Reuters News reported yesterday that, “U.S. businesses urged President Barack Obama on Wednesday to make a case for fast-track authority on trade agreements before his upcoming trip to Asia, which is seen as an opportunity to push a Pacific trade deal.
“Myron Brilliant, head of international affairs for the U.S. Chamber of Commerce, said Obama should send a signal about trade in the time between mid-term U.S. elections on Nov. 4 and an Asia-Pacific Economic Cooperation (APEC) summit in China on Nov. 10-11.
“A bipartisan bill on so-called trade promotion authority (TPA), which allows lawmakers to set priorities for trade deals in return for a yes-or-no vote, was introduced in Congress in January but has not progressed to a vote.”
The U.S. Department of Agriculture’s Economic Research Service (ERS) released a report yesterday titled, “Agriculture in the Trans-Pacific Partnership,” which stated in part that, “The proposed Trans-Pacific Partnership (TPP) is a trade and investment agreement under negotiation by 12 countries in the Pacific Rim, including the United States. This report assesses the potential impacts of eliminating all agricultural and nonagricultural tariffs and tariff-rate quotas (TRQs) under a TPP agreement on the region’s agriculture in 2025—the assumed end date of the pact’s implementation—compared with baseline values for 2025 without a TPP. Cutting tariffs is only one of the many goals of the TPP negotiations, but it is an important one for agricultural trade. The value of intraregional agricultural trade in 2025 under a tariff- free, TRQ-free scenario is estimated to be 6 percent, or about $8.5 billion higher (in 2007 U.S. dollars) compared with baseline values. U.S. agricultural exports to the region will be 5 percent, or about $3 billion higher, and U.S. agricultural imports from the region in 2025 will be 2 percent, or $1 billion higher in value compared with the baseline.”
The ERS report also noted that, “While each member country will experience growth in both its agricultural imports and exports, Japan and the United States will account for the largest shares of the increases in intraregional imports and exports, respectively. The United States will supply about 33 percent of the expansion in intraregional agricultural exports—the value of U.S. agricultural exports to TPP partners in 2025 is estimated to be 5 percent ($2.8 billion) higher under the TPP scenario than in the baseline. Japan will account for almost 70 percent of the expansion in intraregional agricultural imports—the value of Japan’s agricultural imports from its TPP partners in 2025 is expected to be about 14 percent ($5.8 billion) higher than in the baseline.”
Reuters news reported yesterday that, “Mexico and the United States reached a deal on Monday to avert potentially steep duties on Mexican sugar imports to the United States, defusing a months-long dispute that threatened to escalate into a major trade war.
“In the deal hammered out hours before U.S. regulators were going to slap penalties on Mexican imports, the U.S. Department of Commerce said that Mexican and U.S. officials and Mexican sugar exporters initialed a draft agreement that would suspend both anti-subsidy and anti-dumping duties on the goods, if adopted in full.
“The deal included provisions that will prevent imports from being concentrated during certain times of the year, limit the amount of refined sugar that may enter the U.S. market and establish minimum price mechanisms to guard against undercutting or keeping U.S. prices artificially low, it said.”
University of Illinois agricultural economist Gary Schnitkey indicated on Friday at the farmdoc daily blog (“Cash Deficits Projected for Corn in 2014 and 2015”) that, “In Tuesday’s article (farmdoc daily, October 21, 2014), gross revenue from corn was projected to be much lower in 2014 and 2015 than in 2011 through 2013. Total costs are compared to gross revenues in this article. For cash rent farmland, total costs are projected higher than gross revenue in 2014 and 2015. Projected losses are over $100 per acre in 2014 and 2015 [related graph].”
The farmdoc update noted that, “Given a cash rent situation, losses are projected for both 2014 and 2015. A -$109 per acre loss is projected for 2014 and a -$143 loss is projected for 2015. These are large losses from a historical standpoint. The only other time that a loss occurred since 2000 was in 2009. In 2009, gross revenue minus total costs equaled -$21 per acre.”
Tim Devaney reported yesterday at The Hill Online that, “The Environmental Protection Agency’s (EPA) water rule passed a crucial test Thursday, gaining the approval of the agency’s internal review board.
