USDA Reports Preview

Thu. Oct 08, 2015 5:28 PM

By Darin Newsom
DTN Senior Analyst

OMAHA (DTN) -- The most shocking thing about the October Crop Production and Supply and Demand reports would be if USDA's numbers are outside pre-report ranges.

USDA will release the two reports at 11 a.m. CDT Friday.


Let's start this preview by looking at soybeans, not because the world will be paying attention but because those providing pre-report estimates had a hard time guessing where USDA might go next with its always fluid view of soybean production and supply and demand. Notice that the range for 2015-2016 ending stocks runs from a high of 511 million bushels to 125 mb as compared to USDA's September estimate of 450 mb. Forget Pin The Tail On The Donkey, this is a game of Pin The Tail On The Continent, most notably Asia. If USDA misses this range, some sort of investigation should be immediate in coming.

If we just go with the average pre-report estimate of 398 mb, analysts would be looking for a 52 mb decrease from USDA's September guesstimate. Notice that this is roughly equivalent to the expected change in production from September's 3.935 billion bushels to the pre-report average of 3.884 bb. What then of USDA's reduced beginning stocks (old-crop ending stocks) of 19 mb, the difference between USDA's September estimate (210 mb) and its expected surprise reduction to 191 mb quarterly stocks figure from Sept. 30? Either pre-report guessers forgot about this adjustment, or another reduction in total demand is expected. Recall that the July report pegged total demand at 3.745 bb, the August report at 3.717 bb, and the September at 3.725 bb.

World ending stocks are also expected to dip slightly, most likely a reflection of the slight reduction in U.S. production. The bottom line in soybeans is, as usual, nobody knows what move USDA is going to make with domestic numbers.


Though USDA's corn numbers are rarely as entertaining as its soybean guesses, King Corn usually gets the headlines. Truth be told, it's probably fair given that there at least seems to be an attempt at realistic numbers from USDA regarding corn, usually. With that in mind, pre-report estimates for U.S. ending stocks averaged 1.498 bb, down 94 mb from USDA's September estimate of 1.592 bb. With production expected to decrease 124 mb, an average pre-report estimate of 13.461 bb compared to September's 13.585 bb, a decrease in total domestic demand would be implied.

However, attention should still be paid to old-crop ending stocks. Though USDA's quarterly stocks figure came in at 1.731 bb, nearly unchanged from its September estimate of 1.732 bb, further adjustments could be made in old-crop exports that appeared (according to USDA's own weekly export sales totals) to come up short of the projected 1.875 bb.

As for world ending stocks numbers, pre-report estimates averaged 189.2 million metric tons, down slightly from September's WASDE figure of 189.7 mmt. As with soybeans, this adjustment would most likely be due to the slight revision in U.S. production, with the world's other two largest producers (China and Brazil) expected to see unchanged figures.


Wheat always seems to take a backseat to corn and soybeans, particularly this time of year. However, this month's new-crop ending stocks guess from USDA could prove to be interesting, given the wide range from 896 mb to 765 mb as compared to the September figure of 875 mb. The pre-report average came in at 821 mb, leading to the question of where those 54 mb went. Could it be larger exports? Unlikely, though a continued downtrend in the U.S. dollar index and Russia's activity in the Middle East might raise hopes (there's that word again) of increased interest in U.S. supplies.

The safest bet is that pre-report estimators are anticipating USDA to incorporate its own reduction of 84 mb of production from the August monthly report to the Sept. 30 small grains summary. If so, then the implication would be that demand is expected to be reduced by about 30 mb, a likely scenario given the pace set over the first third of the 2015-2016 marketing year (USDA's total shipments are running 18% behind last year as opposed to USDA's September estimate of a 5% year-to-year increase).

World ending stocks for 2015-2016 are also expected to be reduced, the average pre-report estimate coming in at 224.7 mmt compared to the September WASDE figure of 226.6 mmt. While most of this is expected to come from the reduction in U.S. production, keep an eye on the estimates for the world's other two largest wheat producers, the European Union and the 12 nations of the former Soviet Union. Both saw increased production estimates from August to September, most notably the 6.31 mmt for the European Union.

Editor's note: Join DTN Senior Analyst Darin Newsom at 12 p.m. CDT on Friday for a discussion on the latest USDA reports. Sign up now at:….

