Keith Good: World Rice Production to Dip; China May Boost Corn Imports

    Crop Watch

    Bloomberg writer Supunnabul Suwannakij reported yesterday that, “Global rice production will shrink after weak rains in India and the end of a subsidy program in Thailand hurt supplies from the biggest exporters, according to the Food & Agriculture Organization.

    “Worldwide output of milled grain will probably drop 0.4 percent to 496.4 million metric tons in the 2014-2015 season from a year earlier, the United Nations agency said in a quarterly report. Ending stockpiles will drop 2 percent to 177.7 million tons in 2014-2015, the first contraction in a decade, while global trade expands 1.1 percent to a record 40 million tons in calendar year 2015, the Rome-based FAO said.”

    Lynn Hicks reported on the front page of yesterday’s Des Moines Register that, “Corn — not rice or wheat — is the largest crop in China, and the country has a glut of the grain now. If the economy keeps growing and its people eat more meat, however, the nation expects to have a long-term deficit of corn for livestock feed.

    “China will increasingly rely on imports to fill part of the deficit, which could expand the market and boost prices for corn grown in Iowa and elsewhere. But increased demand also offers an opportunity to improve Chinese corn production. The northeast, home to 40 percent of China’s total corn harvest, has yields that are about two-thirds to three-quarters lower than in the U.S. Corn Belt.

    “DuPont Pioneer wants to help close the gap. The Johnston-based seed company has already changed Chinese agriculture once, by promoting improved corn hybrids and the use of planting machines.”

    Also yesterday, Bloomberg writer Megan Durisin reported that, “Corn futures rose to the highest in five weeks on concern that rain will delay the harvest in the U.S., the world’s largest producer. Soybeans touched a three-week high, and wheat gained.

    “Rain in some areas of the Midwest will disrupt soybean and corn collection with some severe weather ‘unfavorable for the mature crops’ before drier weather returns by the end of the week, DTN meteorologist Joel Burgio said in a report. As of Oct. 12, 40 percent of soybeans and 24 percent of corn were harvested, trailing the average in the previous five years, according to the U.S. Department of Agriculture.”

    The article noted that, “Corn futures for December delivery rose 3.2 percent to close at $3.57 a bushel at 1:15 p.m. on the Chicago Board of Trade. Prices touched $3.575, the highest for a most-active contract since Sept. 8…U.S. farmers will collect a record 14.475 billion bushels of corn this year, and soybean output will reach an all-time high of 3.927 billion bushels, the USDA said Oct. 10.

    “Soybean futures for November delivery climbed 2.1 percent to $9.6475 a bushel. Earlier, the price reached $9.705, the highest since Sept. 19.”

    A news release yesterday from University of Missouri Extension stated that, “Commodity prices both in the U.S. and worldwide are under pressure and likely to remain so for quite a while… . [University of Missouri Extension ag economist David Reinbott] expects December corn futures to be between $3.15 and $3.50.”

    Reuters writers Tom Miles and Krista Hughes reported yesterday that, “India broke World Trade Organization rules by blocking imports of U.S. poultry and other farm products because of unsubstantiated bird flu fears, a WTO dispute panel ruled on Tuesday, potentially opening up an estimated $300 million a year export market for the United States.

    “India had claimed its import restrictions, imposed in 2007, were justified by international rules on animal health, but the panel agreed with the United States and found that India’s measures were not based on international standards and were discriminatory.

    “‘This is a major victory for American farmers,’ said U.S. Trade Representative Michael Froman, who termed the poultry decision ‘the fourth major WTO victory’ for the United States this year. ‘Our farmers produce the finest, and safest, agricultural products in the world.'”

    The article noted that, “‘India’s ban was thinly veiled protectionism,’ James Sumner, president of the USA Poultry and Egg Council, and Michael Brown, president of the National Chicken Council, said in a joint statement. ‘Free and fair trade, particularly with food, should never be used as a political bargaining chip.’

    “In India, which under WTO rules has 60 days to appeal the ruling, the Trade Ministry declined to comment.”