Marcia Zarley Taylor reported yesterday at the DTN Minding Ag’s Business blog that, “Given the abrupt drop in commodity prices this year, ‘the solvency of some farm customers could shift quickly,’ David Lynn, a senior vice president for Farm Credit Mid-America cautioned ag economists attending a conference in Louisville this month.
“Indeed, University of Illinois economists now estimates 2014 gross revenues in northern Illinois will run about $300/acre below the 2011-2013 average of $1,100/acre. That’s even counting robust yields, which won’t totally compensate for the steep collapse in corn prices this season. Projections for 2015 look worse, although it’s still early in the process.
“Lynn urges his association’s 97,000 farm customers to be proactive about this reversal of fortune and to develop habits that will persuade lenders they remain good long-term risks, even if potential 2014 and 2015 losses reflect a temporary setback.”
Chris Clayton reported yesterday at DTN that, “A provision to exclude yields from Actual Production History for farmers affected by severe weather will go into effect for some select spring crops in 2015, USDA announced Tuesday.
“USDA’s rollout comes too late to boost insurance coverage for winter-wheat producers who have been some of the most vocal proponents of the provision. Some wheat growers could pursue litigation over the department’s delayed implementation.
“The provision for the 2014 farm bill essentially waives Actual Production History yields that collapsed due to extreme weather. The APH exclusion would adjust a farmer’s actual yields for crop insurance in counties where the average planted-acre yield tumbled at least 50% below a 10-year county average. Under the provision, farmers could exclude yields for up to six years of crops. Growers in contiguous counties would also qualify.”
DTN Ag Policy Editor Chris Clayton reported yesterday that, “Congress and the Obama administration will once again have to decide whether labeling meat with the country of origin is worth the trade headaches it causes.
“The ruling is a victory not only for Canada and Mexico, but U.S. meatpackers that have long opposed labeling the origin of meat products at retailers. Opponents of the law urged both the Obama administration and Congress to eliminate the rule or change it.”
DTN Ag Policy Editor Chris Clayton reported on Friday that, “Without giving any indication how the next World Trade Organization ruling on Country of Origin Labeling will come down, Agriculture Secretary Tom Vilsack said Thursday the COOL decision could become public within a few weeks, if not days.
“Vilsack spent Thursday with his Mexican counterpart, Enrique Martinez, secretary of fisheries and agriculture, showing Martinez some climate research facilities at Iowa State University before holding a joint forum at the 2014 World Food Prize Borlaug Dialogue.
“In a press conference late Thursday afternoon, Martinez said through an interpreter that the ruling on COOL would affect producers in both countries. Martinez also noted the U.S. Congress created the law to label the country of origin for meat.”
From USDA’s Economic Research Service (ERS)- “Global stocks of major crop commodities are forecast to expand in the 2014/15 marketing year, with total stocks of wheat, rice, corn, and soybeans completing recovery from the relatively low levels that preceded the 2008 spike in world crop prices. Record U.S. crops of corn and soybeans, along with good harvest by some other major producing countries, are forecast to push both U.S. and global stocks of these commodities to record levels. World wheat stocks are forecast to rise based on the outlook for record or near-record harvests by major foreign producers, including China, the EU, India, and the Former Soviet Union. While world rice stocks are forecast below peak levels of the early 2000s, good harvests and ample stocks are expected across the major producing regions in Asia. The supply outlook is expected to lead to lower commodity prices, with the average U.S. farm prices of corn (-24 percent), soybeans (-23 percent), wheat (-14 percent), and rice (-10 percent) all forecast down in their respective 2014/15 marketing years compared with 2013/14. Find additional analysis in the current editions of Feed Grain Outlook, Oil Crops Outlook, Wheat Outlook, and Rice Outlook.”
Yesterday, the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri provided an update on crop price projections reflecting information available in mid-October.
A summary of the FAPRI update indicated that, “The projected corn price for the 2014/15 marketing year was reduced slightly this month, to $3.40 per bushel. The record U.S. corn crop got even bigger in USDA’s October estimates, and carry-in stocks were also greater than had been estimated in September.
