USFR Weekly Recap - June 9-10, 2012

June 9, 2012 09:43 AM
 

 

 

THIS WEEK ON U.S. FARM REPORT

EPISODE # 2026
JUNE 9-10, 2012

 

JOHN’S OPEN:

Hello and welcome to U.S. Farm Report. We start today on a somber note. Mark Pearson died unexpectedly at his Iowa home this week. Many of you are familiar with his work on “Market to Market” on Iowa public television, while I met him briefly at farm meetings I knew him by his TV career. He was a professional, blessed with a rich voice, his presence let his guests communicate better his analysis informed viewers across the country. We are better because of his years of service. We offer our sympathies to his family and friends on his untimely passing. Time for all the headlines, here is Tyne Morgan.

 

HEADLINES:

Thank you. If you look at USDA records it would show hash marks on the 5 year average for wheat harvest. Normally it has not started in the Big Wheat State but this is not a normal year. As of Monday, 20% of the state's crop was harvested. Conditions helped farmers make big strides this week with temperatures in the low to mid 90's and low wind. Crop conditions however have declined in recent weeks due to the lack of rain. A third of the crop is fair, another third is good, 8% is excellent. One warmer we talked to is impressed with wheat harvest. This year has been good different because the yields have been --maybe the best we have ever had or at least in the last 15 years. From low 50s to upper 70's for us. From Kansas to Oklahoma and in Oklahoma three quarters of the winter wheat fields are cut. That's 60 points ahead of the 5 year average. In Texas 38% is harvested, in Arkansas harvest is all but done. Nearly 80 points ahead of the 5 year average. Cotton futures fell to a 2 1/2 year low. There are concerns the struggling world economy will further slow the demand for cotton while expanding the crops. Cotton futures closed at 66 a pound at midweek. The 2012 Farm Bill is on the move. The bill was introduced on the Senate floor this week. Senate Agriculture Committee Chair, Debbie Stabenow projects this could last 2 to 3 weeks. The debate still continues on the dairy portion of the bill, proposed as the Dairy Supply Act which would put in a supply management system in milk production. A farmer said he is against the act because the program would be supplied by the government. No other Agriculture commodity uses a full government supplied insurance program. We rely today on private insurance that provides crop insurance. We want that same thing in the dairy insurance like a livestock gross margin insurance that's provided by private insurance. We know we get a fair deal then because we have competition. If the government is in it it's not what I call a fair program. Groups like International Dairy Foods are against the proposed legislation while National Milk Producers Federation supports it. Those are the headlines. Now back to John.

 

CROP WATCH:

Crop Watch is heating up. Let's go to three different parts of farm country. In North Carolina, a wheat grower said he harvested his first field and the average was over 100 bushels an acre. He adds that some corn is already silking. In Daviess County they say it's getting “scary” dry. Corn is showing stress, he has even seen a few beans wilting up. And in western Fresno California cotton looks great and is squaring. A farmer said he will start cutting wheat this coming week.

 

ANALYSIS:

Our guests this week, Greg Wagner, and Tom the market was really active this week and I guess one of the things that I like to ask you first because I know with Tom he told me what's been going on but how about the quickness in trade with the additional hours? Did that make a difference? It's just--it takes an adjustment. Adjust member period but the market is obviously what trader's respond to. Gets everybody more opportunity, more time, whether or not increases volatility I don't buy into it. I think it's by providing a larger window, anytime you compress trading time and get a three day weekend. You only have four days to trade. You have to after a three day weekend, guarantee Tuesday, increases volatility. Increasing the amount of time that is allowed to trade. Are you eliminating that but if you expand it, just -- like Decom pressing. Talk Friday morning and then you said markets are not looking that good and Friday afternoon we are taping --had a different story. What happened? Thing is it’s turned around. Whether it be based on weather or the stock market. The outside market. Crude oil and you saw it come back. You saw the stock market and we came into a very weak stock market. Let's talk about gold, a lot of people watch gold. All the old timers watch it. It seems to be the universal currency. It went down about $20. You had a $60 move in gold. If you are signature there long grain and you say gold just dropped $60 maybe I don't want to belong. Speculator, you tend to lighten up. By the end of the day it looked like gold may be up on the day. You are seeing big volatility. Cotton put on 360 and then another limit up, extended, extreme volatility on the commodities that were sold off and rallying back up to more of a risk on trade. You aren't looking at weather and some of the things a lot of produce he’s saying fundamentals. The outside market like Tom said. Gold and cotton are looking at extreme turmoil and the Euro zone. It's really I like to make the rally we had recently going back a couple weeks that --I’m talking about corn, soybeans and wheat. Based on weather, drying out. Did that rally, that whole rally happened when the dollar was also rallying sharply. You had essentially, a disconnect the market was able to disengage between what was going on with the strength of the dollar because strength of the dollar is normally negative for grain markets, negative for commodities in general and it'll go back to the idea, fundamentals, we are trading one of the three big issues, weather, weather, weather right now. Weather weather weather. And we talked a lot about weather and you do that with, everybody you talk to. How is the weather. All the time. Yeah. You know you talk about Spain and it's not unusual, got up at three in the morning. The auction went well. People showed up to buy the debt of the Spanish Bonds and the markets, all the markets --so grains were a little weaker and they caught a bid at three in the morning based of how the Spanish market went. Anyone on the shelf can call me at 3 in the morning. The markets aren't moving on the outside influences, whether they stay there that's a different story. How the prices they trade during the day are influenced by the market. They will end up trading fundamentals end of the day they have these wild moves that --a guy like me loves as long as you are willing to work 21 hours a day. Or be available or have the market available. Yeah. How about the idea of a trading --can a farmer trade out of his own house anymore on the internet? Yeah. We trade out of the house if we drive in the rain. If your cell phone works you can have internet. If it's getting signal you request have a cell phone card that's getting it. Doesn't always work in the Agriculture community. Places where it’s been pretty you know so so. It's all there. We will talk about how the market is. Closing in and going almost 24 hours a day. We will return with more in just a few moments. . Greg Wagner, Agriculture advisor, Tom, our guests here, when we left I told people we were going to get back and talk about this near 24 hour trading. We are off on weekends trading. When do we quit on Friday and when do we start on Sunday night? Sunday night for sure we will start at 5:00pm unless Monday is a holiday. That works out well for someone like me. I'm trading all the markets. It was always weird too trade the gold and silver at five, do what you want in those it, go back outside, grab a soda, come back in and now it's six another open but everything opens at five and that's working out well. How about closing on Friday? Just today new rule, now we are going to keep the pit open until 2 and the screen open until 2. We are 5 until 2, 21 hour trading the pit was opening traditional hours 9:30 do 1:15. A lot of guys said we want to be open if the screen is open. We don't mind working. Let the consumer, the customer pick the best market, whatever works best for them. Now the screen and pit will both close at two and as you know the upcoming number, they will open the pit early. My understanding, 7:20, that was just as of a few hours ago. It's interesting how the Mercs responded to that because of the fact that okay, are you going to have this number come out at 7:30, and obviously the board opens, board --the trading will start at 7:20 but this goes back to you know the grain markets used to get the report at 2:00 p.m. in the afternoon. The market closed at 1:15 and it was then the stand alone board of trade that lobbied the USDA to say that don't get the report out after the close and on the opening, that's where it started at 7:35 a.m. so Chicago could get the first crack. In regards to this coming on now with the USDA report, the upcoming one will start Tuesday the 12th and what will happen there was similar to the stock indexes future in to the 80's. In the 80's and 90's the Mercs would open the stock index-at 7:15 and this isn't unprecedented, I think it’s welcomed in a lot of quarters. Looks like we will be able to agree and trade it? Absolutely, the USDA just put out two days ago a survey asking everybody, speculators, farmers, ranchers, anyone involved in the market, brokers, anyone, 30 day comment period on what will be best for releasing the number. Part of it is people have access to them. Releasing data and then not being able to access the market seems silly. Now with the markets open as we spoke on before the show, when we have a big export sale like we did this morning we sold a lot of soybeans, the market was able to react instantly within seconds. You saw the sale come out 7:30, soybeans on their way up. That price tag on over-the- counter market. Absolutely in other words, off exchange markets were ready trading numbers in any event. You get a good idea of where. My volume over the last few weeks tripled from the morning session to the afternoon because I quit trading the morning. I used to trade the night succession quit at 10 and now I’m actively involved very aggressive from 4:30 until about 10 in the afternoon. Quick question, what should farmers be concerned about? What's the number one thing? Weather weather weather, anything else? Weather weather weather what's going on in Europe, is obviously a concern. I would make this point. Given where we are at, we have a long history of getting late weather related rallies, go back to 1983. Our incidents, the other thing is don't put crop conditions, real quickly, now crop condition reports, no correlation, people will trade them. Out to August and September before you get this link.