    Yesterday’s article added that, “‘US producers are ready and have been ready to provide high quality poultry and poultry products to the Indian market,’ said U.S. Agriculture Secretary Tom Vilsack.”

    Senate Ag Committee Chairwoman Debbie Stabenow (D., Mich.) indicated yesterday that, “‘This WTO decision is an important victory for the U.S. livestock industry and reflects the importance of enforcing our trade rules,’ said Stabenow. ‘Our trading partners need to be making decisions based on sound science, not illegal and improper efforts to tilt the playing field. When everyone is playing by the rules, America’s farmers compete – and they win. I commend the U.S. Trade Representative for pursuing this case and urge our trade negotiators to bring it to a successful conclusion.'”

    William Mauldin reported yesterday at The Wall Street Journal Online that, “Powerful agricultural groups say many fast-growing developing economies put arbitrary rules on U.S. food and farm products, despite rules among WTO nations barring arbitrary restrictions. Foreign officials say U.S. policies give domestic sugar, dairy and cotton producers unfair advantages.”

    With respect to sugar issues, Reuters writer Krista Hughes reported yesterday that, “Mexican Economy Minister Ildefonso Guajardo said on Tuesday a win-win solution to a dispute with the United States over sugar is within reach and could avoid a damaging trade war.

    “Speaking during a visit to Washington, Guajardo said he was optimistic of agreeing a negotiated settlement whereby Mexico would agree to limit exports at a level which would satisfy its cane growers without inundating the U.S. market.”

    Ms. Hughes explained that, “Guajardo said retaliation would escalate the complaint filed by U.S. sugar producers against their Mexican colleagues earlier this year into an all-out fight where ‘everybody is going to lose.’

    “Still, Mexico had several weapons at its disposal, including a case before the World Trade Organization, and would take some kind of action if a settlement could not be reached, he said.

    “‘I do trust the intelligence of the parties in both that at the end of the day we can come out with an agreement that we can live with on both sides,’ Guajardo said.”

    In transportation news, an update yesterday from Rep. Kevin Cramer (R., N.D.) indicated that, “Today [Rep. Cramer] announced BNSF Railway and Canadian Pacific Railway (CP) have publicly filed updated weekly status reports on the backlog in grain shipments.

    “The figures from BNSF show a total of 3,706 past due rail cars in North Dakota averaging 12.3 days late as of October 9, compared to the report the previous week which indicated 2,905 past due cars were averaging 9.3 days late. The CP report shows a total of 1,771 open requests in North Dakota with an average age of 3.57 weeks. The previous report showed 2,327 open requests with an average age of 5.23 weeks.

    “The BNSF report can be viewed here, and the CP report can be viewed here.”

    Stephanie Strom reported today at The New York Times Online that, “Whole Foods Market on Wednesday began a ratings program for fruits, vegetables and flowers aimed at giving consumers more information about pesticide and water use, the treatment of farm workers and waste management, and other issues surrounding the food they eat.

    “The upscale grocery chain will rate the produce of suppliers electing to participate in the program, Responsibly Grown, as ‘good,’ ‘better,’ or ‘best,’ depending on, for example, how they handle plastic waste in their operations and whether they provide conservation areas to foster bees, butterflies and other pollinators.”

    Farm Bill

    Agricultural economists Carl Zulauf (Ohio State University) and Gary Schnitkey (University of Illinois) indicated yesterday at the farmdocDaily blog (“ARC-CO and PLC Payment Indicator for 2014 Crop Year: October 2014 WASDE U.S. Yield and Price.”) that, “This article provides payment level indicators for ARC-CO and PLC payments based on the October 10, 2014 WASDE U.S. yield and U.S. price projections for barley, corn, oats, long grain rice, medium (and short) grain rice, sorghum, soybeans, and wheat. This article updates previous indicators given on August 13, 2014 and September 18, 2014 based on the August and September WASDE (World Agricultural Supply and Demand Estimates). Estimated payments are referred to as indicator estimates because they use U.S. yield not the county yield used by ARC-CO or farm payment yield used by PLC. The estimates are not payments an individual FSA farm will receive. Nevertheless, the indicator estimates using U.S. yields should help frame perspectives and questions for FSA farm owners and operators regarding program choices.”

