Jacob Bunge reported yesterday at The Wall Street Journal Online that, “U.S. grain and soybean futures closed sharply lower Wednesday—with corn sinking to the lowest level in more than four years—after government and private-sector reports reinforced expectations for massive harvests ahead.
“Corn futures for September delivery fell 4.1%, the biggest decline on a percentage basis since June 30, pressured by reports from Allendale Inc. and Lanworth estimating high yields that may translate to larger U.S. grain stockpiles, analysts said.
“September corn dropped 14½ cents to $3.41¼ a bushel on the Chicago Board of Trade, marking the lowest closing price since June 29, 2010. December corn futures, the most-active contract by volume, dropped 11¾ cents, or 3.2%, to $3.52 a bushel.”
Mr. Bunge added that, “Soybean and wheat futures also declined Wednesday as crop-yield forecasts soothed concerns over weather-related threats to some U.S. soybean fields, and a strengthening U.S. dollar added uncertainty to export prospects for the domestic wheat crop.”
Bloomberg writer Phoebe Sedgman reported today that, “[Corn] farmers may harvest 14.595 billion bushels, FCStone said Sept. 2. The crop may reach 14.409 billion bushels, Illinois-based Allendale said yesterday. The USDA forecasts a record 14.032 billion bushels [related graph].”
Yesterday, the Federal Reserve Board released its Summary of Commentary on Current Economic Conditions. Commonly referred to as the “Beige Book,” the report included observations with respect to the U.S. agricultural economy, a complete summary of these observations has been posted here, at FarmPolicy.com Online.
The Chicago District noted that, “With national records expected for the corn and soybean crops, prices moved down from the prior reporting period…Higher milk prices helped the livestock sector stay profitable even though hog and cattle prices slipped.”
The Minneapolis District stated that, “Livestock and dairy producers continued to benefit from higher output prices and lower feed costs;” while the Kansas City District indicated that, “Improved growing conditions and the potential for record crop production this fall depressed prices and lowered farm income expectations since the previous survey period…District farm income remained well below year-ago levels even with strong profits in the livestock sector due to rising cattle and hog prices.”
Also, the Dallas District noted in part that, “Some cattle producers have started to rebuild their herds after the sharp liquidations that took place over the past few years, but progress has been slow because of historically high cattle prices.”
Meanwhile, Kelsey Gee reported yesterday at The Wall Street Journal Online that, “Animal health company Zoetis Inc. said it received a conditional license from the U.S. Department of Agriculture for a vaccine to combat a swine virus that’s estimated to have killed millions of pigs since entering the country last year.
“The vaccine, which Zoetis on Wednesday said it expects to be available to veterinarians this month, is licensed for use in pregnant female pigs to help them develop antibodies to porcine epidemic diarrhea virus that they can then pass on to pig litters.”
The Journal article added that, “The announcement follows the conditional approval in June of another PEDv vaccine offered by Harrisvaccines Inc., a small company based in Ames, Iowa. Harrisvaccines has sold more than 2.5 million doses of that drug.”
In a separate article yesterday at The Wall Street Journal Online, Kelsey Gee explained that, “Hog futures this year rallied for months as investors braced for PEDv to dramatically reduce supplies of market-ready animals. While millions of pigs have died from the disease since last spring, producers have fed hogs to heavier weights, producing larger volumes of pork in the meantime. As the number of hogs available to processors has grown, hog futures have tumbled nearly a third since mid-July.”
And Reuters writer P.J. Huffstutter reported yesterday that, “Zoetis, which was spun off from drugmaker Pfizer Inc last year, joins a growing push by both the agriculture and pharmaceutical industries to combat the spread of porcine epidemic diarrhea virus (PEDv), which has killed about 13 percent of the U.S. hog herd over the past year.”
Los Angeles Times writer David Pierson reported yesterday that, “Perdue Foods, the nation’s third-largest poultry producer, said it has removed all antibiotics from its chicken hatcheries to address growing concerns about bacterial resistance to the widely used drugs.”
Sen. Dianne Feinstein (D., Calif.) indicated in an update yesterday that, “One of the largest poultry producers in the United States has now committed to using antibiotics more responsibly. It has successfully eliminated the use of antibiotics in its hatcheries and, in doing so, has demonstrated the agriculture industry can be an effective partner in ensuring antibiotics stewardship.”
Yesterday’s update noted that, “Feinstein is the sponsor of the Preventing Antibiotic Resistance Act, a bill pending in the U.S. Senate that would direct the Food and Drug Administration to prohibit the use of human antibiotics in the feed and water of healthy farm animals if it jeopardizes human health.”
In other developments, Leslie Josephs reported in today’s Wall Street Journal that, “Brazil’s sugar industry is slimming down, a shift that producers hope will deliver them from a yearslong glut that has depressed prices.
“The sugar surplus has led processors to shut dozens of mills and some growers to invest less in their fields. The moves highlight the desperate economics of the domestic sugar industry following an ill-fated expansion.
The Journal article noted that, “The effect of the cutbacks in Brazil, which is the world’s biggest producer of the sweetener and accounts for more than 40% of exports, hasn’t yet hit the world marketplace, where prices are near their lowest in more than six months. But many analysts expect the impact to be felt as soon as next year.
