Hello and welcome to US Farm Report, I’m John Phipps. At the risk of seeming naïve I will venture to say things are looking up for much of Agriculture and our fellow citizens. Not every business or every location, but some sort of normal. Even the wild market gyrations for commodities has become less alarming for all of us. And this is just as how things are right now and as we will try to highlight, some surprising adaptations to this new environment proves once again people usually find a way.
The drought looks to be diminishing for some portions of the Southern Plains which is helping to improve cattle numbers. This week’s Cattle on feed report shows analysts expecting April placements to be about 1.5 million head lower than last year or about 12%. That would be the smallest placements since 2009.
About a year ago feedlot inventories hiked as the drought caused the green pastures to turn brown in the Southern forcing producers to liquidate much of their herds. The recent rains have improved pastures, which may translate into smaller Beef supplies later this year.Agriculture is still feeling the brunt of a roller coaster year for weather in 2011. From drought to floods to fires, it was the year that farmers and ranchers seemed to see it all. There's a new tally on crop losses from those disasters. New data from the Risk Management Agency shows crop insurance companies paid out nearly $11 billion last year alone. This marks a new record topping the previous of 8.7 billion set in 2008. The agency said the crops that endured the most damage were corn, cotton, wheat, soybeans, grain sorghum, pastor, range land and tobacco. Just when you think land prices can't go any higher, two new reports show they continue to climb in 2012. The Federal Reserve Bank of Chicago reports AG land values increased 19% in the first quarter of 2012 over the same period last year. While it is not the record pace we saw in 2011, it’s still a big jump. Iowa continues to lead the way with land values jumping 27%. Just to the east Illinois is climbing rapidly with a 20% increase. Kansas City Fed. also released its quarterly report and it shows that cropland values climbed more than 20% for the second year in a row. Ranchland values grew 16%.Nebraska land prices saw the biggest jump in the first quarter of 2012, with an increase of more than 41% for irrigated land and nearly 39% for non- irrigated.
Crop watch this week takes us to the south where it ranges from too much moisture to not enough. Steve Olson from Plainview Texas sent us this photo. He’s planting cotton and kicking up a dust storm late in the week. Just a few days earlier they got some rain, anywhere from 1 to 3 inches but the region is still well behind in soil moisture. And Keith Dunn, who farms in Yale, Virginia, said nearly 2 inches of rain Thursday night washed out the sweet potato field. He says the frequent moisture has pushed soybean planting 2 weeks behind. Now to Maine, the NASS office says bees have been moved into most of the state’s wild blueberry fields. The crop bloom has been delayed by cool weather and plant disease could be a problem also.
Our guests this week are Gregg Hunt and Jim Bower. While the weather turned around in Russia and Ukraine, some winds and hot conditions over there got the spark out of the weak market. And then, corn kicks in and as tight as a hit to week and the beam that moment also. We ended up seeing that the maps, when they got out of here Friday we talked about a blocking and bringing back seat and we do have areas in the belt I could use the rain. Weather can't be the only thing that happened Jim, what do you think. I think the market is kind of caught between two major factors. The first probably negative factor is from a macro economic standpoint worldwide. We are seeing that bond yields go down to record lows which indicate there is a lot of uncertainty. Isn't this all Europe? Absolutely not. The bonds are a market of reality. The commodity markets are markets of the future, but the market of reality says the general economic backdrop worldwide as evidenced by record low interest rates and tells us there is macro-economic issues out there that are unknown and dangerous. Like Gregg mentioned we have some new situations that have surfaced, and we are in some degree of weather problems already, and as Gregg said in the former Soviet Union and a good portion of the Ukraine, if they don't get rain in the next 10 days. They could lose another 15 or 20% of their winter crops there. We need to bring through that pretty well also. The funds that were pushed to market early on, is that the reason other than weather. Well we had to find a short anathema of week, and I put in probably a decent move this week. And that was across 50, and then July corn did it yesterday and this morning and at one time we were about it. And there's a lot going on that can fool you. One might look week one day, all it really is; they are banging the box between corn and beans either way.
