FarmPolicy

December 15, 2019

Ag Economy; Climate; CFTC; Data; Immigration; and, Policy Issues

Agricultural Economy

Donnelle Eller reported yesterday at The Des Moines Register Online that, “Storms over the past week have damaged thousands of crop acres in northwest Iowa, officials say, leaving farmers uncertain whether they’ll be able to replant.

“‘I don’t ever remember seeing this much standing water,’ said Joel DeJong, an Iowa State University field agronomist in northwest Iowa for over two decades. ‘There’s a lot of standing water.’

Hail and wind also damaged Iowa corn and soybeans. And farmers on the western state border have rising river waters.”

The article noted that, “Farmers will assess over the coming days whether crops can be replanted.”

Cheri Zagurski reported yesterday at DTN (link requires subscription) that, “Corn and soybean conditions worsened slightly and winter wheat harvest more than doubled to 33% complete in the week ended June 22, according to USDA’s latest Crop Progress report.

Seventy-four percent of the nation’s corn crop is rated good to excellent, compared to 76% last week…Seventy-two percent of the soybeans are rated good to excellent, compared to 73% percent last week.”

The DTN article added that, “Winter wheat harvest is at 33%, compared to 16% last week and a five-year average of 31%. Winter wheat condition is holding steady at 44% poor to very poor and 25% good to excellent.”

Bloomberg writer Megan Durisin reported yesterday that, “Corn futures fell the most in five weeks on speculation that crop conditions will improve in the U.S., the world’s biggest producer and exporter. Wheat dropped, while soybeans rose.

Nebraska and Iowa got as much as 8 inches (20 centimeters) of rain over the weekend, and moisture in much of the rest of the Corn Belt remains ‘favorable,’ according to Commodity Weather Group in Bethesda, Maryland. Weather conditions are expected to benefit crops through the next several weeks, the group’s report said.

“‘When you look at the entire domestic picture of the U.S., the rains that have fallen in most cases have been beneficial,’ James Bower, the president of Bower Trading Inc. in Lafayette, Indiana, said in a telephone interview. ‘The crop is rated very, very high.’”

Yesterday’s article noted that, “Corn prices have dropped 20 percent in the past 12 months. The USDA has forecast that farmers will harvest a record 13.935 billion bushels in the season starting Sept. 1.”

University of Illinois agricultural economist Darrel Good indicated yesterday at the farmdoc daily blog (“Anticipating the Soybean Stocks and Acreage Estimates”)  that, “For the most part, expectations are that the upcoming forecast of planted acreage will not be smaller than March intentions. If large acreage is confirmed, prospects for a record large soybean crop and a build in stocks during the year ahead will be maintained. The potential U.S average yield and size of the crop will be indicated by the weekly crop condition ratings. In the first two reporting weeks, the percent of the crop rated in either good or excellent condition was record large. That percentage is expected to decline as the season progresses, as it almost always does, but will likely be above average for at least the next few weeks.”

Meanwhile, Kelsey Gee reported yesterday at The Wall Street Journal Online that, “U.S. hog futures jumped to a record Monday, signaling that grocery shoppers could face further increases in pork prices in the months ahead.

“Hog futures for July, the front-month contract, gained 0.47 cent, or 0.4%, to $1.283 a pound at the Chicago Mercantile Exchange, surpassing the previous record settlement reached on Thursday.

Hog futures have soared 50% this year–among the fastest-rising commodities–as a deadly swine disease has cut into supplies of slaughter-ready animals. The gains have extended to bacon, ham and pork-chop prices at the supermarket, with average U.S. retail pork prices reaching a record $4.10 pound last month, up 15% from a year earlier, according to the U.S. Agriculture Department.”

The Journal article indicated that, “Cattle futures extended a recent climb, supported, too, by smaller-than-expected supplies. June live-cattle futures advanced 0.6 cent, or 0.4%, to $1.4815 a pound. August feeder cattle gained 1.02 cent, or 0.5%, to $2.0790 a pound.”

In other production related news, Rani Molla reported yesterday at The Numbers blog (Wall Street Journal) that, “‘Super weeds’ are becoming increasingly common.

Texas cotton growers are petitioning the Environmental Protection Agency to let them use propazine, an alternative herbicide to Monsanto’s glysophate, which is currently used, to combat a ‘super weed’ that has developed resistance to it. According to the Weed Science Society of America, these herbicide-resistant weeds were first reported in the 1950s — soon after farmers began using the first major synthetic herbicides — and are on the rise [related graph].”

