Hot weather yields tight supply of hot hybrids
The yearly warning to book seed early appears not to be a cry of "wolf" for 2012. Many seed corn fields suffered the same or worse production woes as commodity fields during the past growing season.
While winter production can take up some of the slack on the supply side, seed companies admit that it is costly and hard to deliver for early planting. Add more demand for corn acres and the challenge of producing new refuge-in-a-bag (RIB) products, and supplies of your favorite varieties could be snug.
"This year, more than ever, growers need to communicate with their seedsman," says Tom Burrus of Burrus Seed Company in Arenzville, Ill. "On top of the supply challenges, situations such as rootworm resistance, Goss’s wilt and other diseases came along in 2011 that make it imperative for growers to choose hybrids wisely."
Pat Steiner, Syngenta corn portfolio head, says his company, and the seed industry in general, builds weather scenarios into its production plans. "We plant more acres than needed and spread risk by planting in a wide variety of locations," Steiner says. "This year was unusual in that almost every region suffered some sort of a challenge and, often, a combination of challenges, such as drought, high heat and straight-line winds."
Disaster early in the season actually panned out for AgriGold Hybrids, says Philip McCutchan,
AgriGold marketing manager. "Flooding eliminated some of our acres early and we were able to replant those," he explains. "That ended up being a blessing because those fields missed the heat that caused pollination problems in many of the fields in the Midwest."
McCutchan says the company had production spread across several Midwestern states, with nearly 90% of the seed fields irrigated. "Water helped, but it doesn’t remove the impacts of heat during pollination," he adds. "I don’t think we’re any different than the rest of the industry—there will be some tight supplies of certain hybrids, and grade sizing may be challenging." Seed size availability is often impacted in dry years, with more large seeds and more small seeds being the norm.
Seedsmen report that inbreds are not as tough as commodity corn when it comes to unfavorable weather, particularly long spells of 90°F-plus temperatures. "If commercial corn yield is off by 15%, you can expect seed corn to be off by at least twice that amount," Burrus says.
"Our methods of yield estimating paid off big this summer, as we have a good handle on what we need out of South America to meet customer demand," he adds.
"Our plan is to condition and deliver our summer-produced seed corn and soybeans by early March—meaning two-thirds of our customers’ needs will be met, ready to plant whenever they want. Starting in mid-March, we will focus on conditioning, treating, blending and delivery of the winter crop."
Winter wrap-up. Chris Garvey, general manager of Mycogen Seeds, notes that all the uncertainties seed companies deal with in summer are also true for winter. "Cool, wet, delayed planting conditions; overall growing conditions; harvest timing and transportation logistics are all variables," Garvey says. "One of the biggest challenges of winter production is timing and getting the product to the grower in time."
Beyond offsetting some summer production issues, winter product is also used to accelerate new product introductions. That option takes on added importance in 2012 as companies get ready to launch RIB products.
RIB products comprise two separate hybrids blended into one bag.
Not only does that require matching hybrids together, but it also means matching seed sizes of both hybrids.
Seed companies report that virtually all these products were being produced during 2011 with very little or no carryover seed available. In addition, with new technology the seed supply is sometimes low to begin with.
"Supply will be tight with respect to certain hybrids," Garvey says. "Just like in every season, it will be a hybrid-by-hybrid issue."
Costs Keep on Simmering
Higher-yielding genetics loaded with new technology have always come at a cost. However, the good news is that prices seem to be tempering.
The October 2011 edition of the Purdue Crop Cost and Return estimates for 2012 put anticipated seed costs for average and high-productivity soils at $107 per acre, compared with $99 per acre in 2011. Estimates assume a biotech variety with multiple traits.
Terry Gardner, director of marketing and sales effectiveness for Pioneer Hi-Bred, a DuPont business, says that new products are typically priced higher than those they replace, due to the added value they bring growers. "We share that value with growers. Commodity prices do affect the cost of production, but we take a long-term sustainable approach and do not follow commodity prices up and down," Gardner says.
Monsanto Company executive vice president Brett Begemann recently announced that the cost of DeKalb brand seed corn will rise by an average of 5% to 10% because of improved performance and higher production costs. This comes after Monsanto moved to more conservative pricing in 2011 as a result of farmers balking at 2010 prices for trait-loaded packages.
Monsanto spokesperson Danielle Stuart explains that Monsanto uses a zone pricing structure. "Annually, we add new genetics to our portfolio to offer farmers a greater hybrid mix. Pricing varies depending on the product mix and hybrids a farmer chooses and his location," Stuart says.
"The 2012 season brings additional pricing zones, trait offerings and new germplasm. Those first-year hybrids do come at a premium compared to mature offerings in the marketplace," she adds. Monsanto’s portfolio will be 10% to 25% first-year hybrids; 25% to 40% core and proven hybrids; and 10% to 25% mature hybrids. New higher-value seed hybrids replace hybrids that average four to six years old.
Jeff Hartz, director of marketing for Wyffels Hybrids, is hoping to turn the challenging 2011 production season into a marketing advantage. "The good thing is, Mother Nature showed her hand early and we were able to respond quickly and aggressively with production plans," he says.
Growers seeking refuge-in-a-bag products can expect to pay a premium. The cost of upgrading seed handling has been high. Seedsmen experience more waste as they plant enough refuge acreage to match kernel sizes and densities across geographic areas.
Beans More Bountiful
The soybean crop seems to have weathered the summer better than corn.
Seed companies are reporting more than adequate soybean seed yields to supply needs. David Thompson, national marketing and seed director for Stine Seed Company, says early harvest results look good for quality and quantity.
"Yields have been tremendous, especially in central Iowa, where we experienced August rains," Thompson says.
Chris Garvey, general manager of Mycogen Seeds, says some cold temperatures arrived earlier than normal in the north but soybean production remains in good shape for 2012.