Waiting on EPA's RFS Rule

Wed. Nov 25, 2015 5:17 PM

By George Orwel
DTN Energy Reporter

NEW YORK (DTN) -- Following multiple delays, the Obama administration is under intense pressure from ethanol, oil and ag commodity groups as well as members of Congress as it prepares to release Renewable Fuel Standard obligation levels for 2014 through 2016 sometime between now and Monday.

The Environmental Protection Agency is supposed to determine how much ethanol is needed for the next year by Nov. 30, but the agency has missed its deadline at least each of the past two years.

Last May, EPA announced in a response to litigation by the petroleum industry that the agency would make the call on the blend volumes by Nov. 30. As a result, the 2014, 2015 and 2016 Renewable Volume Obligations (RVOs) are expected to be issued before Tuesday.

The RVO levels for ethanol are determined by estimating gasoline demand for the years in question. EPA had initially considered cutting the blend volumes by about 20% below the statutory levels because of earlier data showing weak demand for gasoline.

Given the fight since 2013 over these blend levels, it's likely biofuel supporters or the petroleum industry will cry foul once the blend volumes are released and immediately file a lawsuit over the EPA's handling of the issue.

Estimating gasoline demand has been a challenge due to the fact that the U.S. economy is resilient, but the global economy has been affected by the Chinese slowdown. However, prices for unleaded gasoline and 10% ethanol-blended gasoline across most of the country are now below $2 a gallon, the lowest for the Thanksgiving holiday since 2004, according to market analysis from the website GasBuddy.com.

EPA's proposal released in May would set renewable fuel mandates at 15.93 billion gallons for 2014, 16.3 billion gallons for 2015 and 17.4 billion gallons for 2016. The proposal reflects between 9% and 10% of gasoline volumes.

Last week, the Renewable Fuels Association sent a letter to President Barack Obama detailing the dynamic state of the U.S. ethanol industry, and noted that in excess of 13 billion gallons of ethanol are produced annually in the domestic market.

RFA and Growth Energy, two top ethanol trade groups, went to the White House on Nov. 18 to urge strict compliance with the RFS in the face of a campaign by anti-ethanol groups for the government to either scrap the RFS law or limit the ethanol mandate. They told officials at the Office of Budget Management that the EPA should not cut RVOs as initially proposed.

RFA President and CEO Bob Dinneen said the U.S. ethanol industry would have no problem meeting the 15 billion gallon blending level specified by the statute, citing data from EIA showing that gasoline consumption projections for 2016 have increased to a nine-year high.

The American Petroleum Institute, the nation's largest trade group for the oil and gas industry, has increased its lobbying campaign to lower the ethanol mandate. API has not been a fan of the RFS. The petroleum industry had its own meeting with White House officials late last week. API argues that ethanol mandates should be kept below the current 10% threshold acceptable for use in all cars and trucks. The American Fuel and Petrochemical Manufacturers had a similar message.

Even foreigners have got into the act. The Union of Sugarcane Industry Association, Brazil's largest trade group for sugarcane and ethanol producers known by its Portuguese acronym UNICA, said it had earlier submitted comments opposing the proposed changes to RFS or lower ethanol mandates.

UNICA said lower statutory RVOs are "unnecessary" since Brazil has increased its output and exports to the U.S. over the past three years by 6%, and hopes to raise exports to the U.S. over the coming years to 2 billion gallons.

Lawmakers remain divided on the issue. A bipartisan group of 184 House members recently sent a letter that calls on the EPA to set the final volume for ethanol in 2016 at a level that would account for the blend wall.

But last week, House Minority Leader Nancy Pelosi, D-Calif., and Democratic Whip Steny Hoyer, D-Md., wrote to the White House urging it to push refiners to use more ethanol. Those producers say oil companies could provide ethanol blends of up to 85% if they were prodded to do so by the government. A rule that locks in the "blend wall" would be "counter to our efforts" in the 2007 law.

DTN Ag Policy Editor Chris Clayton contributed to this report.

George Orwel can be reached at george.orwel@dtn.com


Enlist Reversal

Wed. Nov 25, 2015 5:10 PM

By DTN Staff

OMAHA (DTN) -- The U.S. Environmental Protection Agency said in a court motion Tuesday it wants to pull the plug on Dow AgroScience's Enlist Duo herbicide, citing "new information" it received about the potential environmental effects of the herbicide designed to work with genetically-engineered corn and soybean.

In a court document filed with the U.S. Ninth Circuit Court of Appeals Tuesday, EPA stated that because the agency has "new information regarding potential synergistic effects between the two ingredients on non-target plants, EPA seeks a voluntary remand in order to reconsider the Enlist Duo registration in light of the new information." In court documents, the agency said it "cannot be sure, without a full analysis of the new information, that the current registration does not cause unreasonable effects to the environment, which is a requirement of the registration standard under FIFRA (Federal Insecticide, Fungicide, and Rodenticide Act)."

Enlist Duo herbicide, which contains a mix of glyphosate and a new formulation of 2,4-D, received EPA registration in a select number of corn states in fall 2014. The genetically-engineered trait package that gives crops resistance to those two herbicides was approved for corn and soybeans September 2014 and for cotton, July 2015.

In April 2015 the EPA granted final approval of Enlist Duo herbicide for use in nine additional states, bringing the total to 15 states.