“Corn acreage could decline in 2015, and more typical growing conditions would result in lower yields next year. Projected prices increase to $3.74 per bushel for 2015/16, and to $4.20 per bushel by 2018/19.”
Yesterday’s update added that, “USDA soybean production estimates also increased slightly this month, but this was offset by a reduction in carry-in stocks, leaving total supplies marginally reduced from September estimates. The projected 2014/15 soybean price is little changed from last month, at $9.95 per bushel.
“Soybean acreage could stay near this year’s record in 2015 and the resulting large soybean supplies cause projected 2015/16 prices to drop to $8.93 per bushel, before recovering to $10.50 per bushel by 2018/19.”
In part, yesterday’s report noted that, “Lower corn prices continued to benefit poultry and livestock producers that rely on corn for feed” (Atlanta District); “Livestock and dairy producers continued to benefit from lower feed costs and high output prices” (Minneapolis District); “Cattle prices continued to be at a record high while feed prices fell, boosting profitability for cattle producers” (Dallas District) and “low corn prices and stable fertilizer and machinery prices benefited dairy and feedlot operations” (San Francisco District).
The Chicago District noted that, “Crop income was lower than a year ago as higher yields were insufficient to offset lower prices. Crop insurance will cover some of the lost income, but farmers already are planning to trim costs for next year, particularly spending on farm equipment and other capital purchases.”
And the Kansas City District added that, “Crop insurance and some pre-selling of this year’s crop at higher prices earlier in the year may help mitigate the effect on overall farm incomes of recent spot price declines…The demand for farm operating loans has risen substantially from last year as more crop producers borrowed to pay for operating costs. Bankers also reported a rise in requests for agricultural loan renewals and extensions and noted that loan repayment rates have edged down from the high levels seen the past few years. Despite the sharp drop in crop prices, farmland values were typically holding at high levels.”
* Fifth District- Richmond- “Corn prices declined further over the past six weeks. Soybean prices also fell, while cotton prices were unchanged. A West Virginia farmer stated that grain prices declined after seven years of above-average prices. Farmers’ input prices were unchanged in South Carolina and Virginia. A grower in South Carolina reported completion of corn harvesting and the start of peanut harvesting since the previous report. In West Virginia a farmer said that crop planting, reseeding, and harvesting were on schedule, and that his compost business had increased in the past six weeks.”
* Sixth District- Atlanta- “Parts of Alabama, Florida, and Georgia experienced abnormally dry to severe drought conditions. Lower corn prices continued to benefit poultry and livestock producers that rely on corn for feed. The USDA announced a new financial assistance program for eligible Florida citrus growers to help with the removal and replacement of stock affected by citrus greening.”
* Seventh District- Chicago- “Overall crop conditions were very good at the start of the harvest. The District should see record corn and soybean harvests. Early results indicated yields for corn and soybeans would range from above-average to record-high levels. The huge anticipated harvests pushed down corn and soybean prices. Crop income was lower than a year ago as higher yields were insufficient to offset lower prices. Crop insurance will cover some of the lost income, but farmers already are planning to trim costs for next year, particularly spending on farm equipment and other capital purchases. Corn farmers helped bid up cattle prices, with the intention of using the abundant harvest as feed for their own cattle production rather than selling it. Hog and milk prices were higher as well, contributing to expansions in output of these commodities.”
* Eighth District – St. Louis- “As of late September, about 75 percent of the District’s corn, rice, and soybean crops was rated in good or excellent condition. Similarly, about 60 percent of the District’s pastureland was rated in good or excellent condition; Kentucky’s pastureland, in particular, has improved significantly since the previous report. Harvest completion rates across the District have lagged behind their five-year averages.”
* Ninth District- Minneapolis- “Agricultural conditions were mixed since the previous report. The most recent USDA forecast calls for substantially increased production of corn and soybeans this year in District states compared with 2013. Livestock and dairy producers continued to benefit from lower feed costs and high output prices. Most of the district’s crops were in good or excellent condition despite late planting; however, an early frost damaged soybeans in some parts of Minnesota and South Dakota. Relative to a year earlier, prices received by farmers in September were lower for corn, soybeans, and wheat; prices increased for hay, cattle, hogs, poultry, and milk.”
