Ag Economy; Farm Bill; Budget; Immigration; Trade; Biotech; and, Regulations
Ag Economy; Farm Bill; Budget; Immigration; Trade; Biotech; and, Regulations
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Agricultural Economy
A news release yesterday from USDA’s National Agricultural Statistics Service (NASS) indicated that, “According to the November Crop Production report released today by [NASS], corn production is expected to reach 14.4 billion bushels this year, up 3 percent from 2013 [related graph]. Soybean production is forecast at 3.96 billion bushels this year, up 18 percent from 2013 [related graph]. Both crops are on target for record-high yields and production. Based on conditions as of November 1, yields for corn are expected to average 173.4 bushels per acre, down 0.8 bushel from the October forecast, but 14.6 bushels above the 2013 average. As for soybeans, yields are expected to average a record high 47.5 bushels per acre, up 0.4 bushel from October and up 3.5 bushels from last year.”
Also yesterday, the World Agricultural Outlook Board (WAOB) released its monthly World Agricultural Supply and Demand Estimates (WASDE) report, which incorporated the NASS production report.
The WASDE report included this overview table of corn supply and demand variables, and stated that, “Projected corn ending stocks are lowered 73 million bushels. The projected range for the season-average farm corn price is raised 10 cents on each end to $3.20 to $3.80 per bushel.”
Likewise, yesterday’s WAOB report included this overview table of soybean variables, and explained that, “Soybean and soybean product prices for 2014/15 are unchanged from last month. The U.S. season-average soybean price range is projected at $9.00 to $11.00 per bushel. Soybean meal and soybean oil prices are projected at $330 to $370 per short ton and 34 to 38 cents per pound, respectively.”
With respect to wheat, yesterday’s WASDE update added that, “The projected range for the 2014/15 season-average farm price is narrowed 10 cents on both the high and low end to $5.65 to $6.15 per bushel.”
University of Illinois agricultural economist Darrel Good indicated yesterday at the farmdoc daily blog (“USDA Reports Provide Some Surprises, Particularly for Corn”) noted in part that, “If current production and consumption forecasts actually verify, the big story this year will be that extremely large corn and soybean crops resulted in less than burdensome year ending stocks. The modest level of stocks relative to the consumption base opens the door for a tighter supply and consumption balance for the 2015-16 marketing year, particularly for corn. If consumption next year remains near the projected level for this year, a corn crop less than 13.66 billion bushels would result in a drawdown in stocks. With a national average yield at the trend value of 163 bushels per acre, harvested acreage would have to increase by about 700,000 acres to produce a crop greater than 13.66 billion bushels. Similarly, with acreage at this year’s level, the national average yield would have to be at 164.4 bushels to produce a crop of 13.66 billion bushels. The soybean picture is a little different. If soybean consumption next year continues at the level projected for this year, a crop less than 3.615 billion bushels would result in a drawdown in year ending stocks. A trend yield of 44.3 bushels per acre would require harvested acreage of only 81.6 million to produce a crop of 3.615 billion bushels. That is 1.8 million fewer acres than expected to be harvested this year.
“While the large harvest this year will keep prices at relatively low levels, particularly for corn, the odds now favor prices that will be profitable for both corn and soybean producers in 2015-16.”
Jesse Newman reported yesterday at The Wall Street Journal Online that, “Corn prices rose Monday as federal forecasters predicted the U.S. crop would be slightly smaller than expected, though still the biggest in history…[C]orn futures for December delivery on the Chicago Board of Trade rose 1 3/4 cent, or 0.5%, to $3.69 1/4 a bushel. Prices for the grain have fallen roughly 15% this year after a 40% decline last year, pressured by bumper U.S. crops.”
Meanwhile, Bloomberg writer Chanyaporn Chanjaroen reported earlier this week that, “Morgan Stanley reduced its price forecasts for corn, soybeans and wheat because global surpluses are larger than expected and said rates will probably fall to a level that may curb supplies in high-cost producers like Brazil.
“The bank cut its estimate for corn to $3.90 a bushel in 2014-2015 from $4.35 in October and for soybeans to $9 a bushel from $10.10, according to analysts Bennett Meier and Lee Jackson. Wheat was lowered to $5.40 a bushel from $5.75.”
