Yesterday’s Crop Production report from the USDA’s National Agricultural Statistics Service (NASS) noted that, “Corn production is forecast at 14.4 billion bushels, up 3 percent from both the August forecast and from 2013. Based on conditions as of September 1, yields are expected to average 171.7 bushels per acre, up 4.3 bushels from the August forecast and 12.9 bushels above the 2013 average. If realized, this will be the highest yield and production on record for the United States [related graph].”
The report added that, “Soybean production is forecast at a record 3.91 billion bushels, up 3 percent from August and up 19 percent from last year. Based on September 1 conditions, yields are expected to average a record high 46.6 bushels per acre, up 1.2 bushels from last month and up 3.3 bushels from last year [related graph].”
AP writer Joan Lowy reported yesterday that, “Senators and shippers complained Wednesday that widespread delays in freight rail shipments are hurting a wide array of industries and driving some companies out of business, and they expressed doubt that the railroad companies are doing all they can to fix the problem.
“The delays, which escalated late last year and continued through the spring and summer, appear to be the result of too few rail cars and too much demand from shippers, officials representing the agriculture, auto and chemical industries told a hearing of the Senate Commerce, Science and Transportation Committee. Lawmakers displayed a photo of a giant mound of wheat standing in the open because North Dakota farmers can’t get a railroad company to ship it.
“Shipping rates are 90 percent higher than they were in 2002, but service has drastically diminished, said Calvin Dooley, president of the American Chemistry Council.”
“The Environmental Protection Agency has proposed a rule that it says will clarify which streams and waterways are shielded from development under the Clean Water Act, an issue that remains in dispute even after two U.S. Supreme Court rulings.
“Agriculture groups and farm-state politicians call the proposed rule a power grab that would allow the government to dictate what farmers can do on their own land. They said the rule is an example of governmental interference by bureaucrats who don’t know as much as farmers and ranchers do about how to be good stewards of their land.”
“The initiative, using money provided in the new five-year farm bill, will buy conservation easements from farmers to protect the environment, help wildlife populations and promote outdoor recreation, the USDA said in its announcement. The agency selected 380 projects nationwide covering 32,000 acres of prime farmland, 45,000 acres of grasslands and 52,000 acres of wetlands.”
Michael R. Crittenden reported in today’s Wall Street Journal that, “Lawmakers returning to Capitol Hill on Monday hope to quickly deal with a government funding measure and several other must-address items before decamping to the campaign trail ahead of November’s midterm elections.
“After a five-week summer break, legislators have given themselves a tight window to pass a stopgap measure to keep the government running beyond Sept. 30, as well as decide how to handle other-deadline driven issues such as the U.S. Export-Import Bank and a long-standing moratorium on Internet access taxes.”
Robert Wright reported yesterday at The Financial Times Online that, “Senior executives from two of North America’s biggest rail operators on Thursday pleaded with regulators not to force them to take other operators’ trains on their networks in areas of the northern plains plagued by severe freight delays.
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.”
* Fifth District- Richmond- “Prices received by farmers dropped for some crops since our last report. For example, cotton prices decreased in the last six weeks and corn prices fell year over year. However, farmers reported no change in input prices in recent weeks. A Virginia producer reported completion of summer soybean planting and barley harvesting, while corn harvesting has begun in South Carolina.”
* Sixth District- Atlanta- “Parts of Georgia, Florida, and Alabama experienced abnormally dry to moderate drought conditions over the reporting period, while the rest of the District ended the period drought free. The USDA designated several counties in the Florida Panhandle as primary natural disaster areas due to damages and losses caused by excessive rain earlier this year. Lower corn prices benefitted livestock and poultry producers that rely on corn for feed.”
* Seventh District- Chicago- “Corn and soybean production in the District should exceed last year’s levels. Although much of the District recently weathered a dry spell, cool temperatures helped reduce the stress on crops. Nonetheless, crops in the northern parts of the District may not fully mature before the dates of normal first frosts. With national records expected for the corn and soybean crops, prices moved down from the prior reporting period. To avoid selling crops for lower prices than in recent years, farmers have explored options for storage and livestock feeding. Higher milk prices helped the livestock sector stay profitable even though hog and cattle prices slipped. Ethanol prices eased, but production remained profitable.”
