Crop Watch
Some variables impacting U.S. crop production are highlighted in today’s New York Times. Michael Wines reported in today’s paper that, “The Terminator — that relentless, seemingly indestructible villain of the 1980s action movie — is back. And he is living amid the soybeans at Harper Brothers Farms.
“About 100 miles northwest of Indianapolis, amid 8,000 lush acres farmed by Dave Harper, his brother Mike and their sons, the Arnold Schwarzenegger of weeds refuses to die. Three growing seasons after surfacing in a single field, it is a daily presence in a quarter of the Harper spread and has a foothold in a third more. Its oval leaves and spindly seed heads blanket roadsides and jut above orderly soybean rows like skyscrapers poking through cloud banks. It shrugs off extreme drought and heat. At up to six inches in diameter, its stalk is thick enough to damage farm equipment.”
Today’s article explained that, “Botanists call the weed palmer amaranth. But perhaps the most fitting, if less known, name is carelessweed. In barely a decade, it has devastated Southern cotton farms and is poised to wreak havoc in the Midwest — all because farmers got careless.
“Palmer, as farmers nicknamed it, is the most notorious of a growing number of weeds that are immune to the gold standard of herbicides, glyphosate. Cheap, comparatively safe and deadly to many weeds, glyphosate has been a favorite ever since the Monsanto Company introduced it under the name Roundup in the mid-1970s.”
Tony C. Dreibus reported in today’s Wall Street Journal that, “Corn futures rallied on Monday as investors who had bet on lower prices bought back contracts and closed positions ahead of a government report on Tuesday.
“Analysts surveyed by The Wall Street Journal said the U.S. Department of Agriculture will peg corn production at 14.2 billion bushels on yields of 170 bushels an acre, both records, in a monthly supply-and-demand report set for release at noon on Tuesday.
“About three-fourths of the U.S. corn crop was in good or excellent shape as of Sunday, according to the USDA, due to rainy, cool weather through most of the growing season.”
Today’s article noted that, “Corn futures for September delivery, the front-month contract, gained five cents, or 1.4%, to $3.56 ¾ a bushel on the Chicago Board of Trade, the first increase in three sessions. December futures, the most-active by volume, rose 4¾ cents, or 1.3%, to $3.68¼ a bushel on the CBOT.”
With respect to the demand side of the equation for corn, University of Illinois agricultural economist Darrel Good indicated yesterday at the farmdocDaily blog (“Prospects for Corn Consumption“) that, “With expectations of a record large U.S. corn crop in 2014, market attention will soon shift to prospects for corn consumption. The market will follow a number of indicators of potential use as well as the revealed pace of consumption in the ethanol, export, and feed markets.
“Ethanol use of corn has increased during the 2013-14 marketing year following a sharp decline during the 2012-13 marketing year. The increase has been fueled by a combination of increased domestic consumption of ethanol, increasing exports and declining ethanol imports, and some rebuilding of ethanol stocks.”
The farmdocDaily update added that, “U.S. corn exports during the current marketing have exceeded early season projections, with the latest USDA projection at 1.9 billion bushels.”
And regarding feed usage, yesterday’s update stated that, “Feed and residual use of corn is also difficult to anticipate, largely due to the apparent variation in the ‘residual’ component of use. Residual use is thought to be positively correlated with crop size so a large crop this year would point to another year of large residual use. Feed use of corn is obviously influenced by livestock and livestock product production and the unknown variation in feeding rates per animal. The USDA has projected a one percent increase in the number of grain consuming animal units during the 2014-15 marketing year. In addition, corn feeding rates should be supported by lower feed prices, low corn prices relative to other feed ingredients, and positive profit margins for all the livestock sectors. Weekly, monthly, and quarterly USDA livestock and grain stocks reports will be followed closely to judge potential feed use of corn. Some small expansion in dairy cattle numbers is occurring, but broiler placements are running near the level of a year ago. A decline in the reported cases of PED virus along with the continuation of heavier slaughter weights may support corn feeding in the pork sector. The number of cattle being fed, however, will remain below the level of the previous year for an extended time. A modest increase in feed and residual use should be expected during the year ahead.
“The typical corn price pattern in a large crop year is for cash prices to reach a low near harvest and then to increase modestly as the marketing year progresses. Such a pattern is dependent on corn consumption increasing in response to low prices. Early indications are for such a pattern to unfold this year.”
Meanwhile, Jamie Chisholm reported yesterday at The Financial Times Online that, “It’s not just gold and crude prices that have been wobbly on news relating to Russia’s stand-off with the west over Ukraine.
“The two countries may be responsible for nearly 20 per cent of global wheat exports this year, according to forecasts, so the grain price has been beholden of late more to news of tanks than tractors.