Dow had not yet sold the seed and herbicide package commercially. It had been conducting research, seed production and "stewarded" trials for corn and soybean seed in 2015. Dow had said it was holding full commercial release pending Chinese approval of the genetically-engineered traits in grain. Dow had said it did not want producers to run into grain sales issues; China has a recent history of being slow to approve a number of U.S.-approved traits and has refused U.S. corn that contained unapproved traits.

In a statement provided to DTN Wednesday, EPA said Dow made new information available "that suggests (the) two active ingredients could result in greater toxicity to non-target plants. EPA has not yet completed its review of the new information."

Neither EPA nor Dow would specify at press time what the "new information" included. Dow has for months, on its Enlist Duo website (http://www.enlist.com/…) and in sales and marketing materials, heralded "combining the proven control of a new 2,4-D and glyphosate" as one of the key points for growers using the Enlist herbicides and the crops genetically engineered to tolerate both herbicides. Farmers have been using a tank mix of the two products, applied as burndowns and other early season applications, for decades.

According to the motion filed by EPA in court, the agency originally registered the herbicide because it saw "no indication of synergism" with the combination of glyphosate and 2,4-D. So, in approving the new combination product, it reviewed the toxicology and other environmental effects of each herbicide individually. It did not ask for research trial data on the two active ingredients together because, at the time, EPA said "it is reasonable to assume that there are no synergistic interactions for the taxonomic groups that were not tested, including plants."

The court filing this week says that EPA "recently discovered" Dow's claims of "synergistic weed control" in patent filings Dow has made on Enlist Duo. EPA's court filing says it sent a letter to Dow on Oct. 13 saying that the synergistic weed control Dow was claiming could "affect the Agency's assessment of drift reduction measures."

Andrew Kniss, University of Wyoming weed researcher, detailed the meaning of synergistic effects in a blog post Wednesday http://bit.ly/… and noted that Dow's patent http://bit.ly/… indicates synergies exist between the two chemicals.

A Dow spokesman told DTN that the company learned of the court filing Tuesday. He said the company is "considering options" regarding what court actions it may take.


Drift control has been a critical issue in the Enlist Duo registration, as 2,4-D has a long history of drift issues. The new Enlist herbicide/seed packages would allow the growth-hormone disruption herbicide to be applied much later in the season, when sensitive crops and plants would be growing and much more susceptible to it.

EPA had mandated buffer zones around Enlist crops as part of the original registration in an effort to reduce drift issues.

"EPA is seeking a remand because this new information could lead EPA to a different decision on the restrictions for using Enlist Duo. Specifically, this could result in changes to the width around application areas of no-use buffer zones that EPA imposed to protect unintended plants, including those listed as endangered," the EPA court filing said.

In October 2014, several environmental groups sued EPA in the Ninth Circuit Court of Appeals on the agency's decision to register the Enlist Duo herbicide.

Groups such as the Center for Food Safety and the Environmental Working Group quickly heralded EPA's decision to ask to pull the registration. Several claimed the decision was based on "high toxicity levels," though EPA announcements referred to the need to evaluate spray drift buffer strips and did not discuss toxicity levels.

Enlist Duo had been labeled for use in Arkansas, Kansas, Louisiana, Minnesota, Missouri, Mississippi, Nebraska, Oklahoma, Illinois, Indiana, Iowa, Ohio, South Dakota, Wisconsin and North Dakota. EPA had considered approving the product for use in Tennessee, but decided against it because of concerns it would harm some the endangered plant species Spring Creek bladderpod.

The first six states approved are areas with strong penetration by Dow's Mycogen Seeds and other seed partners. The 10 additional states, particularly the Southern states of Arkansas, Louisiana, Tennessee and Missouri, are key battleground areas for tough glyphosate-resistant weeds such as Palmer amaranth.

Registering in Southern states has been a bit trickier because few crops are as sensitive to 2,4-D drift than non-tolerant cotton. The Enlist cotton trait received regulatory approval July 2015, but Enlist Duo herbicide is still pending for that crop.

The original Enlist Duo registration included a number of use requirements and restrictions that are unusual for an EPA registration. The agency has made it known it is interested in curbing weed resistance to herbicides, and said all new herbicide-tolerant crops, not just this system, will likely carry restrictions to guard against the overuse, and subsequent weed-resistance problems. Similar restrictions for current herbicide-tolerant cropping systems, including glyphosate and glufosinate, are also being discussed.

The registration required 30-foot, in-field, no-spray buffer zones to minimize drift, and does not allow spraying when winds are greater than 15 miles per hour. In addition, EPA required scouting and reporting for potential weed resistance to Enlist Duo, as part of the six-year registration.

Last year, Canada approved the use of Enlist Duo for the same uses that EPA authorized. Other approvals have come from Argentina, Australia, Colombia, Japan, Korea, Mexico, New Zealand, South Africa and Taiwan. In addition, the herbicide mix is approved for use in 26 European Union nations.

EPA has had several recent safety reviews of 2,4-D: in 2005, in 2012 and in 2014.

Neither EPA nor Dow could offer a timeline on when the agency would finalize the current review of any new information. "We expect to complete our review in a timely manner," EPA told DTN in an email.

Dow issued a general response to media, saying the company is "working with EPA to quickly provide further assurances that our product's conditions of registered use will continue to protect the environment, including threatened and endangered plant species." The company said it expects "that these new evaluations will result in a prompt resolution of all outstanding issues."

