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Pork: USDA reports help brighten outlook

Published July 7, 2014

URBANA, Ill. – According to Purdue University Extension economist Chris Hurt, pork producers might want to say thank you for the recent USDA reports that have sharply brightened their profit outlook. The June 27 Hogs and Pigs report indicated that breeding herd expansion had not yet started and that baby pig death losses from the PED virus continued to be high last spring. The second report of beneficial numbers came in the June 30 Grain Stocks and Acreage reports, which were contributors to rapidly falling corn and soybean meal prices.

“In the week following the reports, higher anticipated hog prices and lower anticipated feed prices have increased profitability prospects about $18 per head for the period that represents use of the 2014 crops,” Hurt said. “Lean hog futures rose on average about $6 per hundredweight and corn prices fell by about 40 cents per bushel with soybean meal declining around $30 per ton.

“Prior to the hog inventory report, there was an expectation that the nation’s breeding herd was already in expansion, with spring farrowing intentions up 2 percent,” Hurt continued. “However, on June 1, the breeding herd was down fractionally and actual spring farrowings were also down modestly. The PED virus apparently continued to inflict higher death losses in the spring than had been anticipated. While USDA does not specifically ask producers to report death losses from PEDv, they do report the number of pigs per litter. By comparing the reported number of pigs per litter this year to the five-year trend provides a proxy of how PEDv has affected baby pig survival.”

Hurt said that this analysis suggests that baby pig death losses began to show up in the national data last October, with 2 percent losses. That expanded to 3 percent in November, 6 percent in December, and peaked near 8 percent death losses in the coldest weather months of January, February, and March. Losses appeared to be moderating somewhat with warmer weather, but were still 7 percent in April and 5 percent in May. The death losses from PEDv will likely continue to trend lower this summer, but current information suggests that the disease is far from controlled.

“The number of hogs coming to market this fall and winter will be smaller than had been expected due to smaller spring farrowings and higher-than-expected PEDv death losses,” Hurt said. “This is the basis for the sharply higher lean hog futures this fall and winter. Producers have been selling their surviving hogs at higher weights. The number of hogs marketed in the first half of 2014 was down about 4 percent, but weights were up over 3 percent. As a result, pork supplies were surprisingly down less than 1 percent as weights substantially compensated for PEDv death losses. This means that high hog prices are being partially driven by smaller pork supplies, but more important by strong pork demand. The two most important components of strong pork demand are related to the currently tiny supply of beef and to strong pork export demand.

“Record-high retail beef prices have some consumers looking around the meat case for alternatives,” Hurt added. “In May, USDA estimated the average grocery store price of beef cuts to be $5.91 per pound. The average cut of pork on the other hand was $4.10 per pound. Even though this was also a record pork price, it was $1.81 per pound lower than beef. This large price difference seems to be causing a number of consumers to shift toward pork.  Foreign consumers have been strong competitors for limited world supplies of pork as well. Losses from PEDv have been highly publicized since February and this has seemingly contributed to aggressive foreign buying of pork in an attempt to avoid the summer pork shortages resulting from peak baby pig death losses last winter.”

Hurt said that as a result, hog prices in the first half of 2014 averaged a record of about $80 per hundredweight on a live basis. This was nearly 25 percent higher than in the same period the previous year. The full impact of smaller pork supplies will be felt this summer with new record-high hog and pork prices. Live hog prices are expected to average in the mid $90s in the third quarter before moderating in September and moving down to the mid-to-higher $70s for the final quarter of 2014.

“Producer profits were record high in the second quarter this year, near $70 per head,” Hurt said. “Continued record hog prices and now lower feed prices mean that record will fall this summer as third quarter profits are expected to be over $100 per head. These extremely high profits are clear signals for producers to increase pork production. The USDA report did reveal that producers have received this signal and they intend to increase farrowings by 4 percent this fall. If they start the expansion, and if PEDv is better controlled, pork supplies can begin to grow by the spring of 2015, and could total 4 to 6 percent higher in the last three quarters of 2015.

