Keith Good: Farm Bill Peak 2015; Corn, Soy Projections; Ethanol; Chicken Caucus

5-Year Farm Bill Peaks 2015

Reuters news reported yesterday that, “Government support for U.S. grain farmers under the new five-year farm bill will peak with the coming 2015 crop, the Food and Agricultural Policy Research Institute said in a new report.”

The article noted that, “‘Payments under 2014 farm bill programs increase when crop prices fall,’ FAPRI said in its 2015 U.S. Baseline Briefing Book. The think tank estimated that $3.9 billion in ARC and PLC payments for last year’s 2014 crop would be made after fiscal 2016 begins on Oct. 1.

“‘ARC spending is greatest in 2015/16 but declines in later years as the moving averages that determine benchmark revenues adjust,’ FAPRI said. ‘Projected average ARC and PLC payments peak with the 2015 crop at about $6.5 billion but decline to $3.4 billion for the 2018 crop.'”

A closer look at the FAPRI report, along with updated baseline projections released earlier this week from the Congressional Budget Office, can be viewed at this FarmPolicy.com page

Corn and Soybean Projections

With respect to the market price outlook in the FAPRI and CBO updates, University of Illinois agricultural economist John Newton provided a visual look at the difference in price projections for corn and soybeans in the two baselines in these two graphs from yesterday.

 

Corn Futures Higher after Fed Forecast Tighter Stockpiles

In related news regarding market prices, Jesse Newman reported in today’s Wall Street Journal that, “U.S. corn futures trimmed losses Tuesday after federal forecasters projected tighter-than-expected stockpiles of the grain.”

The Journal article explained that, “Corn prices shed declines–and briefly moved higher–after the U.S. Agriculture Department estimated that corn stockpiles before the next harvest would total 1.777 billion bushels. That was down from its estimate in February of 1.827 billion bushels and below analyst forecasts for 1.822 billion bushels, reflecting in part expectations for healthier demand for the grain from livestock producers and overseas grain buyers.

“The USDA, in a monthly supply-and-demand report, also cut its forecast for global corn stockpiles, surprising some analysts.

“Corn futures for March delivery were down 1 1/4 cents, or 0.3%, to $3.82 a bushel at the Chicago Board of Trade. The March contract had fallen more than 1% before the USDA report was released.”

Today’s article added that, “Corn prices tumbled in the past two years as U.S. growers produced back-to-back bumper crops. But demand for corn from buyers including livestock producers has been relatively healthy, limiting recent declines in the futures market.”

Yesterday’s crop report indicated that, “The season-average farm price for corn is projected at $3.50 to $3.90 per bushel, up 5 cents at the midpoint.”

John Newton, from the University of Illinois, tweeted yesterday that, “New mid-point of the WASDE 14/15 corn marketing year price is 3.70, squeezing out potential #PLC benefits”

The WASDE report added that, “The U.S. season-average soybean price range for 2014/15 is projected at $9.45 to $10.95 per bushel.”

 

Corn-for-Ethanol

Christopher Doering reported yesterday at The Des Moines Register Online that, “Meanwhile, the government cut its estimate for corn-for-ethanol use by 50 million bushels, to 5.2 billion bushels. Iowa is the largest ethanol-producing state.”

The Register article noted that, “U.S. farmers have seen prices for corn and soybeans plunge the past two years as once-scarce supplies were more than replenished by record productionWhile some farmers have struggled to cover their cost of production, cheap prices have helped ethanol plants and livestock producers.”

Bloomberg writers Jeff Wilson and Lydia Mulvany reported yesterday that, “The grain [corn] plunged 43 percent in the previous two years after farmers harvested record crops in the U.S., the world’s top grower. World food prices tracked by the United Nations extended a drop to the lowest since July 2010 last month amid bigger global crops.”

 

Planting in Texas; Kansas and Oklahoma Wheat Crop Vary

Current crop condition reports from Texas, Kansas and Oklahoma were highlighted in this FarmPolicy.com update from yesterday– corn planting is underway in Texas, where 50% of the winter wheat crop is in good to excellent condition. Forty-six percent of the wheat crop in Kansas is in good to excellent condition, while 42% of the wheat crop in Oklahoma falls into that category.

Texas Governor Gov. Greg Abbott recently issued a proclamation to renew the state of disaster designation for 95 Texas counties due to exceptional drought conditions, Texas Ag Commissioner Sid Miller noted yesterday that, “I commend Governor Abbott for his continued leadership on water issues and commitment to using all available resources to help Texans who are suffering from this extended drought. Even though our state has received welcomed rains, the drought is still causing perils for agriculture producers and citizens alike. It’s important to understand the drought is by no means over. Many area lake levels remain low and river flows are down.”

 

Chicken Caucus in the House of Representatives

In other policy related news, an update yesterday from Rep. Jim Costa (D., Calif.) noted that, “Today, [Rep. Costa] and Congressman Steve Womack (R-Ark.) announced the formation of a new, bipartisan Congressional Chicken Caucus in the House of Representatives.

“The caucus will serve as a formal group of members whose mission is to educate members of Congress and others about the history, contributions and issues of importance to U.S. chicken producers, pertaining to food safety, international trade, labor, animal welfare, immigration and environmental issues, like having the best chicken coop for their chickens, and more.

More broadly on poultry issues, Reuters writer Meenakshi Sharma reported yesterday that, “Poultry firms expect demand to pick up after a ban on beef in India’s western state of Maharashtra, with other states ruled by Prime Minister Narendra Modi’s Hindu nationalist party also aiming to toughen laws on livestock slaughter.”

Also, Reuters writers Tom Polansek and P.J. Huffstutter reported yesterday that, “A suspected case of avian influenza has been identified in poultry in Arkansasthe third-largest U.S. turkey producer and home to Tyson Foods Inc , the nation’s biggest chicken company, the U.S. Department of Agriculture said on Tuesday.

“The infection, if confirmed, threatens to widen trading bans from countries such as Taiwan, Singapore and Nicaragua that have already restricted U.S. poultry exports due to bird flu outbreaks in states ranging from Minnesota and Missouri to California.”


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