Timing of that review is critical, Dow and farmers have said during the original Enlist registration process. The combination of the herbicides and traited seeds offers one of the few alternatives to glyphosate-resistant weeds, which are now found in most corn and soybean growing areas. Dow had expected Chinese registration for the grain traits soon, as recent trade visits by U.S. representatives had focused on speeding up Bejing's approval process.

The Enlist issue marks the third regulatory blow to Dow originating in the U.S. Ninth Circuit Court of Appeals in a matter of months.

On Nov. 12, the EPA announced a ban of sulfoxaflor, the active ingredient in Dow's Transform WG insecticide, and the agency has also proposed a ban of chlorpyrifos, the active ingredient in Dow AgroScience's Lorsban insecticide.

The Transform ban was inspired by the Ninth Circuit Court of Appeals' ruling after a lawsuit by the Pollinator Stewardship Council, filed by Earthjustice, questioned whether the EPA had sufficient environmental data to register the chemical. The court ruled that the agency's original registration of sulfoxaflor in 2013 was "based on flawed and limited data" and demanded that agency "obtain further studies and data regarding the effects of sulfoxaflor on bees."

Likewise, the proposed ban on chlorpyrifos stemmed from a Ninth Circuit Court of Appeals' ruling that pressured the EPA to establish food tolerances for the insecticide, an action EPA lacked the data to execute. This time, the lawsuit was filed by Earthjustice on behalf of the Pesticide Action Network and Natural Resources Defense Council.

"This court is known for making rulings that align with activist organizations at the expense of agriculture," former National Sorghum Producer chairman J.B. Stewart said in a press release protesting the Transform ban. "We plan to do our part in pushing back on these nonsensical court decisions that unfortunately are becoming more frequent and to the detriment of farmers and ranchers across the nation," he added.

DTN reporters and editors Todd Neeley, Pam Smith, Chris Clayton and Emily Unglesbee contributed to this story.


Woodbury: Farm Family Business

Wed. Nov 25, 2015 11:58 AM

By Lance Woodbury
DTN Farm Family Business Adviser

Conflict and family business simply go together. When you work everyday among people with whom you've spent a major portion of your life, your different opinions and approaches are bound to rub each other the wrong way. The question is not whether you will have conflict, but over which issues you will fight, how you will engage each other, and whether you will be able to move on.


Conflict, when focused on the right issues, can expose alternative ideas and create necessary change. In particular, conflict over the vision and strategies of the business can be useful in uncovering opportunities in the market, or a differentiated or more competitive way of operating. Family business participants, and especially current and future owners, need to air their differences and come together over where the business is headed and how it will get there. Working through those conflicts will produce a psychological ownership, helping the company persevere through the ups and downs of a cyclical industry.

There are other issues, however, where conflict can be destructive. Fighting over inheritance decisions, and conflicts around how family members and spouses are treated in daily interaction, are two places where the results can be deleterious.

A typical farm or ranch inheritance conflict is one in which the on-farm heir is gifted an equal portion of the land or operating company along with off-farm heirs. While this may satisfy the parents' desire to be equal, it almost always creates a financial and control hurdle, and future conflict, for the on-farm heir. The parents who built or grew the business have every right to dispose of their assets as they see fit, but the fight between the parents and on-farm heir can destroy the farm.

Another fight often emerges around how people are treated. A lack of communication in general, not including spouses in relevant discussions, making assumptions about people's intentions and motivations, and talking about one family member or their spouse with other family members, such that alliances are formed, can chip away at the trust and respect between family members.


Several behaviors contribute to effective management of conflict. First, acknowledging the conflict exists is critical. Family members often sweep it under the rug, hoping it will go away, but that strategy almost always backfires. Second, knowing what you want and why you want it -- which requires personal reflection -- helps clarify your position and your interests; it helps you and others know where you stand. Third, agreeing to a process of meetings ensures communication. And you will likely need several meetings, as you almost never reach major conclusions with just one. If the issues are too "hot," consider an impartial third party as a mediator. Fourth, agreeing to how you will treat others is critical, especially when it involves in-laws who didn't grow up dealing with your family's communication style. Commit to listening to others, give each person an equal opportunity to speak, and avoid personal attacks.


In looking at solutions to conflict, reaching an agreement in which all parties get everything they want is unrealistic. A more consensus-oriented question is whether everyone can live with the agreement. Moreover, recognize that conflicts in a family are seldom resolved. Rather, they are "managed" through ongoing communication.

While it can be frustrating to engage in a continuing process of conflict management, recall the many benefits of a family business. The flexibility, the chance to work with your children, and the opportunity to transfer values and a legacy may be well worth working through the occasional conflicts.

EDITOR'S NOTE: Lance Woodbury writes family business columns for both DTN and our sister publication, "The Progressive Farmer." He is a Garden City, Kansas, author, consultant and professional mediator with more than 20 years of experience specializing in agriculture and closely-held businesses. Hear him in person Dec. 6 at the DTN University course in Chicago www.dtnagsummit.com. Email ideas for this column to Lance@agprogress.com


DTN Retail Fertilizer Trends

Tue. Nov 24, 2015 3:47 PM

By Russ Quinn
DTN Staff Reporter

OMAHA (DTN) -- As has been the case in recent months, fertilizer prices continue to slide lower slowly, according to retailers tracked by DTN for the third week of November 2015. Meanwhile, farmers are becoming more efficient at squeezing more bushels out of the fertilizer they apply, experts say.

