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Archive for October, 2012

Demand for corn and soybeans remains robust and projected supply is stable, which is expected to support prices moving forward.

USDA focused heavily on demand in its October World Agricultural Supply and Demand Estimates (WASDE) released today.

USDA dropped its corn production estimate slightly to 10.706 billion bushels from September’s 10.727 billion bushels. USDA also dropped its U.S. average yield forecast slightly from September’s 122.8 bushels per acre to 122 bushels.

Estimated corn ending stocks were dropped 114 million bushels to 619 million. “Corn ending stocks levels are historically tight, virtually pipeline,” says Greg Wagner, president of GWX Ag Advisors, Chicago. Wagner was an analyst on the October 10 pre-report press briefing held by the CME Group, Chicago. USDA’s October 2012-13 corn ending stocks forecast was well within trade estimates, which ranged from 454 million to 815 million bushels.

Despite lower production and ending stocks, USDA still dropped its U.S. season average farm price for corn by 10 cents to $7.80 per bushel.

USDA left feed use for corn unchanged at 5.85 billion bushels and decreased projected corn exports only slightly, from 1.25 billion bushels in September to 1.15 billion bushels in today’s report. “Demand will help support the corn market,” says Randy Martinson, manager of Progressive Ag Marketing, Fargo, N.D., and a commentator on an MGEX press briefing following the report.

“The 2012 growing season is not without precedence, but it certainly is one for the ages,” says Wagner. In its May 10 WASDE report, Wagner points out that USDA’s estimated U.S. average corn yield was 166 bushels per acre, and the December corn futures contract was trading below $5 per bushel. Since then, the December contract has soared to a high close near $8.40 per bushel and subsequently retraced to the mid-$7 range.

Soybean Yields Increasing

USDA’s forecast for soybean production is now 2.86 billion bushels, up 9% from September’s estimate, but 8% lower than last year’s output. The department increased its U.S. average soybean yield estimate by 2.5 bushels per acre to 37.8 bushels, which is 4.1 bushels lower than last year. USDA should have a pretty good handle on the soybean yield with 58% of the crop already harvested as of Oct. 7, according to USDA’s Crop Progress report released Monday.

“We were predicting disaster three months ago, but we had pretty good moisture in August,” says Jerrod Kitt, with the Linn Group, Chicago, and a commentator on the CME Group’s press briefing. “Our final estimate for the soybean yield is 38 bushels per acre,” Kitt adds.

According to USDA’s Crop Production report, also released today, yield forecasts for soybeans were higher or unchanged in all of the top soybean states. USDA also increased its harvested acreage estimate for soybeans to 75.7 million acres, a 1% increase from September’s forecast.

Ending stocks for soybeans are now estimated at 130 million bushels, up 15 million bushels from September’s estimate. The 2012-13 ending stocks estimates ranged between 95 million and 203 million bushels.

I don’t normally like to talk politics because it usually doesn’t end well. However, being actively engaged in production agriculture I was really curious to know where each of the respective presidential candidates stood on the issues. So, I was somewhat excited when I saw this article on Ag Web this morning. Now I will say that even after reading this there is still a lot fo grey area.  But this is at least a start on our way to becoming informed voters.

Where the Candidates Stand on Agriculture

October 4, 2012

By: Roger Bernard, Farm Journal Policy and Washington Editor

Biofuels, regs and trade in the presidential election

Amid the struggling economy and stubborn unemployment rate, most of the election debate stems around the budget deficit and the debt situation. Nevertheless, agriculture fits into the bigger picture and the presidential face-off between Democratic incumbent Barack Obama and Republican candidate Mitt Romney. The added dynamics of a farm bill in flux and the most severe drought in decades have rural voters keeping a watchful eye on the campaigns.

Farm policy. President Obama and his team have continued to push for lawmakers to wrap up the farm bill, primarily to restart disaster programs that would help livestock producers.

When it comes to a safety net, the Democratic party’s platform supports “increased availability of crop insurance and emergency disaster assistance to help farmers and ranchers keep their farms in business after natural disasters and crop loss.”

Due to weather and market volatility, Romney and his fellow Republicans believe farm programs should be “as cost-effective as they are functional, offering risk management tools that improve producers’ ability to operate when times are tough. Programs like the direct payment program should end in favor of those, like crop insurance, that help manage risk and are counter-cyclical in nature.”

Biofuels. In light of the drought and high crop prices, several U.S. governors have requested a waiver of ethanol mandates under the Renewable Fuels Standard (RFS). Obama and his administration will “stay committed to biofuels because the RFS has increased the amount of biofuels consumption,” said former Iowa Agriculture Commissioner Patty Judge, who represented the administration at the Presidential Forum on Agriculture, sponsored by the Farm Foundation.

Romney and the Republican party also support the RFS mandate, according to Sen. Mike Johanns (R-Neb.). “There needs to be new ways to use that product [ethanol] and take the next steps in terms of science and in terms of using other things to produce ethanol other than corn,” he added.

Regulations. The Democratic National Committee says the Obama administration is focused on a “simpler, smarter and more cost-effective approach to regulation, rather than one riddled with special rules written by lobbyists. Efficient and effective regulations enforce commonsense safeguards to protect the American people. That’s what we’ve done in this country for more than a century. It’s why our food is safe to eat, our water is safe to drink and our air is safe to breathe.”

The committee also claims that the directive by President Obama to have all agencies review and streamline outdated regulations will save at least $10 billion over five years and eliminate tens of millions of hours in annual paperwork burdens.

