish positions based on this indicator.

Market Trend
The Relative Strength Index is somewhat oversold at 35.70 but given the 45 bar new low here, greater oversold levels are likely.

The MACD is in bearish territory. 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. Further, the market just put in a 45 bar new low. More lows are possible here.

Glossary of Technical Terms http://www2.barchart.com/education/learning.asp 

International Crop Weather News

England: “Better weather has allowed some fieldwork progress this week, however many crops are still backwards and will soon be entering stem extension so there is little time for plants to compensate with extra tillering. Soil conditions are wet with a forecast to return to colder, wetter and windier conditions. Yield potential is very definitely lower than last year at this point.” Nick Ward, England

United States: In the West, rain and snow continue from central California into the northern Rockies and Pacific Northwest, boosting mountain snow packs and providing much-needed recharge to streams and reservoirs. Much of California remains under moderate to extreme long-term drought despite the recent wet weather. On the Plains, milder conditions are returning to the region. Today’s temperatures over the High Plains are expected to average up to 20 degrees F above normal. Meanwhile, southern crop areas are in dire need of moisture, with moderate to extreme drought stretching from southern Kansas into central Texas. In the Corn Belt, dry weather continues.

Europe: Dry weather on the Iberian Peninsula increases irrigation demands for vegetative winter wheat. Rain and snow over Germany and Poland provide additional topsoil moisture for dormant winter crops. Winter grains in France break dormancy under sunny skies and near-normal temperatures.

Former Soviet Union: A warming trend follows a brief period of very cold weather in Ukraine, Russia, and Belarus, providing favorable overwintering conditions for dormant winter grains. Generally dry weather along with a lack of snow cover in southern Ukraine and southernmost areas in Russia likely prompts early spring fieldwork.

Southeast Asia: Increasing heat in northern portions of India and Pakistan threatens heading to filling winter wheat.

South Asia: Showers and thunderstorms benefit heading winter wheat in northern portions of India and Pakistan.

Middle East: In Turkey, additional rain maintains favorable conditions for vegetative winter wheat and barley. Showers ease drought in winter crop areas of Syria, Iraq, and western Iran.

North Africa: Showers return to Morocco, maintaining abundant topsoil moisture for vegetative to heading winter wheat and barley. Periods of rain in northern Tunisia provide additional moisture for winter grains.

Australia: In southern Queensland and northern New South Wales, drier weather helps the maturation of earlier-sown summer crops, while moisture supplies remain adequate for immature cotton and sorghum.

South America: Drier weather returns to the high-production farming areas of central Argentina, following beneficial rain on February 22. Drought intensifies in La Pampa and southern Buenos Aires, increasing stress on summer crops and livestock. Beneficial rain continues in Rio Grande do Sul, Brazil, boosting moisture levels for immature soybeans. Rain in central Brazil benefits safrinha corn and other secondary crops but slows soybean harvesting.

South Africa: Widespread rain falls throughout the Corn Belt and most other major farming areas.

Canada: Seeding commences in April in Southern regions and May in Northern regions.