 

JOHN’S WORLD:

Last month a landmark settlement was reached in the long running legal battle over Atrazine in public drinking water. The maker of the popular herbicide agreed to a 105 million dollar payout to help filter the chemical and pay the 35 million-dollar legal fees to date. This case is important for several reasons, first the usefulness of Atrazine as a tool. Even after decades of research, this low cost weapon for full season grass control remains unique. A precedent has been set for not just meeting all public health standards but taking a zero tolerance for chemical residue and water supplies, none of the incidents came close to the federal maximum allowable level. While it can be argued there was a strong economic case for settling this for both sides the outcome may encourage similar efforts to capitalize ever improving detection technology into badly needed revenue for water suppliers. Even the long odds of dubious lawsuits may not detour our over populated legal profession. For producers while we can breathe a sigh of relief this tool is still available. It should encourage us to redouble our efforts to keep spoil and chemicals in place. Budgets are tight enough without adding a legal fee category. Let us know what you think. Send e-mails to USFarmReport.com or call and leave us a voicemail.

 

2ND HALF OPEN:

Hello and welcome. I'm almost getting used to 50 cent moves in grain prices, almost. What I still have trouble grasping are the factors way beyond traditional Agriculture that may impact the market. I'm struggling to make sense of the Euro crisis, I’m studying the monsoonal rain patterns in India and I can now almost pronounce the China currency. I'm way behind on Farm Bill details. Somebody better tell aspiring farmers that graduation doesn't mean the end of homework. Let's get started the headlines now. Thank you John, Even though USDA said lean finely textured beef is safe to eat all but three states are deciding not to use it. You may remember the up roar when it vent viral. Amid the controversy when USDA gave schools the choice to buy beef with or without it for the next school year. The national school lunch program was a big buyer of ground beef. There are only 3 states that will use it next school year. That's Iowa, Nebraska and South Dakota. Those three states all had plants that produced it. The company has shut them down because of lack of demand. A federal judge said the FDA needs to do more to address the risk of humans over medication use in livestock and animal feed. The FDA feels it should cut back on medication, but public health groups filed suit. This week a judge ruled in favor saying it must reconsider its stance. The court questions the argument it would be less costly and more efficient to ask the industry to self-monitor. If you are looking for a job, it may not be a good choice in the feed industry. A 6th of the work force works in some portion of the food chain. That includes farms, slaughterhouses, grocery stores and restaurants. A study by the food chain workers alliance found just more than 1 in 10 employees earns what they call a livable rage. From the 700 interviewed the median wage is $9.65 an hour. Nearly 14% of those workers depend on federal aid. That's above the average of 8.3 nationwide. They found more than half have touched or been around food while sick. Senate weather experts at Colorado State University haven't increased their predictions for the hurricane season, they have estimated the season for three decades. They call for 13 named storms, 5 of them expected to be hurricanes, and two of them could be major storms. They call it a below average season. They said there is still some worry about when El Nino might develop. It got an early start last week. If you are worried about bed bugs in hotels our next story probably won't give you peace of mind of researchers at Iowa state university just wrapped up a major study on the effectiveness of over-the- counter bug spray to see what is the most effective in battling bed bugs, they found foggers or bug bombs are not working. The assistant professor did the study. I'm requesting that the EPA do a data call in where they actually say to the manufacturer, show me your date and let me value the data and show me how your product works and that its effective against the insect that are listed on the container. The professor said bed bug numbers have increased in the past decade as much as 500% in North America.

 

HEARTLAND:

Its legend continues to wind through modern American history. Route 66 was the way to travel the country for decades, one of the halfway stops on that route has reopened in southwest Missouri. Spared from foreclosure and demolition the Boots Motel is welcoming guests back. Steve grant has the story. By the end of World War II, 4 million cars were rolling off Detroit’s line. Americans were free and ready to travel. Thousands rolled through the Ozarks on their way to or from the Grand Canyon. Waiting to accommodate them were tourist courts and cabins with more than 400,000 units. In Missouri the place to stay was the boot. This was the interstate of the day. This was long before the interstate. It was like being on the interstate and it was like staying in a fancy hotel, a vacationing Clark Gable visited twice and he was the star. Back in the saddle again, Gene and his horse were also there. The Boots, named for the builder, not the cowboy wear came through Joplin. Then it fell into flop house apartment status. Then two sisters decided they could bring it back before a major drugstore chain had plans. Anybody who thinks it's a profit making business well, it won't turn a dime but it's saving it. Complete restoration will take time. One wing is still undone. No TV. This is Steve Grant for US Farm Report. Thank you Steve, A good piece of history and you can be part of it; don't plan on staying until after October. The motel is booked up through the fall festival.

 

 

As always, we want to hear from you, send comments to mailbag@usfarmreport.com or leave us a voice mail at 800-792-4329.

 

 

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