Bloomberg writer Alan Bjerga reported yesterday that, “A cold snap gripping the U.S. East Coast today is bad news for farmers whose peaches and other spring crops are already suffering the effects of bad weather.
“Consumers, too, may feel the impact of poor growing conditions in states such as California, the biggest fruit and vegetable producer, and South Carolina.
“‘Prices are going to be up in May and June,’ said Chalmers Carr, president of Titan Farms LLC, a 5,000-acre farm in Ridge Spring, South Carolina, that sells peaches in the eastern U.S. through Wal-Mart Stores Inc., (WMT) Kroger Co. (KR) and other grocers. ‘Finding southern peaches on a store shelf is going to be a challenge.'”
The Associated Press reported today that, “Wheat futures rose sharply for a second straight day Tuesday amid cold temperatures in the U.S. and growing concerns that Ukraine’s grain exports could be disrupted.
“Wheat rose 23 cents, or 3 percent, to settle at $7.02 a bushel. The price has risen nearly 7 percent over the last two days.
“In Ukraine, government forces took their first military action to suppress a pro-Russian uprising in the Eastern part of the country, repelling an attack by about 30 armed men at an airport.”
And a twitter update yesterday from T-storm Weather noted that, “We calculate that a maximum 13% of U.S. HRW wheat production may have been afflicted by winterkill today (in the south where it’s jointing).”
Also, an update yesterday from the USDA Radio News Service indicated that, “Winter wheat is having a rough time due to the drought.”
In news on the livestock sector, USDA’s Economic Research Service (ERS) released its Livestock, Dairy, and Poultry Outlook yesterday, which stated in part that, “Cattle and beef dynamics will depend on precipitation patterns during the remainder of 2014. With California already dismally short on precipitation and past the rainy season, the rest of the United States is hoping for more normal rainfall. With normal rainfall, anticipated expansion of cattle inventories could begin this year. Reduced supplies of beef and higher prices could follow.”
The ERS update added that, “Pork production is forecast to decline about 2 percent in 2014, largely as a result of Porcine Epidemic Diarrhea. Prices of both hogs and pork will increase as a consequence. Reduced pork production will likely reduce U.S. pork exports and increase pork imports this year.”
The ERS report also explained that, “The milk production forecast is raised in April. Given favorable milk-to-feed price ratios, cow numbers are expected to increase later in 2014; however the 2014 forecast number is unchanged from March. Continued robust demand for dairy products, both foreign and domestic, tightens ending stocks on both a fats and skims-solids basis. The result is higher forecast dairy product prices, except for nonfat dry milk (NDM).”
Reuters writer Rod Nickel reported yesterday that, “[Cargill Executive Chairman Greg Page] also said the mortality of young pigs from the PED (porcine epidemic diarrhea) virus has abated significantly within Cargill’s herds, which account for about 30 percent of the hogs it processes.
“‘But the impact will last a long time because the death loss was in very young pigs,’ he said. ‘This will have a long tail on it through the end of the summer.’
“Cargill has lost hours of pork processing time and seen ‘multimillion-dollar losses’ due to the shortage of hogs caused by the virus, Page said.”
The Reuters article noted that, “The United States should make it mandatory that animal owners and veterinarians report the presence of PEDv, Page said.
“‘It isn’t about government interference, it’s about acknowledging that we’re all interdependent on every other participant in our industry, so my answer would be unequivocally, ‘yes” to mandatory reporting.”
In more specific reporting on U.S. food prices, Jonathan House indicated yesterday at The Wall Street Journal Online that, “Higher housing and food costs helped lift overall consumer prices last month, a development that could reassure some Federal Reserve officials as they roll back their easy-money policies.
“The consumer-price index, which measures how much Americans pay for everything from hospital visits to gasoline, advanced a seasonally adjusted 0.2% in March from the prior month, the Labor Department said Tuesday.”
Mr. House pointed out that, “Food prices rose 0.4% as droughts in parts of the U.S. and Brazil undermined agricultural output.”
Eric Morath reported yesterday at the Real Time Economics Blog (Wall Street Journal) that, “Grocery shoppers may soon need more green in their wallets to afford their next salad.
“The cost of fresh produce is poised to jump in the coming months as a three-year drought in California shows few signs of abating, according to an Arizona State University study set to be released Wednesday.
“The study found a head of lettuce could increase in price as much as 62 cents to $2.44; avocado prices could rise 35 cents to $1.60 each; and tomatoes could cost 45 cents more at $2.84 per pound. (The run-up in produce prices is in line with other projections showing that overall food cost gains are expected to accelerate this year.)”
Also see this related graph from yesterday’s Journal update, “Produce Prices Pop.”
AP writer Steve Karnowski reported earlier this week that, “Spring fieldwork is getting off to a late start because of winter’s stubborn grip on Minnesota, but farmers say their yields shouldn’t be hurt as long as they can get into their fields soon after Easter.