U.S. CROP PRODUCTION (Million Bushels) 2015-16
Oct Avg High Low Sep 2014-15
Corn 13,461 13,798 13,050 13,585 14,216
Soybeans 3,884 3,989 3,590 3,935 3,927
Grain Sorghum 569 578 560 574 433
U.S. AVERAGE YIELD (Bushels Per Acre) 2014-15
Oct Avg High Low Sep 2014-15
Corn 166.4 169.6 161.0 167.5 171.0
Soybeans 46.9 48.0 43.0 47.1 47.5
U.S. HARVESTED ACRES (Million Acres) 2014-15
Oct Avg High Low Sep 2014-15
Corn 80.9 81.4 80.5 81.1 83.1
Soybeans 82.9 84.0 82.2 83.5 82.6
U.S. ENDING STOCKS (Million Bushels) 2015-16
Oct Avg High Low Sep 2014-15
Corn 1,498 1,750 1,130 1,592 1,731
Soybeans 398 511 125 450 191
Grain Sorghum 39 42 36 41 18
Wheat 821 896 765 875 753
WORLD ENDING STOCKS (Million Metric Tons) 2015-2016
Oct Avg High Low Sep 2014-15
Corn 189.2 193.0 181.7 189.7 197.2
Soybeans 84.6 86.5 82.0 85.0 78.7
Wheat 224.7 226.5 221.5 226.6 211.3
WORLD PRODUCTION (Million Metric Tons)
2015-16 2014-15
Oct Sep Oct Sep
FSU - 12 wheat 117.0 112.7
European Union wheat 154.1 156.5
China corn 225.0 215.7
Brazil corn 79.0 84.0
Brazil soybeans 97.0 94.5
Argentine soybeans 57.0 60.8

Darin Newsom can be reached at


RFS Doubt Stifles Farms

Thu. Oct 08, 2015 5:27 PM

By Todd Neeley
DTN Staff Reporter

OMAHA (DTN) -- If there's any question about what the Renewable Fuel Standard means to the rural economy, just wait a few weeks from now when the U.S. Environmental Protection Agency is expected to announce final volumes for three years.

That announcement could yield almost immediate market effects, Chip Bowling, president of the National Corn Growers Association, told reporters Thursday during a conference call.

"If the EPA raises numbers a little (compared to proposed numbers), you will see an increase in commodity prices," he said. "The uncertainty put in by a lack of annual volumes was critical in determining how the U.S. ag economy will fair."

Waning federal support for the RFS is a key reason why farm income in the United States is expected to hit its lowest level in about a decade and investment in advanced biofuels is slowing, according to a new white paper released Thursday by NCGA and the National Farmers Union.

The groups point to EPA's retreat from the federal mandate requiring a certain volume of biofuels to be blended in the nation's gasoline supply as one major reason the farm economy is struggling.

"The U.S. Renewable Fuel Standard, which has driven sustainable growth in renewable fuel for a decade and is the only federal law on the books directly targeting climate change, is under dire threat by the Environmental Protection Agency," the white paper said.

The groups point to new USDA data forecasting a decline in 2015 net cash income for American farmers.

"That devastating forecast is worse than originally projected, and it represents the lowest farm income levels in nearly a decade, and it could get worse," the groups said in their analysis.

"This year started off bad enough for farmers. In February, the Congressional Research Service called the 'lack of annual renewable fuel volume percentage standards for 2014 and 2015' by the Obama administration a 'key uncertainty' that was 'crucial in determining how the U.S. agricultural economy will fare.' Now, we see the results of that uncertainty."

NFU President Roger Johnson said during the press conference the RFS isn't the only reason for lower commodity prices and farm incomes.

"Obviously, stocks are hanging over the market," he said, "but the RFS is the principal factor that has driven demand."


The boom years of the past decade featured expanded markets for corn, mostly created by increased demand for corn for ethanol. USDA projects 2015 net cash income will decline by $35 billion from the 2013 peak. Net farm income for 2015 is projected at $58.3 billion compared to the record level of $123.7 billion in 2013, according to the group's analysis. That would place net farm income at its lowest since 2006.

The white paper said the enactment of the RFS in 2005 and its expansion in 2007 sparked innovation by U.S. corn farmers.

"The result encouraged the rapid growth of the U.S. ethanol industry, and produced both an increased supply of renewable transportation fuel and co-products to add to America's livestock feed supply," the groups said. "However, the current level of uncertainty in this market threatens these valuable investments in innovation and growth."


USDA projects 2015 cash corn receipts will be off by more than $25 billion from a record 2012 showing, including more than a $7 billion decline from 2014.

"Considering all U.S. crop cash receipts are projected to be down about $34 billion since 2012 and nearly $13 billion compared to 2014, it is easy to see why so many farmers so strongly support the RFS," the white paper said. "It has been the most significant growth factor for agriculture since its inception in 2005."

The analysis touts how the expansion of corn and ethanol production has benefitted other sectors of the agriculture economy.

The analysis said about one-third of each 56-pound bushel of grain used to produce ethanol returns to the animal feed market through dried distillers grains, corn gluten feed and gluten meal.

According to the analysis, in 2014 the renewable fuels sector became "one of the top animal feed processing segments in the country. It produced about 39 million metric tons of feed, or the equivalent would provide every American with a normal-sized chicken breast every day for a year.

"The agricultural economic revolution spawned by the renewable fuel industry helped raise farm incomes across nearly all agricultural sectors while creating jobs in rural communities," the white paper said.

"...Unfortunately, the EPA is failing farmers, rural communities, our environment, and economic security by refusing to fulfill its responsibilities to administer the RFS consistent with its statutory obligations."

The groups said EPA's proposal to reduce RFS volumes not only hurts farm income, but has "frozen investment in rural communities and new income streams for farmers related to advanced and cellulosic biofuels just as these products are finding their footing.