* Eighth District – St. Louis- “As of mid-August, around 73 percent of the District corn, rice, and sorghum crops was rated in good or excellent condition. In contrast, only 56 percent of District pasturelands was rated in good or excellent condition. District farmers will likely produce close to 9 percent less corn in 2014 than in the previous year. However, District rice, cotton, and sorghum production will be 34 percent, 17 percent, and 11 percent higher than last year, respectively.”
* Ninth District- Minneapolis- “Agricultural conditions were mixed since the last report. Most of the District’s corn and soybean crops were in good or excellent condition in mid-August, with strong yields forecasted. Livestock and dairy producers continued to benefit from higher output prices and lower feed costs. A majority of lenders responding to the Minneapolis Fed’s second-quarter (July) survey of agricultural credit conditions reported lower farm incomes compared with the previous quarter. Relative to a year earlier, prices received by farmers in July were lower for corn, soybeans, and wheat; prices increased for hay, cattle, hogs, poultry, eggs, and milk. A mildew outbreak in North Dakota may reduce sunflower yields.”
* Tenth District- Kansas City- “Improved growing conditions and the potential for record crop production this fall depressed prices and lowered farm income expectations since the previous survey period. The majority of the District’s corn and soybean crops were rated in good condition but improved yields may not offset the effect that recent price declines will have on income. District farm income remained well below year-ago levels even with strong profits in the livestock sector due to rising cattle and hog prices. Demand for farm operating loans rose further but loan-to- value ratios remained relatively conservative. Still, some bankers reported loan repayment rates had weakened since last year and also noted a rise in loan renewals and extensions. Despite lower farm income, cropland values generally held steady during the growing season while strong demand for high-quality pasture supported modest gains in ranchland values.”
* Eleventh District- Dallas- “The severity of District drought conditions eased over the reporting period, particularly in the Texas Panhandle and southern New Mexico. Texas’ cotton crop was mostly in fair to good condition and harvesting started in some areas. Most crop prices declined over the past six weeks due to expectations of very high U.S. corn, cotton, and soybean production. Domestic demand for beef remained solid despite continued record-breaking cattle prices. 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.”
* Twelfth District- San Francisco- “Contacts reported good agricultural conditions in the District overall. Excellent cotton and grain harvests are expected. Produce supplies are somewhat constrained due to the drought in California, and prices of some products, including grapes and nuts, are high. Growers in California were able to tap underground aquifers this year but are concerned about water sources next year should the drought continue. Contacts reported a spike in growers’ shipping costs due to the diversion of locomotives to the Midwest to haul oil and Beige Book — September 3, 2014gas rail cars to refineries in Texas.”
Reuters writer Naveen Thukral reported today that, “Chicago corn futures slid for a third consecutive session on Wednesday to their lowest in three weeks, while soybeans eased after a U.S. government report showed further improvement in crop conditions.”
“Soybean conditions were 72 percent good-to-excellent, up from 70 percent a week ago and 54 percent last year.”
Today’s article also noted that, “Commodity brokerage INTL FCStone on Tuesday raised its forecast of U.S. 2014 corn production to 14.595 billion bushels, from 14.455 billion in its previous monthly report.
“The firm raised its corn yield estimate to 174.1 bushels per acre, from 172.4 last month.
“It raised its forecast of U.S. 2014 soybean production to 4.0 billion bushels, from its August forecast of 3.865 billion. The firm forecast the average soybean yield at 47.6 bushels per acre, up from its August estimate of 46.0 bushels.”
Neil Shah reported in today’s Wall Street Journal that, “After soaring in the years since the recession, use of food stamps, one of the federal government’s biggest social-welfare programs, is beginning to decline.
“Food-stamp use remains high, historically speaking. The share of Americans on the benefit—which lets them buy basics like cereal and meat and treats like cookies, but not tobacco, alcohol or pet food—is above the 8% to 11% that prevailed before the financial crisis.”
Tom Meersman reported over the weekend at the Minneapolis Star-Tribune Online that, “The prospect of a bin-busting crop has driven corn prices to their lowest levels in four years and raised fears of a prolonged slump for crop farmers in Minnesota and elsewhere.