“No relief for consumers is expected this summer as retail pork prices keep moving up to new records,” Hurt concluded. “Retail pork prices are expected to level off in the fall and then move somewhat lower into the winter. More relief from record-high retail pork prices can be expected in the second half of 2015 as pork supplies build.”

 

Jul30

Palmer Amaranth Field Research Tour

9:00 AM - 1:00 PM
Palmer Amaranth Research Site, Union Hill, Ill.

The tour will begin at 9 a.m. and conclude with a catered lunch around noon. Advanced registration is available at bayerrespecttherotation.com. There is no fee to attend and credits for certified crop advisers will be available. The research site is located approximately ½ mile east of the intersection of county roads 14000 west and 3000 north near the community of Union Hill, Ill.

Palmer amaranth field research tour set for July 30

Published July 2, 2014

URBANA, Ill. - The University of Illinois weed science program will hold a field tour and discussions on July 30 at the Palmer amaranth research site, located approximately ½ mile east of the intersection of county roads 14000 west and 3000 north near the community of Union Hill, Ill.

The tour will provide an opportunity for farmers, input suppliers, members of the media, and others to have a first-hand encounter with a Palmer amaranth population thriving just a few miles south of Chicago. The tour will feature four presentations by weed scientists that highlight the identification, biology, and management of Palmer amaranth, and will also provide ample opportunity to view the numerous research plots. 

Participants will receive a complimentary tour booklet that contains field research protocols and maps to help guide them through the research plots. The tour will begin at 9 a.m. and conclude with a catered lunch around noon.  Advanced registration is available at bayerrespecttherotation.com. There is no fee to attend and credits for certified crop advisers will be available.

Tour presentations will include:

  • Larry Steckel, Extension weed scientist, University of Tennessee, will provide tips on Palmer amaranth identification and also share his vast experience in managing this invasive and extremely competitive weed species in Tennessee.
  • Pat Tranel, professor of molecular weed science, U of I, will discuss the current status of herbicide resistance among waterhemp and Palmer amaranth populations in Illinois, and also offer insights into how to best employ future technologies to manage these dioecious pigweeds.
  • Aaron Hager, Extension weed scientist, U of I, will discuss recommendations to manage Palmer amaranth in Illinois agronomic crops, including how to best utilize soil-residual herbicides in combination with intense crop scouting, timely applications of foliar-applied herbicides, and other mechanical and cultural methods.
  • A representative of Bayer CropScience will also provide an update on new Bayer traits and technologies under development to help manage Palmer amaranth and other troublesome weeds.

“Our Palmer amaranth field research activities and tour are in collaboration with scientists and researchers from Bayer CropScience.  We thank Bayer CropScience and all our research partners for providing the research support necessary to better understand and manage Palmer amaranth in Illinois, said Hager.

Remember the European corn borer?

Published July 2, 2014

URBANA, Ill. - The European corn borer, once regarded as a major and consistent insect pest, is now only rarely observed in most commercial cornfields across the Corn Belt, said a University of Illinois entomologist.

Mike Gray said that in 1939, European corn borers were first reported in Illinois and by 1942 the pest could be found in all counties within the state. “William ‘Bill’ Luckmann, a longtime retired and well-known entomologist, once mentioned that he had only observed two cornfields totally destroyed by insects—once by chinch bugs and once by European corn borers,” Gray said.

Since the introduction of Bt hybrids in 1996, the use of transgenic corn has risen sharply. Gray said that according to the USDA Economic Research Service, Bt hybrids were planted on 76 percent of the U.S. corn acres in 2013. In 2013, transgenic corn hybrids (including Bt hybrids, stacked hybrids [Bt and herbicide tolerant], and herbicide tolerant only) were used on 90 percent of corn acres. The widespread use of highly effective Bt hybrids on lepidopterous insect pests such as the European corn borer has had a significant areawide population suppression effect on this once prominent species.

“In evening drives around the state of Illinois the past few years, the first or second flights of European corn borers have been barely noticeable,” Gray said. “Many will recall what these spring and summer evening drives did to our windshields.”