"The enhanced greenhouse gas and economic benefits of advanced biofuels cannot be realized without strong policy support. This new industry has experienced a $13.7 billion shortfall in investment due to uncertainty around the RFS. That means new plants and jobs won't be created in rural communities and lost markets for crop residues and other feedstocks, cutting off long-term potential for supplemental farm income.

"The EPA is causing uncertainty throughout the whole renewable fuel and agriculture value chains putting American jobs, innovation and investments at risk, and undermining the social and economic fabric of rural America."

Todd Neeley can be reached at

Follow him on Twitter @ToddNeeleyDTN


Ag, Forestry Want Webinar Info

Thu. Oct 08, 2015 2:59 PM

By Todd Neeley
DTN Staff Reporter

OMAHA (DTN) -- Despite public claims by the U.S. Environmental Protection Agency that it reached out to agriculture groups on the new waters of the United States rule, a number of groups continue to seek information about how the new rule will affect farmers and ranchers.

This week a number of ag and forestry groups asked EPA and the U.S. Army Corps of Engineers to share information generated from a non-public webinar for state regulators. In that Sept. 17, 2015, webinar, the federal agencies answered more than 20 different questions about how state regulators are to interpret the new rule in the field.

So far, the answers to those questions have not been made public, according to a letter sent Tuesday to EPA Administrator Gina McCarthy and Secretary of the Army John M. McHugh.

The groups, including the American Farm Bureau Federation, National Corn Growers Association and others, tell McCarthy and McHugh the industries still are trying to sort out what the rule will mean to their members. Some 30 states have sued the federal government, attempting to stop the rule in numerous cases pending in several federal courts. Right now the rule doesn't apply to 13 states where a court injunction is in effect.

"The undersigned organizations represent or work with farmers, ranchers and foresters who are struggling to understand the practical implications of the final rule defining 'Waters of the United States' (WOTUS) under the Clean Water Act," the groups write in a letter.

"Non-state agency personnel were not invited to participate. For the reasons cited below we ask that you promptly release publicly the answer that your agencies provided at the webinar to these and any other questions that were addressed. Furthermore, as additional webinars on other final rule implementation topics are held, we ask that your agencies' answers to those questions also be made public immediately.

"Not just the regulators, but the regulated public, have a need to know how your agencies interpret the rule. Our members are deeply concerned that as a result of this final rulemaking, effective today in 37 states, they now have drainage and water features on their properties that are categorically WOTUS. If this is the case, our members know that they are subject to serious civil and even criminal federal liabilities for point source discharges into those features."

DTN filed a Freedom of Information Act request with EPA in May asking for a variety of materials documenting communications between EPA and agriculture interest groups and farmers. The request still is pending.

Other ag and forestry groups asking for the webinar information include the American Forest and Paper Association, American Soybean Association, American Sugar Beet Growers Association, American Sugar Cane League, CropLife America, Forest Landowners Association, Forest Resources Association, Hardwood Federation, National Alliance of Forest Owners, National Cattlemen's Beef Association, National Cotton Council, National Council of Farmer Cooperatives, National Pork Producers Council, and the Virginia Agribusiness Council.

The webinar in question covered a variety of topics such as what is the difference between ditches and canals, how to know if ditches were constructed in dry land, what definitions of 'ephemeral,' 'intermittent,' and 'perennial flow regime' will be used in determining ditch exclusions, and whether there is guidance for onsite determinations of that nature, according to the letter.

Other questions addressed in the webinar are how the agencies will determine whether ditches that have been in place for decades are relocated tributaries or are excavated in tributaries, and whether permitted discharges into these ditches must be designed to meet water quality standards in the ditch or in the receiving water.

"Liability may be imposed even if the landowner does not know that the features involved are WOTUS," the groups write. "There is a fundamental fairness problem with communicating to the regulators but not to the regulated community that will bear the liabilities on the finer points of how to identify WOTUS under the rule."

The groups said answers provided to the state regulators would "be vitally helpful to our members to help reduce their confusion and uncertainty and make informed business decisions about whether and how their operations need to change to avoid discharges in violation of the Clean Water Act.

"We believe your agencies have an obligation to provide this information to the public. Whatever answers and guidance have been provided to assist state agency personnel would be equally useful to the regulated community and should be easy to share."

The letter to McCarthy and McHugh:…

Todd Neeley can be contacted at

Follow him on Twitter @ToddNeeleyDTN


Cash Market Moves

Wed. Oct 07, 2015 3:35 PM

By Mary Kennedy
DTN Cash Grains Analyst

A variety of quality issues in the U.S. soft red winter crop -- including low falling numbers and vomitoxin -- have led to a wide basis spread in cash prices available at domestic mills versus export terminals or feed users.

Soft red winter wheat (SRW) accounts for 15% to 20% of total U.S. production and is grown primarily in the eastern U.S. and in states along the Mississippi River, according to USDA. Flour produced from milling SRW is used in the United States for cakes, cookies, and crackers. China, Brazil and Egypt are among the countries that favor SRW.

