Keith Good: Hog Futures Erase Gains for Year as U.S. Herd Expands

    Economic News

    Bloomberg writer Megan Durisin reported yesterday that, “The 2014 rally in hog prices is over as concerns over a deadly pig virus give way to an expanding supply of the animals.

    “After rising as much as 56 percent to an all-time high in the first quarter of 2014, hog futures erased gains for the year today on prospects that U.S. pork production is headed to a record. The domestic herd jumped 6.1 percent in the three months ended Sept. 1, the largest gain since 1991, government data show.

    “Hogs are going the way of many commodities as glut of raw materials sends the Bloomberg Commodity Index lower for a fourth straight year. Prices have tumbled 36 percent from a record $1.33425 a pound reached in March as producers were able to rebuild herds following losses from the deadly porcine epidemic diarrhea virus. The bigger supplies signal U.S. consumers will keep paying less for bacon, after retail prices slid 5.7 percent from an all-time high reached in June.”

    Bloomberg writer Phoebe Sedgman reported today that, “U.S. diners are set to tuck into more beef and veal from Australia.

    “Exports to the U.S. from the third-largest shipper will jump 35 percent to 360,000 metric tons in 2014-2015, the Australian Bureau of Agricultural and Resource Economics and Sciences said in a report. That’s the highest since 2004-2005.

    “The U.S. cattle herd started the year at the smallest since 1951 after years of drought forced producers to cull herds, and cattle futures reached a record last month. Prices may rise the most among agricultural commodities next year amid tight supply and strong demand, according to Rabobank International.”

    Also, Reuters writer Tom Polansek reported yesterday that, “The United States has suspended imports of live and raw poultry from the Canadian province of British Columbia due to an outbreak of bird flu virus, the U.S. Department of Agriculture’s chief veterinary officer told Reuters on Monday.”

    Meanwhile, Biman Mukherji and Benoit Faucon reported yesterday at The Wall Street Journal Online that, “Iran has clamped down on imports of rice to protect the country’s farmers and reduce a stockpile, traders say, sending shivers through Asia because the Middle East is one of the region’s biggest export destinations.

    “The move is especially painful for India, the world’s top rice exporter, as it has stepped up production of drought-resistant rice this year while Pakistan has also been seeking to send more to sanctions-hit Iran.”

    And the Los Angeles Times editorial board indicated in today’s paper that, “This week, an investigative series in The Times is describing the shocking conditions under which many seasonal farmworkers in Mexico live and work — barracked in squalid shacks far from their homes, underfed, trapped by debt or even held captive by their employers. The details of the lives of these desperately poor people working under difficult and sometimes illegal conditions read like a retelling of the scandals involving Bangladeshi garment workers.

    “It’s taken years, but progress is finally being made on the garment workers front. Now it’s time to do the same for contract farmworkers in Mexico, who also toil to make products for U.S. consumption.”

    Vicki Needham reported yesterday at The Hill Online that, “Top U.S. and European Union trade officials said on Monday that they will meet in February to continue negotiations on massive trade agreement.

    “U.S. Trade Representative Michael Froman and EU Trade Commissioner Cecilia Malmstrom met Monday in Washington to discuss progress on a broad range of issues in the talks over the Transatlantic Trade and Investment Partnership (TTIP), while renewing their determination to ink a deal.”

    David Nakamura reported yesterday at The Washington Post Online that, “House Democrats from the nation’s manufacturing heartland are vowing to fight President Obama’s push for a major trade deal in the Asia Pacific, saying the pact will harm U.S. jobs and charging that the administration has not been transparent with Congress in its negotiations.”

    Rep. Rosa DeLauro (D., Conn.) noted in part yesterday that, “Right now, lead negotiators from the 12 nations involved in the Trans-Pacific Partnership are meeting behind closed doors and without input or oversight from members of Congress. The Administration has repeatedly refused to take into account the deeply harmful impact the TPP would have on workers and families, food safety, intellectual property, financial regulations, the environment and access to medicine. The American people want confidence that international trade creates jobs and grows the economy. Instead, we know that corporate interests are driving these negotiations.”

    Progressive Farmer Contributors Des Keller and Barb Baylor Anderson indicated yesterday at DTN (link requires subscription) that, “If there was a downturn in cash rents in 2014, Mike Pearson didn’t really see it. Nor is the Iowa crop and hog producer expecting to see much of a change in 2015.

