Jesse Newman and Tony C. Dreibus reported in today’s Wall Street Journal that, “Tumbling corn prices [related graphs here, here, and here] are sowing fears that many U.S. farmers will suffer their first losses in years and the agricultural economy could face its first sustained slump in a decade.
“Corn prices have plunged nearly 30% in the past three months to their lowest point since 2010 as near-perfect weather in the Midwest fuels expectations of a second consecutive bumper harvest. Prices of other crops have fallen sharply as well, with soybeans trading near 2½-year lows and wheat near four-year lows.”
Farm Bill Implementation- House Ag Committee Chairman Frank Lucas
Ron Hays, of The Oklahoma Farm Report and Radio Oklahoma Network, spoke yesterday with House Ag Committee Chairman Frank Lucas (R., Okla.) about Farm Bill implementation issues.
An audio replay and summary of the Chairman’s remarks from yesterday can be found here, while an unofficial FarmPolicy.comtranscript of the conversation with Ron Hays and Chairman Lucas is available here.
In part, Mr. Hays queried: “Let’s talk about crop insurance. I know this is kind of a sore point right now. The subcommittee that Chairman Mr. Conaway, under the House Ag Committee umbrella, had Michael Scuse in here just a few days ago [summary of that hearing here, related article from Politicohere], it seemed like the request was pretty clear to Mr. Scuse and to USDA: we need APH, actual production history, for this upcoming crop season, starting with wheat growers when they put the crop in the ground here in a matter of a few more weeks. USDA doesn’t seem to have much intention to get this done.”
Chairman Lucas indicated that, “The response that USDA gave that day, and they’ve given to me personally from the top all the way to the bottom, is they have so many things going on they can’t implement the process. But for our listeners out there, actual production history adjustment is critical when you’ve been through the kind of drought that we’ve been through for multi years in our region.
“What I’ve asked of the Department, what Mr. Conaway made the request of the Department, what I’ve asked of the Secretary is if you can’t implement it for the whole country for this coming crop year, at least look at Oklahoma and Texas and Colorado, California and New Mexico, Kansas, the places that have suffered from the drought. If you can’t implement the whole thing, at least consider doing a partial implementation in the hardest hit areas.
“Producers who have really suffered in recent years, this APH is the difference between having viable crop insurance for the coming year or not having viable crop insurance. And you’re exactly right, it’s going to be time soon to put the wheat in the ground in our region.”
Tyrel Linkhorn reported yesterday at the Toledo Blade Online that, “Two years ago, farmers in the four-county Toledo metro area collected more than $10.5 million in direct payments from the federal government, a subsidy program that had become increasingly seen as a poor use of taxpayer money.
“Starting this year, those payments disappear. In their place are federal safety-net programs that officials say will slightly reduce federal expenditures and better reflect the purpose of protecting the nation’s farmers in dire times.
“‘The fundamental political problem that direct payments ran into is a question of fairness,’ said Carl Zulauf, an agricultural economist at Ohio State University. ‘Is it fair farmers were receiving these payments when income was at record or near-record levels? We as a country decided that was not something we felt comfortable with.’”
Bloomberg writer Megan Durisin reported today that, “The U.S. soybean crop is in the best shape for this time of year since 1994, while corn ratings are the highest in a decade as mild Midwest temperatures helped boost the outlook for yields.
“Seventy-three percent of the U.S. soybean crop was rated in good or excellent condition as of July 20, the U.S. Department of Agriculture said yesterday. Seventy-six percent of corn earned the top rating, the most for this time of year since 2004.
“Soybean prices tumbled 17 percent in the past 12 months, while corn entered a bear market on July 3. A lack of heat through the end of the Northern Hemisphere summer will limit threats during later stages of plant development, according to Commodity Weather Group LLC. Bigger U.S. crops are helping to keep global food inflation in check, with the United Nations reporting a third monthly drop for prices in June.”
The article added that, “Soybean futures for November delivery fell 0.2 percent to $10.69 a bushel on the Chicago Board of Trade today. Prices reached $10.65 on July 11, the lowest for a most-active contract since Oct. 8, 2010. Corn dropped to $3.705 a bushel yesterday, the lowest since July 14, 2010.”
