US corn experience for Newdegate farmer

The report suggested increasingly bearish fundamentals were the result of an over supply of global wheat for the 2011/12 season which saw the US Department of Agriculture (USDA) forecast the third largest world wheat crop on record.

Last week Farm Weekly spoke with Plum Grove senior pool manager Tony Smith who suggested pools were by far the most attractive option for growers this year because the USA's downgraded corn harvest would result in a positive jump for corn prices and should theoretically support global wheat.

But MarketAg director Richard Vincent believed there were numerous other options for harvest cash flow and pools need not necessarily be used by default.

This was also the sentiment echoed by Newdegate grower Simon Cugley who recently returned from the USA where he witnessed the country's poor corn harvest first hand.

After an unseasonably hot spell in June made the flowers fall off a large majority of Moline, Illinois, corn crops, growers in the region were busy stripping their low yielding Roundup Ready (RR) paddocks in an attempt to earn maximum profits in a tight season.

Bordering the Mississippi River, the Moline region was usually home to some of the best corn yields in the USA due to its dark and fertile riverbed soil.

But this year conditions were tough and the season was even tipped to have a marked affect on how growers like Mr Cugley marketed their wheat in WA.

But despite the innate relationship between global corn and wheat crops hardly any wheat was grown regardless of its historical significance in the wider Moline region.

"Nearly 100 per cent of the hectares are now planted to soy or corn for stockfeed or ethanol," he said.

"There's hardly any wheat to be seen."

Growers in the region told Mr Cugley the move to corn and soy was purely based on profit and the farmer's ability to attract a higher dollar for their harvest.

After the corn was harvested and in a bid to make the most of their resources, growers utilised residual dry matter by mulching it back into the ground using a deep ripper equipped with off-set discs.

But back home farming is very different for Mr Cugley.

He and his father Geoff, brother Matt and families had 4000 hectares of wheat, barley, canola, lupins and oats in for the season.

And after receiving about 250 millimetres of rain since May 17 (337mm for the year) their Newdegate property was set up for a well yielding season.

But as is the case of other WA farmers and corn growers in the USA, Mr Cugley was well aware high yields didn't necessarily mean high profits for the 2011/12 season.

Because, as yet, the US corn situation hadn't resulted in extra profit for WA wheat growers by raising wheat prices.

"Theoretically wheat prices should be supported by the corn situation in the USA but we're not seeing it," Mr Cugley said.

"So as a way to spread the risk we signed some forward contracts for a small percentage of our wheat, barley and oats at seeding.

"But as a general rule we won't lock in anything substantial until the crop is out of the ground.

"We have all heard the horror stories where growers have come unstuck and over-committed themselves."

Last year the Cugley family harvested one tonne a hectare wheat and 0.9t/ha barley crops but this year hoped to achieve at least double those figures.

A recent Rabobank report also predicted wheat's price direction would continue to be taken from the global corn market and tipped the inverted spread to widen as wheat would continue to under-perform relative to corn during the next few months.

With that said the US corn harvest remained on track despite overall poor yields with 47 per cent of the 2011/12 crop already harvested as of October 16.

The effect of late rain forecast for this week would undoubtedly cause some minor corn harvest delays but Rabobank analysts were confident the final production forecast of 12,409 million bushels, just lower than the USDA's initial estimate of 12,443m bushels, would still be reached.