    “That’s not to say adjustments won’t be made in the future. ‘I think it is going to hinge upon prices for the remainder of the year and on the local demand for land,’ said Pearson, whose operation is based near Fort Dodge. ‘Nobody wants to make a change. As far as landlords are concerned, they don’t want to take a step backward.’

    “That’s what a decrease in cash rent rates might feel like for landowners in 2015, even though crop prices have declined dramatically from the highs of 2012 and early 2013. However, from the tenant’s perspective, high rents account for about half of U.S. soybean costs, almost equal to direct operating and other costs combined. For corn, land is more than a third of the total cost of production, according to data from Kelvin Leibold, Iowa State University Extension and Outreach farm-management specialist.”

    The DTN update noted that, “Early rent negotiations in Iowa, Illinois and Indiana seem to be resisting adjustments.”


    Soumya Karlamangla reported yesterday at the Los Angeles Times Online that, “Los Angeles lawmakers reversed course late Monday on a proposed ban on the growth of genetically modified crops that had previously faced nearly zero resistance within City Hall.

    “The proposal would ban selling and planting genetically modified crop seeds, fruit trees and plants within city limits. Opponents of genetically modified organisms, or GMOs — whose composition has been altered in a laboratory to resist disease — say they pose a threat to biodiversity and may be unsafe for consumption.”

    The article noted that, “But Councilman Joe Buscaino questioned why the city is pursuing a ban that would be mostly symbolic, since no GMOs are grown within L.A. city limits. He said he didn’t think the issue was something that needed to be addressed on a city level.”

    Tracy Loew reported yesterday at the Statesman Journal (Salem, Ore.) Online that, “Supporters of a measure to label genetically modified food in Oregon filed a lawsuit Monday claiming 4,600 valid votes were rejected during the statewide recount that’s underway.

    “Nine voters have asked a judge for a restraining order to stop certification of the recount results until those 4,600 votes are counted, said Keven Glenn, spokesman for the Yes on 92 campaign.”


    Ed O’Keefe reported in today’s Washington Post that, “Plans to quickly approve a $1.1 trillion spending package to keep most of the federal government open through the end of the fiscal year fell apart late Monday, increasing the chance lawmakers will miss a Thursday deadline.

    “Just in case, top appropriators said Monday that they were ready to pass a short-term extension of a few days in order to give the House and Senate more time to pass the final bill and end the least productive congressional session in modern history.

    “Top leaders spent most of Monday reviewing the final details of the massive spending bill, but hopes of unveiling the legislation by midnight were dashed amid last-minute disagreements over the renewal of a terrorism insurance program.”

    The article noted that, “The legislation would provide full funding for 11 of the 12 appropriations bills Congress is supposed to pass each year, but it would extend funding for the Department of Homeland Security, which has jurisdiction over immigration enforcement, only through early next year. The shorter deadline for DHS would allow Republicans to craft a legislative response to Obama’s immigration orders next year instead of now.”

    Mr. O’Keefe added that, “Several congressional Democrats said their support for the legislation was dependent on whether Republicans try tucking any policy ‘riders’ into the bill.”

    Jonathan Weisman and Ashley Parker reported in today’s New York Times that, “Congress prepared on Monday to scale back Michelle Obama’s school-lunch nutrition mandates and curtail some clean water regulations in a $1 trillion spending bill that would avert a government shutdown this week but extract a policy price from Democrats.

    “Continued fighting over such policy changes threatened to delay a huge spending agreement that lawmakers hope to pass to keep the government funded past Thursday.”

    The Times article indicated that, “Negotiations grew contentious on Monday and the public release of the legislation was likely to slip until Tuesday. The delay would push a House vote on the deal from Wednesday — the target date — to Thursday, with little margin for error to pass the package to avoid a government shutdown.”

    Weisman and Parker explained that, “Policy prescriptions, including those to ease standards on school lunch content and the Environmental Protection Agency’s jurisdiction over some bodies of water, have been more contentious than the negotiations over money…’Nobody here is disagreeing on nutrition in school lunches,’ said Representative Tom Cole of Oklahoma, a Republican on the House Appropriations Committee. ‘It’s just that sometimes people carrying out your wishes are so overzealous they go beyond what you were asking.’

    “Republicans maintain that efforts by the first lady and congressional Democrats to improve school nutrition by reducing the sodium content and increasing the percentage of whole grains in school lunches have become onerous for beleaguered school cafeterias. The eased school lunch standards are ‘about pace and flexibility,’ Mr. Cole said.”