All of eight major fertilizers slipped lower compared to a month earlier but none were down any significant amount. DAP averaged $545/ton, MAP $559/ton, potash $424/ton, urea $403/ton, 10-34-0 $579/ton, anhydrous $629/ton, UAN28 $287/ton and $332/ton.

On a price per pound of nitrogen basis, urea averaged $0.44/lb.N, anhydrous $0.38/lb.N, UAN28 $0.51/lb.N and UAN32 $0.52/lb.N.

Last week we reported the challenges those in the fertilizer industry faced with changing regulatory issues. Retailers face major changes with the storage and handling of anhydrous while all in the industry have an obstacle to overcome with the Des Moines Water Works suing three rural counties upstream from Iowa's capital city.

Despite this lawsuit, there are signs farmers are becoming more efficient at growing crops with fewer inputs. In a presentation at the recent Fertilizer Outlook and Technology Conference in Jacksonville, Florida, Harry Vroomen, vice-president of economic service for The Fertilizer Institute, highlighted some of this data.

Fertilizer typically boosts crop yields 40% to 60%, according to research. Vroomen said U.S. corn production increased 114% from 1980 to 2014. But during that same time nutrient use only increased 4.5%.

"This would be a 105% increase in partial fertilizer efficiency," Vroomen said.

Vroomen also broke down the fertilizer use by pounds of nutrient per bushel of corn produced.

In 1980, producers used an average of 1.58 pounds of nitrogen per bushel of corn, 0.0727 pounds of phosphorus and 0.882 pounds of potash, for a total NPK application of 3.188 pounds per bushel. In 2014 this same bushel only required 1.556 pounds of total NPK with 0.890 pounds of nitrogen, 0.326 pounds of phosphorus and 0.3440 pounds of potash. This meant 44% less nitrogen, 55% less phosphorus and 61% less potash produced with NPK total down 51%.

This data does raise some interesting questions in terms of crop production, he said.

How much lower could fertilizer input numbers go and still maintain yields? Or is it more likely that these figures will level-off or possibility even rise in the near-to-mid future? Some research shows we may have reached a turning point on nutrient use trends for P and/or K, he said.

"How will the world, and the U.S. in particular, increase food production by 70% [because of rising world population] by 2050 and how might this impact future U.S. nutrient demand," he asked. "These questions will have to be answered in the coming years."

With retail fertilizer moving lower in recent months, only one fertilizer remains more expensive compared to a year earlier. 10-34-0 is 3% higher than last year.

The remaining seven nutrients are now lower compared to retail prices from a year ago. DAP averages 5% lower, MAP 6% less expensive while UAN32 is 9% lower and both anhydrous and UAN28 are 11% less expensive. Potash is 12% lower while urea is 18% less expensive versus a year ago.

DTN collects roughly 1,700 retail fertilizer bids from 310 retailer locations weekly. Not all fertilizer prices change each week. Prices are subject to change at any time.

DTN Pro Grains subscribers can find current retail fertilizer price in the DTN Fertilizer Index on the Fertilizer page under Farm Business.

Retail fertilizer charts dating back to November 2008 are available in the DTN fertilizer segment. The charts included cost of N/lb., DAP, MAP, potash, urea, 10-34-0, anhydrous, UAN28 and UAN32.

DTN's average of retail fertilizer prices from a month earlier ($ per ton):

Nov 17-21 2014 576 595 480 493
Dec 15-19 2014 565 592 483 461
Jan 12-16 2015 566 594 486 465
Feb 9-13 2015 569 597 488 473
Mar 9-13 2015 570 597 489 471
Apr 6-Apr 10 2015 570 598 491 461
May 4-8 2015 570 598 491 457
June 1-5 2015 570 598 491 461
June 29-July 3 2015 570 596 490 469
July 27-31 2015 569 594 487 469
Aug 24-28 2015 567 586 476 447
Sept 21-25 2015 562 575 454 428
Oct 19-23 2015 547 562 435 413
Nov 16-20 2015 545 559 424 403
Date Range 10-34-0 ANHYD UAN28 UAN32
Nov 17-21 2014 560 709 322 366
Dec 15-19 2014 572 705 322 362
Jan 12-16 2015 582 710 325 364
Feb 9-13 2015 589 707 330 370
Mar 9-13 2015 626 706 331 371
Apr 6-Apr 10 2015 648 709 333 370
May 4-8 2015 653 711 331 371
June 1-5 2015 650 710 331 371
June 29-July 3 2015 642 705 330 369
July 27-31 2015 636 689 324 354
Aug 24-28 2015 609 667 309 350
Sept 21-25 2015 589 646 297 343
Oct 19-23 2015 582 637 291 334
Nov 16-20 2015 579 629 287 332

Russ Quinn can be reached at russ.quinn@dtn.com

Follow him on Twitter @RussQuinnDTN


CFTC Proposes Automated Trading Rule

Tue. Nov 24, 2015 12:05 PM

By Katie Micik
DTN Markets Editor

OMAHA (DTN) -- The Commodity Futures Trading Commission is proposing a new rule to bring firms that specialize in algorithmic trading, which are responsible for an estimated 35% of futures trade, under its regulatory umbrella.

The new rule would require about 100 firms at the most to meet a three-part test to register as floor traders with the CFTC. It would establish requirements for risk controls and compliance, not only at the firm level, but at the exchanges and clearinghouses that handle their business.

