Keith Good: Weather Impacting Grain Prices; Ukraine Issues Simmering

    Agricultural Economy

    Tony C. Dreibus reported yesterday at The Wall Street Journal Online that, “Grain prices jumped as dry weather in the U.S. southern Plains raised concerns about the nation’s winter-wheat crop and persistent cold sparked worries about slow corn planting in the Midwest.

    “About 84% of Kansas, the biggest wheat-producing state, was in a moderate-to-extreme drought as of March 18, up from 67% just seven days earlier, according to the U.S. Drought Monitor.  Most of the western third of the state was in extreme drought, meaning crop losses are imminent, the Drought Monitor said in a report last week.

    “The poor weather has prompted worries about the possibility of crimped grain supplies. At the start of the year, analysts, traders and investors were anticipating abundant harvests, but some have scaled back those expectations due to the lack of rain and extreme cold temperatures in key growing regions.”

    The Journal article added that, “Another cold front sweeping through the U.S. Plains and Midwest will keep corn and soybean farmers from preparing fields for spring planting, Charlie Sernatinger, a Chicago-based analyst for brokerage EDF Man Capital, wrote in a Monday report.

    “No rain fell in most of western Kansas, the Oklahoma Panhandle or West Texas on Saturday or Sunday, according to the National Weather Service. The weather in the region will be mostly dry in the next seven days, with temperatures near or above normal after Tuesday, according to private forecaster DTN.”

    AP writer Steve Rothwell reported yesterday that, “The price of wheat rose sharply Monday as traders worried that ongoing tensions in Ukraine will reduce exports from that region.”

    And Bloomberg writer Whitney McFerron reported yesterday that, “Ukraine’s plunging currency is raising concern that farmers may reduce purchases of fuel and pesticides later this season even as spring planting accelerates to the fastest pace in six years.”

    Meanwhile, the Kansas office of the USDA’s National Agricultural Statistics Service (NASS) indicated yesterday that, “For the week ending March 23, 2014, dry conditions prevailed for another week with precipitation limited to a quarter of an inch or less across portions of northern Kansas, according to USDA’s [NASS]. As a result, soil moisture supplies continued their downward trend with less than half of the state reporting adequate supplies. Windy conditions were again noted with soils blowing in portions of the western half of the state. Temperatures continued to average below normal, slowing wheat development.”

    The Oklahoma NASS office noted yesterday that, “There were wind speeds as high as 40 mph in some parts of the state. High winds kept field work to a minimum. Wind erosion and dust storms were experienced in the Panhandle and Southwest Oklahoma this past week. Significant moisture is needed across the whole state, assuredly in the Panhandle and Southwest for winter wheat development.”

    While the NASS office in Texas pointed out yesterday that, “Windy weather brought cooler temperatures and dust storms to the Panhandle late in the week… . [W]inter wheat in the Southern Low Plains and the Edwards Plateau continued to show signs of stress brought on by dry, windy conditions.”

    In addition, University of Illinois agricultural economist Darrel Good indicated yesterday at the farmdocDaily blog (“Reports Continue to Support Corn and Soybean Prices“) that, “March is one of four months that contain an unusually large number of reports that reflect supply and demand conditions for corn and soybeans.  The number of reports is larger in January, March, June, and September when various quarterly USDA reports are released.

    “So far this month, information in the regular monthly reports has been generally supportive for corn and soybean prices.”

    The farmdoc update added that, “Also on March 31, the USDA will release the annual Prospective Plantings report.  Based on a farmer survey earlier this month, the report will reveal planting intentions for all major spring planted crops.  Estimates of both total planted acreage and acreage of individual crops will be important.  Large prevented planted acreage in 2013 is expected to result in total planting intentions that exceed last year’s acreage.  In addition, the generally favorable price of new crop soybeans relative to other crops, particularly corn, is expected to result in intentions to plant considerably more soybean acreage in 2014 than in 2013.