SRW is a versatile weak-gluten wheat with excellent milling and baking characteristics, but the U.S. crop this year was not milling quality on average due to poor weather during the growing season and at harvest. The final grade for the 2015 crop reported by U.S. Wheat Associates (USW) was #3 SRW, 11.3% protein, with test weight of 56.9, 3.4% damage and 4.1% total defects. One of the biggest issues with the new crop is pockets of vomitoxin (DON) and poor falling numbers. Falling number indicates how much sprouting or pre-harvest germination was happening in the wheat being tested.

Vomitoxin (DON), is a mycotoxin that infects grain heads when wet weather occurs during the flowering and grain-filling stages of plant development. The FDA advisory for finished wheat products, such as flour, bran and germ that potentially may be consumed by humans, is set at 1 part per million, which makes it more strict for mills when buying.

"Commercial millers are expressing concerns about long-term sourcing of this year's crop with acceptable falling number values and DON results," USW noted. "Blending with old-crop wheat is resulting in wheat with acceptable falling number value currently, but as we move through the crop year, low falling number values could present challenges. The new crop appears to be milling satisfactorily to date for those millers contacted, and they have been able to meet customers' specifications with little negative feedback regarding flour functionality."

Helen Pound, commodity specialist and vice president for Wedbush Securities Inc., Futures Division told DTN via email, "There is a multi-tier market for soft red winter wheat due to large quality differences for SRW grown in different regions. Mills that are not able to source 'milling quality' in their traditional drawing area are forced to pay a high basis 'transportation premium' to draw SRW from great distances. This creates a dramatic difference in prices paid for soft red winter wheat for mills versus for export or for feed. For example, in St Louis the highest bid by a mill is +45 WZ [45 over the Chicago December contract] while the bid by elevators is 85 cents less at -40 WZ. This situation is also apparent in the +30 WZ Toledo mill bid as compared to the Cincinnati elevator bid at -30 WZ."

Another issue is the mixed quality of the SRW delivery stocks. "There is variable quality in SRW stocks located in Toledo futures delivery terminals," said Pound. "Note that there have been WU [Chicago September] futures deliveries in Toledo even though the mill basis is well over futures delivery value (plus load-out and transportation costs). This suggests the quality of this grain is above 'delivery grade' but below 'milling quality.' This could be due to any grading factor, but may be due to small amounts of vomitoxin."

According to Pound, there are also regions where there are large inventories of "deliverable" as well as "non-deliverable" SRW along the Ohio River and the Lower Mississippi River. "Note that there have been Chicago September wheat futures deliveries in these regions that have not yet been moved out. This would seem to indicate that these stocks will remain in storage until after the row-crop harvest is complete and barge transportation into the export market is cheaper. It would seem that the non-deliverable SRW stocks will stay in storage until they can be priced into the feed market."

Mary Kennedy can be reached at

Follow her on Twitter @MaryCKenn


Harnessing Drones

Wed. Oct 07, 2015 2:03 PM

By Todd Neeley
DTN Staff Reporter

OMAHA (DTN) -- Congress recently has focused on the need to secure airports from unmanned aerial vehicles as reported near-misses with commercial airliners have been growing in frequency. But a House committee Wednesday grilled a Federal Aviation Administration official on continued delays in implementing UAV regulations and exemptions.

In particular, some representatives from rural areas raised questions about the state of exemptions granted to companies that wish to operate drones before federal regulations are completed. The FAA was required by law to set regulations by September 2015. A federal official testified that the FAA now is on target to complete regulations for UAVs 55 pounds and lighter by June 2016.

A number of companies wish to launch a variety of commercial UAV applications in agriculture in particular and have been allowed to do so through exemptions.

The House Transportation and Infrastructure Committee questioned a panel of experts Wednesday on how to protect manned aircraft from UAVs operating around airports. Rep. John Garamendi, D-Calif., has offered legislation that would restrict the use of UAVs within 2 miles of airports.

In addition, with harvest well underway in some parts of the country, Rep. Todd Rokita, R-Ind., said he was concerned current FAA exemptions for using drones allow for only daytime operations.

"Farmers may want to be in the field soon," he said. "In a farm field they (drones) can be used around the clock."

Michael G. Whitaker, deputy administrator of the Federal Aviation Administration, said farmers who use drone technology at night during harvest "could be allowed by exemption" to do so.

Rep. Rodney Davis, R-Ill., said while the FAA's exemption process has allowed companies to proceed with the commercial use of UAVs, the exemption process hasn't been fast enough.

"Part of my concerns have to do with the exemption process moving slowly," he said. "Now that it has sped up, the older requests are limited versus the new requests, based on technology improvements. There might be some concern that older exemptions should have flexibility similar to newer."

As of Sept. 30, 2015, FAA had granted 1,742 petitions for what is known as a FAA Modernization and Reform Act of 2012, Section 333 exemption, according to data from FAA's website.

By law, aircraft operation in national airspace requires certified and registered aircraft, a pilot license and operational approval.

According to FAA (…) a number of companies including agriculture precision and scouting companies already have been granted Section 333 exemptions.

Much of the committee hearing focused on what aviation officials said Wednesday is a growing number of close calls airliners and other planes have had with UAVs. The hearing comes just one day after the FAA fined a company in New York about $2 million for improperly flying drones in restricted airspace.