It's a layered approach to regulation that follows the lifecycle of an order, and CFTC said that approach was designed to prevent market disruption caused by an algorithmic trading dysfunction, such as the "flash crash" in the stock market in 2010.

CFTC worked with the Securities Exchange Commission after the flash crash to establish some controls at the clearing level, but CFTC Chairman Timothy Massad said the commission began working on the proposed rule several years ago in hopes of addressing the evolving concerns about algorithmic trade, including high-frequency trading, in commodity markets.

"It focuses on minimizing the potential for disruptions and other operational problems that may arise from the automation of order origination, transmission or execution," Massad said in a statement. "They may come about due to malfunctioning algorithms, inadequate testing of algorithms, errors and similar problems. No set of rules can prevent all such problems."

But Massad said a number of the proposals in the rule reflect industry best practices, and rather than apply prescriptive controls, the rule grants flexibility in setting appropriate risk controls.

A firm must register as an "automated trading person" if it's a proprietary trader that engages in algorithmic trading on a regulated exchange via direct electronic access.

Once those firms are registered, they'll have to establish pre-trade risk controls, such as maximum order size and frequency. They'll have to put in place a cancellation system and complete an annual compliance report. CFTC will require them to join industry association groups, such as the National Futures Association, which often enforce industry best practices and can implement newer or stricter rules more quickly than regulators.

The futures exchanges would also have to develop risk controls and enhanced compliance procedures for these firms. They will have to increase their transparency about market maker and trade incentive programs, including what kinds of monetary benefits they give to the types of firms that help provide liquidity.

Clearinghouses would have to provide a platform for algorithmic traders to test new algorithms and would create tools that prevent self-trading, which is defined as matching of orders for accounts with common beneficial ownership or under common control. In the few cases where self-trading would be allowed, the clearinghouses would have to release annual statistics.

Perhaps the most controversial portion of the rule requires algorithmic trading firms to make their source code available to the CFTC and the Justice Department upon request. Currently, the federal government must use a subpoena to access a company's intellectual property, such as source code.

"I am unaware of any other industry where the federal government has such easy access to a firm's intellectual property and future business strategies," CFTC Commissioner Chris Giancarlo said in a statement.

In the days leading up to the proposed rule's release, livestock market participants have wondered aloud if this rule would help reign in some of the wild volatility that's roiled the market since Labor Day.

DTN Livestock Analyst John Harrington said it's tempting to blame the volatility on the close of pit trading, but he also thinks that's an overly simplistic answer.

"After all, automatic trading and high-frequency trading were probably dominant before we finished pit trading. It's very tempting to think along these lines: As small as the pit was, have we lost an anchor that we used to have?"

Harrington thinks the proposed rule sounds like a step in the right direction, he said, and hopes pre-trade risk controls on order quantity and frequency can help reign in some of the volatility.

Once the rule is published in the Federal Register, a 90-day comment period will begin. The 19-page rule also includes a list of more than 150 questions for public comment.

Katie Micik can be reached at katie.micik@dtn.com

Follow Katie Micik on Twitter @KatieMDTN


Weighing Chlorpyrifos Ban

Tue. Nov 24, 2015 7:47 AM

By Todd Neeley
DTN Staff Reporter

OMAHA (DTN) -- A series of court decisions and actions by the U.S. Environmental Protection Agency threatens to remove a popular Dow AgroSciences insecticide.

EPA recently proposed a ban of chlorpyrifos -- the active ingredient in Dow AgroScience's Lorsban, an organophosphate insecticide used for combating pests such as soybean aphids, spider mites and corn rootworm.

Entomologists contacted by DTN said it could take years before chlorpyrifos products are removed from the market. However, there is some concern that removing chlorpyrifos from the market could at some point complicate the battle against insects, especially when growers are being encouraged to rotate chemistry to guard against possible resistance.

For right now, however, when it comes to combating insects in soybeans, there are options.

According to EPA, corn accounts for chlorpyrifos' largest agriculture market for total pounds used because overall corn acres are much larger than soybeans. However, in recent years use of chlorpyrifos has expanded in soybeans and has been on the decline in corn.

According to Dow AgroScience's website chlorpyrifos use in soybeans expanded from about 200,000 acres in 2004 to some 8 million acres in 2008. Dow estimated chlorpyrifos was applied to about 11% of soybean acres planted in 2008.

Since 2000, Dow estimates soybean aphid infestations have caused economic yield losses of up to 45% in untreated fields. Soybean aphids are now present in 20 states including the Great Plains and into the Northeast and South, according to Dow.

The USDA estimates corn rootworm leads to more than $1 billion in lost revenue each year. That includes $800 million in yield loss and about $200 million in treatment costs.

Erin Hodgson, associate professor and extension entomologist at Iowa State University, said during a recent podcast there are many other options to combating insects in soybeans, making the potential loss of chlorpyrifos easier for farmers to overcome.

Christian H. Krupke, professor of entomology at Purdue University, said a look at Purdue's 2015 insecticide recommendations shows there are plenty of options.

"Chlorpyrifos, while still in use, does not represent a large portion of the corn and soybean insecticide market," he said. "While it was once thought to be indispensable, it has been largely replaced by a variety of pyrethroids for foliar sprays in corn and soybeans and by Bt for rootworm and some caterpillars in corn.