But back to the bigger picture, this could also be a very bullish thing because China eating into the eastern, the production, the standard of living, it will not go down at least in the area because the communist party will make sure that there is plenty of things and especially hawks. And China made some big purchases this week. Yes, there will be two types of buying, out of China. There will be a small amount of corn and that will be picking up a lot more, and I think it will end up building a reserve, and I think that will take place in new cross court right now, the reserve people are the ones buying for the state, and the price sensitivity is probably different than it is for the end-users over there. I think that the big news for next year is, China has finally arrived, and they will be a major buyer of US corn. Let's talk about the corn still out here in the bin that has been sold yet. It seemed like those prices went down, but it went higher and higher. Well we took advantage of these price moves that we have been selling out of our options. Our average price was $6.97 and a half and we have diverted our attention now to the 2012 crop. We have a lot of situations that will develop macro-economic wise as well as symmetrically, but I think the USDA is significantly too high on the corn yield at 4 near the 166 mark. I think it's a stretch already. Our guest today here at the farm report roundtable Gregg Hunt and Jim Bower, and when we left we were talking to you about the fact that here in the United States and the Government reports, we might not be able to --I thought you were going to tell me that we were going to raise 166 bushels per acre. Well we don't know that, but that we were so forceful, and to me that's amateur. And it’s also advertised in soybeans. And even at the trend line yield, we are basically stuck with it, very well done Mike Lowell 2013 carry out because that band is so strong. And, we can tell by the action in the spread since that report came out, the world is concerned about the availability of soybeans, particularly if we have any kind of weather.
Are they going to continue trying or how will they end that might even end up in that country? While they own up to do 5 or 7 days more beans, and, then we take a look at how many beans have been priced for next year's crop. It's mind-boggling. So they could be 38 million metric tons versus year ago and all of South America. There's going to be a window there, and that's logistically frightening because we won't be able to load out and get beans in any time to wait the picture is looking right now. And in order to protect or maximize his potential profit? Let's make that a broader issue. What can an investor or trader or producer do? It looks like what this general economic background, it's so difficult to tell what will happen. Was shifted a little bit, let's go back to the 5-7% wool, which is what I promote, and, then we narrowed that down and even more and have it in the boot sector. Because as Gregg said we had these tremendous demand issues all over the planet which will not go away overnight. So I’m trying to get our portfolio and the portfolios of their customers into a position where is heavily oriented towards food because that's one area that I don't see it happening. It's constantly being threatened. But when you talk about but you are talking about people putting in money and putting up the whole thing. They are talking about 5-7%? I'd say take 5 or 7% of US investment dollars and put that into the commodity market. So 5-7% is appropriate especially in this kind of market. Well, you are now seeing this site and make funds. And I will continue to improve gold, silver, copper at a lot of the base metals. And, if they didn't make that --if they didn't make that Monday, 550 million Euro on Monday afternoon, then nothing would have stood up. And, the bottom line right now, the grease will be gone and off the table within the year, and nothing will come of that, but at least we do have a story. Okay, thank you very much.
New numbers from Mint.com, an online personal finance service shows what Americans are willing to pay for pets. Not counting one-time expenditures such as licenses are vaccinations, the long- range cost for a dog ranges from 600-900 dollars year. I think a total cost figure is easily much higher.Meanwhile this week State Farm announced they spent $109 million last year to settle dog bite claims. Such costs are folded into your homeowner’s premiums, of course. In all, dog bites cost the entire insurance industry nearly a half billion dollars. These are real market derived signals about the intensity of Americans attachment to companion animals. For the livestock industry, pretending the phenomenon doesn’t exist could be intensifying their ongoing love-hate battle with consumers. Agriculture has not just failed to provide a clear delineation between companion and food animals, they are doing the opposite. Every Petting Zoo, every billboard with an attractive young female farmer bottle feeding a calf, every bucolic Old-MacDonald Farm coloring book handed out to grade-schoolers helps to blur the distinction for a consuming public to the point that they are concluding animals are animals. In our rush to exploit baby animals to trigger warm gooey affection to spill over on ourselves, we ensure market rejection when the truth of farm animal life and death is revealed. We need to decide if we want to sell sentiment or protein.