Rep. Michael E. Capuano, D-Mass., said the FAA needs to take steps to protect airspace before it's too late.

"Doing nothing is not an excuse," he said. "I see a reluctance to do something, especially the FAA. Do something before someone loses their life. Just get it done. Something is always better than nothing in the face of a known danger."

Whitaker said FAA is attempting to provide much-needed education about the safe use of drones in two recently launched public campaigns.

FAA developed the "Know Before You Fly" and "No Drone Zone" programs. The first is a public-relations campaign aimed at what Whitaker said is conveying "commonsense advice" including don't fly near airports, don't fly in adverse weather, don't fly under the influence of alcohol or drugs, and don't fly over people or sensitive infrastructure such as power plants.

The second campaign launched during the most recent Super Bowl game earlier in 2015 includes a video posted on YouTube that received more than 59,000 hits.

"Most importantly, we received no reports of unauthorized activity in the restricted airspace around the stadium," Whitaker said in his written testimony.

"We want people to enjoy their hobby, but we want to make sure they fly safely. Education, such as the programs noted above, has been our preferred method for successfully integrating UAS operators. We can never let an educational opportunity slip by. We need to be creative and collaborative in our approach to reaching the public."

Todd Neeley can be reached at

Follow him on Twitter @ToddNeeleyDTN


Disparity in ARC Payments

Wed. Oct 07, 2015 9:54 AM

By Marcia Zarley Taylor
DTN Executive Editor

LOUISVILLE, Ky. (DTN) -- When USDA issues an estimated $3.5 billion in farm program checks for the 2014 crop to corn growers later this month, policymakers should brace for a torrent of complaints between the have nots and the haves.

Growers were warned that payments would vary based on county revenue formulas, but the disparity may catch some off guard. In parts of Texas, for example, growers in one county will collect about $109 per base corn acre, while those in a county next door will collect nothing. In Nebraska, some checks will run $20 an acre, others closer to $80 an acre. Similar situations are cropping up in Kansas, Iowa and Illinois, in large part because of the local variation in 2014 yields, policy experts report. In parts of Oklahoma, USDA may have had difficulty establishing county wheat yields, since farmers often graze fields rather than completing harvest, others theorize.

"In the past, Loan Deficiency Payments were the only farm program payment I can think of where checks varied by counties," said Dee Vaughan, a former National Corn Grower Association president and Dumas, Texas, grower. "But that amount varied by only a few dollars per acre, not by $100 an acre."

The shift to county-based calculations for the new farm safety net highlights how aid is supposed to be targeted to those in need. For most producers, it means bumper 2014 county yields offset the decline in prices, so they won't meet the threshold for farm payments. But for farmers who operate in more than one county, this bureaucratic technicality has become a sore point.

At issue is that program payments will be determined by your "administrative" county Farm Service Agency (FSA) office. For growers with farms in multiple counties, that rule means Agricultural Risk Coverage-County checks will not be paid at county rates where the ground is located but where records are housed.

All of Nebraska farmer John Oehlerking's 1,600-acre Nebraska farmland will be paid at the Otoe County rate even though half of his land is located in Cass County where other farmers are being paid at a much higher rate. The difference could be up to 50% more, although FSA has not released final calculations yet, he said.

"It is perplexing to me why my Cass County ground should be penalized, just because of where I sign my papers," Oehlerking told DTN. "Had I chosen to do all my paperwork in Cass County, I would have had a windfall."

Payments in Cass County are projected to be close to $50 an acre for corn while projected payments in Otoe County are projected at $18 an acre.

Underpaying some land and overpaying others makes little sense. But when Oehlerking contacted his FSA office "they were polite but they basically said, 'We don't like it either, but there is nothing we can do about it, so contact your elected officials,'" he said.

Iowa corn growers first noticed the discrepancy last winter, but the last-minute remedy they were able to secure in the FSA handbook only allowed farmers to change administrative offices due to a county FSA office closure or consolidation. Even then, farmers were required to designate a new office by Sept. 25 for 2014 payment purposes.

"FSA communicated this change in April. However, I am not aware of any direct outreach to individual farmers as they did on other farm program changes," said National Corn Growers Association's Sam Willett, who calls the experience one of the more frustrating issues encountered with implementation of the farm bill. FSA argued that paying farmers based on where the land was located, rather than where records were housed, would create an administrative nightmare.

"My understanding is that the complexity of their information and record systems made it very difficult for FSA to alter their procedures," Willett added.

Congress gave FSA enough flexibility to pay farmers based on the counties where their land is located, a House Agriculture Committee staffer told a group of agricultural economists this week in Louisville. Hopefully, there's a pathway there, he said. As a last resort, a farmer hurt by an FSA action has the right to ask for "equitable" relief.

Brad Lubben, a University of Nebraska economist who specializes in farm policy, said a formula for blending irrigated and non-irrigated acres may also contribute to some payment disparities. FSA determined that counties needed at least 25% irrigated production and 25% non-irrigated production to break irrigated and non-irrigated fields into separate county yields by farm practice.