    Also, Steve Tetreault, Washington Bureau Chief at Stephens Media, tweeted yesterday that, “Source: ‘Cromnibus’ to contain one yr delay in Fish/Wildlife Svc decision on ‪#sagegrouse listing, to September 2016. ‪#lvrj

    Meanwhile, with respect to the tax extenders issue, Sen. Roy Blunt (R., Mo.) was a guest on yesterday’s AgriTalk radio program and host Mike Adams inquired specifically about the tax extenders issue- a portion of the exchange on this topic from yesterday’s program can be heard here (MP3- 1:22).

    Policy Issues

    An update yesterday at Agri-Pulse Online indicated that, “Rep. Michael Conaway, R-Texas, the incoming chairman of the House Agriculture Committee, today named eight new Republican members who will serve on the panel in the 114th Congress… . [T]he new Republican members of the committee include: Jackie Walorski of Indiana, Ralph Abraham of Louisiana, Rick Allen of Georgia, Mike Bost of Illinois, Tom Emmer of Minnesota, John Moolenaar of Michigan, Dan Newhouse of Washington and David Rouzer of North Carolina.”

    news release yesterday from Rep. Kevin Cramer (R., N.D.) noted that, “Today [Rep. Cramer] urged U.S. Secretary of Agriculture Tom Vilsack to withdraw a proposal to dramatically increase fees for agriculture inspections at U.S. ports of entry. The U.S. Department of Agriculture’s Animal and Plant Health Inspection Service (APHIS) first proposed the increases to Agricultural Quarantine Inspection (AQI) fees in the Federal Register on April 24. The proposal would increase fees for commercial trucks by 52 percent, commercial trucks with transponders by 205 percent, commercial vessels by 66 percent, and commercial aircraft by 218 percent.”

    According to the Majority Leader’s Daily Schedule for today, the House will: “Complete Consideration of H.R. 5781 – California Emergency Drought Relief Act of 2014 (Closed Rule) (Sponsored by Rep. David Valadao / Natural Resources Committee).”

    Yesterday, Majority Leader Kevin McCarthy (R., Calif.) tweeted that, “Today the House will debate ‪#CaliforniaDrought relief. This legislation is a critical step toward providing relief to suffering communities.”

    Leader McCarthy also discussed the measure on the House floor yesterday.

    An update yesterday from Rep. Jim Costa (D., Calif.) indicated that, “Today, [Rep. Costa] spoke on the House Floor, stressing the importance of passing H.R. 5781, the California Emergency Drought Relief Act of 2014.” Excerpts from his speech can be read here.

    On the other hand, a news release yesterday from Rep. John Garamendi (D., Calif.) stated that, “Today, [Rep. Garamendi], a former Deputy Secretary of the U.S. Department of the Interior, voiced his opposition to H.R. 5781, a California water grab bill, which is expected to pass the Republican-led House of Representatives tomorrow. The Congressman’s full statement is…linked here.”

    Statement of Administration Policy yesterday from the executive branch noted that, “The Administration opposes H.R. 5781 because it fails to equitably address critical elements of California’s complex water challenges.”

    The Wall Street Journal editorial board opined today that, “President Obama likes to pillory House Republicans for blocking bipartisan solutions. But in the current logjam over modest legislation to ameliorate California’s drought, the main roadblock are Democrats carrying water for liberal interests.

    On Monday House Republicans debated a bill crafted in part by Democratic Sen. Dianne Feinstein and supported by Rep. Jim Costa that would provide a short-term salve to Californians south of the Sacramento-San Joaquin River Delta. The White House has threatened to veto the bill, which will be voted on Tuesday.

    “Ms. Feinstein disowned her ideas after environmental groups and Sen. Barbara Boxer expressed outrage at negotiating with Republicans. Thus dies another bipartisan solution to California’s water crisis.”

    In related news, Jim Carlton reported in today’s Wall Street Journal that, “With this state’s [Calif.] drought entering its fourth year, orders for urban water districts to curb their use have met wildly uneven results, with some places barely conserving at all and others soundly exceeding statewide averages.”

    And Timothy Cama reported yesterday at The Hill Online that, “California’s historic drought this year was caused by natural patterns and not primarily human-induced climate change, a study released Monday found.

    “The study put the blame on an atmospheric ridge over the northern Pacific Ocean, which decreased California’s rain and snowfall in recent years, and was ‘due to natural variations of ocean systems, with sea surface temperatures largely responsible,’ Richard Seager, lead author of the study, said Monday.”

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