FarmPolicy

October 15, 2018

Persistent Drought- Negative Repercussions for Livestock Producers

Perry Beeman and Dan Piller reported in today’s Des Moines Register that, “Iowa and the rest of the Midwest are likely to be warmer and drier than normal in early winter, the National Weather Service projected on Thursday.

“Forecasters said there is little evidence the drought will ease, though it might shift to the west. That would still leave the Midwest solidly in the drought, which has cut corn yields, threatened drinking water supplies and dried wetlands used by wildlife.”

The Register article included these graphs (click on graph for expanded view):

Beeman and Dan Piller added that, “Farmers are watching particularly closely because if Iowa’s fields don’t get significant rain by Dec. 1, next year’s corn seeds will get off to another thirsty start, state agriculture officials say.”

The Register article explained that, “Because corn and soybean prices are 20 to 25 percent higher this year than last, the economic impact on Iowa agriculture from the 2012 drought will be muted. Farmers expect to reap close to the record $20 billion in cash receipts they enjoyed in 2011.

Iowa hog and cattle producers will face most of the negative effects. They are girding to pay record feed costs for what is the nation’s largest hog inventory and fifth-largest cattle feeding stock. Hog producers are expected to finish the year in the red and, barring an unexpected turnaround, will suffer similar losses next year, according to Steve Meyer of Paragon Economics, an analyst for pork producers’ organizations.”

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Economic Research Service: Oil Crops Outook- October

On October 12, the U.S. Department of Agriculture’s Economic Research Service (ERS) released its Oil Crops Outlook report, “Advancing Soybean Harvest Eases Near-term Prices.”

In part, the ERS report stated that, “USDA raised its forecast of the 2012 U.S. soybean yield this month to 37.8 bushels per acre. Coupled with a 1.1-million-acre increase in harvested acreage, a higher yield boosts the forecast of 2012 U.S. soybean production by 226 million bushels this month to 2.86 billion. USDA raised its 2012/13 export forecast by 210 million bushels to 1.265 billion. Similarly, the expected crush for 2012/13 is up 40 million bushels from the September forecast to 1.54 billion.

“Based primarily on a larger U.S. crop, global soybean production for 2012/13 is forecast up to 264.3 million metric tons from 258.1 million last month. An improved U.S. export share in 2012/13 would moderate soybean exports from Brazil and Argentina to 37.4 million tons and 12 million tons, respectively.”

The ERS report contained this graph depicting 2012/13 soybean supply, exports and domestic crush (click on the graphs for full, expanded view):

Last week’s ERS report added that, “In September, a better yield outlook and the surge of U.S. new-crop supplies into the market moderated soybean prices. Between late August and early October, central Illinois cash prices plunged by more than $2 per bushel to around $15.25 per bushel. USDA lowered its forecast of the U.S. season-average farm price to $14.25- $16.25 per bushel from $15-$17 last month. Price relief may prove to be short- lived, however. Once the harvest finishes and demand accelerates, upward momentum for soybean prices could soon build again.”

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Farm Bill; Budget; Ag Economy; Biofuels; and, CFTC Issue

Farm Bill –Policy Issues (Conservation, Nutrition, Trade, Regulations, Labor), Political Notes

Randy Olson reported in yesterday’s Sauk Herald (Sauk Centre, Minn.) that, “As stark as the outlook is for the hard-to-handle U.S. federal budget, Congressman Collin Peterson (DFL-Detroit Lakes) has a simple message for people to take to heart. ‘We’ll all have to pay a little more, and we’ll all get a little less,’ Peterson said during an interview on Monday in Sauk Centre. ‘It’s not an appealing message to share during election season, but we have to get our budget under control,’ the 11term congressman added.”

The article noted that, “As the ranking Democrat on the House Agriculture Committee, Peterson has been at the front of Farm Bill policy discussions since they began three years ago. ‘I worked during my last term on the Farm Bill, when Democrats were in the majority and I was Chairman,’ Peterson explained. ‘We were the only committee working under the Super Committee in 2011 who produced a bill. When the Super Committee fell apart, we took Farm Bill discussion to the Senate and took it up in the House this past July. After 13 hours in committee and 99 amendments, we got it out pretty much how we put it together’…‘We had a deal that included major spending cuts, but the Republicans in the House didn’t bring it up,’ Peterson stated. ‘We had plenty of time to finish it, but they broke two weeks early. Right-wing groups like Club for Growth said if anyone voted for it, they would get a negative score. Many Congressmen have farmers in their districts but left them out to dry.’”

Joel Myhre reported yesterday at the Fergus Falls Journal (Minn.) Online that, “Holding down Minnesota’s Seventh District for 21 years, DFL Congressman Collin Peterson is running for another term with his focus on the farm bill and responsible government spending…‘My number one priority is to get the farm bill done,’ he said. ‘That has been my focus and will continue to be my focus until it’s done.’”

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