Nebraska counties with high percentages of irrigated corn acres were much more likely to trigger 2014 ARC payments than dryland corn acres, Lubben said. That's because the non-irrigated farmers in 2014 had higher overall yields than their average yield used in the ARC formula. In situations where the 25% irrigation rule wasn't met, FSA blended irrigated yields and non-irrigated yields into a single county average, which may also skew results.

For growers with multiple county locations and underpaid due to the administrative ruling, Lubben said "an administrative appeal may be in order."

Marcia Taylor can be reached at

Follow her on Twitter @MarciaZTaylor


Groups React to TPP Deal

Tue. Oct 06, 2015 2:07 PM

By Chris Clayton
DTN Ag Policy Editor

OMAHA (DTN) -- Initial reaction to a Trans-Pacific Partnership deal was varied Monday as some agricultural groups acknowledged they need more details on the final pact while others already had their minds made up on whether they back TPP or oppose it.

The agreement between the U.S. and 11 other Pacific-rim countries was announced Monday after marathon talks over the weekend in Atlanta.

Reflecting the importance the White House sees in getting agriculture on its side in the TPP debate, President Barack Obama will go to the U.S. Department of Agriculture on Tuesday where he will join Ag Secretary Tom Vilsack for a meeting with agriculture and business leaders. The event is specifically to pitch the benefits of the trade deal.

U.S. Trade Ambassador Michael Froman pointed out Monday the deal eliminates tariffs on more than 18,000 U.S. products. The White House added that the "key tax cuts" in the trade deal would help American farmers and ranchers expand exports. The administration added those import taxes currently can be 40% on poultry products, 35% on soybeans and 40% on fruit.

Froman pointed to the benefits of the deal for agriculture for beef, pork and dairy.

"Our dairy industry has become a more export-oriented industry in the last 10 years," Froman said. "We export about 15% of our dairy products. This will open up additional opportunities in these other countries where they face tariff or non-tariff barriers."

The countries in the partnership account for 42% of all U.S. ag exports, totaling $63 billion, Vilsack said. The agreement "provides a more level playing field in trade for American farmers," he said. Besides reducing or eliminating tariffs, TPP also will reduce the likelihood of non-scientific trade barriers among the countries. The secretary cautioned against rejecting the deal.

"Failing to grasp this opportunity would be a mistake; worse than just losing out on potential gains, our producers would fall behind other countries that are negotiating their own preferential arrangements in TPP countries," Vilsack said. "We are committed to working with Congress within the framework of the recently-passed Trade Promotion Authority to obtain a strong bipartisan understanding of and support for this historic trade deal that benefits farmers, ranchers, and all those who live, work and raise families in rural communities."


U.S. Wheat Associates noted Asia is a growing regional market and the trade agreement has the potential to increase wheat demand even in countries already offering duty-free access, said Alan Tracy, president of the group. "That is critically important because our competitors like Australia are moving ahead with bilateral agreements that eliminate tariffs on wheat imports with countries like Vietnam. The high standards in the TPP agreement should help us be more competitive and hopefully lead to even more opportunity for our wheat as new countries join TPP in the future," Tracy said.

Groups such as the National Pork Producers Council and National Cattlemen's Beef Association immediately praised the deal. NPPC stated the group was confident the deal would be good for U.S. pork producers. "We look forward to reviewing the full text of the TPP agreement and the schedules of market access concessions as soon as possible," said Ron Prestage, president of the National Pork Producers Council. "We are reserving final judgment on the package until then."

The National Chicken Council also applauded the conclusion of talks and was looking forward to seeing how the deal will affect the prospects of exports to Canada. The TPP represents a significant opportunity to expand U.S. chicken exports and bring increased economic benefits to chicken farmers and companies across the country.

"Our major goals in this deal are to get a strong commitment on enforcement, in particular in the area of sanitary and phytosanitary measures," said Mike Brown, president of the National Chicken Council. "Second, we hope to see that the long-protected Canadian market is finally opened to free trade for poultry."

Chip Bowling, president of the National Corn Growers Association, stated the group was pleased an agreement has been reached and the group was looking forward to the details. "We are hopeful that this agreement continues the tradition of past free trade agreements, which have had a positive impact for America's farmers and ranchers," Bowling said. "In the coming weeks, we will carefully examine the agreement to determine whether it is in the best interests of America's corn farmers."


National Farmers Union, whose members have been long-time opponents of the deal, cited the lack of enforcement on currency manipulation as another strike against the trade pact. "Because of this, NFU will continue to vigorously oppose this agreement and urge Congress to reject this deal as well," said Roger Johnson, president of NFU. "Gains that may have been made in the agreement to ensure fairness and equity in trade for America's family farmers and ranchers are likely to be lost due to currency manipulation."

A more surprising statement came from Ford Motor Co., which also lashed out at negotiators for failing to address currency manipulation even though the deal is expected to lower tariffs for auto exports to Japan. Ford noted the trade-promotion bill set a clear objective of dealing with currency issues. "TPP fails to meet this test," stated Zia Ojakli, Ford's vice president for government and community relations. "To ensure the future competitiveness of American manufacturing, we recommend Congress not approve TPP in its current form, and we ask the administration to renegotiate TPP and incorporate strong and enforceable currency rules."

