Keith Good: Positive Reports Continue on Corn, Soybean Yields
Agricultural Economy: Crop Production, Biofuels, Biotech
Donnelle Eller reported on the front page of Saturday’s Des Moines Register that, “A growing year filled with extreme weather — a May snowstorm followed by too much rain and too little heat, then too little rain and too much heat — is generating an extreme range in yields this fall.
“‘Like the weather, the yields have been highly variable,’ said Chad Hart, an Iowa State University economist.”
Ms. Eller indicated that, “In the end, though, Hart believes Iowa’s yields will be close to the government’s September estimates of 162 bushels per acre for corn and 43 bushels for soybeans. ‘The thinking was that the USDA numbers were too high. But as farmers are getting into the fields, it’s lining up pretty closely to the projections,’ he said.”
The Register article stated that, “Strong yields in other states, especially in the eastern Corn Belt states such as Illinois, Indiana and Ohio, are expected to drive a record 13.8 billion bushels of corn this year, beating the 2009 record of 13.1 billion bushels. U.S. farmers are expected to harvest nearly 3.2 billion bushels of soybeans.”
An update Friday at Radio Iowa Online indicated that, “Early reports indicate corn yields are higher than expected in parts of Iowa and Iowa State University Extension Climatologist Elwynn Taylor says the cooler-than-normal temperatures during the month of August are responsible for that. ‘Cooler than usual in August is almost always a sign of an increasing yield,’ Taylor says.
“Last year U.S. corn fields yielded about 122 bushels per acre. ‘We were expecting something near 150,’ Taylor says. ‘Now it’s up to the mid-150s for the nation and for the state of Iowa well above that.’ Commodity experts predict the world’s corn crop this year will be the largest ever.”
Don Dodson reported yesterday at the News-Gazette Online (Champaign, Ill.) that, “Area farmers and grain elevator operators say they’re pleasantly surprised by how high soybean yields are this fall, given a late-summer dry spell.
“‘Soybeans are a huge surprise,’ said Roger Miller, chief executive officer of Champaign-based Premier Cooperative. ‘We went through August and most of September without any significant rainfall. I was always told soybeans needed August rain. But we have really good yields this year.’
“Soybean yields in Premier’s territory, which covers much of Champaign County and parts of Vermilion, Ford and Piatt counties, have typically been in the mid-50 to mid-60 bushels per acre this fall.”
Also, a news release Friday from Purdue University stated in part that, “Hog production is returning to profitability as feed prices fall, and a reduction in slaughter numbers seems to show that producers are noticing, Purdue Extension agricultural economist Chris Hurt says.
“Major drought in 2012 ransacked the nation’s feed crops, sending livestock feed prices sky high and driving hog producers to quickly send animals to slaughter. With a large-yielding corn crop expected this year, feed prices have been decreasing, which has turned around the outlook for hog profits.”
In developments regarding biofuels, a news release Friday from the Food and Agriculture Organization of the United Nations stated that, “Following a week of intense discussions, the Committee on World Food Security stressed the link between biofuels and food security, saying that the ‘progressive realization of the right to adequate food for all’ should be a priority concern in biofuel development.
“The world’s most important intergovernmental and multi-stakeholder platform for food security and nutrition said biofuel development ‘should not compromise food security, and should especially consider women and smallholders.'”
Reuters news reported on Friday that, “A leading ethanol group reacted vigorously on Friday to media reports of a proposed easing of biofuel requirements next year, calling for U.S. agencies to investigate the leak of a draft Environmental Protection Agency document.
“On Thursday, Reuters and other news outlets reported on EPA documents that showed the agency proposing a reduction in the amount of corn-based ethanol that would be required for blending into gasoline next year, a retreat from the landmark 2007 law and a major victory for the oil industry.”
The article indicated that, “‘Because of the dramatic economic impact on commodity markets there should be an immediate investigation by the Justice Department, and the Commodity Futures Trading Commission to determine if this was an attempt to manipulate markets such as corn futures, ethanol futures and/or RINS markets,’ Tom Buis, CEO of Growth Energy, said in a release.
“The Department of Justice could not be reached for comment, and DOJ representatives are less available than usual because of the partial government shutdown. In general, the Department of Justice does not confirm investigations that have yet to be confirmed by the targets. The CFTC has said it is unlikely to be able to respond to media requests during the shutdown.”
A Reuters news article from Saturday reported that, “The Environmental Protection Agency on Friday sought to calm a furor over its apparent proposal to reduce ethanol use in gasoline next year, saying that no final decisions had been made about the contentious mandate.”
And on the issue of biotechnology, Christopher Doering reported on the front page of yesterday’s Des Moines Register that, “After almost two decades of rapid growth, technology used to produce corn, soybeans, cotton and other crops from genetically tweaked seeds stands at a crossroads.
“Promising new applications are on the verge of commercialization, researchers say. Yet critics are mounting an aggressive campaign to rein in the use of biotech crops they contend have been improperly used and under-regulated.”