"Chlorpyrifos is one of the few remaining available compounds in the organophosphorus class of insecticides, which were at one time widely used and effective, but now have been replaced by other options both because of problems with resistance and their relatively high toxicity to mammals. I don't anticipate a significant impact of the phase-out in these crops."


Matthew E. O'Neal, Iowa State University entomologist, however, said when it comes to soybeans there should be some concern about what a chlorpyrifos ban could mean in years to come.

"My concern is if we get into a situation where we have a resistance to the other classes of insecticides used for aphids we're going to need an alternative," he said. "Chlorpyrifos is commonly used by farmers for aphids and other pests in soybeans. If one class of insecticide replaces its uses in soybeans, this could increase the likelihood of resistance occurring. In four or five years that's when you'd start to notice there are is no chlorpyrifos and you're looking for something that works."

Dow AgroSciences suffered a separate blow last week when the EPA banned sulfoxaflor (Transform WG), also used to combat soybean aphids.

In June 2000 EPA eliminated all household uses except in ant and roach baits. According to EPA's website termiticide uses were phased out as well. EPA also banned the use of chlorpyrifos products on tomatoes. In 2002, EPA restricted the use of chlorpyrifos on citrus and tree nuts, and other crops.

In 2012 EPA limited the use of chlorpyrifos by lowering pesticide application rates and creating no-spray buffer zones around public spaces, including recreational areas and homes.

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @ToddNeeleyDTN


USDA Weekly Crop Progress

Mon. Nov 23, 2015 3:16 PM

By DTN Staff

OMAHA (DTN) -- Corn harvest is complete for 2015 and winter wheat planting is nearly done, according to USDA's latest weekly Crop Progress report.

Winter wheat planting is 96% complete, compared to 94% last week and a 100% five-year average. Ninety percent of the crop is emerged, compared to 87% last week and a 90% five-year average.

"USDA said that 53% of winter wheat was rated good-to-excellent, resulting in a one-point increase in the DTN Winter Wheat Condition Index to 142, which was down from 154 a year ago, but above the five-year average of 125," said DTN Analyst Todd Hultman. "Monday's report is neutral for wheat."

Ninety-four percent of sorghum is harvested, compared to 91% last week and a 93% five-year average.

Seventy percent of the cotton crop is harvested, compared to 64% last week and an 82% five-year average.

National Crop Progress Summary
This Last Last 5-Yr
Week Week Year Avg
Cotton Harvested 70 64 76 82
Sorghum Harvested 94 91 87 93
Winter Wheat Planted 96 94 99 100
Winter Wheat Emerged 90 87 91 90
National Crop Condition Summary
(VP=Very Poor; P=Poor; F=Fair; G=Good; E=Excellent)
This Week Last Week Last Year
Winter Wht 2 8 37 42 11 2 8 38 41 11 1 5 36 49 9

Please send comments to talk@dtn.com


Macri Elected President of Argentina

Mon. Nov 23, 2015 12:53 PM

By Alastair Stewart
DTN South America Correspondent

SAO PAULO, Brazil (DTN) -- Argentina elected Mauricio Macri as its new president Sunday, a victory that will likely mark a major change in farm policy and the release of soybean stocks onto the market.

On Sunday, the center-right mayor of Buenos Aires won 51.4% of the vote, beating Daniel Scioli, the government-backed candidate, on a platform of free-market reforms and a clean break from the populist, interventionist policies of outgoing president, Cristina Fernandez, and her late husband and predecessor, Nestor Kirchner.

The country's grain sector heavily backed Macri, who has committed to roll back export controls and taxes when he takes over on Dec. 10.

Macri has repeatedly said that he will scrap the 23% tax and quotas on wheat shipments and lift controls on corn.

However, the big question is what he will do on soy, as farmers are currently holding around 15 million metric tons (551.2 million bushels) of soybeans in silo bags across Argentina, according to the Argentine Rural Society. Those stocks could flood the international market.

During the election, Macri committed to cut the 35% soybean export tax by five percentage points in December and then by another five points in each subsequent year.

There are rumors that he may cut deeper initially in December to stimulate nearby shipments and thus generate revenue. However, the soybean export tax covers around a third of government spending, and a big cut would spell lost revenues at a time when government coffers are bare.

On Monday, Macri would not comment on the issue, telling a press conference that his economic team is assessing its options.

However, perhaps more important to Argentine farmers is when, and by how much, the Argentine peso is devalued.

The principal reason farmers have been holding soybeans is the expectation that the government would allow the peso to float after the election.

Argentine farmers currently must convert soybean export dollars to pesos at the official rate, which traded Monday at $1 = AR$9.64, while the black (floating) market rate stood at $1 = AR$15.10.

Macri has pledged to dismantle the controls on foreign exchange dealings from day one, which would necessarily mean the peso goes south.

That's the electoral rhetoric. In reality, Macri inherits a precarious economic situation where inflation is running at double-digits, foreign reserves are negligible and the country is shut out of international markets.

By clearing away all capital controls in one go, Macri runs the risk of triggering a full-on economic crisis. On the other hand, by using an incremental approach, he risks seeing inflation eat away at the benefits and politics derail the process in the middle.

It's a tough call to make.

Certainly, if the peso floats or there is a significant cut in the soy export tax, there is likely to be a significant flow of Argentine soy onto international markets.

Argentine grain prices have risen over the last week in anticipation of changes.


Whatever happens in the short term, the farm sector will be relieved to see the exit of Fernandez, with whom it has battled over the last eight years.