While the White House released a detailed fact sheet highlighting tariff reduction, labor and environmental rules, internet commerce and other provisions, the fact sheet did not address rules on currency.


Trade negotiators acknowledged Monday that dairy access proved to be one of the last issues negotiated. New Zealand, where dairy is the country's largest export, failed to get the market access it had hoped to achieve when New Zealand took the lead to help form the TPP. Fonterra, New Zealand's major dairy cooperative, stated the group was disappointed the TPP fell short of the original goals to eliminate all tariffs.

Dairy Farmers of Canada cited that Canada essentially gave up what amounts to 3.25% of its projected 2016 milk production in the trade deal. The country already has approved a $3.29 (U.S.) billion package to help Canadian dairy farmers deal with imports over the next 15 years. Still, Canada's dairy farmers largely protected their supply-management program.

"We obviously would have preferred that no additional market access be conceded in the dairy sector," said Wally Smith, president of Dairy Farmers of Canada. "However, we recognize that our government fought hard against other countries' demands, and have lessened the burden by announcing mitigation measures and what seems to be a fair compensation package, to minimize the impact on Canadian dairy farmers and make up for cutting growth in the domestic market. We have come a long way from the threat of eliminating supply management."


Health groups praised a provision that would prevent tobacco companies from suing countries over health laws meant to curb tobacco use. The groups have criticized tobacco companies in the past for claiming that tighter controls on tobacco use in some countries violate trade laws. House Ag Committee Chairman Michael Conaway, R-Texas, pointed to the tobacco provision in a statement Monday, saying the language is "establishing a dangerous new precedent that could negatively impact agriculture going forward."

Chris Clayton can be reached at

Follow him on Twitter @ChrisClaytonDTN


Todd's Take

Tue. Oct 06, 2015 1:52 PM

By Todd Hultman
DTN Analyst

It is no secret that grain prices have not done well in 2015, but neither have most other commodities. A quick survey shows corn, wheat, and gold near their lowest spot prices in five years; soybeans, cotton, sugar, copper, silver, and crude oil near their lowest spot prices in six years. Soybean oil rounds out the bottom of the list with the lowest spot price in nearly nine years.

Of course, each commodity has its own bearish story, but when so many are trading at multi-year lows, you have to suspect a strong macroeconomic influence at work and we certainly have that. In short, the U.S. economy has done a better job of rebounding after the financial meltdown of 2008-09 than other countries and the advantage has boosted the U.S. dollar to its highest level in 12 years.

At the same time, China's economic slowdown has not only slowed demand for raw materials and industrial metals, but has also had a dampening effect on the economies that supplied them. Finally, the U.S. has been so good at increasing oil production that it has broken oil prices and the budgets of many oil-producing countries.

The result is the world economy is currently straining to grow and deflation remains a bearish threat to commodity prices. As bearish as that sounds, the current malaise reminds me of another time when the case for commodities looked gloomy -- 2001.

In 2001, spot corn traded at roughly $2.00 a bushel, soybeans at $4.50, gold at $270 an ounce, copper at 70 cents a pound, and crude oil at $26 a barrel. Investors, for the most part, ignored commodities, choosing instead to ride the stock market's bullish wave of the late 1990s, powered by the collapse of the Berlin Wall and return to a federal budget surplus. Gold was so unpopular that European Central Banks agreed to limit sales, fearing they would collapse prices if too much sold at once.

Also hurting commodities, the Federal Reserve pushed the federal funds rate up to 6.5% in May 2000 as Chairman Alan Greenspan sensed the irrational exuberance of the dot-com bubble. A high interest rate plus the goodwill of a budget surplus drove the U.S. dollar index up to 120 by June 2001, the highest level in 15 years.

If we would have talked in mid-2001, I would have mentioned all kinds of reasons that commodities were cheap and explained that the macro teeter-totter had dropped them to their bottoms, but we couldn't have seen the bullish forces that were lying in wait.

Only later would we witness the World Trade Center come tumbling down on that clear fall day. We could then see the stock market slide lower and the Fed push the federal funds rate back down, eventually reaching 1% by mid-2003. Very quickly, the bullish argument for the U.S. dollar disappeared and, once again, commodities became a viable investment.

The rumblings of war certainly helped crude oil prices in 2002, but it was the waking giant of China that later boosted the prices of oil and many other commodities -- grains included -- farther than anyone ever expected.

This does not mean that today's depressed commodity market will bring on another 9/11 or bullish surprise as big as China. However, when we see nearly all commodities beat down to cheap levels, the market is often over-responding to the bearish news that it knows and is under-estimating the future events that none of us know.

As in 2001, the most bullish thing I can say is grain prices are fundamentally low and the bearish reasons are obvious. I don't know yet what will shake up the current outlook, but both the U.S. dollar and stock market are suspect. Bullish changes aren't on the radar screen yet, but we are watching.