“Rod Jorgenson saw a fresh dusting of snow as he looked out over his corn and soybean fields near Kasson in southeastern Minnesota on Monday. But spring fieldwork has barely begun across the region. And this week’s forecast calls for below-normal temperatures with the possibility of more snow Wednesday or Thursday. Yet southern Minnesota is rapidly approaching the traditional start of its ideal period for planting corn.”
The article noted that, “Most farmers still need to apply fertilizer and make one pass with a field cultivator to loosen the soil before planting, though, which means some hectic workdays ahead and a fieldwork schedule that will get further compressed if it turns rainy.”
With respect to fertilizer, University of Illinois agricultural economist Gary Schnitkey indicated yesterday at the farmodocDaily blog (“Monthly Fertilizer Prices: Spring 2014 with Comparisons to 2009 through 2013“) that, “Fertilizer prices have been increasing in recent months; however, per acre fertilizer costs should be lower in 2014 than in recent years. In this post, monthly prices for anhydrous ammonia, diammonium phosphate (DAP), and potash are shown for 2009 through 2014. In most cases, monthly fertilizer prices in 2014 have been below prices for the 2011, 2012, and 2013 crop years. Prices suggest fertilizer costs for corn of $150 per acre in 2014, compared to costs near $200 per acre in 2012 and 2013.”
In related news regarding transportation, Reut
“The Surface Transportation Board, a regulatory agency that arbitrates rail disputes, has heard from farmers across the upper Midwest that a shortage of rail cars and delivery delays were endangering their livelihoods.”
The Associated Press reported yesterday that, “A federal oversight board told Canadian Pacific Railway and BNSF Railway that they have until Friday to report their plans to ensure delivery of fertilizer shipments for spring planting of U.S. crops.
“The Surface Transportation Board’s decision Tuesday comes in response to a hearing it held last week on recent service problems in the nation’s rail network. Farmers and representatives of agriculture producers told the board that delays in fertilizer delivery could disrupt planting.
“Increased crude oil and freight shipments have largely been blamed for causing the rail delays. BNSF has also said that rail service has been backlogged because of bad winter weather.”
A news release yesterday from Sen. John Thune (R., S.D.) indicated that, “‘This is a step in the right direction for the STB and I am pleased that they acted so quickly after last week’s hearing to address some of the ongoing rail service issues in South Dakota and the surrounding region,’ said Thune. ‘I will continue to press the STB and the railroads to do all they can to improve service across South Dakota during this critical time of year for our farmers. Continued rail service disruptions are not only having a direct impact on agriculture producers, grain handlers, and the ethanol industry, but also on manufacturers and main street businesses across our state.’
“Last week, Thune addressed the STB at their public hearing on U.S. Rail Service Issues.”
Senator Heidi Heitkamp (D., N.D.) noted in statement yesterday that, “The Surface Transportation Board did the right thing today by requiring the railroad industry to provide answers and soon,” said Heitkamp. “North Dakota farmers have serious deadlines coming up and we need to know that their fertilizer will arrive in time. This is a needed step that I hope will lead to rail service improvements so farmers can access supplies for a strong start to the planting season.”
And a statement from Rep. Kevin Cramer (R., N.D.) indicated that, “I am encouraged by this decision from STB which recognizes the urgency of spring planting. While this may help farmers get the fertilizer they need, there are still unacceptable delays for shipping grain and other products to market. This is one of the most significant infrastructure challenges we face in the growing North Dakota economy, and I continue to be personally engaged in the situation.”
In other news regarding transportation issues, an update this week from the Federal Reserve Bank of Kansas City indicated that, “The latest issue of the Main Street Economist examines the evolution of oil transportation networks and the challenges faced in moving ever-increasing amounts of crude from the central United States.”
In other news, an article yesterday at The Wall Street Journal Online reported that, “Farmland values in Canada jumped in 2013, led by Saskatchewan and Manitoba, a report from Farm Credit Canada said.
“While this is viewed as an advantage to many established producers in the agricultural sector, it could create complications for new entrants, according to some provincial farm groups.
“The average increase was 22.1%, the highest national rise since FCC starting reporting on farmland values in 1985.”
David Rogers reported yesterday at Politico that, “After the buckets of political blood spilled over food stamps this past year, the Congressional Budget Office has quietly lowered its cost estimate for the nutrition program by $24 billion over the next decade.
“The ‘technical’ adjustment is tucked into a report issued Monday and reflects revisions in how CBO calculates what the average beneficiary receives each month under food stamps, formally known as the Supplemental Nutrition Assistance Program.
“It’s just a 3 percent change but more than a little ironic after the fighting over fewer SNAP dollars that dogged the recently enacted five-year farm bill. Indeed, having announced the adjustment, CBO’s report then goes out of its way to say as little as possible about the rest of the farm bill’s costs, even with the drop in grain prices.”