Depending on the accumulation of heat units, the first flight of European corn borers generally lasts from mid-May through mid-June. Moths emerge from corn residue and seek out areas of dense vegetation found in ditch banks, fence rows, and grass waterways. Gray explained that females emit a sex pheromone in these “action sites” very late in the evening that attracts males and mating ensues. Females depart action sites after sundown and begin laying egg masses in nearby cornfields, typically two egg masses per night for upwards of 10 days.

From June 13 to 26, a Department of Crop Sciences research team led by Ron Estes, principal research specialist in agriculture, and Nicholas Tinsley, postdoctoral research associate, conducted surveys of action sites in the following 12 counties: Champaign (June 13, 5 action sites), Clinton (June 24, 3 action sites), Douglas (June 13, 5 action sites), Fayette (June 24, 4 action sites), Jefferson (June 24, 3 action sites), Kankakee (June 26, 5 action sites), Kendall (June 26, 5 action sites), Knox (June 17, 5 action sites), McLean (June 17, 5 action sites), Pike (June 18, 3 action sites), Sangamon (June 18, 3 action sites), and Whiteside (June 25, 5 action sites).

Within each action site, 100 sweeps were taken and very few moths (9 total) were collected: Champaign County (1), Douglas County (3 - one in each of 3 sites), Kankakee County (1), Kendall County (1), Knox County (1), McLean County (1), and Sangamon County (1). During these surveys, 51 action sites (100 sweeps/site) were sampled across 12 counties resulting in 5,100 sweeps that yielded 9 moths, or 0.0018 moths per sweep.

“Based upon these results, I believe the following questions are worthy of consideration. Are too few survivors emerging from Bt fields to sustain the continuing efficacy of Bt hybrids against European corn borers? So far, no field-selected Bt-resistant strains of European corn borers have been documented,” Gray said.

Gray questioned if the smaller (5 percent) seed-blend refuges will result in even fewer European corn borer survivors in the landscape and further increase the selection pressure for resistance development. “Recall that structured 20-percent refuges were the norm for Bt corn hybrids for many years. In addition, the structured refuge was a preferred resistance management approach along with the use of high-dose Bt hybrids for European corn borers,” he added.

Gray explained that early on, concern over larval movement from plant to plant by European corn borer larvae resulted in scientists favoring a structured refuge versus a seed blend for this insect pest. “Is the added cost of Bt hybrids worth the investment for this insect pest in light of very low densities of the European corn borer and the less than favorable current and projected commodity prices?

“If the use of Bt hybrids declined, would producers have sufficient time to scout large commercial cornfields, utilize economic thresholds, and apply rescue treatments as needed? Time will tell if this once very significant insect pest will return as a consistent threat,” he said.

Large corn and soybean stocks and large crop potential

Published June 30, 2014

URBANA, Ill. – The USDA’s June Grain Stocks report showed much larger June 1 stocks of both corn and soybeans than had been anticipated by the market. The Acreage report revealed much larger acreage of soybeans than had been anticipated, according to a University of Illinois agricultural economist.

“June 1 stocks of corn were estimated at 3.854 billion bushels, about 132 million bushels more than the average trade guess,” said Darrel Good. “The larger-than-expected estimate implies that feed and residual use of corn during the third quarter of the 2013-14 marketing year was about 40 million bushels less than during the same period last year. The disappointing level of use suggests that the USDA projection of feed and residual use of 5.3 billion bushels for the year may be too high.”

Good said that the projection will be updated in the July 11 World Agricultural Supply and Demand Estimates (WASDE) report. The recent slowdown in the pace of corn export shipments also points to a slightly smaller total for the year than the 1.9 billion bushels currently projected by the USDA. Those declines may be partially offset by more corn than projected used for ethanol production. However, according to Good, the bottom line is that old-crop corn supplies are fully adequate to meet expected consumption needs through the summer, particularly with a large and early maturing corn crop coming on.

