“Despite lost acres and a 2011 yield that’s 5.6 bushels below the 2010 average, the corn crop itself is only one percentage point below last year’s number,” said National Corn Growers Association President Garry Niemeyer of Illinois. In comparison, final soybean production for 2011 was down 8% from 2010, sorghum and cotton were both down 13%, and rice was down 24%.

The slightly higher corn production means increased U.S. feed grain supplies for 2011/12 slightly over the December estimate, according to the World Agricultural Supply Demand Report. Worldwide, coarse grain supplies for 2011/12 remained almost unchanged this month as higher corn production in the United States, Ukraine, EU-27, and Russia is mostly offset by lower expected corn production in Argentina and the lower sorghum production estimate for the United States.

On the use side of the equation, exports were increased by 50 million bushels reflecting the strong pace of sales to date and reduced prospects for Argentina. Ending stocks are projected 2 million bushels lower at 846 million bushels.

What this all meant for corn futures at the end of last week was a big drop, but most analysts expect the market to rebound quickly as demand remains strong.

Calling the overall plan a Blueprint for Stronger Service, Vilsack said it was born out of necessity.

“Since 2010, Congress has reduced our discretionary operating budget by more than $3 billion – a roughly 12% cut,” said Vilsack. “We understood this day of reduced budgets was coming and we have been proactive.”

Part of the plan includes closing 259 domestic offices, facilities and labs across the country, as well as seven foreign offices and consolidating over 130 county Farm Service Agency offices in 32 states. “Of the 131 offices on the list, 35 currently have no employees,” Vilsack said. “Our choice was either to maintain these offices or reduce our effort at improved technology to better serve producers and furlough workers, disrupting service to many, many people. We’ve invested millions of dollars and thousands of hours in an effort to get technology that should allow us to better serve producers with reduced staff.”

Overall, it should save about $150 million a year, which is really just a fraction of USDA’s $145 billion per year budget, but in an atmosphere of increasing spending all the time, it is at least a start.

So far, there seems to be surprisingly little grumbling out in the countryside about the office closings, although the national media has been trying hard to find people willing to complain about it. Of course there will be some people who are inconvenienced initially by the changes, but ideally using technology (internet, cell phones, etc.) will result in way better, more flexible and more efficient service in the long run.

Listen to Vilsack’s comments to AFBF annual meeting here: Ag Secretary Tom Vilsack at AFBF annual meeting

According to the report, “Major Uses of Land in the United States 2007,” the amount of land in the United States devoted to growing crops declined by 34 million acres – or nearly 8 percent – between 2002 and 2007. At 408 million acres, total cropland was at its lowest level since records were started in 1945.

Cropland accounted for 18 percent of the total land area in the country – the third largest land use behind forest (30%) and grassland (27%) – both of which increased over the same five-year period while cropland declined.

The smallest total use of land in the U.S. is urban, at 61 million or 3 percent. However, while urban land use accounts for the smallest percentage, the USDA report shows that it accounts for the biggest increase in land use, quadrupling between 1945 and 2007, increasing at about twice the rate of population growth over the period. Urban land use increased almost 2 percent from 2002 to 2007.

The report is significant because it shows with actual data that cropland acres declined at the same time ethanol production was increasing – which means no direct or indirect land use change as a result of corn being used for ethanol. Instead, Renewable Fuels Association (RFA) president Bob Dinneen said what the report does show is how farmers are producing more on less land, while urban land uses increase.

“It is ironic that the land use debate has fixated on biofuels, when the actual culprit of land conversion has clearly been urban and suburban sprawl,” Dinneen said. “Subdivisions full of mini-mansions, big box stores, shopping malls, and parking lots are encroaching on productive farmland across the country.”

Read the USDA report here.

The major finding of the report is that a metric ton of DDGS can replace an average of 1.22 metric tons of corn and soybean meal feed. “We found that, on average, for the past 5 crop years (2006/07-2010/11), 1 mt of distillers’ grains substitutes for about 1.22 mt of corn and soybean meal combined in the United States,” concludes the Economic Research Service (ERS) report. That means that almost a full 40 percent of the corn used for ethanol goes directly back into the feed supply.

As of 2010/11, DDGS replaced soybean meal as the number two feedstuff fed, and is second only to corn. An increasing amount of soybean meal is being replaced over corn in livestock rations. The report also found that as DDGS market share for beef cattle have declined, market shares for dairy cattle, swine, and poultry have increased. Beef cattle’s DDGS substitution rate for corn is remains higher than any other type of livestock/poultry but is the lowest for soybean meal.