    After detailed analysis, yesterday’s update pointed to several Summary Observations:

    • “As of October 10, 2014, corn, long grain rice, and sorghum are the most likely program crops examined in this article to receive a payment for the 2014 crop year.
    • Whether or not ARC-CO or PLC is likely to make a payment varies by crop.
    • Lower prices will increase the likelihood of payments, especially by ARC-CO. However, because of the 10 percent cap on ARC-CO’s payment, lower prices will not likely increase payments by ARC-CO for corn and sorghum.
    • County yield is a factor in determining 2014 payments by ARC-CO given currently expected prices while payment yield is a factor in determining 2014 payments by PLC.
    • Payments are far from certain for both ARC-CO and PLC if prices strengthen due to lower production or higher demand whether in the U.S. or around the world during the 2014 crop year. At this time, it is reasonable to only say that 2014 crop year payments may occur, that they may be large if the right combination of price and yield materialize, that they will likely vary by crop, and that they will likely vary by program for a given crop.
    • Comparison of payments under the current low, mid, and high prices in the October 2014 WASDE reveals some of the tradeoffs that need to be considered when choosing between ARC-CO and PLC. They include that ARC-CO payments are based on a benchmark revenue that follows the market, which increases the likelihood that ARC-CO will make payments in 2014 because 2014 prices are lower than the high prices of recent years. However, the cap on payments is smaller for ARC-CO than for PLC, which means that the potential payment by PLC is higher, although actual payment may be smaller. Two tradeoffs not illustrated are (1) that ARC-CO’s benchmark will eventually trend lower if prices remain low although this downward adjustment is tempered because ARC-CO has the PLC reference price as a minimum price and (2) that ARC-CO pays on price and yield declines while PLC pays if price is below the reference price. Preferences among these tradeoffs are important considerations in determining which program farmers will choose.”

    Pete Kasperowicz reported yesterday at The Blaze Online that, “The National School Boards Association reported Monday that 83.7 percent of school districts around the country have seen an increase in wasted school lunch food since a 2010 law was passed mandating new nutrition rules.

    “The Healthy Hunger-Free Kids Act was aimed at creating healthier school lunches, but several schools have rebelled against the new rules. Many school districts have reported that while the law requires kids to be served a certain amount of fruits and vegetables, much of that food is being thrown in the trash, resulting in a more costly program that’s not getting results.

    “The NSBA survey seems to confirm that, with its finding that more than four-fifths of school districts are seeing an increase in ‘plate waste.’ The survey said 81.8 percent of schools saw cost increases, and 76.5 percent saw a reduction in participation by students.”


    AP writer Kristen Wyatt reported yesterday that, “Burrito giant Chipotle on Tuesday endorsed ballot measures in Colorado and Oregon that would require labeling of genetically modified food, providing a morale boost for campaigns being heavily outspent by agriculture interests.”

    The article noted that, “Three states — Vermont, Maine and Connecticut — have passed labeling laws, although they don’t take effect immediately. Similar labeling measures in California and in Washington state failed narrowly in recent years after millions of dollars were spent, mostly by labeling opponents.”


    A news release yesterday from Sen. John Thune (R., S.D.) indicated that, “[Sen. Thune] and Representative Kristi Noem (R-South Dakota) today sent a letter to U.S. Secretary of the Interior Sally Jewell and U.S. Fish and Wildlife Service (FWS) Director Dan Ashe calling on the FWS to withdraw its proposed listing of the northern long-eared bat (NLEB) as endangered due to insufficient supporting data to warrant the listing.”

    Timothy Cama reported yesterday at The Hill Online that, “A coalition of environmental and wildlife groups sued the federal government to force it to protect the wolverine under the Endangered Species Act.

    “The lawsuit, filed Monday, comes after the Fish and Wildlife Service (FWS) decided in August that, despite scientists’ concerns that climate change would dramatically reduce the wolverine’s habitat, it did not merit protection as an endangered or threatened species.”

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