Tom Meersman reported over the weekend at the Minneapolis Star-Tribune Online that, “The prospect of a bin-busting crop has driven corn prices to their lowest levels in four years and raised fears of a prolonged slump for crop farmers in Minnesota and elsewhere.
“After three years of profits, analysts are calling 2014 a break-even year, at best. Some think prices could drop more and stay low into 2015.”
“The Market Protection Program is an insurance option for dairy farmers that is being run through the Farm Service Agency. The Margin Protection Program will pay indemnities to farmers when the difference between the price of milk and feed costs falls below a coverage level selected by the farmer.
“Enrollment begins Tuesday and will run until Nov. 28 for the 2014 and 2015 calendar years.”
Todd Neeley reported yesterday at DTN that, “Farm groups are using mapping technology in their latest effort to block EPA from finalizing new regulations under the Clean Water Act.
“A map of the state of Iowa virtually is covered in red — a color that has agriculture groups burning mad at an image that represents all the waters that could be considered jurisdictional if the proposed Clean Water Act rule becomes finalized. An image from the South Dakota Farm Bureau maps the same waters painted green across easily two-thirds of that state — mostly covering South Dakota’s western half.
“A number of ag groups including the American Farm Bureau Federation, the National Pork Producers Council, National Corn Growers Association, National Cattlemen’s Beef Association, among others, have been undertaking the seemingly impossible task of mapping those waters that could be in EPA’s control. In addition, this week the House Committee on Science, Space and Technology is set to post online similar maps of all 50 states provided to the committee by EPA.”
With respect to the Science, Space and Technology Committee action regarding EPA maps, in a separate update yesterday at DTN, Mr. Neeley reported that, “A House committee is pressuring EPA to release more information about an October 2013 agency contract to create waters and wetlands maps of all 50 states, including making those maps part of the official record on the proposed Clean Water Act rule.
Yesterday, USDA’s Economic Research Service (ERS) updated its 2014 Farm Sector Income Forecast, which stated that, “Net farm income is forecast to be $113.2 billion in 2014, down 13.8 percent from 2013’s forecast of $131.3 billion. If realized, the 2014 forecast would be the lowest since 2010, but would still remain more than $25 billion above the previous 10-year annual average. After adjusting for inflation, 2013’s net farm income is expected to be the highest since 1973; the 2014 net farm income forecast would be the fifth highest [related graph].
ERS noted that, “The annual value of U.S. crop production is expected to decline 10.6 percent in 2014 from 2013’s predicted all-time high. Expected declines in cash receipts are especially large for feed crops such as corn. Corn receipts are expected to experience the largest dollar decline in 2014 receipts among farm commodity categories…Declines in soybean receipts are anticipated as higher production and quantities sold are more than offset by large price declines (11.3 percent) [related graph].”
An update yesterday from the Federal Reserve Bank of Minneapolis stated that, “Farm incomes fell from April through June, according to results of the Minneapolis Fed’s second-quarter (July) agricultural credit conditions survey. Capital spending decreased, while household spending held roughly steady, lenders responding to the survey indicated. Falling incomes pushed the rate of loan repayment down slightly, while renewals and extensions increased, though most lenders reported that both were flat. Respondents noted further signs that cropland values were moderating, with prices falling in some areas, though the volume of land sales appears to have decreased. The third-quarter outlook is for continued contraction, with survey respondents predicting further decreases in income, capital expenditure and household spending.”
Yesterday’s update added that, “Recent quarterly surveys have indicated that land prices have moderated following a multiyear period of strong growth, and the second-quarter results continue this trend; values decreased in some cases, along with cash rents. The average value for nonirrigated cropland in the district fell by almost 2 percent from a year earlier, according to survey respondents. Irrigated land fell slightly more (between 2 percent and 3 percent), while ranchland values increased 4 percent, likely owing to strong livestock and dairy prices. The district average cash rent for nonirrigated land fell 6 percent from a year ago, more than the decrease in value. Rents for irrigated land decreased 4 percent, while ranchland rents, which had continued growing in recent quarters, fell by nearly 2 percent.”