Farm Bill Issues
Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “Higher-income farmers and the crop-insurance industry are likely going to cope with reduced federal cost-cost share on crop insurance premiums.
“Both the House and Senate Agriculture Committees passed farm bills out of committee without any income limits on crop-insurance premium subsidies. Through a bill amendment and a Sense of the House resolution, both chambers recognized that cutting back the premium subsidy is one small area of bi-partisan agreement among House and Senate leaders.
“The Senate farm bill lowers the premium subsidy for farmers making more than $750,000 in adjusted gross income, or $1.5 million for married couples. Those higher-income farmers would see their premium subsidy lowered 15 percentage points, from a maximum of 62% to 47%. The provision would affect about 20,000 farmers and save $1 billion over 10 years.”
Meanwhile, John M. Glionna reported on the front page of Saturday’s Los Angeles Times that, “From inside a small plane cruising over cattle country here, Scott Reder spied the carnage and felt sick to his stomach.
“Mile after mile, half-buried by snow, the dead animals lay huddled in groups, calves close to their to mothers — carcasses by the dozens strung out along field fences and packed into ditches, black hooves poking up through the drifts like macabre stakes.”
The article noted that, “Reder is among thousands of ranchers who last week watched helplessly as a killer early autumn blizzard decimated 80,000 head of cattle. Calling it the state’s worst economic disaster in decades, officials say the storm has ravaged South Dakota’s $7-billion livestock industry.”
Mr. Glionna pointed out that, “South Dakota ranks sixth in the country in livestock production, with nearly 4 million head of cattle. Officials say 6,000 ranching operations suffered losses from the storm.
“The blizzard hit just days after 80-degree weather, before ranchers had moved their herds from less-protected summer grazing lands. Most ranchers were set to bring calves to market — the satisfying payday after another year of grueling labor. Thousands of head had been recently relocated here from Texas and New Mexico to escape punishing droughts in those states.”
The LA Times article stated that, “Yet Washington’s shutdown has deprived people here of a traditional safety net: Congress hasn’t passed a new farm bill to subsidize agricultural producers, and the lockout means legislators won’t be voting on the topic any time soon.
“These days, Reder passes a federal Farm Services Administration office whose doors are closed. Like most American ranchers, the 47-year-old is a resilient small businessman used to tending to his own problems, with help from neighbors whose families settled this land generations ago.
“Still, he’s frustrated and feels that federal lawmakers have turned their backs on the nation’s heartland in a time of need.”
Senators Tim Johnson (D., S.D.), Heidi Heitkamp (D., N.D.) and John Thune (R., S.D.) addressed the impacts of the blizzard on the livestock industry, as well as Farm Bill issues, last week on the Senate floor (videos here).
Rep. Kristi Noem (R., S.D.) also discussed the blizzard impacts on the House floor last week , and a news release Friday from Sen. John Hoeven (R., N.D.) indicated that, “[Hoeven] today called Michael Scuse, U.S. Department of Agriculture Under Secretary for Farm and Foreign Agricultural Services, to seek his help with Farm Service Agency (FSA) services for producers. Scuse oversees a range of USDA programs, including the FSA and agriculture disaster programs.
“The senator has received reports from farmers and ranchers that they are unable to access FSA services in the aftermath of a severe winter storm that hit South Dakota and the southern tier of North Dakota last weekend. Producers also said they haven’t been able to obtain check endorsements from FSA for loans and other payments.”
The release added that, “Hoeven made the case that government shutdown rules authorize the agency to retain personnel for public health and the protection of property. Therefore, the senator asked Scuse to restore agriculture disaster services and initiate damage assessments for lost livestock.
“Scuse made a commitment to work through agency programs as soon as possible when the government shutdown is resolved. Meanwhile, he said ranchers need to document their losses carefully so that they’re prepared when services resume.”
On a separate budget related issue and the Farm Bill, Ron Nixon reported on Friday at The New York Times Online that, “The National School Lunch and Breakfast Program could soon be a casualty of the partial government shutdown, leaving millions of children without an important source of nutrition, a group representing school nutrition workers warned Congress on Friday.
“The group, the School Nutrition Association, said in a letter to House Speaker John A. Boehner and Senate Majority Leader Harry Reid that the protracted government shutdown left many school administrators uncertain of their ability to sustain the meal programs after Nov. 1, when schools begin to file federal reimbursement claims for meals served through October. The Agriculture Department said it could not guarantee that money for the school meal program would be available after that.”
And Reuters writer Marina Lopes reported on Saturday that, “Suspension of some $3 billion worth of federal loans due to the U.S. government shutdown has forced cotton farmers to turn to commercial banks for aid, boosting their costs and further complicating the upcoming harvest in the world’s largest cotton exporter.
“The two-week shutdown struck farmers at the start of the 2013/2014 harvest, hampering their access to crucial government loans used to smooth out seasonal financial pressures through the harvest, market participants said.