“Some forecasters anticipate global production to fall short of demand in the 2015 crop year, ending four years of oversupply [related graph].”
With respect to trade issues, an opinion item posted yesterday at The Wall Street Journal Online indicated that, “Shinzo Abe’s cabinet reshuffle Wednesday received a positive reaction from the public and the markets. The Japanese Prime Minister’s decision to place several reformers in key positions is certainly positive… Koya Nishikawa as Agriculture Minister should be good news for the Trans-Pacific Partnership free trade talks. Mr. Nishikawa has headed a ruling party committee on the TPP, so with the farm portfolio in hand he could shepherd the final stages of negotiation.”
DTN’s China Correspondent Lin Tan reported yesterday (link requires subscription) that, “China will import more than 70 million metric tons of soybeans in the 2013-14 crop year — a new record — experts said.”
The DTN article explained that, “While the official August data hasn’t been released, the market estimates that 6.25 mmt (227 mb) were imported in August, bringing the total for the year to 70.25 mmt (2.58 billion bushels), said Zhonghua Wang, market analyst in Beijing.
“The 70 mmt estimate is higher than previous local estimates and USDA’s estimates, Wang added. USDA estimated China’s 13/14 crop year soybean imports at 69 mmt in its latest World Agricultural Supply and Demand Estimates report.”
Policy Issues- Biotech, Biofuels, and, September Congressional Activity
Jacob Bunge reported in today’s Wall Street Journal that, “When Monsanto Co. purchased Climate Corp. for $930 million last year, it got a San Francisco-based startup that crunches weather data to improve crop yields and design insurance. It also got David Friedberg, the company’s 34-year-old co-founder, who may prove an even more valuable asset.
“Mr. Friedberg, a former Google Inc. executive, now oversees the ‘precision agriculture’ services Monsanto sells to farmers, a major initiative encompassing high-tech planting equipment, soil and seed analysis, and weather modeling.”
Mr. Bunge indicated that, “The lifelong vegetarian has also emerged as an unlikely champion of Monsanto at a time when the company—and the business of genetically engineering crops that it pioneered—face intensifying attacks.
“State ballot initiatives have sought to compel companies to label foods containing genetically modified organisms, or GMOs—which the industry fears would be a scarlet letter. Vermont in May became the first state to unilaterally adopt such a measure. Meanwhile, companies like General Mills and Chipotle are stripping GMOs from some foods in response to consumer groups raising health and environmental concerns.”
The Journal article noted that, “Genetically modified seeds, in Mr. Friedberg’s view, enable farmers to grow larger crops with less resources and represent a way to help sustain the growing world population. Some of Monsanto’s critics ‘want to live in a natural world where we’re all living in treehouses in the rainforest and picking coconuts out of the tree,’ Mr. Friedberg said. ‘Maybe it would be possible if we had 100,000 people living on earth, but that’s not the reality that we’re living in today.’”
On the issue of biofuels, Donnelle Eller reported yesterday at The Des Moines Register Online that, “A new $275 million ethanol plant that uses corncobs, leaves and husks to produce ethanol provides the foundation for a ‘new energy future’ that reduces America’s reliance on foreign oil, is more environmentally friendly and can help revitalize rural America, officials said Wednesday at the opening of Poet-DSM’s Project Liberty.”
The Register article added that, “The facility, [Sec. of Ag. Tom Vilsack] said, is ‘literally taking the impact of millions of cars off the roads and cleaning our air.’
“‘There may be some who say, ‘Is it sustainable? Does it protect the environment? Does it help us as we deal with weather variabilities?’’ Vilsack said. ‘I say to those who are so skeptical: Come to Emmetsburg [Iowa]. See for yourself a facility that’s so efficient, it doesn’t need outside power sources. It can produce its own power from the production process.’
“Additionally, Vilsack said the project — and others that follow it — have the potential to help revitalize rural Iowa and America.”
Timothy Cama reported yesterday at The Hill Online that, “Wednesday’s grand opening [of the Emmetsburg, Iowa plant] was a major milestone for backers of biofuels. It is only the second commercial-scale facility in the country to produce cellulosic ethanol, which is made from woody, inedible parts of plants, in contrast to traditional ethanol.”
Meanwhile, Scott Wong reported yesterday at The Hill Online that, “Speaker John Boehner told his conference on Wednesday that the September legislative session will be ‘brief but busy,’ giving Republicans a chance to paint a ‘stark contrast’ with Democrats before the November elections.
“‘The House is going to spend September focused on American solutions to help get people back to work, lower costs at home, and restore opportunity for all Americans. That’s our closing argument,’ the Ohio Republican said on a conference call with GOP lawmakers, according to a source on the line.”
However, Mario Trujillo reported yesterday at The Hill Online that, “Speaker John Boehner (R-Ohio) on Tuesday said Congress could tackle immigration reform next year if conditions are right.
“Boehner, however, warned it is contingent on President Obama following the law as he decides on executive actions to take on the issue.”