In more specific news regarding food and consumer consumption, Julie Jargon reported in yesterday’s Wall Street Journal that, “A decade ago, few Americans had heard of gluten. Today, one survey says, almost a third are trying to avoid the element found in grain. In growing numbers, the world’s biggest food makers and restaurant chains are retooling recipes and labels to tap into the concern, creating a multibillion-dollar business out of gluten-free products…[Y]et gluten-free lovers of the world may be in for a surprise. Many health experts say there is no proven benefit to going gluten-free except for a small sliver of the population whose bodies can’t process the protein. Indeed, according to nutritional food labels, many gluten-free foods contain fewer vitamins, less fiber and more sugar. It is a point some food makers don’t dispute, saying they are simply responding to consumer demand without making health claims [related graph].”

In today’s Wall Street Journal, Julie Jargon reported that, “Food and restaurant companies are under increasing pressure to make products healthier, but sometimes they don’t want customers to know when they have cut the salt or fat.

“Companies have employed the tactic, which some executives call ‘stealth health,’ in tweaking products including Hamburger Helper, Oreo cookies and McDonald’s french fries.

“‘When you tell people something’s healthy, they think it doesn’t taste good,’ said Sara Bittorf, chief brand officer of Boston Market Corp.”

Today’s Journal article pointed out that, “It might seem like food companies would want to trumpet their health initiatives as much as possible. Many times they do, but companies are often cautious because altering the recipe of a successful product to cut salt, sugar, fat or other ingredients risks changing flavor and texture [related graph]”

In addition, a recent update at The Washington Post Online noted that, “Americans, on average, drink 37 percent less milk today than they did in 1970, according to data from the USDA;” and, The Wall Street Journal reported yesterday that, “U.S. orange-juice retail sales fell to the lowest level in 12 years as consumer demand for what was once a staple of the American breakfast table continues to drop.”

In transportation related news, Jacob Bunge and David George-Cosh reported yesterday at The Wall Street Journal Online that, “U.S. regulators ordered two railways to detail their plans to speed shipments of grain, amid a monthslong backlog that has frustrated farmers.

The Surface Transportation Board ordered BNSF Railway Co. and Canadian Pacific Railway Ltd. to disclose plans to address the delays, which have forced some farmers in the upper Midwest to heap grain on the ground after running out of storage space following massive harvests of last autumn.”

The Journal writers explained that, “This year’s bitterly cold winter slowed rail networks in the U.S. and Canada, forcing railroads to run shorter trains and aggravating congestion on a system already dealing with increased shipments of crude oil from North Dakota’s Bakken Shale region. Farmers harvested the largest U.S. corn crop in history and had one of the biggest soybean harvests.

The Surface Transportation Board said data submitted by both railroads indicated some progress toward reducing grain delays. But the agency said it remained concerned about the large quantities of grain that still have to be moved in the limited time left until the next harvest.

“Farmers have said that grain left outside over the summer could rot, costing farmers money.”

More broadly, in global news developments, on agricultural and trade related issues, Reuters writer James Pearson reported yesterday that, “North Korea’s rivers, streams and reservoirs are running dry in a prolonged drought, state media said on Monday, prompting the isolated country to mobilize some of its million-strong army to try to protect precious crops.

“The drought is the worst in North Korea for over a decade, state media reports have said, with some areas experiencing low rainfall levels since 1961.”

Debiprasad Nayak reported yesterday at The Wall Street Journal Online that, “India, the world’s biggest consumer of sugar, will more than double its import duty on the commodity to 40%, hoping to slow the flow of inexpensive imports into its market.

“India’s Food Minister Ram Vilas Paswan said Monday that the import duty will be ratcheted up from 15% so that the country’s refiners—who are forced to buy sugar cane at high, government-set prices—can compete with sugar imports. He didn’t when the new higher tariff would take effect.”

An update yesterday at the USDA’s Economic Research Service Chart Gallery indicated that, “With record shipments so far in 2013/14 (September/August marketing year), China has emerged as a major buyer of U.S. feed grains, but this trade is now being disrupted by China’s rejection of U.S. shipments containing unapproved genetically modified (GM) material [related graph].”

 

Climate Issues

Justin Gillis reported in today’s New York Times that, “More than a million homes and businesses along the nation’s coasts could flood repeatedly before ultimately being destroyed. Entire states in the Southeast and the Corn Belt may lose much of their agriculture as farming shifts northward in a warming world. Heat and humidity will probably grow so intense that spending time outside will become physically dangerous, throwing industries like construction and tourism into turmoil.

That is the picture of what may happen to the United States economy in a world of unchecked global warming, according to a major new report being put forward Tuesday by a coalition of senior political and economic figures from the left, right and center, including three Treasury secretaries stretching back to the Nixon administration.”

 

Commodity Futures Trading Commission

The House Majority Leader’s Daily Schedule for today noted that: “Complete Consideration of H.R. 4413 -­‐ Customer Protection and End User Relief Act, Rules Committee Print (Structured Rule) (Sponsored by Rep. Frank Lucas / Agriculture Committee),” a measure to reauthorize the Commodity Futures Trading Commission.