The Minneapolis Fed update also noted that, “Not surprisingly, expectations are slightly pessimistic, on balance. Across the district, 52 percent of lenders predicted that farm income will decrease in the third quarter of 2014, compared with 12 percent forecasting increases.”
AP writer David Pitt reported on Saturday that, “In an interview Friday with The Associated Press, U.S Secretary of Agriculture Tom Vilsack gave his views on topics ranging from low commodity prices this year to dysfunction in Washington and his future.
“Vilsack spoke after touring Iowa Choice Harvest, a Marshalltown company that processes Iowa-grown food.”
Excerpts from the AP “Q and A” article included: “With corn and soybean prices largely below the cost of production are you concerned about farm profitability?
“Many farmers throughout the United States have forward contracts where they’re going to get paid maybe $4 or $5 for a bushel of corn, maybe $13 or $14 for a bushel of soybeans so I think you have to be careful not to conclude that because prices have come down that there isn’t going to be profitability in agriculture.
“You also have to recognize as these prices have come down it has created opportunities for other producers, livestock producers in particular, who have been challenged over the course of the last many years with high feed costs now see their cost of doing business coming down. They’re looking at record prices for beef and for pork and we’re also seeing an expanded export market.
“Also, that’s precisely the reason we have a farm bill. It creates the safety net that if the prices come down below the price of doing business we have mechanisms in place to ensure that folks can still stay in business.”
Nirmala Menon reported yesterday at The Wall Street Journal Online that, “The U.S. has lost a key round at the World Trade Organization in a trade dispute with Canada and Mexico over meat labeling, according to people familiar with the WTO’s findings.
“Canada and Mexico opposed a new U.S. rule that requires more information on labels about the origins of beef, pork and other meats, which went into effect in November. They took their case to the WTO, saying the rule hurts their competitiveness. The WTO panel that heard oral arguments in the dispute over the so-called country-of-origin labeling rule earlier this year has decided in favor of Canada and Mexico, according to sources familiar with the panel’s confidential report.
“The report, which the three governments have received, is expected to be made public in late September or early October, these sources said.”
The Journal article noted that, “The U.S. Department of Agriculture issued the new rule after a WTO finding in 2012 that an earlier version was discriminatory. But Canada and Mexico said the amended rule was even more onerous, and limited exports of cattle and hogs into the U.S from their countries. The animals end up being sold at a discount to those from the U.S., they said.”
Jesse Newman reported in today’s Wall Street Journal that, “Two visitors on an annual Midwest crop tour here [McLean County, Il] this week quickly found themselves enveloped by 10-foot-high stalks of corn, an up-close view of what some think could be an even-larger U.S. crop than the record harvest projected by federal forecasters.”
The article noted that, “So far, estimates of corn yields from states on the closely watched Pro Farmer tour mostly have exceededU.S. Agriculture Department estimates [graph], adding further pressure to corn prices that have dropped 15% this year and are trading near four-year lows [graph]. Tour findings also indicate that much of the nation’s soybean crop, also expected to reach a record this year, is in good health as it undergoes its main growth stage.
“Corn futures for September delivery, the front-month contract, fell three cents, or 0.8%, to $3.595 a bushel Wednesday on the Chicago Board of Trade. Prices are off 1.7% so far this week.”
Jesse Newman reported yesterday at The Wall Street Journal Online that, “Indiana’s soybean crop will outpace last year’s production, according to an average of survey results collected in the state by scouts on a closely watched crop tour.
“Soybeans will come in at 1220.79 pods per 3-foot square, above the state’s three-year average of 1118.65 pods and 3% higher than the crop tour’s 2013 average of 1185.14 pods.”
Jesse Newman reported yesterday at The Wall Street Journal Online that, “The corn crop in Ohio, the nation’s seventh largest producer of the grain, will surpass projections made in the most recent federal estimates, according to an average of survey results collected by crop scouts on a closely watched crop tour.