Also yesterday, Cheri Zagurski and Emily Unglesbee reported at DTN (link requires subscription) that, “Eighty percent of the nation’s corn crop and 90% of the soybeans were harvested as of Nov. 9, according to USDA’s latest weekly Crop Progress and Conditions report.
“Corn harvest is equal to the five-year average and increased 15 percentage points in the past week.”
AP writer David Pitt reported yesterday that, “The first snow of the season is never a welcome sight, but it’s particularly bad news for farmers in a few states in the Upper Midwest where a significant portion of the corn crop remains in fields.
“Parts of South Dakota already have received between 4 and 8 inches of snow, while some areas of Minnesota have seen 11 inches. Snow also has fallen in Michigan — 2 to 4 inches.”
Mr. Pitt noted that, “About 10 percent of the corn crop remains to be harvested in Minnesota and 16 percent remains in South Dakota…[T]he corn can withstand the cold as temperatures drop below freezing, but deep snow could delay harvest.”
Meanwhile, Veronica Rocha reported in yesterday’s Los Angeles Times that, “Recent rain throughout California made only a slight dent on a drought that has chugged along relentlessly for more than three years, according to federal scientists.
“And dry conditions are expected to return for the next two weeks.”
More broadly, Gregory Meyer reported earlier this week at The Financial Times Online that, “There is no global shortage of calories. In fact, the world wastes a third of all food produced, or 1.3bn tonnes a year, according to the UN Food and Agriculture Organisation.
“Nevertheless, 805m people around the world are chronically undernourished, the FAO reports. This is 200m less than two decades ago, but still a number that exceeds the populations of every country but China and India.”
The FT article noted that, “As populations and personal incomes increase, the average household will be better able to afford sufficient food, reducing hunger. But rising incomes also intensify risks to the food supply, as wealthier people tend to eat more meat, fish, dairy and eggs, requiring more feed grain per pound of food.
“In an October speech, David MacLennan, chief executive of Cargill, the large, US privately held, multinational agribusiness, put it this way: ‘In short, the whole food system becomes more meat-destined than grain-destined.’
“‘Dietary expansion’ starts to happen when incomes rise above $2,000 a year, he says.”
Ilan Brat reported yesterday at The Wall Street Journal Online that, “Dean Foods Co. shares surged after the dairy company reported a smaller-than-expected quarterly loss and said price increases and cost cutting would help it churn out a profit in the current period.
“The company also forecast that prices of raw milk will come down next year, easing its costs.
“Dean, the largest U.S. milk processor by sales, said it was able to pass along some of the record-high milk prices it paid earlier this year to customers in the third quarter and that a cost-reduction drive has helped it offset tepid U.S. consumer demand.
Farm Bill
A news release yesterday from USDA’s Farm Service Agency indicated that, “[USDA] reminds farm owners and producers that the opportunity to choose between the new 2014 Farm Bill established programs, Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC), begins Nov. 17, 2014, and continues through March 31, 2015. The new programs, designed to help producers better manage risk, usher in one of the most significant reforms to U.S. farm programs in decades.”
David Kesmodel and Tony C. Dreibus reported yesterday at The Wall Street Journal Online that, “Andy Bose wanted to expand his nascent Nebraska farm operation a few years ago but couldn’t find land he could afford. The problem: more-established farmers could offer bigger rent checks to landowners.
“Mr. Bose, 35 years old, found a solution in a U.S. Department of Agriculture program that provides financial incentives to older landowners to rent to neophytes more cheaply. In 2012, he began leasing 220 long-dormant acres from Avis Pearson, who owned the land for decades but had no children interested in agriculture.”
The Journal article noted that, “‘It was nice to see crops growing again,’ said the 95-year-old Ms. Pearson.
“Relationships like theirs are sprouting across the heartland thanks to renewed interest in agriculture among younger Americans. Land-matching programs run by governments, universities and community groups have been around for a while but now are enjoying surging demand because they help beginning farmers and ranchers tackle the high cost of farm real estate. The average value of U.S. cropland has soared 52% to $4,100 an acre from 2010 to 2014, according to the USDA.”
Budget
Rebecca Shabad reported yesterday at The Hill Online that, “An omnibus spending bill that would prevent a government shutdown by funding federal agencies through September 2015 won’t be released for several weeks, House Appropriations Committee spokeswoman Jennifer Hing told The Hill on Monday.