“Fears that Black Sea region production would be compromised, last week helped push the Chicago Board of Trade September wheat futures contract off multiyear lows to above $5.70 a bushel. Worries that wet conditions in western Europe could hit the crop also encouraged bulls [related graph].”
The FT article added that, “Wheat prices fell on Monday after Russian forces pulled back from the Ukraine border and Kiev said early harvesting had pushed exports to a multiyear high.
“The US Department of Agriculture is due to publish its monthly crop forecasts on Tuesday.”
Bloomberg writers Phoebe Sedgman and Jeff Wilson reported yesterday that, “Wheat futures fell for the third straight session on speculation that output will top government estimates in the U.S., the world’s top exporter. Concerns eased that shipments from the Black Sea region will be disrupted… . [R]ussia and Ukraine will account for almost a fifth of global exports in the 12 months that started July 1, U.S. government estimates show. Futures fell 16 percent in the past 12 months on expectations that global inventories will increase to a three-year high.
“‘Concerns of supply disruptions in the Black Sea have proven unfounded to date,’ Morgan Stanley said.”
Note that Andrew E. Kramer reported in today’s New York Times that, “The prospect of a Russian intervention in eastern Ukraine appeared to rise sharply on Monday, threatening to tear open what is already the greatest fissure between the East and West in the post-Cold War era.
“As the Kremlin announced that it had sent a convoy of humanitarian aid to the besieged, separatist-held city of Luhansk in eastern Ukraine under the auspices of the Red Cross, the secretary-general of NATO said there was a ‘high probability’ of a Russian attack and Ukraine raised its estimate of Russian troop strength on the border.”
Also, Ken Anderson reported yesterday at Brownfield that, “An analysis of Iowa cropland values indicates prices fell 15 percent in the first quarter of this year.
“The Peak Soil Iowa Cropland Value Index shows 1st quarter values were 8,168 dollars per acre versus 4th quarter 2013 values of 9,565 dollars per acre.
“Paul Kanitra, president of Peak Soil, says their index is the first to capture the severity of the corn and soybean sell-off that started in 2013.”
In other news, Bloomberg writer Alan Bjerga reported yesterday that, “In the long term, California will probably move away from commodity crops produced in bulk elsewhere to high-value products that make more money for the water used, said Richard Howitt, a farm economist at the University of California at Davis. The state still has advantages in almonds, pistachios and wine grapes, and its location means it will always be well-situated to export what can be profitably grown.
“That may mean less farmland in production as growers abandon corn and cotton because of the high cost of water. Corn acreage in California has dropped 34 percent from last year, and wheat is down 53 percent, according to the USDA.
“Cotton planting, [Calif. farmer] Fred Starrh’s one-time mainstay, has fallen 60 percent over the decade, while almonds are up by more than half.”
Kelsey Gee and Joshua Jamerson reported yesterday at The Wall Street Journal Online that, “Dean Foods Co., buffeted by rising milk costs and sluggish consumer demand, reported a wider-than-expected quarterly loss and warned it will post another loss for the third quarter… . Dean is wrestling with surging costs for the raw milk it buys from farmers, due in part to increased demand from overseas buyers for U.S. dairy products and lower production last year in New Zealand and other major dairy producers. The company said Monday it faced difficulty passing on the higher costs because it risked lower sales volumes at supermarkets, where sales trends have been weak.
“The company is battling a yearslong decline in U.S. milk consumption as consumers reach for alternatives include juices, waters and milk alternatives such as almond milk.”
In news relating to transportation issues, an update yesterday from Sen. Heidi Heitkamp (D., N.D.) stated that, “[Sen. Heitkamp] today pressured Canadian Pacific Railway CEO E. Hunter Harrison to make a more concerted effort in addressing agriculture shipment delays in North Dakota that are causing preventable challenges for farmers and shippers across the state.
“Since the U.S. Surface Transportation Board (STB) began monitoring the progress of improvements made by BNSF and Canadian Pacific, Canadian Pacific went from reporting 23,818 open requests for grain cars in June, to 22,457 open requests in August – a mere five percent improvement. In addition, the wait time actually increased, with the average time of an open request going from 63 days to now more than 80 days.”
Sen. John Hoeven (R., N.D.) indicated yesterday that, “‘North Dakota is a dynamic, growing state and that means agriculture and other freight shipments have grown commensurately,’ Hoeven said. ‘We need to sit down like this to discuss what steps are and can be taken to eliminate backlogs and get agriculture shipments on schedule for producers, especially with the fall harvest fast approaching. We appreciate Canadian Pacific CEO and Director Hunter Harrison visiting North Dakota to meet directly with our producers regarding ongoing concerns about shipping agriculture products by rail.'”