“Corn yield potential across five regions of Ohio was estimated Monday at 182.11 bushels per acre, well above the state’s three-year average of 146.13, and greater than the U. S. Department of Agriculture’s Aug. 1 forecast for the state, which pegged yields at 177.0 bushels per acre.
“The new estimate is 3% higher than last year’s state record of 177.0 bushels per acre, reported by the USDA.”
Ms. Newman added that, “South Dakota’s three averaged regions are expected to yield an average 152.71 bushels per acre, almost 10% higher than the USDA’s prediction of 139.0 bushels made earlier this month.”
“The assessment, from Jeff Brown, 45 years old, a fifth-generation farmer outside Decatur, Ill., sums up the view of most people who grow, trade or process corn as they brace for another record U.S. harvest.
Sergio Silva is one of a growing number of Hispanics who own or operate farms in the United States. Video Credit By Channon Hodge, Tanzina Vega, Ben Laffin and Ashley Maas on Publish Date August 17, 2014.
Jesse Newman reported in today’s Wall Street Journal that, “Farmland values in the U.S. Midwest remained mostly stagnant in the second quarter, the latest sign of a slowdown in the market after a multiyear boom, according to Federal Reserve reports on Thursday.
“The average price of farmland in the Federal Reserve Bank of St. Louis’s district, which includes parts of Illinois, Indiana and Missouri, dropped 0.4% in the second quarter from the previous quarter, the bank said [related graph].”
DTN Executive Editor Marcia Zarley Taylor reported yesterday at the Minding Ag’s Business blog that, “Great Plains wheat growers were howling over USDA’s decision to postpone a big promise in the 2014 farm bill, as DTN’s Chris Clayton and Jerry Hagstrom reported last week (see ‘Vilsack Resists APH Update’).
“Growers victimized by years of severe Great Plains drought had fought for a provision to update their crop insurance Actual Production History, or APH, to exclude years in which county yields fell more than 50% below the 10-year average. Under such dire countywide conditions, growers were supposed to be able to delete their own low performance year from their APH history and divide their averages by nine. This was a way for grain producers with near zero yields to retain some semblance of insurance coverage, but prevent fraud since the county would need to suffer a disaster before an individual could erase low yields. Growers in adjacent counties would also be eligible for yield forgiveness.”
Yesterday’s Crop Production report from the USDA’s National Agricultural Statistics Service (NASS) noted that, “Corn production is forecast at 14.0 billion bushels, up 1 percent from 2013. Based on conditions as of August 1, yields are expected to average 167.4 bushels per acre, up 8.6 bushels from 2013. If realized, this will be the highest yield and production on record for the United States [related graph].”
The report added that, “Soybean production is forecast at a record 3.82 billion bushels, up 16 percent from last year. Based on August 1 conditions, yields are expected to average a record high 45.4 bushels per acre, up 2.1 bushels from last year. Area for harvest in the United States is forecast at a record 84.1 million acres, unchanged from June but up 11 percent from last year [related graph].”
A summary of key variables for corn from yesterday’s WASDE report is available here, while a soybean summary can be found here.
The WASDE update noted that, “The projected season-average farm price for corn is lowered 10 cents at both ends of the range to $3.55 to $4.25 per bushel…[and]… The U.S. season-average soybean price for 2014/15 is forecast at $9.35 to $11.35 per bushel, down 15 cents on both ends.”
“Analysts surveyed by The Wall Street Journal said the U.S. Department of Agriculture will peg corn production at 14.2 billion bushels on yields of 170 bushels an acre, both records, in a monthly supply-and-demand report set for release at noon on Tuesday.
“About three-fourths of the U.S. corn crop was in good or excellent shape as of Sunday, according to the USDA, due to rainy, cool weather through most of the growing season.”
Today’s article noted that, “Corn futures for September delivery, the front-month contract, gained five cents, or 1.4%, to $3.56 ¾ a bushel on the Chicago Board of Trade, the first increase in three sessions. December futures, the most-active by volume, rose 4¾ cents, or 1.3%, to $3.68¼ a bushel on the CBOT.”