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November 2011 Archive for From the Editor

RSS By: Brian Grete, Pro Farmer

Pro Farmer Editor Brian Grete takes time to talk with Pro Farmer Members about some of the key issues in each week's Pro Farmer newsletter.

From the Editor for Nov. 18

Nov 18, 2011

Chip Flory

From The Editor

Nov. 18, 2011

Hello Pro Farmer Members!

Another growing season is off and running! No... not here. I'm talking about in South America. And with the start of another growing season, we're starting another run of the Pro Farmer Crop Tour newsletter.

In the November issue of Crop Tour, we finalize the 2011 U.S. growing season with some observations of our own and a final report from Pro Farmer's crop reporters in Illinois, Iowa, Minnesota and Nebraska. We also provide some details on the quick start to the 2011-12 South American growing season from PF consultant Dr. Michael Cordonnier as well as his current estimates of key South American corn and soybean crops. Make sure you check out the Crop Tour newsletter.

Also in this week's newsletter we provide the an update on a farm bill agreement reached between the leaders of the House and Senate Ag Committees. There are some dramatic changes in the proposed plan... no more base acres; no direct payment; no SURE; no ACRE.

Revenue-Protection (RP) payments, when triggered, would be paid on 60% of actual planted acres and the payment would be triggered by a combination of yield and price at the farm level. Wow... if it works.

And it's very unlikely the new program would be compliant under the World Trade Organization (WTO). Reason: Payments would be determined by actual plantings and actual price. That means the program could influence producers planting decisions, which means the program could be "market-distorting." That's a no-no in the farm policy world... but it's only a no-no if you are trying to write farm policy you expect to be a round for a long time. If odds are good the policy will be changed before a multi-year challenge through the WTO would wrap up... then some seem to think it's okay to initiate such policies.

There's no telling if this plan will end up as actual farm law, but it will be an interesting process to watch if lawmakers do make these proposals actual law.

That's it for this week...

Have a great weekend!!

From the Editor for Nov. 11

Nov 16, 2011

Chip Flory

From The Editor

Nov. 11, 2011

Hello Pro Farmer Members!

Welcome to winter! Snow moved into the Midwest this week. Most of it is gone in northeast Iowa, but there are enough spots still visible to let us know the season is changing again.

I meant to talk about corn and soybean basis in the newsletter this week, but ran out of space. I wanted to spend some time focused on corn basis in particular. There is a lot of talk in the market about stronger-than-normal basis... and this basis isn't just strong for this time of the year... it's strong for any time of the year! That makes it exceptionally strong for a post-harvest market.

There are three reasons for strong basis:

  • Strong demand
  • Slow movement of the physical commodity
  • Strong demand and slow movement of the physical commodity

Movement is slow... and there are few piles of corn sitting at elevators across the Midwest. There are a few in northeast Iowa and other scattered around the Corn Belt, but not nearly enough to suggest there is a burdensome amount of corn out there.

One of the reasons for that is there was plenty of on-farm storage available when the 2011 corn crop harvest got started. That's because everybody (yes... I do mean everybody) cleaned out their bins in the summer of 2011. USDA said there was 315 million bu. of corn stored on-farm as of September 1, 2011. If there was that much out there, it was held by livestock, dairy and poultry producers. Cash grain farmers had emptied their bins.

And now they are full again. And they're likely to stay full until the market delivers the right incentive to open the bin door, fill a hopper and haul it to town. Right now, growers don't have that incentive... and they probably won't until spring.

We don't anticipate much additional basis strength... unless demand really kicks up... until end-users really need to refill supplies. That's not likely until late January or early February. We also, however, don't expect much (if any) pressure on basis.

That's it for this week...

Have a great weekend!!

From the Editor for Nov. 4

Nov 09, 2011

Chip Flory

From The Editor

Nov. 4, 2011

Hello Pro Farmer Members!

What a crazy week. It started with more euro-craziness as the Greek President "threatened" to hold a referrendum vote to decide if the people of Greece would accept the austerity plant proposed by the European Union. By the way... if the vote had gone through and the austerity plan had been rejected, it's estimate Greece would have been out of money by the middle of December. Which begs a simple question: "Then what?"

Then came the MF Global fiasco. Stuff on this story is still "breaking news" on CNBC... and all they're doing is reporting rumors. This afternoon... somebody tweeted the lost MF money had been found at JP Morgan... and it got reported! Of course, JP Morgan has money sitting around... just not MF Global's money. I'm pretty sure the MF money has been lost just once, but I think it has been found at least a half-dozen times this week!

The money hasn't been found... and some in the market media are even speculating where Jon Corzine will next be employed. I'm not sure what state he'll be employed in, but I'll bet he's stamping license plates!

So... the macro-economic uncertainties of the world and the MF Global thing made for an unbelieveably eventful and volatile week. But when everything was said and done, December corn futures gain 3/4 of one cent on the week. All that volatility and corn's weekly close was within 1 cent of last week's close! That's some surprising stability as it appeared the world was (once again) falling apart. Wow...

I think that sets the stage for some strength in the grain markets next week. If investors realize how stable the corn market was last week, they might ALL want to stick some money in the grain markets in the week ahead.

Here's a neat 'little meeting' --

Pro Farmer Washington Consultant Jim Wiesemeyer will take part in the National Agricultural Research, Extension, Education and Economics Advisotry Board meeting on Tuesday, Nov. 8. Jim will be speaking on the "Components of the Farm Bill and the Strategic Approach of USDA to the Farm Bill." (I reckon he'll have some fun with that!)

Other speakers will cover the impact of NASS reports on grain market volatility. Speakers on this topic will include:

  • Terry Wolf, owner, Wolf Farms & Wolf Grain Systems Inc.
  • Joe Prusacki, Director, NASS Statistics Division
  • Doris E. Mold, Chair of the Advisory Committee on Agricultural Statistics Perspective.

Following that presentation will be two panel discussions with:

  • Mike Mock, senior risk management consultant, The Andersons Inc. (first)
  • Dave Lyons, vice president for government relations, Louis Dreyfus Corp. (first)
  • The second panel will include Dr. Harry Vroomen, vice president- Economic Services, the Fertilizer Institute (second)
  • Marv Wilson, ag biotech operations director, Pioneer Hi-Bred International Inc. (second)

Obviously, Jim will be there and will report back the most interesting nuggets from the discussions.

I'll also be on a panel discussion next week!

I'll be the moderator of "Risk Management Panel Discussion" at the Dairy Today Elite Producer Business conference in Vegas (baby!):

  • Carl Babler, First Capitol Ag
  • Katie Krupa, Rice Dairy
  • Ron Mortensen, Dairy Gross Margin, LLC
  • Steven Schalla, Stewart-Peterson
  • Robin Schmahl, AgDairy, LLC

I'll be staying for the entire conference and will be tweeting some of the best nuggets from the conference. Be sure to follow @ChipFlory on Twitter to get the inside scoop! 

That's it for this week...

Have a great weekend!!

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