And a news release yesterday from Rep. Kevin Cramer (R., N.D.) indicated that, “Today [Rep. Cramer] said the U.S. government may have no choice but to respond to a performance mandate Canada is imposing on rail companies for its domestic grain. In a letter to Canadian Ambassador Gary Doer, Cramer said Canada’s mandate requiring companies to move its own grain undermines cooperation between the two countries by fostering reduced service for U.S. grain customers.
“The Canadian government decided in March of this year to fine Canadian Pacific Railway (CP) and Canadian National Railway if either fails to move at least 500,000 tons or 5,500 rail cars of domestic grain per week. The mandates are set to last through at least the end of November.
“The signed letter can be viewed here.”
Regulations
Benjamin Goad reported yesterday at The Hill Online that, “A government report made public Monday finds fault with the Environmental Protection Agency’s analyses of the costs and benefits of its regulations.
“The Government Accountability Office report concluded that information incorporated into the EPA’s Regulatory Impact Analyses (RIA) was sometimes murky.”
The Hill update noted that, “An EPA spokeswoman stressed that the report focused on only a ‘small subset’ of rules and that the GAO concluded the agency generally adheres to official guidance for how the analyses are to be conducted.”
And, an update yesterday from the FDA indicated in part that, “The Food and Drug Administration [FDA] released its National Antimicrobial Resistance Monitoring System (NARMS) 2011 Executive Report today, showing both increasing and decreasing antimicrobial resistance trends. NARMS was established in 1996 as a partnership between the FDA, the Centers for Disease Control and Prevention (CDC), and the U.S. Department of Agriculture (USDA) to track antibiotic resistance in foodborne bacteria. The Executive Report summarizes data previously released by each of the three agencies.”
The update explained that, “NARMS is critically important for monitoring trends in antimicrobial resistance among foodborne bacteria collected from humans, retail meats, and food animals. In particular, it assists FDA in making data-driven decisions on the approval of safe and effective antimicrobial drugs for animals.”
Biotech
A news release last week from Vermont’s Attorney General William Sorrell indicated that, “[AG Sorrell] asked the U.S. District Court for the District of Vermont today to dismiss the lawsuit brought by food manufacturer trade associations to invalidate Act 120, Vermont’s law requiring the labeling of genetically engineered (‘GE’) food. ‘The State’s motion makes the case that Vermont’s labeling law withstands all five challenges to its constitutionality made by Plaintiffs and that the Court should dismiss the suit without requiring the State to answer the Complaint or engage in further litigation,’ said Attorney General Sorrell. ‘While the Plaintiffs prefer not to disclose that their products are made with genetic engineering, over 90% of the general public supports labeling genetically engineered foods,’ he added.”
Policy Issues
Bloomberg writer Victoria Slind-Flor reported yesterday that, “The U.S. Department of Agriculture has asked the grocery industry to comment on whether data related to the Supplemental Nutrition Assistance Program is a trade secret.
“The notice was published in the Federal Register, and respondents have until Sept. 8 to submit their comments.”
DTN Executive Editor Marcia Zarley Taylor reported late last week that, “Cash corn prices have collapsed 30% in the last 90 days, but don’t hit the panic button yet. This kind of abrupt market fallout is exactly what the 2014 Farm Act’s safety net was designed to address. In fact, many land grant economists now forecast a potential for maximum corn payments under the 2014 county-based Agriculture Risk Coverage (ARC-CO) program — with odds increasing that soybeans and even some hard-hit parts of the Wheat Belt also could receive 2014 farm program payments.
“Farmers can’t rule out the potential for $30- to $90-per-acre 2014 ARC corn payments in counties with average yields, said Ohio State University economist Carl Zulauf. That’s given his latest estimate that 2014-15 season-average prices will run only $3.60 per bushel, not the $4.00 USDA forecast in the July crop report and nowhere close to the $6 or better prices in play when Congress wrote the bill. Good Corn Belt rains during the next few weeks could tip payments to the high end.”
Hembree Brandon reported yesterday at the Farm Press Blog that, “It’s interesting, says Rep. Rick Crawford, that there are 535 members of Congress who consider themselves experts on farm policy, yet ‘few want to be on the Ag Committee.’
“Crawford, House member from Arkansas’ first district, says those who want to shape farm policy should ‘get on the Committee — that’s where it ought to take place. And when farm legislation goes to the floor, recognize that committee members are implementing policy that’s based on their level of experience and expertise, and on what’s been taken from working with the industry. When we’re implementing farm policy, I think we ought to respect the opinion of farmers and those in the industry.’
“Speaking at the annual conference of the Southern Peanut Farmers Federation, he said ‘it was quite a heavy lift, in the current environment,’ to pass the new farm bill. And, ‘I don’t think implementation of the legislation will be smooth. I think we have a good relationship with the USDA, that they will understand what Congress is trying to accomplish, and that they will maintain congressional intent — but members of Congress will continue to fiddle with policy, through the appropriations process or in other ways, and that’s part of the institution we have to live with.'”