Mr. Rogers explained that, “Reading between the lines, the new numbers do suggest the revamped commodity title might save more, not less, than what CBO had predicted in January. But it’s as if the budget analysts are going through withdrawal after living 18 years with the predictability of direct cash payments under prior farm bills. And until producers have made more choices later this year about the new programs, CBO is not putting its name next to more predictions.
“Thus Monday’s report repeats, without any new detail, CBO’s January estimate of $16.6 billion in savings for the years 2014-2023 — about half from food stamps and half from farm-related expenditures
“Extrapolating for 2024, the total for 11 years will continue to grow to $19 billion, CBO officials said. But again this is working off a May 2013 baseline that is a full year old and outdated given the changed market conditions.”
The Politico article pointed out that, “A year ago, for example, corn prices were assumed to be $4.45 per bushel in 2014 and $4.52 in 2015. By comparison CBO’s new April 2014 baseline — issued Monday alongside the report — expects corn to drop to $3.90 per bushel this year, and only get back to $4 in 2015. Wheat prices also are lower by about 20 cents a bushel.”
Laura Barron-Lopez reported yesterday at The Hill’s Energy Blog that, “A top petroleum group is worried the Environmental Protection Agency will flip on the proposed levels it released late last year for the amount of ethanol and other biofuels refiners must blend into the nation’s fuel supply.
“The EPA proposed its draft 2014 blending volumes under the federal Renewable Fuel Standard in November to cheers from oil companies, which called it a move in the right direction.”
The Hill update added that, “But the agency could go back on that proposal, said President of the American Fuel and Petrochemical Manufacturers (AFPM) Charles Drevna, which wouldn’t bode well for the oil industry.
“‘Recently Gina McCarthy has been remarking that the volumetric requirements for the finalized [Renewable Fuel Standard] may be different than the proposed rule,’ Drevna said to reporters on Tuesday.”
Yesterday’s update also noted that, “Drevna said the EPA is thinking about increasing the volumes because the Energy Department’s stat shop estimates there will be an increase in gasoline demand in the next year.
“The AFPM, along with the oil industry, wants the proposal to stay as is. Opponents of the rule want to see the renewable fuel mandate repealed all together, but that’s not likely to happen during an election year, let alone with a divided Congress.”
Also yesterday at The Hill’s Energy Blog, Timothy Cama reported that, “The Environmental Protection Agency (EPA) released a series of technical white papers Tuesday about sources of methane emissions, asking the public to comment on the research to inform EPA’s efforts to reduce emissions of methane, which is the main component of natural gas.
“The five papers each explore one place that methane may be released into the atmosphere: natural gas compressors, hydraulic fracturing — or fracking — for oil drilling, leaks during natural gas production, removing liquids in gas wells and pneumatic devices used in the gas industry.”
And a news release yesterday from Sen. Mike Johanns (R., Neb.) stated that, “[Sen. Johanns] today wrote Food and Drug Administration (FDA) Commissioner Margaret Hamburg urging FDA to exempt raw agricultural commodities, distillers grain and other byproducts from a promised revision of a proposed rule dealing with livestock feed. As first proposed, the rule would add new requirements to producers of distillers grains – including brewers and ethanol plants – and increase the cost for livestock producers who use these byproducts.”
Tony Barboza reported yesterday at the Los Angeles Times Online that, “Greenhouse gas emissions in the United States dropped by 3.4% in 2012, federal environmental regulators reported Tuesday.
“The decline over the previous year was driven mostly by power plant operators switching from coal to natural gas, improvements in fuel efficiency for transportation and a warmer winter that cut demand for heating, according to an inventory released by the U.S. Environmental Protection Agency.”
A news release yesterday from the National Farmers Union (NFU) indicated that, “Today the third working group of the Intergovernmental Panel on Climate Change (IPCC) issued its report on climate change mitigation. The report finds that climate change is occurring at a rapid rate, but mitigation strategies such as scaling up renewable energy production could substantially reduce anthropogenic greenhouse gas (GHG) emissions.
“‘The working group’s report complements NFU’s long-held, member-led policy positions by recognizing the need for a comprehensive renewable energy strategy,’ said [NFU] President Roger Johnson. ‘Tripling or even quadrupling the share of zero- and low-carbon energy supply from renewables, as the report recommends, will require significant investments in energy technologies that utilize rural America’s renewable and human resources. These investments would pay off not only by helping to mitigate the effects of climate change but by driving significant rural economic development.'”
And Bloomberg writer Alan Bjerga reported yesterday that, “Corn is the most common grain in the U.S., with its production historically concentrated in a Midwestern region stretching from the Ohio River valley to Nebraska and trailing off in northern Minnesota. It had been ungrowable in the fertile farmland of Canada’s breadbasket. That is changing as a warming climate, along with the development of faster-maturing seed varieties, turns the table on food cultivation. The Corn Belt is being pushed north of what was imaginable a generation ago.”