Keith Good: Updated Grain Price Forecasts; Working on Sealing the Pacific Trade Deal

    Positive Update to Grain Price Forecasts

    Earlier this week, the Food and Agricultural Policy Research Institute (FAPRI-MU) released its February 2015 U.S. Crop Price Update, which stated in part that, “FAPRI-MU is developing new long-term projections for the U.S. farm economy that suggest slightly stronger demand for both ethanol and livestock feed than in the January update. Incorporating this new analysis modestly increases projected 2015-18 prices for corn and soybeans.

    “Reduced production helps projected corn prices to increase to $3.87 per bushel for the crop to be harvested this fall, and to reach $4.09 per bushel for the 2018 crop.

    “Large projected U.S. and global supplies put downward pressure on soybean prices in 2015/16, but the decline is not as sharp as indicated in the January update. The projected soybean price is $9.27 per bushel in 2015/16, rebounding to $10.30 per bushel by 2018/19.”

    On Tuesday, University of Illinois agricultural economist Gary Schnitkey indicated at the farmdoc daily blog (“Forecasts of 2015 Market Year Average Prices based on Projected Prices for Crop Insurance“) that, “The 2015 market year average (MYA) prices for corn and soybeans are forecasts using the same futures contract prices as are used to set projected prices on crop insurance products. Prices during the first two week of February indicate projected prices of $4.15 per bushel for corn and $9.60 per bushel for soybeans. Resulting forecasts of 2015 MYA prices are $3.97 per bushel for corn and $9.84 per bushel for soybeans. Given these forecasts, Agricultural Risk Coverage – County Option (ARC-CO) is projected to pay more than Price Loss Coverage (PLC) over many counties in 2015.”

    Chinese Agriculture Key to Economic Growth

    More broadly, Reuters writer Dominique Patton reported earlier this week that, “Modernizing Chinese agriculture will help in countering slower economic growth by driving investment in rural infrastructure and boosting consumption, Chinese Premier Li Keqiang said.

    “The Chinese economy grew at its slowest pace in 24 years in 2014 as property prices cooled, hitting demand for a range of commodities.

    “Investing in infrastructure in rural areas could help digest some of the excess capacity in China’s steel and cement industries, as well as create new jobs, wrote Li in the latest issue of the Chinese Communist Party journal Qiushi.”

    And Bloomberg writer Pratik Parija reported yesterday that, “India, the world’s second-largest wheat grower, will harvest a near-record crop this year, expanding domestic inventories and widening a global grain glut.”

    President Seeks More Support for Trans-Pacific Partnership

    Vicki Needham reported yesterday at The Hill Online that, “President Obama is hawking his trade agenda to a broader audience outside of Washington in hopes of building support in Congress.

    “The president on Wednesday released a two-minute video detailing the benefits of forging global trade agreements, arguing that the pacts will help boost U.S. exports and economic growth.”

    Meanwhile, Reuters news reported yesterday that, “Japan’s economy minister said on Wednesday that any agreement on the 12-nation Trans-Pacific Partnership (TPP) trade deal by Japan’s initial target of as early as March was becoming difficult.

    “Japanese Economy Minister Akira Amari said he met with U.S. Congressman Paul Ryan on Wednesday to affirm the countries’ commitment to establish the trade deal by the deadline.”

    news release yesterday from the Ways and Means Committee noted that, “On the second leg of a three-nation trip to Asia, members of a congressional delegation led by Ways and Means Chairman Paul Ryan (R-WI) arrived in Malaysia on Tuesday…[t]he delegation held a working dinner with Malaysian Prime Minister Dato’ Sri Mohd Najib Tun Razak. The members used the dinner with Prime Minister Najib to stress the short timeline that nations have to conclude a successful TPP agreement and encouraged him to empower his negotiators to make necessary commitments.”

    Also with respect to the TPP, and currency related issues, The Washington Post editorial board indicated today that, “Injecting currency manipulation rules into the trade-promotion bill at this late date could cause a rebellion by TPP negotiating partners, possibly scuttling the entire project, along with all the benefits, geopolitical and economic, of knitting major Pacific Rim economies together under the aegis of U.S.-style free trade. Congress should keep this poison pill out of the law and allow Mr. Obama and his successors to handle currency issues on a separate diplomatic track, the historical approach that has served U.S. interests best.”