JOHN’S OPEN 2ND HALF:
Hello and welcome to US Farm Report, I’m John Phipps. I know we talk about weather way too much on the show but it is a central part of being a farmer, and this year continues to confuse lots of us in the field. For example, the rip-roaring head start to the planting season has been tempered by a cooling-off period. Literally, in fact, the hope we had of having early crops to take advantage of early fall premiums have faded. Especially when you consider Mike's long range forecasts for much of the corn belt. Like the fog of war, the wild card of weather can make decision- making something less than a science. And a believer in luck.
Contrary to what many consumers have been led to believe, eating healthy maybe less expensive than junk food. The USDA just released a new study stating it's cheaper to buy most fruits and vegetables rather than foods high in sugar, fat and salt. The Ag Department says it boils down to how the price is measured. When comparing price per calorie, the higher calorie foods, like junk food may seem cheaper. But when you compare them by weight and portion size, foods like dairy, grains and veggies are better buy. This means choosing carrots over French Fries may make you not only healthy but a bargain shopper. Making that choice however may not be easy since it's not always fast and convenient. A new report shows that could change in the next five years with more demand for value added fresh vegetables. The report by Rabobank says the growing US health crisis combined with consumers wanting easy to prepare meals are the main drivers of the change. The report encourages produced firms to create vegetable products enhanced with more nutritious content which are also easier to prepare. If you want to look at the health of the AG industry, you might set your eyes on a recent report for John Deere. They are the largest farm equipment maker in the world and the company released its quarterly financial this week and it showed net income climbed $2.61 a share in the quarter compared to $2.12 a year ago. They said the 8th straight quarter of record earnings, competitors like AGCO and CNH also reported strong earnings, as a result of strong farm incomes.Wireless company Lightsquared filed for Chapter 11 Bankruptcy protection this week. Business reportedly started going downhill after the FCC revoked the request to build a national wireless network saying its signal interfered with GPS units used in industries like Agriculture. Lightsquared is said to have more than 1 billion in assets and liabilities. It’s a birthday celebration, not just any birthday. The US Department of Agriculture turned 150. It was 150 years ago that President Abraham Lincoln signed into law a measure that created the USDA. Lincoln signed an act on May 15, 1862 that established the department, which he called the people department.
SPIRIT OF THE HEARTLAND:
This weekend we celebrate Armed Forces Day, a time to honor the men and women serving in the military. And perhaps, it’s also a time to show support for the families of our troops. In this report provided by the University of Tennessee, Chuck Denney tells us about a special camp where military kids are learning to cook and serve while their parents serve their country. Is a place where this is the activity of the day. But, it includes some unique cooking. And, they were held recently at this youth camp. Natalie says her dad is in the army. It's fun because they have gone to the same thing that you have, and knowing that you have parents that are in the forces. A kind of makes you feel like you have a connection with them. Making sweet rolls from scratch. It was worth it, to make the sweet rolls. From the preparation to the serving, the military kids do it all. It all looks delicious and the only downside is not having enough room to sample everything and learning those pesky vegetable names. They learned how to make grilled chicken and mashed potatoes, but it Brussels sprouts -- wait, cauliflower. Part of this is about destruction, sometimes stressful. So, for each leaders organizes and just forget about their worries and concerns for just a while. I think just the chance for them to have a civilian camp experience, and these kids may have to help out at home when it comes to cooking meals. When you have one parent gone the cooking skills get slacks at home so it's good for them to be able to pick up that slack. Now for the morning reward, time to beat, At the end of camp, kids cook and kids relate. Serving up a helping of support.
Thanks Chuck. One other note, to commemorate Armed Forces Day, the Federal Government announced this week that active duty service men and women and their immediate families can now visit the national parks free of charge.