“This report reiterates what we have been saying for years: ethanol produces both fuel and food, in the form of high protein animal feed known as distillers grains,” said Growth Energy CEO Tom Buis, noting that distillers grains cost livestock producers about 25 percent less. “This valuable feed displaces a greater volume of field corn and soybeans, is less expensive to the producer and is much more nutritious for the animal.”

Geoff Cooper, Renewable Fuels Association Vice President of Research & Analysis, believes the report has important implications regarding ethanol’s impact on feed grains availability, feed prices, land use effects, and the greenhouse gas (GHG) impacts of producing corn ethanol.

“USDA’s new analysis clearly shows the importance of accurate DDGS accounting,” Cooper said. “The Environmental Protection Agency and CARB should immediately adopt these new findings into their GHG modeling for the RFS2 and LCFS. The resulting decrease in ethanol’s lifecycle GHG emissions could be significant.”

Earlier this year, RFA compared the production of DDGS to only the amount of corn used for feed. With estimated production of 39 million metric tons of distillers grains for feed in the current marketing year, that is the “equivalent to the 4th largest corn crop in the world, and is enough feed to produce 50 billion quarter-pound hamburgers – seven patties for each person on the planet – or enough to produce one chicken breast for every American every day for a year.” Accounting for soybean meal substitution, that makes even more!

What we call DDGS in general can also include a number of other individual ethanol co-product. There’s a whole alphabet soup of them – DDG, DWG, DDGS, DWGS, CDS, corn gluten feed (CGF), wet corn gluten feed (WCGF), and corn gluten meal (CGM). The report suggests that future industry surveys could be more precise if they estimated the effects of all the different ethanol coproducts on the U.S. feed complex.

This report includes some of the most specific and well-researched data on distillers grains production, consumption and the ratios by which it is being used in the different livestock and poultry markets. Read it here.

The report heralds that agriculture is “On the Doorstep of the Information Age” – using mostly information from 2005-06. According to the report, “recent data from the Agricultural Resource Management Survey (ARMS) show that use of yield monitors, often a first step in using precision technology for grain crop producers, has grown most rapidly, and was used on 40-45 percent of corn and soybean acres in 2005-06.”

The information for the study relies primarily on 2001 and 2005 surveys of corn and the 2002 and 2006 surveys of soybeans – “the 2010 corn survey results were not yet available when this report was prepared” – which was this year. While there is some interesting data in the report, it is woefully out of date. Just think, if the survey had included questions about the use of smartphones on the farm, it would have been zero, since it was January 2007 before the first iPhone was introduced – and we’re now on the fifth generation. Point being, the adoption of all types of new technology has literally skyrocketed in the last five years.

Be that as it may, the most interesting findings in the report show that precision really does pay for farmers. For example, they found that corn and soybean yields were significantly higher for farmers using yield monitors compared to those who did not. In addition, farmers using yield monitors had lower per-acre fuel expenses. Average fuel expenses were lower, per acre, for farmers using variable-rate technologies for corn and soybean fertilizer application, as were soybean fuel expenses for guidance systems adopters and adopters of GPS mapping and variable-rate fertilizer equipment had higher yields for both corn and soybeans.

With all this new technology, you would think that USDA could find a way to gather, compile and disseminate information a little bit faster.

Despite the fact that corn stocks are reported to be 34% lower than a year ago, it was expected to be much worse, even just a few weeks prior to the Friday Grain Stocks report. Earlier this year, USDA was predicting corn stocks would finish the year at just 675 million bushels, less than a three-week supply. But as of September 1, stocks instead totaled 1.13 billion bushels, with summer disappearance indicated at 2.54 billion bushels, compared with 2.60 billion bushels during the same period last year.

The report left even USDA’s Chief Economist Joe Glauber scratching his head. “Obviously our analysts are going to be looking at those numbers, but it poses a puzzle in that regard,” said Glauber. Some think the numbers are just off, while others think it could be that livestock producers are using less corn for feed than expected.

That leads us to say don’t look a gift horse in the mouth, because having corn stocks higher is a good thing for everyone. “Pushing corn stocks back above one billion bushels is important for the psyche of the market,” said Renewable Fuels Association Vice President Geoff Cooper. “Having more corn available should somewhat ease supply concerns brought on by poor growing conditions this year and provide more of a buffer until farmers complete the harvest of this year’s crop.”

With corn prices higher this summer, livestock producers may have been using more distillers grains (DDGS), the by-product of ethanol production. When the amount of corn used for ethanol feed co-products is combined with feed and residual demand, total feed demand becomes 6.35 billion bushels, or 47 percent of expected use in 2011/12.

So, if we did look that gift horse – or cow or pig – in the mouth, we might just find more DDGS than corn there. Surprise!