“The bill will likely be released the week of Dec. 8, Hing said. The government will shut down after Dec. 11 without a new funding bill.
“The timing would give lawmakers just a day or two to debate and vote on the new legislation in both chambers.”
The New York Times’ First Draft update yesterday morning indicated that, “Democrats on Capitol Hill are encouraging the White House to hold off on the immigration order until Congress approves a bill financing the government through Sept. 30. They fear that a White House move could lead to a partisan meltdown and leave Congress stuck with a series of disruptive short-term spending bills through late 2015.”
Immigration
Peter Sullivan reported yesterday at The Hill Online that, “Rep. Joe Barton (R-Texas) said in a video posted Monday that impeaching President Obama ‘would be a consideration’ if he moves forward with executive action on immigration.”
And Iowa GOP Senator Chuck Grassley tweeted yesterday that, “Pres Obama flagrantly violating his oath w threats to do immigration by fiat. He is getting dangerous close to assuming a Nixonian posture”
Trade
Shawn Donnan reported yesterday at The Financial Times Online that, “US President Barack Obama has urged the leaders of Japan and 10 other Pacific Rim economies to help him overcome the few remaining ‘logjams’ in the way of creating a vast regional trade bloc.
“In the wake of last week’s midterm election losses, Mr Obama assured a meeting in Beijing of leaders involved in negotiations over a Trans-Pacific Partnership (TPP) that he expected trade to be one area of bipartisan co-operation with the new Republican-controlled Congress.”
The FT article noted that, “Mr Obama’s comments on Monday came after a weekend in which the US saw off an attempt by China to accelerate negotiations over a broader Free Trade Area of the Asia-Pacific, viewed by many as a potential rival to the TPP.”
The FT article added that, “The biggest obstacle facing the TPP has been the slow pace of bilateral negotiations between the US and Japan over opening their respective agricultural and auto sectors to greater competition. Negotiators on both sides, however, say those discussions are nearing a conclusion. They are now focused on a few remaining products such as rice and auto parts, with agreements found on other sensitive areas such as beef and pork.”
“Senior Republicans last week said they were willing to work with the president on trade and have nominated giving him all-important ‘fast-track’ authority to conclude trade agreements as a priority,” the FT article said.
Bob Davis reported yesterday at The Wall Street Journal Online that, “New Zealand’s veteran trade minister, Tim Groser, said he expected a deal on the Trans-Pacific Partnership trade pact early next year now that the parties have reached informal agreement on such thorny issues as intellectual property and rules for the textile and apparel trades.
“‘The finish line is in sight,’ said Mr. Groser in an interview Monday with The Wall Street Journal. ‘We will cross the finish line in the next few months,’ though he noted that unexpected reversals could occur.”
Biotech
Reuters writers Tom Polansek and Carey Gillam reported yesterday that, “DuPont Pioneer, one of the world’s largest seed companies, is refusing to give up on efforts to cultivate genetically modified crops in Chinese fields in the face of regulatory hurdles, even as rivals pull back.
“The Iowa-based agricultural seed and chemical unit of DuPont this autumn harvested its first test crops of GMO corn in China in six years after lengthy efforts to win government approval for the new field trials.”
Regulations
A news release yesterday from Sen. John Hoeven (R., N.D.) stated that, “At a Bismarck-Mandan Chamber of Commerce congressional panel today, [Sen. Hoeven] said that a top priority for the new congress will be to stop unnecessary regulatory burdens, like the Environmental Protection Agency’s (EPA’s) Waters of the U.S. rule, from hampering job creation in North Dakota and across the nation.”
Also, Laura Barron-Lopez reported yesterday at The Hill Online that, “A senior House Republican is pressuring an internal watchdog to investigate the Environmental Protection Agency’s record-keeping policies after finding that thousands of Administrator Gina McCarthy’s text messages were deleted.
“Rep. Lamar Smith (R-Texas) sent a letter on Tuesday to EPA Inspector General Arthur Elkins Jr. requesting the watchdog ‘review the EPA’s compliances with its records management policies.’”
Keith Good
Posted by Keith Good • November, 11, 2014 • 4:57 am
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Ag Economy; Farm Bill; Budget; Immigration; Trade; Biotech; and, Regulations
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