Like many who work the land, Baxter Black is proud of the role he plays in protecting and preserving the place he calls home. He joins us now from his Arizona ranch. We are over the land. The land that everyone is trying to stay. We are of the Earth. The Earth and the glimmer to the grave. The plaintiff in the ocean, the lighting in the Tundra, and you will find us on the outskirts, coaxing bounty from the ground with our watchful eyes cast skyward well beyond the light of town. Dust to dust, we are committed to the earth from which we stand. We are farmers by our birthright and the stewards of the land. There are those who sit in towers who pretend to know what's best. They pontificate and dabble and they bray loudly and protest that a peasant can't be trusted with the land to which he is bred. They rail with the courage of the person who is well fed. We have labored through the ages of these power-hungry kings, and we do all they do all the wars of with arrows and their swings. We have TV masses with fish and loaves of bread for the poor would sit and listen to the words the prophet said. Mother Earth can be forgiving when ignorance we air, but she can die of good intentions. She needs someone who will care. Counting blood and sweat and toil, but the daily care of someone with her hand upon the soil. So the bullets become ballots, the rulers change their name. It will still march on, and our job remains the same. The bureaucrats and battleships, the Einstein vendor acquires, it will spend their life behind the plow if no one but their fire. And that's what we do, and I’m proud to be a part of that. This is Baxter Black from out there. Baxter joins us again in two weeks. Until then check out his work online at BaxterBlack.com.
Al, it looks like we’ve got quite the history with this week’s tractor. That’s right John, the Huber line of tractors was astonishing for its time. I'm probably tragically young but I’ve never heard of this one. You don't remember Edward Huber? While he designed this 1936 Huber HS as a young boy, he knew helping his father build farm wagons would pay off someday. He designed this hay Rake made out of wood at the age of 26. He quickly became the pioneers of farm tractors and construction equipment until World War II. The history of the Huber name lives on through collectors like Dan White. That was the grand fathers. And after he passed away my grandmother sold it to a gentleman who ran a sawmill with it for a lot of years. We pulled it out in the pasture and there it sat. My brother founded in ‘74. Got it running, and then in ‘88 I bought it from him and stripped down all of it and brought it back to life. We had to put a couple in it. And I couldn't find a head gasket for it anyplace. Then I got to thinking, when my mother moved from the farms there were a bunch of gaskets hanging on the clutch wall and I picked them up and brought them down here. So I got to going through the basket and the head gasket was in there. We made up a decal of the pin striping. We went after a tractor in Marion Ohio. That one was about $1136, but you could buy a farm all or something else cheaper. It was expensive but it was well built. It was strictly a brushing tractor, because at that point in time you could hook the whole far behind it. I remember my dad saying, they would use it for farming between 75 and 100 gallons of gas per day. My son wants it, so there it will probably stay for a while. Don't forget you can find tractor tales online at USFarmReport.com or on Facebook. The segments can also be downloaded as podcast from iTunes.
And now to today's country church salute which goes to St. John's Lutheran Church in Sumner, Iowa. The church is affiliated with the Missouri Synod. The present building was constructed in 1914, but the church was actually started in 1875. Church member Jeanette Hoth says the church is 4 miles west of town so you can only imagine it is surrounded by good Iowa corn and soybean crops. Reverend George Volkert is the current pastor. There are 86 members of the congregation. Congratulations to St. John's Lutheran of Sumner Iowa.
Time now for our weekly look inside the farm report mailbag. Here are two final e-mails that I will use to close out our current discussion about the value of cash as a store of wealth. As I previously stated, it's a new investment era and cash will have its rain. That's from Dave Sayers. And this comment for Les... “When other countries start realizing we can't repay them without inflating our currency, they will stop loaning us money.” One big problem with economic discussions like this one is the lack of accountability and substantiation with real numbers. So I am going to suggest a couple of guidelines for the future in our mailbag. First, if a pundit’s predictions never change to from say, impending inflation to possible deflation, it's not a prediction it’s prejudice. It adds no value to the discussion. Second, I think we need a statute of limitation on economic pronouncements. I propose two years. Clever foreseers know the secret to successful predictions is to specify an outcome or a date, but never both. Such pronouncements are useless. So in 2009, if you believed that interest rates would skyrocket, then they were wrong. If they prophesied that farmland prices would collapse, they were wrong. And if they foresaw rampant consumer inflation around the corner, they were wrong. Being wrong is not bad but it is a real world outcome. As for these current comments, I will counter with this fact: Treasury Bond yields, and therefore the price of cash just hit new record lows this week. As always, we want to hear from you. Send comments to USFarmReport.com.