“The added cost of commercial loans is only the latest obstacle for U.S. cotton growers, who are bracing for a lower-quality crop that sprung late this year, increased competition from a bumper crop in India, the world’s No. 2 cotton producer, and a 5 percent sequester cut to federal loans.”
Also, The New York Times editorial board indicated on Saturday that, “The government shutdown has caused staff reductions at two important federal health agencies, increasing the risk of serious harm to American consumers from food-borne illnesses. The two agencies — the Food and Drug Administration and the Centers for Disease Control and Prevention — have decided to focus their remaining resources on imminent threats. But they have shut down very important work that allows them to spot potentially serious problems in advance and take steps to head them off. The longer Congressional Republicans allow the shutdown to continue, the greater the danger of harm.”
In more specific news regarding the federal budget impasse and the Farm Bill, Niels Lesniewski reported on Friday at Roll Call Online that, “Budget negotiators looking to offset the cost of a medical device tax repeal being pushed by Republicans might harvest some of the savings from the farm bill.
“That’s just one of the pieces at play in an increasingly complicated Rubik’s cube of how to find an agreement to end the government shutdown and increase the federal debt limit to prevent default.”
The article noted that, “Repealing the excise tax on gross revenues of medical device makers would cost almost $30 billion over a decade. It’s one key piece of a proposal floated by Maine Republican Susan Collins to get the government back up and running.
“The Senate farm bill, which doesn’t contain the large cuts to food stamp programs favored by the House, would generate budget savings of at least $23 billion over the next 10 years. A source familiar with the farm bill negotiations said late Friday that the idea of using the farm bill savings in the broader agreement had been discussed.”
In broader budget developments, Lori Montgomery and Paul Kane reported in Saturday’s Washington Post that, “Congressional Republicans rushed late Friday to develop a new plan for reopening the government and avoiding a first-ever default in hopes of crafting a strategy that can win the support of the White House before financial markets open next week.
“Talks on Capitol Hill advanced with a new urgency after President Obama rejected House Speaker John A. Boehner’s offer to raise the debt limit through late November to give the parties time to negotiate a broader budget deal.”
Janet Hook and Partick O’Connor reported in Saturday’s Wall Street Journal that, “A proposal crafted by Senate Republicans, which has drawn interest from some Democrats, emerged as the likelier avenue for reaching an agreement. It included a longer extension of borrowing authority–through January–and an explicit agreement to reopen the government.
“The developments set the stage for a weekend of negotiations and calculations about whether Mr. Obama could fashion an agreement on his own terms that could also pass the GOP-led House. They came as the government remained partially closed for an 11th day and amid fears of a debt crisis.”
Jeremy W. Peters and Ashley Parker reported in yesterday’s New York Times that, “Senators Harry Reid and Mitch McConnell on Saturday began last-ditch negotiations on reopening the government and raising the debt ceiling as talks between House Republicans and the White House collapsed, dashing hopes for a quick resolution to the political crisis that has paralyzed the government.”
And Paul Kane and Lori Montgomery pointed out in yesterday’s Washington Post that, “During the fiscal crises that have gripped Capitol Hill over the past five years, each resolution and compromise came after Senate leaders picked up the pieces of failed efforts between the White House and the House.”
Lisa Mascaro reported yesterday evening at the Los Angeles Times Online that, “Although Senate leaders continued to talk, they appeared to make little progress over the weekend, dashing hopes that a deal could be announced before markets opened Monday. Some senators urged House Republican leaders to try again to push a measure through their chamber.
“As Senate Majority Leader Harry Reid (D-Nev.) opened a rare Sunday session, he said was confident a solution could be reached.”
Janet Hook reported in today’s Wall Street Journal that, “Senate leaders attempting to avoid a U.S. debt default remained at loggerheads Sunday and escalated the standoff by reopening the contentious issue of automatic spending cuts, damping hopes that some of Congress’s most canny negotiators would break the impasse.
“As the search for a way to end the partial federal shutdown and avoid a debt crisis shifted to the Senate, Democrats made plain that one of their top priorities was to diminish the next round of across-the-board spending cuts, known as the sequester, due to take effect early next year.
“Many Republicans, including Senate Minority Leader Mitch McConnell (R., Ky.), oppose retreating from those cuts. That set up a clash that seemed almost as intense as the one that caused budget talks between House Republicans and President Barack Obama to collapse Friday.”
Lori Montgomery and Rosalind S. Helderman noted in today’s Washington Post that, “On Sunday — with the Treasury Department due to exhaust its borrowing power in just four days — Reid was wielding that leverage to maximum advantage. Rather than making concessions that would undermine Obama’s signature health-care initiative, as Republicans first demanded, Democrats are now on the offensive and seeking to undo what has become a cherished prize for the GOP: deep agency spending cuts known as the sequester.”
For those who spend a lot of effort trying to understand the grain markets and sometimes feel overwhelmed by the complexity of it all, you may want to sit down