FarmPolicy

November 21, 2019

Wednesday Update: Ag Economy; Policy; and, Regulations

Reminder: Only two FarmPolicy.com reports left.

Agricultural Economy

A news release yesterday from USDA’s National Agricultural Statistics Service (NASS) stated that, “For a second year in a row, U.S. growers are raising the bar on soybean acreage. Growers across the United States intend to plant an estimated record-high 84.6 million acres of soybeans in 2015, [related graph], according to the Prospective Plantings report released today by [NASS].”

Yesterday’s release added that, “NASS today also released the quarterly Grain Stocks report to provide estimates of on-farm and off-farm stocks as of March 1. Key findings in that report include:

“- Corn stocks totaled 7.74 billion bushels, up 11 percent from the same time last year. On-farm corn stocks were up 13 percent from a year ago, and off-farm stocks were up 7 percent.

“- Soybeans stored on farms totaled 1.33 billion bushels, up 34 percent from March 1, 2014. On-farm soybean stocks were up 60 percent from a year ago, while off-farm stocks were up 18 percent.”

University of Illinois agricultural economist Darrel Good indicated yesterday at the farmdoc daily blog (“USDA Stocks and Acreage Estimates Smaller than Expected for Soybeans and Larger than Expected for Corn”) that, “Compared to pre-report expectations, the March 1 soybean stocks and 2015 planting intentions estimates represent modestly friendly surprises. On the other hand, the stocks and planting intentions estimates represented modestly negative surprises for the corn market. Part of the negative corn price response to the estimates likely reflects inflated trend yield estimates for 2015 and perhaps an incorrect interpretation of the pace of feed and residual use during the first half of the marketing year. Attention will now turn to spring weather and planting progress.”

Gregory Meyer reported yesterday at The Financial Times Online that, “After the reports’ release CBOT May corn was down 3.5 per cent to $3.80¾ a bushel. CBOT May wheat was at $5.12¾ a bushel, off 3.3 per cent. CBOT May soyabeans rose 0.7 per cent to $9.74¼ a bushel.

World inventories of grain and oilseeds are bulging after two years of good harvests.”

The FT article noted that, “The ratio of cereals stocks to global demand is at 25.4 per cent, the highest in more than a decade, according to the UN Food and Agriculture Organisation. In Brazil, a rival to the US in soyabean production, a large harvest is under way.

Relatively high stocks have eased big price swings in agriculture. Corn has traded in a narrow range below $4 per bushel for most of the year. Soyabeans, which are crushed to make animal feed and vegetable oil, have edged below $10 a bushel.”

Mr. Meyer pointed out that, “Analysts have had less insight into demand for corn and soya from the meat industry. Pork and poultry producers often take advantage of lower grain prices by expanding pig herds and chicken flocks but the grain stocks report indicated that demand for corn feed had not lived up to expectations.”

AP writer David Pitt reported yesterday that, “Corn can still be profitable for farmers who own their own land and don’t have high overhead costs — particularly in the main corn belt states of Iowa and Illinois where per-acre yields can be high. Many farmers outside of those states, however, are betting they can make more money on soybeans.”

Jesse Neman and Jacob Bunge reported yesterday at The Wall Street Journal Online that, “Wheat planting will total 55.4 million acres, down from 56.82 million last year, according to the USDA. Analysts had forecast plantings of 55.61 million acres…[M]ay wheat futures fell 18.5 cents, or 3.5%, to $5.1175 a bushel.”

Reuters writer Mark Weinraub reported yesterday that, “Sorghum acreage was forecast at 7.9 million, 10.7 percent more than in 2014. Analysts had expected sorghum acres to rise to 8.129 million due to soaring demand from China.”

In other news, Donnelle Eller reported yesterday at The Des Moines Register Online that, “After peaking two years ago, Iowa farmland values have tumbled about 15 percent, a new report shows, and are likely to continue dropping, given weakness in corn and soybean prices.

“The hit, while mostly on paper, is expected to further dent farmer confidence in spending on tractors, combines and other big-ticket equipment, say experts.

“That hurts Iowa’s economy and is already rippling through farm-equipment factory floors.”

And, Stephanie Strom reported in today’s New York Times that, “Archer Daniels Midland, one of the world’s largest commodities suppliers, has joined the growing number of major agriculture and food companies promising to take steps to conserve forests that are threatened by the global demand for commodities like palm oil and soy.

“The company, known as ADM, offered a brief outline of its commitment on Tuesday, including its intention to work with third-party environmental experts to assess the impact of its supply chains on forests and other areas that have high conservation value. It will formally announce details of its policy at its annual meeting on May 7.”

 

Policy Issues

Bloomberg’s Alan Bjerga provided an interesting graphical update yesterday regarding Farm Bill issues titled, “Betting the Farm,” which can be viewed by clicking here.

From an international perspective, USDA’s Economic Research Service released a report yesterday titled, “Cotton Policy in China.”

With respect to nutrition related issues, Cristina Marcos reported yesterday at The Hill Online that, “Rep. Rosa DeLauro (D-Conn.) has introduced legislation to tax caloric sweeteners in beverages as a means of reducing obesity and other health conditions among Americans.

“DeLauro’s bill would impose a tax of one cent per teaspoon of sweeteners like sugars and high fructose corn syrup.”

And, a news release yesterday from the Food Research and Action Center (FRAC) indicated that, “School breakfast is getting healthier while reaching more children, and that’s good news for low-income children who are participating in record numbers. A new analysis by the [FRAC] examines trends in school breakfast participation over the past decade, and finds rapid growth in this program both before and after the new, improved nutrition standards for breakfast were introduced.”

A news release yesterday from Rep. Kristi Noem (R., S.D.) stated that, “In a letter to the Secretaries of Agriculture (USDA) and Health and Human Services (HHS) Tuesday, Reps. Kristi Noem, Vicki Hartzler and more than 65 other Members of Congress urged the agencies to base upcoming food guidelines on nutrition factors, not an environmental agenda. The congressional attention was sparked after the administration revealed it was taking a food’s carbon footprint into account when developing recommendations for new dietary guidelines – the first time such considerations have been made in U.S. history.”

 

Regulations

A news release yesterday from the House Ag Committee stated that, “House Agriculture Committee Chairman K. Michael Conaway (R-TX), House Oversight and Government Reform Chairman Jason Chaffetz (R-UT), and House Science, Space, and Technology Chairman Lamar Smith (R-TX) sent a letter to Environmental Protection Agency (EPA) Administrator Gina McCarthy asking for documents to confirm whether or not the agency weighed the impact of the proposed ‘waters of the United States’ (WOTUS) rule on farmers and ranchers.”

Also, Reuters writer Carey Gillam reported yesterday that, “U.S. regulators will put new restrictions on the world’s most widely used herbicide to help address the rapid expansion of weeds resistant to the chemical, Reuters has learned.

“The Environmental Protection Agency confirmed it will require a weed resistance management plan for glyphosate, the key ingredient in Monsanto’s immensely popular Roundup weed-killer.

“The agency has scheduled a conference call for next week with a committee of the Weed Science Society of America to discuss what the final plan for glyphosate should entail, said Larry Steckel, a Tennessee scientist who chairs the committee.”

Keith Good

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