Yesterday, on the House floor, House Ag Committee Chairman Frank Lucas noted that, “I rise today in strong support of H.R. 4413, the Customer Protection and End-User Relief Act. This is a bipartisan bill to reauthorize the Commodity Futures Trading Commission that I introduced, along with my colleagues Ranking Member Collin Peterson and Chairman and Ranking Member of the Subcommittee on General Farm Commodities and Risk Management, Mike Conaway and David Scott…[U]ltimately, we developed legislation to reauthorize and reform the CFTC in a way that would not only improve operations at the agency, but also protect customers from another market failure like what we saw with MF Global and PFG Best. Our efforts will also increase certainty in the marketplace and provide a more balanced approach to regulations impacting job creators.

“I am proud to say this overwhelmingly bipartisan bill passed unanimously out of the Agriculture Committee by a voice vote.”

 

Data

Reuters writer Karl Plume reported yesterday that, “In the tussle between U.S. farmers and Big Data purveyors, farmers are winning some control over details about crop and growing conditions on their land, but most data sellers are retaining ultimate say over how they can use the information that could be worth billions of dollars.

“Although companies like Deere & Co and Monsanto Co’s Climate Corp are giving some ground by putting legal teeth behind promises made during sales pitches, they are refusing to back away from claims they have an absolute right to all data collected as combines, tractors and other equipment work fields across the country.

“Some farmers suspect they are not getting their share.”

 

Immigration

Jennifer Medina reported in yesterday’s New York Times that, “In his new job as the second-in-command for House Republicans, Mr. McCarthy [Rep. Kevin McCarthy, elected as majority leader on Thursday], along with Speaker John A. Boehner, will play a key role in determining whether any legislation on immigration can pass, or even be voted on. The defeat of his predecessor, Eric Cantor, was widely seen as a deadly blow to an immigration overhaul — largely because Mr. Cantor seemed open to the idea of amnesty for some immigrants, and the candidate who beat him in the Virginia Republican primary, David Brat, used that position against him. But many of the people demanding changes believe Mr. McCarthy is their best hope to push through any bill this year. The path to citizenship, many immigration activists like to say, must go through Bakersfield.

Perhaps no other congressional district epitomizes the vexing immigration debate better than Mr. McCarthy’s, which lies at the southern tip of California’s Central Valley and stands out as one of the state’s few remaining Republican strongholds. The agricultural center has long attracted — and relied on — a steady stream of immigrants to work in the fields. Today, in this historical home of Dust Bowl migrants, roughly a third of the district is Latino.

“Although Mr. McCarthy has said he is open to creating some sort of legal status for immigrants already living in the United States, he has not taken a lead role on such legislation or made clear what kind of changes he would support.”

 

Policy Issues: Drought, Farm Bill

Carolyn Lochhead reported yesterday at The Politics Blog (San Francisco Chronicle) that, “Northern California lawmakers asked Monday that California’s two senators open up their secret talks with House Republicans on a drought bill.

“The House Democrats are at odds with Democratic Sens. Dianne Feinstein and Barbara Boxer over a bill that would make it easier to send more water from the Sacramento-San Joaquin River delta to Central Valley farms and weaken protections for fish. They are more alarmed at what might emerge from negotiations between the senators and House Republicans.

“Feinstein is the lead author of the bill that she managed to get passed by unanimous consent in the Senate last month. House Republicans passed their own, more far-reaching bill in February that would waive endangered species protections, override the federal “wild and scenic river” designation for a short stretch of the Merced River and repeal the restoration of the San Joaquin River, much of which had been dry for decades because of diversions for irrigation.”

Ms. Lochhead added that, “None of the House provisions is in Feinstein’s bill, which is more narrowly tailored but would alter current regulations to make it easier to move water south during the drought.

“Neither bill was subjected to committee scrutiny.”

Brianna Sacks reported yesterday at the Los Angeles Times Online that, “Faced with daunting financial challenges, new farmers are getting some help from the U.S. Department of Agriculture.

“The department said at a UC Davis conference Monday that it has launched a new website that focuses on the specific needs of beginning farmers and ranchers.”

“The site, www.usda.gov/newfarmers, is aimed at attracting and educating a new generation of farmers to an old American industry that is experiencing a ‘renaissance,’ said USDA deputy secretary Krysta Harden.”

AP writer Scott Smith reported yesterday that, “The newly created New Farmers website acts as a portal to resources offered by the U.S. Department of Agriculture to young farmers and ranchers. It includes information on loan assistance, risk management and educational opportunities. The website features success stories of farmers who have used USDA resources and expanded their business.”

Keith Good

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