    “Intentions for corn are expected to be less than last year’s planted acreage.  One of the major benefits of the information in this report is to allow producers to adjust their planting intentions to market signals.  If soybean planting intentions are near the high end of expectations, new crop prices will likely have to adjust to encourage fewer acres of soybeans and more acres of other crops. The size of the price adjustment, if any, needed to alter intentions may also be influenced by spring weather conditions. Prospects for a late planting season, for example, might require a larger price adjustment to discourage soybean acreage and motivate more corn acres.”

    Also yesterday, on the issue of beef prices, Bloomberg writer Megan Durisin reported that, “At a time of year when U.S. prices usually are at seasonal lows, meat is rising faster than any other food group, even before the peak in demand for summer grilling. The domestic cattle herd is the smallest since 1951, after years of drought and high feed costs, and the spread of a piglet-killing disease is tightening hog supplies. Cattle and hog futures in Chicago reached record highs this month.”

    news release yesterday from University of Missouri Extension indicated that, “‘With record high beef prices, it’s a great time to be in the cattle business,’ Scott Brown told a meeting of Miller County producers.

    “The University of Missouri beef economist’s outlook shows a $250 return per cow in the coming year. In the previous beef cycle, returns topped at under $100 per cow.

    “‘We’ve never seen anything like current prices,’ Brown said.”

    The update pointed out: “‘Before you go home and double the size of your cow herd, remember the cattle cycle,’ Brown said. When cow numbers go down, prices go up. However, when numbers go up, prices go down.”

    More broadly, Katie Micik reported yesterday at DTN (“Ag Confidence Index Results“) that, “Crop and livestock farmers’ attitudes toward the agriculture economy are vastly different, according to the latest reading of the DTN/The Progressive Farmer Agriculture Confidence Index, yet their combined sentiment remains positive.”

    The DTN article noted that, “DTN also breaks out indexes for crop producers and livestock producers, and here the attitudes are greatly different. Crop producers’ overall index value is 102.7. While positive, it’s the lowest reading since the initial survey set a neutral value at 100 in April 2010.

    “The overall index for livestock producers came in at 116.4, just two-tenths below the highest all-time reading. Livestock producers’ present situation index was the highest the survey has registered in any category.”

    With respect to trade issues, a news release yesterday from the U.S. Trade Representative’s Office noted that, “During March 27-28, Acting Deputy USTR Cutler will meet Ambassador Hiroshi Oe of Japan in Washington, D.C., to continue bilateral market access negotiations in the Trans-Pacific Partnership (TPP). Several days of working-level meetings on market access will also take place between the American and Japanese negotiating teams beginning March 26.”

    And Brian M. Carney noted in a column in today’s Wall Street Journal that, “More than half the members of the U.S. Senate rose in defense of American dairy last week, in what could be a sign of how hard it will be to forge a comprehensive trans-Atlantic trade deal.

    “The trouble comes from the European Union’s rules concerning ‘protected designations of origin’ (PDO) and ‘protected geographical indications (PGI).’ EU law allows producers of many foods–from Parmesan cheese to prosciutto–to apply for legal protection for the names of their products.”

    Mr. Carney added that, “Whether these differences can be overcome in the name of a larger free-trade deal is far from clear. Europe is not about to give up its PDO/PGI regime, misguided as it is. And it seems very unlikely that U.S. dairy is going to give up its cheeses. It’s a stinker of a problem, whatever way you slice it.”


    Ellyn Ferguson reported yesterday at Roll Call Online that, “Large-scale farming and agribusiness, derisively dubbed Big Ag by critics, look to polish their image this week with a Statuary Hall ceremony for a hero in the field and a screening of a documentary about young farmers and ranchers.

    “On Tuesday, top lawmakers, including Speaker John A. Boehner, R-Ohio, plan to attend the installation of a bronze statue of plant scientist Norman E. Borlaug. Borlaug is hailed as the father of the 1960s ‘Green Revolution’ that improved crop production in Mexico and Asia.”