The president used quotas and export taxes on wheat, corn and beef as a means of controlling runaway inflation.

Those controls limited liquidity for corn and wheat at key times of year and depressed prices. This pushed farmers toward planting soybeans, the area for which exploded in the last decade.

The end of the Fernandez regime will likely lead to more balanced rotations with wheat and corn area growing at the expense of soy, which currently accounts for over 60% of planted area. As a result, corn and wheat exports will inevitably grow and soy shipments subside, although the better rotations will boost yields for the oilseed.

Meanwhile, Argentina's world-famous beef can be expected to make a comeback.

Alastair Stewart can be reached at alastair.stewart@dtn.com


Land Price Tug-Of-War

Mon. Nov 23, 2015 12:00 PM

By Victoria G. Myers
Progressive Farmer Senior Editor

Landowners may be paying a price for pursuing the golden temptress of commodities. Where the allure of $8-a-bushel corn led to tilled-up pastures and torn-down fences, remorse seems to be setting in.

"In our part of the country, a lot of properties that were converted from pasture to row crop are beginning to have serious issues with erosion," said Kurt Hollenberg, a broker with United Country Real Estate and Auction Services, based in Columbia, Missouri.

He said some of these converted operations would like to go back to fences and grass, but many landowners are not in a position to make the shift.

"Now that row-cropping is not making them as much money, they'd like to go back to cattle; but at $13,000 to $15,000 for a mile of good fencing, it's an expensive change to make," he pointed out.


That balance between land for row crops and land for pasture has been at the center of much of the market's evolution going back to 2006. While the tendency is to talk of land price and land use in regard to what that acreage can yield in terms of cash, there is another way of looking at it, said Sterling Liddell, Rabobank vice president of Food and Agribusiness Research Advisory Group, Missouri.

"It's scarcity of land to produce a given commodity that drives prices higher and higher," he explained. "In 2006, we saw a fundamental change in how we price corn and soybeans. Essentially, there was not enough corn to make the market comfortable and allow it to find equilibrium. Then drought drove commodity prices even higher. Now, we are seeing a point where we can produce a surplus."

The pressure to find more land to produce corn and soybeans when prices were at historic highs shifted acreage for those crops outside of traditional regions. The Northern Plains is where the biggest part of that growth took place. Now that prices are lower, and the beef market is in a growth phase, there is a shortage of land for livestock operations, especially in those areas where conversion to cropland took place.

"Pasture and rangeland are where we see the strongest values, and that goes back to that interaction between regions," said Liddell. "In the Dakotas, where a lot of pasture was converted, you've seen the strongest movement in pasture prices. Those acres have been shorted, and with the expectation of adding 3 million to 4 million head of beef cows, we need that pasture back. We will see this continue until there is a rebalance of crops and pasture."


In the Corn Belt, Liddell said a downturn in cropland prices is good news because it will help the industry stay economically feasible. He said he's seen signs of contraction through no-sales at auctions across Illinois, Iowa, Minnesota and Nebraska. With a break-even margin for farmers of around $4.20 per bushel on corn, Liddell said there are essentially only two places producers can make sizeable adjustments to the cost of doing business.

"It's hard to move seed prices. Maybe you can adjust nitrogen, potash and phosphate down a little, but not a lot. It comes to machinery and land. Those two will battle it out for who gets the rest of the income," he explains. "Historically, when prices drop around breakeven, we see about 15 to 20% of the value of the crop going to machinery, 30 to 40% to land."

Liddell expects continued moderation of land prices in the near future, with upward movement possible again in four to five years as global demand for protein grows. It's that long view that has kept investors enamored with farmland. While farmer/buyers dominated the land market the past seven years, investors are poised to jump back in if the price is right.


Linda Niebur, a broker associate with Mason and Morse Ranch Company, out of Colorado, said the investor/buyers she works with are very interested in the Southeast. She sells farmland across the country.

The fresh market (where there's no need to track a commodity market) plus water availability combine to make the Southeast a hot region of the country now, Niebur said. She thinks there is going to be an abundance of land for sale in the year ahead in some areas, as banks tighten up on loans and producers find themselves overextended. That spells opportunity and will likely lead to prices more acceptable to investors.

Overall, land values will tend to be sideways, she added, even in the Midwest. That is assuming the land is very, very good in terms of quality.

"There may well still be some increases in cropland prices in some spots and on some pieces of property. We are absolutely going to continue to see neighbors trying to outbid each other. If they have cash and no problems with the banker, they are in a strong position. But you won't see investors in that situation, because when you put that down on a piece of paper, it doesn't make sense. The good stuff is going to stay good on price, and the medium- and poor-quality ground is going to fall off faster and faster."


Missouri's Hollenberg agreed, saying he's seeing Class A-type land holding its own. In addition, he reported REITs (Real Estate Investment Trusts) are coming in and buying larger tracts. Class B-type farms, on the other hand, are reducing rental rates and falling off more on a percentage basis when it comes to value.

"Investors have to see a rate of return, which is why they have been on the sidelines. But they are willing to buy with the right rate of return, so they are becoming more active in the market," Hollenberg said.

He added supplies of Class A-type cropland continue to be tight in the Corn Belt, with buyers resistant to pay what sellers want, and sellers resistant to lower their prices.

"We are seeing a bit of a tug-of-war right now," he said. "Finally, someone will wear out. Commodity prices will be a part of that."

