Agricultural Economy (WASDE)
University of Illinois Agricultural Economist Darrel Good indicated yesterday at the FarmDocDaily Blog (“USDA Report Highlights”) that, “Today, the USDA’s World Agricultural Outlook Board (WAOB) released the monthly report of World Agricultural Supply and Demand Estimates (WASDE) and the National Agricultural Statistics Service (NASS) released new wheat production forecasts. The WASDE report incorporated the information in the Grain Stocks and Acreage reports released on June 30.”
Reuters writer Charles Abbott reported yesterday that, “U.S. corn stocks will languish near 15-year lows for longer than expected as ethanol plants overtake livestock as the biggest consumers of the feed grain and China buys more American corn, according to government forecasts.
“The U.S. Agriculture Department, as expected, boosted its forecasts on Tuesday of ending stocks this year and next, largely due to weaker-than-expected consumption by the livestock sector this year. But the revisions fell short of analysts’ forecasts and supported prices that have fallen 15 percent from their peak on signs of healthier supplies.”
The article added that, “USDA raised its estimate of the U.S. wheat crop by 2 percent from June due to higher yields, especially for soft red winter wheat, but cut the global outlook for next year due to a sharp 3.5 million tonne downgrade in output from Canada where heavy rains delayed planting in the Prairies.
“Although the inventory forecasts were lower than analysts’ estimates, the report painted a broadly more encouraging picture for global grain supplies next year, albeit with caveats: stocks, particularly of corn, remain too low to bid a final farewell to the kind of food-led inflation that has bedeviled policymakers and stirred discontent this year.”
Bloomberg writers Whitney McFerron and Jeff Wilson reported yesterday that, “Corn rose to the highest price this month after the government said U.S. stockpiles will be smaller than expected, heightening concern that costs for food and fuel will climb. Soybean prices also gained.
“U.S. corn inventories before next year’s harvest may total 870 million bushels, the lowest since 1996, the Department of Agriculture said today.”
Tom Polansek reported yesterday at The Wall Street Journal Online that, “The U.S. Department of Agriculture raised its estimates for corn exports to China fourfold, another nod to the country’s rising demand in a market under strain.
“In addition, the amount of the grain used to make ethanol is expected to eclipse its use in animal feed in the U.S. for the first time ever.”
The Journal article explained that, “The agency upgraded its forecast for global corn consumption by 5.9 million to 877.61 million tons, citing increased needs for animal feed in China as well as burgeoning corn demand from ethanol producers in the U.S., the world’s biggest corn grower.
“This year, 5.05 billion bushels of corn will go to ethanol production compared with 5 billion for feed. Not only will ethanol plants’ corn needs outpace those of livestock producers for the first time ever this marketing year, the trend will continue next year, according to the USDA.
“The ethanol industry is now expected to consume 5.15 billion bushels next year, a hike of 2% from previous estimates.”
The AP reported yesterday that, “Traders will be watching the weather in Iowa, Illinois, Nebraska and other critical farm states to make sure this year’s crop comes off as promised. The USDA estimates farmers will grow an average 158.7 bushels of corn on every acre planted.
“If that figure drops by even 2 bushels an acre, the supply picture could become just as grim as it was a month ago when corn traded at record highs, said Jason Ward, an analyst with Northstar Commodity in Minneapolis.”
And a news release yesterday from the American Farm Bureau Federation stated in part that, “The Agriculture Department forecasts higher corn stocks in its July crop report released today compared to its June report, but economists with the American Farm Bureau Federation stress that corn supplies are still very tight and a big crop is needed to meet strong demand and build reserves to a more comfortable level.”
Meanwhile, in other news, the AP reported yesterday that, “A heat wave that has pushed temperatures well over 100 degrees has killed tens of thousands of turkeys and chickens in Kansas and North Carolina and left farmers across the lower part of the country struggling to cool off their flocks.
“In North Carolina, about 50,000 chickens died at a farm after the power went off for less than an hour. In Kansas, one couple lost 4,300 turkeys that took 26 hours to bury.”
A.G. Sulzberger and Timothy Williams reported in today’s New York Times that, “The heat wave has been particularly unrelenting in Wichita, Kan., where the temperature first hit 100 this year on May 9, the earliest ever recorded. And for 20 more days, the temperature has passed that milestone — it reached 101 on Tuesday and is expected to remain near or above that mark for the next week, according to the National Weather Service.
“But if you really want to know how hot it is, head to Michael Rausch’s farm outside of Wichita, where for the first time in his 57 years, he is wearing shorts as he walks his fields and milks his cows.”
The Times writers noted that, “Ranchers say cows are eating less — lowering beef and milk production. The ranchers are also worried about a replay of last year when hundreds of cows died because of heat. More than 4,000 turkeys reportedly died at a poultry farm over the weekend. Farmers note that the heat is hurting corn and other crops already strained by a long drought.”
