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USFR Weekly Recap - April 7-8, 2012

April 11, 2012

THIS WEEK ON U.S. FARM REPORT
EPISODE #2017
APRIL 7-8, 2012

JOHN’S OPEN: Hello and welcome to U.S. Farm Report, I'm John Phipps. After historically unusual March weather, the expectation for an equally remarkable beginning to the major planting season has sputtered to a fitful lurch as dry soils and forecast cold temperatures frustrate farmer plans. In my part of the world, we're already competing over tenths of an inch of rain, something that typically takes place in July or August. At the same time, normal April weather seems like a return to winter. All this anxiety stems from the deep conviction that 2012 crop really matters. The realization that burdensome surpluses of the past are gone is finally sinking in. Time now for the headlines.....here's Tyne Morgan.

CROP PROGRESS: Thanks John. A remarkably mild spring has planters rolling earlier than normal across the Corn Belt. As of last weekend, the Ag Department reports about 3% of the nation's corn crop is already in the ground. Federal crop watchers report planters are rolling in a number of northern states...including Illinois, Indiana, Michigan, Nebraska and Ohio. The five-year average shows planting is typically not underway at this time in any of those states. 5% of the crop is planted in Illinois and 2% in Michigan.
Down south Texas is trailing slightly behind while Tennessee, North Carolina and Missouri are ahead of pace.

WHEAT CONDITION: Also from the field, the condition of the winter wheat crop continues to improve. In its weekly update, the Ag Department pegs 58% of the crop as good or excellent...more than 20 points ahead of where the crop was a year ago. Texas growers are facing the biggest challenge as about a third of that state's winter wheat is rated poor or very poor.

CHINA BUYS CORN: China is back in the market for U.S. corn. Reports indicate the Chinese placed an order for 120,000 tonnes to be shipped by the end of August. That brings their total for the season to nearly 4 million tonnes, right in line with USDA's forecast and the highest total in nearly two decades.

MILC PAYMENTS: For the first time since April of 2010, the Ag Department announces it will be making a milk income loss contract payment. USDA says it will pay 39-cents per hundredweight for February milk production. Based on current futures prices, industry insiders estimate payments will be made now through September. To be eligible, producers must sign up on or before the 14th of the preceding month. The March payment is estimated at 59-cents...the estimate bumps up to 89-cents in April and back down to 59-cents in May.

ANALYSIS: Mike Hogan chip Hemminger

JOHN’S WORLD: To most everyone's surprise, there is good news on the economic front. One of the most optimistic signs is a resurgence in exports. While we here in agriculture have been following this trend for decades, suddenly more industries are benefiting from American global competitiveness. Economist Tyler Cowen thinks this will powerfully affect our whole economy. U.S. exports are booming because more of the world have incomes closer to ours and want to buy products Americans buy. We excel in that market. It is also occurring because technology around the world is replacing people with ever smarter machines. Suddenly the cost of labor doesn't matter as much, so insourcing jobs is now fashionable. But there is another side to this story. In his analysis there will be stark differences for workers in exporting industries and those producing for a stagnant domestic market. Protected service sector jobs, like education, health care and government will be able to maintain numbers and wage growth, but otherwise abundant, well-paying jobs will not be a feature of this export-driven economy. Consequently, the flow of wealth will be to those who invest the capital or produce and operate technology - not everyone. Farms are not immune. Investments in farm machinery, land and improvements will continue to earn strong returns. Operator labor will get a much smaller slice of the pie. Hard work alone will not be sustainable business model.

2ND HALF:
JOHN’S OPEN:
Hello and welcome to U.S. Farm Report, I'm John Phipps. There was mediocre news on the job market Friday, but clearly the economy is plodding in the right direction. Nowhere is that news more welcome than our protein industry. Hard-pressed consumers slow down meat and dairy purchases faster in response to pinched finances. But even if the recovery accelerates, clearly it will not operate on the same fundamentals as before. Not only have consumers developed slightly new shopping habits, but the generational shift away from baby boomers raises new questions. We don't know much about succeeding generations, but if we want to market successfully in the future, we'd better start hanging out with them. Tyne Morgan is here with the headlines...

FDA SCRUTINY: Thanks John. New numbers show the FDA is stepping up efforts to safeguard the nation's food supply. In 2011, the agency reports it issued 52% more food-related warnings and nearly 300 food-related recalls. According to the Centers for Disease Control and prevention, an estimated 48-million Americans get sick and three-thousand are killed each year from food-borne illnesses. In addition, economists estimate outbreaks cost the U.S. economy more than 150-billion-dollars annually.

VEGGIE ACRES: An increase in vegetable production could equal lower prices for consumers. According to USDA estimates, veggie farmers will plant one-million additional acres in 2012. A big part of the boost will come from dry beans, sweet potatoes and mushrooms. In California alone, tomato production is expected to jump 3% with potato output up 6%. The big winner may be mushrooms. The market is now worth one and a quarter billion dollars...and that total is expected to climb in the year ahead.

CALI CITRUS GREENING: An unwanted visitor is taking aim at California's 2 billion-dollar citrus industry. The Ag Department has confirmed a case of citrus greening in Los Angeles County. The disease has already killed millions of trees in Florida and Brazil. Now agents say greening has been found on a tree in a residential neighborhood. Sales and shipments of citrus trees are being shut down in a five mile radius...and the quarantine could expand if more cases are confirmed.

HONEY PRICES: Don't expect honey prices to dip anytime soon. New figures show honey production totaled just under 150-million pounds in 2011...a 16% dip from the year before. As a result, stocks remain tight and prices remain at record levels.

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