And Alexander Bolton reported yesterday at The Hill Online that, “Senate Republican Leader Mitch McConnell (Ky.) said Wednesday that Republicans want to pass a clean short-term government funding measure this month to avoid drama over a possible government shutdown.”
Also with respect to the budget, Benjamin Goad reported yesterday at The Hill Online that, “The largest food safety overhaul in generations is being starved of funding needed to enforce a host of new regulations for factories, farms and importers, safety advocates warn.
“The 2010 Food Safety Modernization Act (FSMA) was billed as creating a fundamental shift in the way government protects the nation’s food supply against the threat of food-borne illness.
“But despite bipartisan and industry support for the program, only a fraction of the funding needed to implement and enforce it has materialized. Now, with most fiscal 2015 funding issues likely in limbo until after the midterm elections, uncertainty remains.”
And a news release late last month from the House Committee on Natural Resources indicated that, “The House Natural Resources Committee will hold a Full Committee field hearing in Harrisburg, Pennsylvania on September 8, 2014 on ‘The Northern Long Eared Bat: The Federal Endangered Species Act and the Impacts of a Listing on Pennsylvania and 37 Other States.’
“This hearing will examine questions regarding bat data and non-human-caused disease, as well as the likely negative impacts that a federal endangered listing of the Northern Long Eared Bat under the Endangered Species Act (ESA) would have on important activities such as farming.”
The release noted that, “‘This hearing is part of the House Natural Resources Committee’s effort to improve and update the Endangered Species Act. I want to thank Chairman Doc Hastings for initiating this timely hearing on the proposal by the U.S. Fish and Wildlife Service to designate the Northern Long Eared Bat as endangered, which will have sweeping effects on a range of economic sectors in 38 states including Pennsylvania,’ said Rep. Glenn ‘GT’ Thompson (PA-05).”
A news release yesterday from Rep. Rosa DeLauro (D., Conn.) stated that, “[Rep. DeLauro] and Senator Tom Harkin (D-IA) led a group of Congressional Democrats today in calling for the Obama Administration to strengthen its oversight of food and beverage companies and ensure that they are making progress on reducing unhealthy food marketing to children.”
And an update yesterday from the Federal Reserve indicated that, “Five federal agencies are seeking comment on a proposed rule to establish margin requirements for swap dealers, major swap participants, security-based swap dealers, and major security-based swap participants as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).”
Food Security: USDA- Economic Research Service Report
Reuters writer Ros Krasny reported yesterday that, “The percentage of Americans regarded as ‘food insecure’ – lacking access to enough food for a healthy life – has declined in the past few years but still represents over 17 million households, the U.S. Agriculture Department said on Wednesday.
“About 14.3 percent of households were termed food insecure in 2013, down from 14.9 percent in 2011.
“Rates of food insecurity were substantially higher than the national average in households with incomes near or below the poverty line, those headed by single women or single men, and those headed by blacks and Hispanics, USDA’s Economic Research Service said in an annual report [summary of report here].”
Bloomberg writer Alan Bjerga reported yesterday that, “North Dakota’s oil and gas production boom has boosted incomes and, according to a government report today, left the state with the lowest percentage of households struggling to afford food.
“An estimated 8.7 percent of North Dakota households were at risk of hunger in 2013, compared with 14.3 percent of U.S. households, the U.S. Department of Agriculture said in an annual report. Virginia was second lowest, at 9.5 percent, the USDA reported, and Arkansas was highest at 21.2 percent.”
James Bovard indicated in a column in today’s Wall Street Journal that, “Is being ‘food insecure’ the same as going hungry? Not necessarily. The USDA defines a ‘food insecure’ household in the U.S. as one that is ‘uncertain of having, or unable to acquire, enough food to meet the needs of all their members because they had insufficient money or other resources for food’ at times during the year. The USDA notes: ‘For most food-insecure households, the inadequacies were in the form of reduced quality and variety rather than insufficient quantity.’
“The National Academy of Sciences urged the USDA in 2006 to explicitly state that its food-security survey results are not an estimate of nationwide hunger. The USDA responded by dropping any mention of ‘hunger’ in the survey’s response categories. Nevertheless, the survey’s results continue to be pervasively misrepresented as an accurate measure of hunger in America.”
Janet Hook and Mark Peters reported in today’s Wall Street Journal that, “Upending the U.S. Senate race in Kansas, the Democratic candidate has withdrawn from the contest, leaving Republican Sen. Pat Roberts with a narrowed field and a potentially formidable opponent in an independent candidate.
“The development may turn the race from a fairly safe contest for Mr. Roberts into a more difficult election.
“Democrat Chad Taylor, a county prosecutor, offered no explanation for why he left the race.”
Alexandra Jaffe reported yesterday at The Hill Online that, “Despite filing papers with the Kansas secretary of State withdrawing from the Senate race late Wednesday, Democrat Chad Taylor may be stuck on the ballot this fall.
“Two election law statutes have raised questions about whether Taylor gave sufficient cause to remove himself from the ballot, and, if so, whether Democrats must ultimately choose a candidate to replace him.”
Also, Emily Cahn and Abby Livingston penned an update yesterday at Roll Call Online titled, “The 10 Most Vulnerable House Members.”