As for Romney’s regulation agenda, Johanns said the Republican presidential candidate would practice a “time-out” on new regulations. Regulations are “a wet blanket over the economy,” Johanns noted. “There needs to be a thoughtful approach on what we are doing. We need to do the right cost-benefit analysis” on the impact of regulations, he said.

The Republican National Committee’s reply to the Democratic stance is that regulations “must be drafted and implemented to balance legitimate public safety or consumer protection goals and job creation. Constructive regulation should be a helpful guide, not a punitive threat. Worst of all, overregulation is a stealth tax on everyone as the costs of compliance with the whims of federal agencies are passed along to the consumers at the cost of $1.75 trillion a year.”

Johanns argued that the administration is out of touch with reality, citing the now-tabled child labor laws for farms and claiming that the Environmental Protection Agency had planned to regulate farm dust and ran surveillance flights over Nebraska feedlots. Johanns added that there are “a pile” of regulations that the administration will not release until a second term. “When the election occurs, hold onto your hat,” he warned.

Judge disputed Johanns’ assertions. “I don’t believe [the Democrats] are out there with fistfuls of regulations just waiting to release them,” she countered. “Let’s put the farm dust issue to rest. There are no pending regs on dust. Period.” Judge continued, “Do we need to be careful? Absolutely. If things are going too far, we should call [the administration] on it. We need a healthy economy that is not burdened with regulations.” Both parties agree that farmers and ranchers, for the most part, are good stewards of the land and don’t need new regulations to force the matter.

Trade. The topic of trade often comes up in Washington and, as a result, agriculture’s positive contribution to the trade picture. On a value basis, more ag products are sold overseas than are brought into the country. “I’ve signed trade agreements that are helping our companies sell more goods to millions of new customers,” claimed Obama when accepting the Democratic nomination for President in Charlotte, N.C.

Romney pledges to “make trade work for America by forging new trade agreements, and when nations cheat in trade, there will be unmistakable consequences.”

Turning the focus on agriculture, Judge noted that trade issues at times continue to be “vexing,” especially when countries throw up barriers to U.S. ag goods that aren’t based on science. She said the administration will continue to work with the private sector, USDA, lawmakers and others to solve trade issues.

As president, Romney would involve the World Trade Organization (WTO), Johanns said. “You have to get them involved in browbeating, doing whatever is necessary to get the members of the WTO—which are 156 countries, the major trading countries—to recognize that we have to work with each other on principles and standards that are fair to each side. You can’t say to the United States, ‘We want to sell you our pork, but we don’t want to buy your beef.’ That just doesn’t work.”

Johanns said Romney would pursue bilateral trade deals. “Our farmers and ranchers can compete with anybody in the world if we get a level playing field,” he said. He also mentioned that Romney would seek trade promotion authority from Congress, which would allow the administration to negotiate trade deals and bring them back to Congress for an up-or-down vote.

Key Swing States

While the candidates’ views on agricultural policy aren’t as contrary as they are in other sectors, agriculture will still play a part in the outcome of the presidential election. For Romney to win,political watchers predict he has to take Florida, Ohio and Virginia. For Obama to stay in the White House, he has to win Florida, Ohio or Virginia and either New Hampshire, Iowa or Colorado. The addition of Rep. Paul Ryan (R-Wis.) as Romney’s running mate inserts Wisconsin into the battleground states.

Locally corn basis looks to continue to improve, while soybean basis remains steady.

By: University News Release

By Keith Robinson, Purdue University 

After an extremely hot and dry summer, farmers and others might be wondering what kind of weather they can expect for the fall and coming winter.

A variable temperature and precipitation pattern is developing this fall, with September so far a cool and wet month. Indiana average temperatures have run nearly two degrees below normal while precipitation has ranged from near normal in the northern third of the state to more than twice normal in central counties, according to the State Climate Office, based at Purdue University.

Temperatures could remain cool through early October but may turn warm later in the month. The warm weather pattern could continue through November. The wet trend is forecast to continue through the next two weeks, but conditions drier than normal could prevail for October as a whole. The precipitation outlook for November is less certain, with equal chances of precipitation above normal, normal or below normal at this point.

And what about winter? For now, it’s wait and see. Forecasters are waiting to see how an El Nino develops and how the Arctic Oscillation might influence weather patterns. “An El Nino generally increases the chances of a warmer and drier Indiana winter, but there is just too much at play at this time, making an outlook challenging,” said State Climatologist Dev Niyogi. Early indications are that an El Niño will develop in early fall.

“One month could be warmer than normal and the following colder,” he said. “This high variability will be key as we move into winter this year. So it’s probably going to be more like a little bit of everything this time around.”

Winter weather in Indiana is regulated by elements such as oceanic patterns, including Pacific Ocean surface temperatures and wind circulation around the North Pole. Last year, many forecasters thought Indiana would have a winter similar to that of the previous year: very cold and lots of snow, based in part on how the Arctic Oscillation could have developed. But the weather patterns shifted and moved into a phase that brought warmer air and little snow.

“Recently, we have seen unusual seasonal patterns: the very early start to spring, hot summer and historic drought,” Niyogi said. “What climatology tells us alone will not be the final answer to this winter. My best advice at this stage would be to wait and watch. Sometimes the signals are just not strong enough to make any confident projections – and during a transition such as we are going through with a likely El Nino, change is in the air. We just don’t know which way and how far off from normal the weather will be.”

Niyogi said the State Climate Office will continue to monitor weather patterns and issue another outlook when it has more significant, updated information.