Todd Hultman can be reached at

Follow Todd Hultman on Twitter @ToddHultman1


View From the Cab

Tue. Oct 06, 2015 12:23 PM

By Richard Oswald
DTN Special Correspondent

LANGDON, Mo. (DTN) -- "We didn't do anything yesterday. Just a rainy, misty, ucky kind of day." That's the way DTN View from the Cab Farmer Lane Robinson summed up the weekend at his farm outside Cromwell, Indiana. "Saturday felt like December ... It's almost unseasonably cold," he said.

Harvest around Lane's place began a couple of weeks ago. Neighbors had been working since then, until a brief spate of wetter weather brought combines to a halt. "I didn't see anything moving here. It's supposed to be a good week the next week and everybody'll keep marching along," he told DTN late Sunday.

After cutting "average" soybeans "in the mid-50s range" last week, Lane and his farming partner, Eric Strater, have dipped into corn with better results. "We popped into the first corn, a 150-acre pivot (irrigated) field with no drowned-out spots on sandy, loamy ground at Eric's home farm. It was 236 bushels per acre (corrected dry yield) at 21% moisture. We only made it half or two thirds of the way across the field. It will take a while to dry that," Lane said.

Local dryland corn has been reported yields of about 200 bpa. And corn is standing well -- so far. "Given the amount of moisture (rain), I don't think stalks are tremendously strong, but I haven't seen any corn down. There are some tops out of the stalks." Lane was asked if there was enough storage space to hold a big crop. He replied, "There's no corn going on the ground yet, but yield may be good enough that we will. But you don't have to go very far south, just one county below us, where you're going to find plenty of bin space. They just aren't going to have the crop."

With cool and wet spring planting delays, crops are all over the board depending on variety, maturity, and planting dates. "I actually have some 3.8 maturity soybeans that were planted May 5 that still have leaves on. Development is a little delayed." Despite that, harvest is moving along. "Everybody seems to be going at it, doing beans when they'll go. Most have moisture in the 11% to 12% moisture range. I haven't even heard of anybody who had to put air on them."

A marketing advisory service Lane subscribes to, Roach Ag Marketing, offers subscriber yield reports as an alternative to USDA estimates. "Roach has Indiana average corn yield at 173 bpa now, based on 83 reports. USDA is estimating 156. Roach is 17 bushels over USDA. In soybeans USDA has us at 50. Roach submissions have it at 51," he said.

"I'm looking for sales points for 2016 crop corn already. We're back in that area where you have that time decay -- the value is in time -- just like an option. March 2017 corn is looking attractive at $4.20," Lane explained.

Besides row crops, Lane raises more than 600,000 Pekin ducks in 10 barns each year. "We're loading out tonight. I only have one barn to ship this week," he said. When Lane purchased the existing facility, one of the changes he made was to shorten turnaround time in order to use it more efficiently.

"Our fiscal year ends November 30. We're going to end up with 83 flocks. When I first took operations over, we were on a seven- or eight-week cycle. Now we're in a pretty hard six-week cycle doing 17 turns per barn every two years." In Lane's three dirt-floor barns, used litter will "compost mortality" by being layered with deceased ducks, which kills pathogens by heating up to 150-200 degrees. The other seven barns with slatted floors will be cleaned and allowed to dry two or three days. Then brooders are placed inside and barn thermostats get set up to 80 degrees before replacement ducklings arrive.

"We don't just wait around," he said.

Meanwhile, outside Gurley in the Nebraska Panhandle, View From the Cab farmer Leon Kriesel had good news; "We got saved. We got a rain Friday night. We ended up at 0.78 inches. It was a lifesaver for the wheat I think," he told DTN late Sunday.

Leon grows and sells certified seed from about 3,000 acres. He has been concerned because absence of late-season rains left much of the winter wheat he seeded last month marooned in dry dirt. "Emergence has been spotty. I think a lot of people were really relieved. This will fill everything in. I'd say by the end of the week we'll see lots of wheat," he said.

Weather conditions at Leon's place Sunday evening were foggy and chilly. But with a typical first freeze date in September, frost still isn't a threat in weather forecasts, with more rain possible by midweek.

Some area growers are looking at the possibility of replanting thin wheat stands. With that in mind, Leon has been making preparations. "We had some reserves we kept back. There was some replant going on so we decided to clean that. We finished cleaning two varieties of what we had saved, last week. We'll clean another variety this week. We're happy with the rain, because now we can touch up the skips and get that done," he said.

Leon didn't plant any this year, but area corn harvest is off to a slow start. Irrigated fields picked last week tested around 30% moisture. "They should be happy with what they got. It looked good," he said. Dryland corn should be getting dry enough for harvest. Proso millet harvest was mostly complete before last week's rain. Sunflowers and milo need more time.

"There was some sugar beet harvest going in last week to get the plant up and running. They'll probably get started this week. They have a set date when they start picking," he said. Temperatures are an important component of beet harvest. "They pile the beets and cover them with straw. Some people think that's to keep them from freezing, but it's to keep them cool," Leon explained.

Winter isn't far off in Nebraska high country where Leon noted that the Sidney airport recorded a Sunday high temperature of 52 degrees.

"You had to wear a coat," he said.

Richard Oswald can be reached at

Follow Richard Oswald on Twitter @RRoswald


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