“The June 1 stocks of soybeans were estimated at 405.2 million bushels, 27 million bushels more than the average trade guess and 57 million bushels more than our calculation of the likely magnitude of those stocks,” Good said. “Some of the surprise may have been due to larger-than-expected imports during May. The Census Bureau will release the estimate of May imports on July 3. Otherwise, the estimate implies that the size of the 2013 U.S. crop may have been underestimated. That will not be known until the release of the Sept.1 stocks estimate. Like corn, the stocks estimate means that old-crop stocks of soybeans are fully adequate to meet expected consumption needs through the summer months, particularly with prospects for a very large soybean harvest this fall,” he said.

The June USDA surveys revealed that corn producers planted 91.641 million acres of corn this year, 3.7 million fewer acres than were planted last year, but essentially equal to intentions reported in March. Acreage exceeded intentions in Illinois, Indiana, Missouri, North Dakota, South Dakota, and Wisconsin, but fell short of intentions in Iowa, Kansas, Minnesota, and Nebraska. Acres of corn harvested for grain are projected at 83.839 million, 3.8 million fewer acres than harvested last year.

“Early season weather and crop conditions, however, point to a very high U.S. average corn yield, perhaps exceeding the record yield of 164.7 bushels of 2009,” Good said. “A yield of 165 bushels would result in a crop of 13.833 billion bushels, slightly less than last year’s record crop of 13.925 billion bushels. A continuation of generally favorable weather conditions through July is expected, suggesting that the average yield could be even larger than 165 bushels.  Regardless, it now appears that the 2014 crop will be large enough to lead to a substantial increase in corn stocks by the end of the 2014-15 marketing year. Conditions now point to an average price near $4.00 during the crop year ahead,” Good said.

Soybean producers reported that they planted or intend to plant 84.839 million acres of soybeans this year, 8.306 million more than planted last year and 3.347 million more than revealed in the USDA’s March Planting Intentions report.  Acreage exceeded March intentions in a large number of states, with the largest difference (500,000 acres) in both Illinois and Iowa.  Harvested acreage of soybeans is projected at 84.058 million acres, almost 8.2 million more than harvested last year. 

“Current crop and weather conditions have created expectations for a record U.S. average soybean yield near 45 bushels,” Good said. “A yield near that level would result in a crop of 3.78 billion bushels, nearly 500 million bushels larger than the 2013 crop. There is some chance that planted and harvested acreage will fall short of the June estimates due to extremely wet conditions in northern growing areas. USDA’s reports of prevented plantings will eventually give some indication of that possibility. Still, conditions point to a very large soybean harvest and a substantial buildup of stocks during the 2014-15 marketing year. Stocks could well exceed 400 million bushels on Sept. 1, 2015. Such a surplus points to a substantial year-over-year decline in the average price of soybeans, from over $13 this year to perhaps $10.50 next year.

“The sharp decline in corn prices following the release of the USDA reports put December corn futures about 35 cents (7.6 percent) below the spring crop insurance price,” Good concluded. “Crop revenue insurance will provide some revenue protection for those with high levels of coverage if prices continue to decline. Soybean prices also declined sharply following the reports, with November futures moving within about 20 cents of the spring crop insurance price.  There appears to be more downside potential for soybean prices,” he said.   

 

NRES Professor's article featured in ACES special report

Published June 30, 2014
This 2011 photo shows a flooded grain terminal on the Mississippi River north of Birds Point, Missouri.
This 2011 photo shows a flooded grain terminal on the Mississippi River north of Birds Point, Missouri.

NRES Professor Ken Olson's article "Agricultural Productivity Lost to Flood Damage" is featured In the ACES special report: Food for Thought2. In the article, Dr. Olson explains that the Cache River Basin has changed substantially from it's historical location due to factors including seismic activity and glacial meltwaters, to it's presents location. The basin encompasses one of the most unique and diverse natural habitats in Illinois and the nation. He expands on the topic of the 2011 flood to the area, and the consequences in terms of erosion and crop production.

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