Rabobank's Liddell points out in Iowa, investors were buying nearly 50% of the farmland sold prior to 2005; today, that class of buyer is more like 20%. As investors look to come back, he adds it may be an opportunity for farm operators who need financing to find a partner.

"It will all depend on how strong their balance sheet is. The key to being attractive to potential financiers will be data flow from the farm. Farmers who can control their input costs and show where risks are and how they are mitigating those risks will be very attractive to investment groups," he believes.


As this year's farmland market continues to settle, most analysts and brokers describe it as sideways in character. Cropland prices are expected to decline, in some areas by as much as 5%. Pasture and rangeland prices, however, are more likely to increase by 5%. One would essentially cancel out the other.

Should interest rates increase, even 1%, that will impact prices negatively, as there is an inverse relationship between land prices and interest rates. However, Rabobank's Liddell said he believes that going into the end of 2015, the land market has already priced in an anticipated interest rate increase.

R.D. Schrader, president of Schrader Real Estate and Auction Co., in Columbia City, Indiana, said while an increase in interest rates could well push land prices down in some areas, he's not expecting anything dramatic.

"Over the years, interest rates have been a big variable in the land market. The historically low rates we've seen have certainly benefitted land prices. Sooner or later, though, there is no place for interest rates to go but up. When that happens, if it's slow and methodical, the market can handle it."


Regional differences can make for huge variances in land price, whether it's traditional row-crop property or pasture. The USDA's Land Values 2015 Summary, for example, shows the average price for an acre of cropland in the Corn Belt at $6,840; that same acre of ground in the Northern Plains averages $3,130.

This year's land-price outlook includes projections broken down by region. These projections, by editors at The Progressive Farmer, indicate a steady land market overall, with more opportunity for buyers. For the full report, see the story in the Nov. 1, 2015, issue "Land Price Fallout." What follows is a brief recap.

-- Corn Belt. Taken as a whole, cropland in Illinois, Indiana, Iowa, Missouri and Ohio averages $6,840 per acre. Pasture comes in at a much more moderate $2,440 per acre. During the last year, cropland prices trended down just 2.3%, while pasture prices moved up 3.4%. For the year ahead, expect level to continued downward pressure on cropland (0 to 2%) and continued upward movement for pasture (1 to 2%).

-- Lake Region. Michigan, Minnesota and Wisconsin average $4,670 per acre for cropland and $2,250 per acre for pasture. Cropland prices remained mostly unchanged during the past year, but pasture prices jumped 15.4%. For the year ahead, cropland prices are poised to drop (3 to 5%), while pasture prices continue to climb at a somewhat slower pace (even to 5%).

-- Northern Plains. Kansas, Nebraska, North Dakota and South Dakota played pivotal roles in the expansion of row-crop acres at the height of the corn market. Prices average $3,130 per acre for cropland and $1,020 per acre for pasture. Prices for both increased in the last year, up 1.3% for cropland and 6.9% for pasture. For the year ahead, cropland prices are expected to decrease slightly (level to 2%), while pasture will be up again (3 to 5%).

-- Southeast. This southern region, which includes Alabama, Florida, Georgia and South Carolina, is a hot draw for investors thanks to water availability and the potential for more diverse crop production. Cropland averages $3,770 per acre, almost the same as pasture, which averages $3,790 per acre. Prices for cropland were up slightly at 1.1% over the last year, while pasture values held level. For the year ahead, cropland is likely to fall slightly (even to 2%), while the price increase in pasture is expected to balance that out (even to 2%).

-- Delta Region. Arkansas, Louisiana and Mississippi are seen as offering high-quality cropland at bargain prices when compared to the Midwest. Prices for cropland average $2,600, a 3.6% increase over the past year. Pasture is a more moderate $2,320, a 2.2% increase. For the year ahead, cropland in the Delta region will be down slightly (even to 5%), while pasture will trend up (even to 3%).

-- Mountain Region. Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah and Wyoming make up the biggest region the USDA reports on. Prices for cropland average $1,740 per acre, a 3% increase over the past year. Pasture prices average $614 per acre, a less than 1% increase. Looking ahead, cropland will trend up (even to 3%). Pasture will also move up as beef operations look to continue expansion (1 to 2%).

-- Southern Plains. Recovery in Oklahoma and Texas continues in the wake of drought. Oil and gas returns have brought resources into the market. A downturn in that area may slow growth, but cattle operations and high-quality ground will continue to pull the money. Prices average $1,780 per acre for cropland, a 9.2% increase during the past year. Pasture prices average $1,570, a 1.9% bump. In the year ahead, cropland may sag (even to down 3%), while pasture continues to reflect a strong beef industry (up 3 to 5%).

-- Appalachian Region. States in this region, which includes Kentucky, North Carolina, Tennessee, Virginia and West Virginia, are some of the most heavily influenced by urban areas. Cropland prices average $3,830 per acre, a 1.3% increase in the last year. Pasture prices average $3,350, a 2.1% climb. For the year ahead, cropland will likely fall (1 to 3%), and pasture will climb (even to up 4%).

For More Information:

USDA Land Values: www.usda.gov/nass/PUBS/TODAYRPT/land0815.pdf

Kurt Hollenberg: www.missourilandandhome.com

Linda Niebur: www.ranchland.com

R.D. Schrader: www.schraderauction.com

Sterling Liddell: www.rabobankamerica.com


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