“After three years of profits, analysts are calling 2014 a break-even year, at best. Some think prices could drop more and stay low into 2015.”
“The Market Protection Program is an insurance option for dairy farmers that is being run through the Farm Service Agency. The Margin Protection Program will pay indemnities to farmers when the difference between the price of milk and feed costs falls below a coverage level selected by the farmer.
“Enrollment begins Tuesday and will run until Nov. 28 for the 2014 and 2015 calendar years.”
Todd Neeley reported yesterday at DTN that, “Farm groups are using mapping technology in their latest effort to block EPA from finalizing new regulations under the Clean Water Act.
“A map of the state of Iowa virtually is covered in red — a color that has agriculture groups burning mad at an image that represents all the waters that could be considered jurisdictional if the proposed Clean Water Act rule becomes finalized. An image from the South Dakota Farm Bureau maps the same waters painted green across easily two-thirds of that state — mostly covering South Dakota’s western half.
“A number of ag groups including the American Farm Bureau Federation, the National Pork Producers Council, National Corn Growers Association, National Cattlemen’s Beef Association, among others, have been undertaking the seemingly impossible task of mapping those waters that could be in EPA’s control. In addition, this week the House Committee on Science, Space and Technology is set to post online similar maps of all 50 states provided to the committee by EPA.”
With respect to the Science, Space and Technology Committee action regarding EPA maps, in a separate update yesterday at DTN, Mr. Neeley reported that, “A House committee is pressuring EPA to release more information about an October 2013 agency contract to create waters and wetlands maps of all 50 states, including making those maps part of the official record on the proposed Clean Water Act rule.
Yesterday, USDA’s Economic Research Service (ERS) updated its 2014 Farm Sector Income Forecast, which stated that, “Net farm income is forecast to be $113.2 billion in 2014, down 13.8 percent from 2013’s forecast of $131.3 billion. If realized, the 2014 forecast would be the lowest since 2010, but would still remain more than $25 billion above the previous 10-year annual average. After adjusting for inflation, 2013’s net farm income is expected to be the highest since 1973; the 2014 net farm income forecast would be the fifth highest [related graph].
ERS noted that, “The annual value of U.S. crop production is expected to decline 10.6 percent in 2014 from 2013’s predicted all-time high. Expected declines in cash receipts are especially large for feed crops such as corn. Corn receipts are expected to experience the largest dollar decline in 2014 receipts among farm commodity categories…Declines in soybean receipts are anticipated as higher production and quantities sold are more than offset by large price declines (11.3 percent) [related graph].”
An update yesterday from the Federal Reserve Bank of Minneapolis stated that, “Farm incomes fell from April through June, according to results of the Minneapolis Fed’s second-quarter (July) agricultural credit conditions survey. Capital spending decreased, while household spending held roughly steady, lenders responding to the survey indicated. Falling incomes pushed the rate of loan repayment down slightly, while renewals and extensions increased, though most lenders reported that both were flat. Respondents noted further signs that cropland values were moderating, with prices falling in some areas, though the volume of land sales appears to have decreased. The third-quarter outlook is for continued contraction, with survey respondents predicting further decreases in income, capital expenditure and household spending.”
Yesterday’s update added that, “Recent quarterly surveys have indicated that land prices have moderated following a multiyear period of strong growth, and the second-quarter results continue this trend; values decreased in some cases, along with cash rents. The average value for nonirrigated cropland in the district fell by almost 2 percent from a year earlier, according to survey respondents. Irrigated land fell slightly more (between 2 percent and 3 percent), while ranchland values increased 4 percent, likely owing to strong livestock and dairy prices. The district average cash rent for nonirrigated land fell 6 percent from a year ago, more than the decrease in value. Rents for irrigated land decreased 4 percent, while ranchland rents, which had continued growing in recent quarters, fell by nearly 2 percent.”
The Minneapolis Fed update also noted that, “Not surprisingly, expectations are slightly pessimistic, on balance. Across the district, 52 percent of lenders predicted that farm income will decrease in the third quarter of 2014, compared with 12 percent forecasting increases.”