And The New York Times editorial board indicated today that, “Right now, the official drought map of the United States looks as if it has been set on fire and scorched at the bottom edge. Scorched is how much of the Southeast and Southwest feel, in the midst of a drought that is the most extreme since the 1950s and possibly since the Dust Bowl of the 1930s. The government has classified much of this drought as D4, which means exceptional. The outlook through late September shows possible improvement in some places, but in most of Texas, Oklahoma, southern Arkansas, and northern Louisiana and Mississippi the drought is expected to worsen.”
“Droughts are measured in dollars as well as degrees. The prospects for cattle and wheat, corn and cotton crops across the South are dire. There is no way yet to estimate the ultimate cost of this drought because there is no realistic estimate of when it will end. Farmers have been using crop insurance payments, and federal relief is available in disaster areas, including much of Texas. But the only real relief will be the end of the dry, hot winds and the beginning of long, settled rains.”
Reuters writer Doug Palmer reported earlier this week that, “A top U.S. business leader said on Monday he expected President Barack Obama to formally submit free trade pacts with South Korea, Colombia and Panama to Congress in coming days and urged their quick approval.”
Alan Beattie reported yesterday at The Financial Times Online that, “The US Congress and the White House are locked in a dispute over ratifying three bilateral trade deals, with the administration insisting that a programme to help displaced workers be agreed at the same time… [O]rrin Hatch, the top Republican on the committee, earlier this week called for a joint conference between the House and Senate to try to reconcile different versions of the two bills.”
A news item from the U.S. Trade Representative’s Office stated that, “This morning, Ambassador Ron Kirk spoke at a breakfast hosted by the Council of the Americas at the United States Capitol… Ambassador Kirk discussed the current pending trade agreements with South Korea, Colombia and Panama. Ambassador Kirk also answered questions and stressed the importance of Trade Adjustment Assistance to American workers, business owners, farmers and ranchers.”
Farm Bill Issues
Philip Brasher reported yesterday at the FoodWatch Blog that, “Want to save money on the farm bill? Force farmers to control soil erosion and other environmental problems through regulations and fees rather than continuing to give them subsidies to do so.
“That idea comes, believe it or not, courtesy a conservative group. It’s a central idea in a group of proposals released today by the American Enterprise Institute, which is trying to frame the debate on how to restructure U.S. farm policy and cut its cost.”
Mr. Brasher added that, “The AEI’s ideas come at a time when Congress and the White House are negotiating over deep cuts in federal spending that almost certainly mean steep reductions in funding for farm and conservation programs. Conservative lawmakers who see the AEI proposals as a roadmap for making those cuts in farm spending may want to take a look at the fine print.”
A recent news release from the Oklahoma Association of Conservation Districts stated in part that, “The recent rash of water quality alerts in Oklahoma, including blooms of blue-green algae and increased levels of E coli bacteria in certain lakes shows the need for additional resources dedicated to addressing nonpoint source pollution in water according to Joe Parker, President of the Oklahoma Association of Conservation Districts (OACD). In addition, Parker said that these events also help highlight the folly of recent actions taken by the Environmental Protection Agency (EPA) including cuts made to federal funding to control nonpoint source pollution in water and the rejection in 2008 of a water quality management plan for the Grand Lake Watershed. It also shows the challenges that could be created by proposed cuts to Farm Bill Conservation programs.”
On other Farm Bill related developments, a news release yesterday from Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.) stated that, “[Sen. Stabenow], today announced that Michigan will be one of only two states to participate in a new pilot program that gives schools increased ability to use locally produced fruits and vegetables in school lunches. The program, overseen by the U.S. Department of Agriculture, will help to boost Michigan’s growing agriculture industry and provide healthy and fresher produce to school children.”
A news release from USDA yesterday stated that, “Agriculture Deputy Secretary Kathleen Merrigan today highlighted the importance of the Healthy, Hunger-Free Kids Act and announced the findings of USDA’s first Farm to School report during the 2011 School Nutrition Association national convention.”
The release added that, “A USDA Farm to School Team was established late in 2009 as a result of discussions within the department-wide Know Your Farmer, Know Your Food initiative, which seeks to create new economic opportunities by promoting local and regional food systems that help keep wealth in rural communities.”
Meanwhile, Daniela Hernandez reported yesterday at the Los Angeles Times Online that, “Better access to supermarkets — long touted as a way to curb obesity in low-income neighborhoods — doesn’t improve people’s diets, according to new research. The study, which tracked thousands of people in several large cities for 15 years, found that people didn’t eat more fruits and vegetables when they had supermarkets available in their neighborhoods.
“Instead, income — and proximity to fast food restaurants — were the strongest factors in food choice.
“The results, published Monday in the Archives of Internal Medicine, throw some cold water on the idea that lack of access to fresh produce and other healthful foods is a major driver in the disproportionate rates of obesity among the poor, or that simply encouraging grocery chains to open in deprived areas will fix the problem, said study lead author Barry Popkin, director of the Nutrition Transition Program at the University of North Carolina in Chapel Hill.”