Donnelle Eller reported late last week at The Des Moines Register Online that, “Farmland prices in Iowa ticked higher in the second quarter, pushing up 2.1 percent, based on sales, Farm Credit Services of America said today.
“Average farmland prices bumped up to $10,172 an acre, based on 109 farmland sales during April, May and June, the Omaha-based farm credit and insurance group said. A year earlier, the average value was based on 120 sales.
“Lower commodity prices led to reports in early 2014 of more cautious land buyers and declining farmland values. But several years of record-high profitability and low interest rates continued to positively impact the farmland market through June, the group said.”
DTN writer Todd Neeley reported yesterday that, “American Farm Bureau Federation President Bob Stallman said in a statement Thursday that the industry’s attempts to reach out to EPA officials have been unsuccessful on many of the issues of concern for agriculture in the proposed Clean Water Act rule.
“This comes on the heels of EPA Administrator Gina McCarthy’s trip to Missouri last week, during which she met with farmers and gave a speech in front of agribusiness representatives, in an attempt to begin to calm the waters on the proposed rule.”
The DTN article noted that, “The AFBF released to Congress a 16-page response Wednesday evening, to a July 7 blog written by EPA Acting Assistant Administrator Nancy Stoner, ‘Setting the Record Straight on Waters of the US,’ countering her point by point. In a news release Thursday, AFBF said that Stoner had made ‘numerous inaccurate and misleading comments’ about the proposed rule.
“One of the main concerns expressed by farmers and farm groups is that the 56 conservation practices listed in an interpretative rule released along with the larger CWA rule, essentially would narrow those practices exempt from the law by requiring farmers to follow Natural Resource Conservation Service specifications on those practices.”
The Chicago District indicated that, “The District’s corn and soybean crops made up ground after a late start to planting as favorable weather helped plants emerge more quickly than the five-year average. The consensus among contacts was that the corn and soybean crops were in excellent shape, but were unlikely to set records when harvested because of the late plantings…Hog prices moved higher as disease affected supplies.”
The St. Louis District noted that, “Over 90 percent of the District’s corn, cotton, rice, sorghum, and soybean crops were rated in fair or better condition.”
The Kansas City District pointed out that, “The corn and soybean crops were in good condition overall, and improved growing conditions led to a drop in prices for both crops. Cattle prices continued to rise, but feeder cattle prices have recently increased much faster than fed cattle prices and narrowed margins for feedlot operators. The cumulative effect of reduced piglet numbers due to the swine virus and strong export demand for pork supported further gains in hog prices, even though pork production forecasts were raised due to heavier dressed weights and higher than expected slaughter in the second quarter.”
And, the Dallas District added that, “Widespread rains greatly improved prospects for row crops, especially cotton, but came too late to aid the Texas wheat crop, which is expected to be down 20 percent this year.”
A summary of all of the ag related notes from yesterday’s Fed report can be found here, at FarmPolicy Online.
Anthony Greder and Emily Unglesbee reported yesterday at DTN (link requires subscription) that, “Corn and soybean development was slightly ahead of the five-year averages for both crops, and the condition of the nation’s corn crop improved slightly in the week ended July 13, according to USDA’s latest Crop Progress Report.
“Corn was 34% silking as of Sunday, up from 15% a year ago and ahead of the five-year average of 33%. The crop was rated 76% in good-to-excellent condition, up from 75% the previous week.”
The DTN update added that, “Soybeans were 41% blooming, up from 24% a year ago and also up from the five-year average of 37%. The crop was rated 72% in good-to-excellent condition, the same as the previous week.”
Gregory Meyer reported on Friday at The Financial Times Online that, “Soyabean markets went into freefall after a government report lifted supply estimates for the world’s most widely grown oilseed.
“The bean is typically crushed into soya meal that is fed to livestock, and into vegetable oil, making it a key input in products including steak, baked goods and biodiesel.
“The US Department of Agriculture raised its estimate of the global oilseed crop by 5.8m tonnes on Friday to a record 521.9m tonnes” [full report here, summary of U.S. supply and demand variables for soybeans here].