    The Roll Call article noted that, “Borlaug ‘was a passionate believer in biotechnology and a passionate devotee of science,’ said Kenneth M. Quinn, president of the World Food Prize Foundation begun by Borlaug. Quinn, a former U.S. ambassador to Cambodia, said Borlaug took to heart an inscription in the Great Hall of the National Academy of Sciences building that describes science as the ‘pilot of industry, conqueror of disease, multiplier of the harvest, explorer of the universe, revealer of nature’s laws, eternal guide to truth.'”

    Ms. Ferguson explained that, “A coalition led by the Grocery Manufacturers Association, tired of pouring in millions to stop state-level efforts to require some form of mandatory labeling of foods with genetically modified ingredients, is scouting congressional members to introduce federal legislation to override such efforts. The coalition is circulating draft legislation that would override any state GMO-labeling laws.

    “Just Label It, an alliance of the organic food industry, non-GMO farmers, environmentalists and others, is fighting the food makers with a message that consumers have a right to as much information as possible about the food they choose to eat.”

    Tim Devaney reported yesterday at The Hill’s RegWatch Blog that, “A consumer group is criticizing the Obama administration for not requiring food manufacturers to notify consumers when they buy products that were made with genetically modified organisms (GMOs).

    “The Food and Drug Administration (FDA) last month proposed the first overhaul of nutritional labels on food packages in 20 years, but the Organic Consumers Association says the rules do not go far enough to protect consumers from GMOs.”

    Yesterday’s AgriTalk radio program included a discussion with Norman Borlaug’s granddaughter, Julie.  In part, host Mike Adams asked, “Julie, this is at a time when GMOs are very much in the news, and there’s a lot of controversy still around them, and people are critical of them. Your grandfather took a position on them, and pointed to their benefits in saying he felt they were the only way to increase food production as the world runs out of unused arable land. What do you think he would make of this debate and ongoing criticism of GMOs?”

    Ms. Borlaug indicated that, “I know if he was here talking to you he would be angry right now because he would find it so unreasonable, the backlash, whether it’s against GMOs or any type of innovation in technology and agriculture. There seems to be a misconception with people in the United States and Western countries that we can go back to the farming techniques of the early 1900s, late 1800s, and somehow this lovely organic romanticized view that that’s the agriculture we can return to.”

    Steven Leath, the president of Iowa State University, Eric Kaler, the president of the University of Minnesota, and Mark Hussey, the interim president of Texas A&M University penned a column yesterday at Roll Call Online where they stated that, “With the world population expected to grow from 7.15 billion to 9.5 billion people by 2050, scientists and farmers must find ways to produce at least 70 percent more food. As challenging as it is to meet these growing food needs of the not so distant future — and we know that 870 million people worldwide remain malnourished and more than 2 billion have micronutrient deficiencies — it is even more complex to develop solutions while dealing with water, energy, land and overall carbon footprint concerns and limitations.

    “Sustainable intensification, a major thrust of the U.S. Agency for International Development’s Feed The Future initiative, seeks to optimize the use of water, fertilizer and other inputs to maximize production yields on existing agricultural lands while minimizing the impact on the natural resource base by limiting the clearing of forests, wetlands, and savannahs and protecting water sources from pollution. In other words, we must green the Green Revolution to sustainably meet the food supply needs of sub-Saharan Africa, Asia and Latin America.”

    Farm Bill- Policy Issues

    news release yesterday from USDA noted that, “Agriculture Secretary Tom Vilsack today announced increased opportunity for producers as a result of the 2014 Farm Bill. A fact sheet outlining modifications to the U.S. Department of Agriculture’s (USDA) Farm Service Agency (FSA) Farm Loan Programs is available here.

    “‘Our nation’s farmers and ranchers are the engine of the rural economy. These improvements to our Farm Loan Programs will help a new generation begin farming and grow existing farm operations,’ said Secretary Vilsack.”