    Justin McCarthy reported yesterday at the Irish Farmers Journal Online that, “European Commissioner for Agriculture Phil Hogan is in the US meeting US Secretary of Agriculture Tom Vilsack.

    “Discussions around the Transatlantic Trade and Investment Partnership (TTIP) are likely to take centre stage.”

    The update noted that, “We would expect that Commissioner Hogan will also raise concerns around the new US Farm Bill and how compliant the range of measures are with World Trade Organisation (WTO) regulations.”

    Port Disruptions Continue to Hurt Ag Businesses

    In updated news on the West Coast port labor dispute, and its negative impacts, Bloomberg writer Jeanna Smialek reported yesterday that, “‘The short shelf life of chilled beef and pork makes timely delivery critical,’ Barry Carpenter, president and chief executive officer of the North American Meat Institute, said in a Jan. 23 statement. ‘Our cold chain simply cannot sustain this backlog much longer and our employees should not be forced to experience the lost work days that may result if we must slow or stop production in some of our plants.’

    “In the Pacific Northwest, exporters of apples, hay, potatoes and forest products have complained of losing hundreds of millions of dollars in business.

    “‘It’s devastating,’ said Blaine Calaway, vice president of sales at Calaway Trading in Ellensburg, Washington. The hay exporter may see customers turn to suppliers in Canada and Australia, he said.”

    House Ag Committee member Dan Newhouse (R., Wash.) tweeted this photo yesterday,  and noted that, “Today I sat down with growers and processors in Moses Lake to hear how the ‪#wcports slowdown is affecting them”.

    Ag Groups Say Drone Regulations Too Restrictive

    Lydia Wheeler reported yesterday at The Hill Online that, “In a first for all fish, the National Wildlife Service removed the Oregon chub from the federal list of endangered and threatened animals.”

    Reuters writers Karl Plume and P.J. Huffstutter reported yesterday that, “U.S. farmers hoping to use drones to locate lost livestock or monitor trouble spots in their fields were disappointed by what they say are overly restrictive commercial drone rules proposed Sunday by the Federal Aviation Administration.

    “Two of the long-awaited draft rules were singled out for particular criticism: a requirement that pilots remain in visual contact with their drones at all times and a height restriction that limits the crafts to flying no more than 500 feet above ground. These constraints, farmers and drone operators say, would limit a drone’s range – and consequently its usefulness.”

    Lastly today, in an article yesterday, The Wall Street Journal provided additional information on last week’s discovery of a Mad Cow case in Canada.

    House to Discuss Food Stamps

    Next week, the House Agriculture Committee will hold two hearings on nutrition related issues.

    On the 25th, the Full Committee will Review the SNAP Program, and on the 26th, the Nutrition Subcommittee will hold a hearing to better understand the SNAP population through published research.

    The Nutrition Subcommittee is chaired by Jackie Walorski (R., Ind.) and the ranking member is Jim McGovern (D., Mass.).

    Rep. Walorski issued a news release yesterday, which stated that, “[Rep. Walorski] visited Martin’s Super Market in South Bend today in an effort to tout legislation that encourages businesses to donate food inventory to local food shelters. During the visit, Walorski was joined by Rob Bartels, CEO and president of Martin’s Super Market and Milt Lee, executive director of the Food Bank of Northern Indiana.

    “Last week, the House passed legislation that would allow tax deductions for charitable contributions of food inventory. H.R. 644, The Fighting Hunger Incentive Act, permanently extends the deduction for businesses to donate food inventory to local food shelters and pantries.”

    In other nutrition related news, Roberto A. Ferdman reported yesterday at the Wonkblog (Washington Post) that, “One of the simplest ways to put poor kids in a position to succeed is to make sure they eat breakfast…[F]ortunately, there’s a program that tries to make sure low-income children are able to eat breakfast each day: the decades old School Breakfast Program, which helps provide free or near-free morning meals to poor students….[U]nfortunately, the program is failing to live up to its potential.

    “The School Breakfast Program still isn’t feeding nearly as many poor students as it should be. In fact, the program is falling short by at least ten million students, if not more, according to a new study by the Food Research and Action Center (FRAC).”

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