Today is not the time for blame. Today is the time to reflect upon the incredible achievements that have allowed U.S. farmers to pull through disastrous weather reasonably in-tact, producing what may be a near-record crop.

Farmers, by the very nature of their business, must depend upon the weather. This year, Mother Nature proved uncooperative at best. In spring, she flooded the banks of the Missouri and Mississippi rivers and delayed planting with a seemingly unending deluge. Then, showing her mercurial nature, she baked Texas, and much of the Corn Belt to a lesser extent, with an unrelenting heat. Finally, as if to show that no one would escape her wrath, Hurricane Irene leveled much of the crop almost ready for harvest along the East Coast. If this were an actual mother, the family would certainly be in counseling by now.

Despite harsh conditions, farmers maintained their composure using the vast array of tools and techniques developed through advanced research to mitigate the string on blows pummeled upon their fields. Day after day, they walked the rows contemplating a next move, a way to make the most of the quickly deteriorating situation.

What we should celebrate today is the fact that farmers, backed by research and technology, can still produce an abundant crop even in difficult conditions. Only 10 years ago, the national average yield was 138 bushels per acre and the crop totaled 9.5 billion bushels. Now, even in a year many farmers describe as having the worst weather they have seen, the United States is set to produce 12.5 billion bushels of corn with a national average yield of 148 bushels per acre. Today, farmers do what those only a few decades ago could not have imagined under circumstances without recent parallel.

It only gets better though. As new traits come through the pipeline, Texans will have access to corn varieties that can better resist drought. Corn Belters will select the seeds they need to withstand more or less rain as they see fit. Scientists are hard at work to make sure that every farmer’s hard work is matched by the thought and development in each seed they plant.

The fully cooked food-aid product is called Instant Corn Soy Blend and it was developed by USDA Agricultural Research Service (ARS) scientists to supplement meals, particularly for young children. The work was led by food technologist Charles Onwulata at the ARS Dairy Processing and Products Research Unit in Wyndmoor, Pa.

Onwulata developed the new food product using the same type of machines that are used to make fully cooked puffed snacks and cereals. “Cheese puffs” and “cereal puffs,” for example, have been popular in the United States for more than 50 years. The extrusion technology used to make Instant Corn Soy Blend cooks food completely in a short period of time under high heat and high pressure. The crunchy, fully cooked product exits the extruder through an opening at the end of the machine in less than two minutes. The resulting Instant Corn Soy Blend is then crushed and milled to form the ration.

Instant Corn Soy Blend could also soon be purchased for the USDA Foreign Agricultural Service-administered McGovern–Dole International Food for Education and Child Nutrition Program, which provides U.S. agricultural products for school feeding and other projects in more than 30 countries.

Read more about it from ARS here.

At the recent InfoAg 2011 Conference in Illinois, USDA Acting Under Secretary for Farm and Foreign Agricultural Services Michael Scuse said that the Acreage Crop Reporting Streamlining Initiative Project (ACRSIP) may well be the “most important thing that USDA has ever done.”

According to Scuse, the concept would simplify and provide new reporting options for producers. “Rather than a farmer or rancher going to the local FSA office to do their crop reports as they do now and have to give a second report to their agent, they can actually do the report from home,” Scuse said. “Our ultimate goal is for those that have precision ag equipment in their planters and combines to actually use the information that’s collected from that equipment to be downloaded directly to their Farm Service Agency and to the crop insurance agent, to simplify the process even further.”

Scuse says they plan a pilot test of the program this fall and hope to have it implemented by 2013. “This is how we’re going to provide a better service for farmers and ranchers,” he said. “It will ultimately save the taxpayers a great deal of money with this initiative.”

Listen to my interview with Scuse from InfoAg here: Interview with Michael Scuse, USDA

“The main stress that we’re seeing right now in corn and soybeans is not the high temperatures, but it’s this lack of overnight cooling because of the high humidity that’s forcing the plant to put energy in at a time of day when it really should be winding down just like you or me,” says USDA meteorologist Brad Rippey. “The plant needs some down time during the night, otherwise some of the carbohydrate that goes into the production of the stalk or the vine, and also the fruit – the soybean or ear of corn – is burned off at night because the temperature is so high.”

Rippey says even irrigated crops are wilting under the assault of this heat and yield potential could suffer. “It has started to take just a little bit of a dent out of those good to excellent corn and soybean conditions that we’ve been seeing throughout most of the growing season,” he said. As of Monday, corn condition was rated 66 percent good to excellent, down about three percent from last week. Progress is trailing behind normal, with 35 percent of the corn silking compared to 47 percent average for this time of year.

Meanwhile, the markets are reflecting the weather, with prices rising right along with the heat and the humidity.