With respect to debt negotiations, an uncertain variable that will likely impact spending on farm programs, Carol E. Lee, Damian Paletta and Naftali Bendavid reported in today’s Wall Street Journal that, “Negotiations over a deficit-reduction agreement spiraled downward Tuesday as the White House and congressional leaders dug in even as anxiety mounted that they could wait too long to reach a deal to avoid a government default.
“In one sign that top leaders worry they won’t reach a deal in time, Senate Minority Leader Mitch McConnell (R., Ky.) unveiled a proposal that would allow President Barack Obama to raise on his own the federal borrowing limit by $2.4 trillion in three installments before the end of 2012, unless two-thirds of Congress votes to block it.
“Because Mr. Obama would have to lift the debt ceiling, it could place any political fallout on him for doing so. But Republican conservatives protested that Mr. McConnell’s plan would give up the leverage the GOP has to force the White House to approve government spending cuts in return for a debt-ceiling increase.”
Meredith Shiner reported today at Roll Call Online that, “Under McConnell’s Plan B, the president would send a request to Congress for a series of three debt limit increases between now and the 2012 elections, but those increases would have to be offset with proposals for spending reductions elsewhere. Congress would be allowed to vote on joint resolutions of disapproval intended to kill the increases, but the president would be able to veto those resolutions. Congress then would have to come up with a two-thirds supermajority to prevent the debt ceiling from increasing.
“Because Obama would need to initiate the request, veto it and then rely on a Democratic Senate majority to cement his veto, the McConnell plan would put most of the onus of raising the debt ceiling on Democrats.”
Jackie Calmes reported in today’s New York Times that, “Administration officials welcomed the McConnell initiative for at least signaling that both parties’ leaders were committed to averting a potential economy-shaking government default; many Democrats in Congress saw it as a way to avoid the sort of deep cuts in Medicare, Medicaid and Social Security that Republicans have sought as the price of their votes for a debt-limit increase.
“But many conservatives immediately assailed Mr. McConnell’s proposal as a panicky sell-out, much as they in recent days had attacked the House Republican leader, Speaker John A. Boehner, for privately discussing with Mr. Obama a debt-reduction deal that could raise revenues as well as cut spending — ultimately forcing Mr. Boehner to retreat.”
David Rogers reported last night at Politico that, “Washington’s political mood darkened dramatically Tuesday, as the debt ceiling crisis showed signs of spinning out of control and Republicans began looking for an escape path from the default showdown they helped create.
“For the first time, President Barack Obama warned that Social Security checks for millions of senior citizens could be in jeopardy next month, and White House talks ran into the early evening with House leaders missing multiple votes on the floor.
“Republicans are no longer making any attempt to hide what’s become a deep-seated distrust of the president, but, even more striking, GOP leaders continue to work at cross-purposes with one another — even at the table in front of Obama himself.”
Yesterday on the AgriTalk radio program with Mike Adams, “Chad Gregory, Senior Vice President of the United Egg Producers explained why his group agreed to a deal with the Humane Society of the United States to push for legislation banning most hen cages currently in use.”
To listen to this discussion from yesterday’s AgriTalk program, just click here.
A second segment from yesterday’s show with Chad Gregory is available here (MP3- 3:05).
An update posted today at the California Farm Bureau Online indicated that, “California producers say they’re unhappy that under the agreement, egg producers here would still have to comply with a 2015 deadline adopted through the passage of Proposition 2 in 2008, rather than a much later deadline being proposed for egg producers in the other 49 states. Proposition 2 stated that enclosures in use in California by 2015 must provide each bird with enough room to stand up, turn around and flap its wings freely. Egg producers in California have repeatedly asked how they could be expected to comply with a standard that is so subjective in interpretation.”
And a news release yesterday from the National Cattlemen’s Beef Association (NCBA) stated that, “[NCBA] Vice President of Government Affairs Colin Woodall issued the following statement regarding a July 7, 2011, agreement between the United Egg Producers (UEP) and the Humane Society of the United States (HSUS) to work together toward the enactment of federally mandated egg production standards.
“‘Cattlemen are rightfully concerned with the recent UEP-HSUS agreement to seek unprecedented federal legislation to mandate on-farm production standards. Cattlemen take very seriously the responsibility to care for their animals. Cattlemen support and actively participate in multiple voluntary, industry led initiatives aimed at ensuring the production of healthy cattle and, ultimately, the safest, highest quality and most nutritious beef. The U.S. beef industry is recognized as a worldwide leader for its proactive and responsible health and wellbeing programs.’”
“‘The cattle industry’s successful programs were not the result of a government mandate. They were developed by industry for industry to ensure cattlemen constantly improve handling and management techniques. And we will continue working to ensure our standards – not just animal care and handling, but food safety and environmental stewardship as well – are based on the latest knowledge. Unlike the UEP-HSUS agreement, our cattle care programs should never be weakened by being misused or construed as the basis of a regulatory or government mandated program.’”