    An update yesterday from Kansas State University (KSU) (“Updated Estimates for the Marketing Year Average (MYA) Prices“) noted that, “The Marketing Year Average (MYA) prices that are published by the National Agricultural Statistical Service (NASS) are used in the new farm commodity program to set the Agricultural Risk Coverage (ARC) guarantees and to settle losses for both ARC and Price Loss Coverage (PLC). ARC uses the most recent five years of MYA prices to set the guarantee, while PLC’s guarantee is set in statute. This year’s MYA prices are not complete, so KSU has estimated those prices.”

    news release yesterday from the National Farmers Union (NFU) included submitted testimony to “the U.S. House of Representatives Subcommittee on Agriculture Appropriations, outlining NFU’s priorities for Fiscal Year 2015 funding for agricultural programs.”

    Note that Kevin Concannon, USDA Under Secretary for Food, Nutrition, and Consumer Services, will present testimony this morning at the Subcommittee on Agriculture Appropriations.

    And Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “The U.S. Fish and Wildlife Service is partnering with conservation groups to highlight problems with grassland conversions to crop production in the Prairie Pothole Region.

    “The Fish and Wildlife Service announced the ‘Prairies Conservation Campaign‘ on Monday to note that grasslands and wetlands are being converted to crop production in the upper Plains states at levels not seen since the 1920s or 1930s.”

    Also, Rick Barrett reported yesterday at the Milwaukee Journal Sentinel Online that, “U.S. potato growers, including big farms in Wisconsin, have again been snubbed by government officials who have kept fresh spuds off the list of approved foods for the federal Women, Infants and Children voucher system.

    “Earlier this month, the U.S. Department of Agriculture expanded low-income families’ access to produce and whole grains through the WIC program. The white potato continues to be the only fresh vegetable excluded, potato growers say, much to their disappointment.”

    The article stated that, “The potato industry has urged Congress to persuade the USDA to put white potatoes back on the WIC approved foods list. Last year, the National Potato Council spent $185,000 in lobbying, and has said the WIC issue is an important priority… . [T]he USDA’s decision to exclude white potatoes was based on old information, according to the potato industry.”

    In other policy related news, an update yesterday from the National Pork Producers Council (NPPC) stated that, “The [NPPC] today thanked the Senate Environment Committee of the Connecticut General Assembly for standing with local Connecticut farmers by defeating a measure banning the use of gestation stalls, a safe and humane form of housing pregnant sows.”


    Robert Mendick reported recently at The Telegraph (UK) Online that, “The United Nations will officially warn that growing crops to make ‘green’ biofuel harms the environment and drives up food prices, The Telegraph can disclose.

    “A leaked draft of a UN report condemns the widespread use of biofuels made from crops as a replacement for petrol and diesel. It says that biofuels, rather than combating the effects of global warming, could make them worse.”


    Seung Min Kim reported yesterday at Politico that, “House Democrats plan to launch a discharge petition on Wednesday in a long-shot effort to force a floor vote on immigration reform – their latest move to pressure Republicans to advance an overhaul this year.”

    “The discharge petition will be filed on a House bill that largely mirrors the legislation written by the Senate Gang of Eight that passed that chamber last June, according to a senior House Democratic aide. Democrats will mark the launch with an event on the steps at the East Front of the Capitol on Wednesday morning,” the article said.


    news release yesterday from Rep. Randy Neugebauer (R., Tex.) stated that, “[Rep. Neugebauer] introduced legislation today that will improve the Endangered Species Act (ESA).  H.R. 4284, the ESA Improvement Act of 2014, empowers state and local agencies to protect and restore species and prevent costly listings.

    “‘The ESA isn’t working in its current form.  It imposes costly requirements on businesses, it restricts property rights for landowners, and it hasn’t been successful at recovering species,’ Neugebauer said.  ‘In forty years, only two percent of species listed under the ESA have been successfully recovered and removed from the list. It’s clear that we need to make some changes.’

    “Neugebauer’s bill will facilitate species management and habitat conservation at the state and local level, giving stakeholders the necessary tools to protect and restore species and prevent ESA listings.”

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