Producers of corn, soybeans, and wheat—the three largest crops produced in the United States—are the largest consumers of Federal crop insurance, although producers of other crops are a growing share of program enrollment. In 1997, corn, soybeans, and wheat crops accounted for 80 percent of all acres enrolled in the program; including cotton and sorghum raised the share to nearly 90 percent of all acres enrolled. Over the last 15 years, with new types of policies being offered and more crops added to the program, the share of enrolled acres attributed to these major crops fell as participation in the Federal crop insurance program continued to rise. Pasture, forage and range land have accounted for the bulk of recent gains in enrolled acres, expanding from zero in 1997 to 48 million acres in 2012. By 2012, corn, soybeans, and wheat made up roughly 68 percent of all acres enrolled, with cotton and sorghum accounting for an additional 7 percent. The share of acres enrolled in crop insurance varies by crop and region, but these differences decreased between 1990 and 2012 as coverage rates increased. For more data and analysis, see The Effects of Premium Subsidies on Demand for Crop Insurance, released July 2014.
Gregory Meyer reported yesterday at The Financial Times Online that, “The prospect of a colossal 1bn-tonne global corn crop has sent the price of the grain below $4 per bushel for the first time in almost four years.
“Reports of near-perfect conditions in the US corn belt and favourable weather from Ukraine to China have pounded bulls in agricultural markets in recent weeks. Farmers’ incomes, tractor sales and land prices could be hit.
“Analysts expect the US Department of Agriculture to raise its forecast of how much corn the average US farmer will harvest per acre when it updates official estimates on Friday. The agency’s current estimate, of 165.3 bushels per acre, would already be a record.”
Tim Devaney reported yesterday at The Hill Online that, “House Republicans clashed with Environmental Protection Agency (EPA) officials Wednesday over the agency’s controversial plan to regulate small bodies of water, which the GOP says could hurt American farmers.
“Republicans fear the EPA’s proposed Waters of the U.S. rule would expand the agency’s authority to include small rivers, streams and ponds around the country, which they say could hurt farmers whose lands are strategically surrounded by water.
DTN writer Todd Neeley reported yesterday that, “If nothing else, EPA Administrator Gina McCarthy hopes a trip to Missouri this week to talk to farmers and agribusiness representatives will help to dispel what she said are ‘myths’ about the agency’s proposed Clean Water Act rule.
“During a conference call with reporters Tuesday ahead of a farm tour in the Columbia, Mo., area Wednesday and a speech before the Agricultural Business Council of Kansas City Thursday, McCarthy wasted little time tackling claims made by agriculture interest groups and others about the proposed rule.
“‘Unfortunately there is a growing list of misunderstandings going around and we’re trying to clarify the issues,’ she said. ‘Hopefully it is an opportunity to set the record straight. This is not about restricting farmers, but protecting waters downstream. While there are legitimate concerns, we’re hearing some concerns that, to put frankly, are ludicrous.’”
Tony C. Dreibus reported in today’s Wall Street Journal that, “Corn and wheat futures tumbled to their lowest prices in nearly four years as favorable weather over the July Fourth holiday weekend upgraded prospects for U.S. crops.
“Soybeans fell, too, closing at their lowest level in more than four months.
“In the past week, up to six times the normal amount of precipitation fell in parts of Iowa and Illinois, the biggest U.S. growers of corn and soybeans, further improving growing conditions. About three-fourths of the nation’s corn and soybean crops were in good or excellent condition as of Sunday, according to the U.S. Agriculture Department [related graph].”
Robert Gebelhoff reported earlier this week at the Milwaukee Journal Sentinel Online that, “Schools across the nation are preparing to work with stricter standards for nutrition from the U.S. Department of Agriculture, as part of a nationwide campaign championed by first lady Michelle Obama to eliminate empty calories. The new standards took effect Tuesday for all schools that participate in the National School Lunch Program and will build off previously implemented standards that limited serving sizes and restricted what food was healthy enough for the program.
“What can students expect to find? Wheat bread, low-calorie drinks, meals with limited sugar, fat and salt.
“Some district officials are saying they’re all for healthy food, but they have to sell enough hot lunches to break even on their program — and that won’t work if the kids shun the food. They also are a little prickly about federal officials telling them what to do.”
Mr. Gebelhoff explained that, “Frustration by schools and parents across the country prompted Republicans in Congress to propose a waiver system that would allow schools strapped for cash the chance to receive federal subsidies from the government without having to comply with the USDA’s requirements. If it becomes law, schools that can demonstrate a net loss over a six-month period in their food service would be eligible to operate outside the standards.”