* Tenth District- Kansas City- “Despite expectations of above-average yields, further declines in crop prices weighed on farm income prospects in the District. However, crop insurance and some pre-selling of this year’s crop at higher prices earlier in the year may help mitigate the effect on overall farm incomes of recent spot price declines. The corn and soybean crops were mostly rated in good to excellent condition as harvest began. Cattle prices rose since the last survey period while hog prices fell with increased production resulting from higher dressed weights. The demand for farm operating loans has risen substantially from last year as more crop producers borrowed to pay for operating costs. Bankers also reported a rise in requests for agricultural loan renewals and extensions and noted that loan repayment rates have edged down from the high levels seen the past few years. Despite the sharp drop in crop prices, farmland values were typically holding at high levels.”
* Eleventh District- Dallas- “District drought conditions eased slightly over the past six weeks, although more than half of Texas remained in a drought that has plagued the state since the end of 2010. Harvesting of row crops like cotton and corn continued, and crop conditions were slightly better than last year. Cattle prices continued to be at a record high while feed prices fell, boosting profitability for cattle producers. Domestic and export beef demand remained strong despite retail beef prices reaching a record high in August. Improved moisture conditions overall have increased optimism for winter crops and expanded prospects for cattle herd rebuilding.”
* Twelfth District- San Francisco- “Agricultural conditions in the District were mixed during the reporting period. Continuing droughts in California and parts of Washington and Idaho elevated water costs and depressed harvests of cotton and various grains, vegetables, nuts, and legumes. Farmers increased the number of acres lying fallow and reduced herd sizes. However, low corn prices and stable fertilizer and machinery prices benefited dairy and feedlot operations. Milk prices increased, and export demand for hay from the West Coast reached an historical peak.”
From USDA’s Economic Research Service (ERS)- “The United Nations has designated 2014 as the ‘International Year of Family Farming’ to highlight the potential family farmers have to help feed the world. But what is a family farm? USDA’s [ERS] defines family farms as those whose principal operator, and people related to the principal operator by blood or marriage, own most of the farm business. Under the ERS definition, family farms represent 97.6 percent of all U.S. farms and are responsible for 85 percent of U.S. farm production. Other definitions rely on who supplies the labor. Large farms often rely heavily on hired labor, but farm families who own the farm and provide most of the farm’s labor still account for 87.1 percent of U.S. farms, with 57.6 percent of farm production. Some farms also hire firms to perform some farm tasks. If we account for the labor provided by those firms, family farms that provide most of the labor used on the farm still account for 86.1 percent of farms and nearly half of production. This chart can be found in ‘Family Farming in the United States‘ in the March 2014 Amber Waves.”
Reuters writers Tom Miles and Krista Hughes reported yesterday that, “India broke World Trade Organization rules by blocking imports of U.S. poultry and other farm products because of unsubstantiated bird flu fears, a WTO dispute panel ruled on Tuesday, potentially opening up an estimated $300 million a year export market for the United States.
“India had claimed its import restrictions, imposed in 2007, were justified by international rules on animal health, but the panel agreed with the United States and found that India’s measures were not based on international standards and were discriminatory.
“‘This is a major victory for American farmers,’ said U.S. Trade Representative Michael Froman, who termed the poultry decision ‘the fourth major WTO victory’ for the United States this year. ‘Our farmers produce the finest, and safest, agricultural products in the world.’”
Reuters writer Julie Ingwersen reported yesterday that, “U.S. corn futures rose 3.6 percent on Monday, the second-biggest single-day jump of 2014, as rains in the Midwest interrupted the harvest and slowed the arrival of a record-large crop into marketing channels, traders said.
“Soybeans and wheat followed corn’s lead, with a weaker dollar supporting grains, making them more attractive to those holding other currencies.
“‘Rains should be widespread and heavy across all but far northwestern portions of the Midwest today and tomorrow, which will stall corn and soybean harvesting,’ MDA Weather Services said Monday in a daily note.”