THIS WEEK ON U.S. FARM REPORT
MARCH 24-25, 2012
JOHN’S OPEN: Hello and welcome to U.S. Farm Report, I'm John Phipps. We could sit and swap astounding stories of the record-smashing march heat, but with a week still to go, we're already tired of that news. Left under-covered I think is the soil moisture story. High temperatures coupled with brisk, low humidity winds have made field work a delight, but now threaten to deplete an already dwindling soil moisture reserve. More than a few of us regret breaking open some fields as the entire tillage profile is now parched. Our analysts will have more soon, but even without a drought designation there are many of us starting to scan the forecast not for open planting weather, but for a soaking rain. Time now for the headlines.....here's Al Pell.
TEXAS DROUGHT: Thanks John. Even after some much needed rains, last year’s drought is still making quite an impact on the state of Texas. Texas Agri-Life Extension updated the 2011 agricultural losses to nearly eight billion dollars. That's up from the 5.2 billion estimated last August. Of that - livestock losses are estimated at more than 3 billion dollars, up from the 2 billion estimated last fall. Cotton losses were pushed up about a half-billion dollars to over two billion in losses.
OKLAHOMA DROUGHT OVER: In neighboring Oklahoma, widespread rain is helping to end the drought. Oklahoma State says a slow-moving storm produced 4-6 inches of rain across much of the eastern half of the state. 63% of the state is now considered drought free.
HERD EXPANSION: There are signs that beef producers who culled herds during the drought may have started the early stages of expansion. Beef cow numbers have dropped by 9% since 2007. Purdue economist Chris Hurt says strong prices and moderating feed costs are encouraging some producers to start the expansion. Professor Hurt will join me in a moment for today’s round-table.
DAIRY PRODUCTION: Milk production in the top 23 dairy states in February totaled just over 15 billion pounds, a five-percent bump from the year before. Output was actually up more than 8%, but the figure was adjusted after factoring in last month's additional leap-year day. California lead the way with production up nearly 11%.
ALLENDALE ACREAGE: Coming up this week, USDA will release its March prospective plantings report. As farmers start rolling their planters this spring, it's expected they'll plant one of the largest corn crops since World War II. USDA forecast 94 million acres. Allendale incorporated is expecting 95 million. Bill Biedermann from Allendale will also be in our studios for the roundtable.
CROP WATCH: Crop watch this week is a cross-country adventure... In Oklahoma, 70% of winter wheat is good to excellent. More than half is jointing, well ahead of average pace. There was also improvement in the Texas crop. A third is good to excellent. And more than half of the Kansas winter wheat is called good or better. In Wayne County, New York, - just off Lake Ontario - a farmer says he couldn't resist planting a row of sweet corn. He expected the crop to spike on Friday. And in Georgia, the NASS office says most of the state's blueberry crop is blooming and most is in good shape. And 65% of the state's famed peach crop is now blooming as well.
ROUND TABLE: Roundtable guests this week we have Chris Hurt and Bill Biedermann. I'm going to start with you because I know that, a week ago they came up and released what they thought in terms of acres. Let's talk about acres first and stocks in the moment. We did 26 states, pretty extensive, and about 63% of the area that's planted. We are seeing increases in corn in southern Missouri, southern Illinois, southern Indiana and Ohio. So that whole south-Midwest build. And then up in North Dakota we see every chunk. Now, we are seeing the decline in central Illinois and right up along route 26 near South Dakota where we had all the mud, we saw declining corn acres there so I don't know what it takes couple years to do the couple crops but that's where we saw decline. But overall, it will be the largest acreage since 1944 in corn. And in beans, we are seeing the second highest ever and acres on them came in at 74. Okay. Is that kind of what you are thinking, quick. I would say just to hear what Bill has to say on that report but I think we've been looking around the 95 and the 70 76 on these, maybe a touch higher. I think beans fought their way back in this market since the first of February, and we were ready to discount them up until the first of February but they really let the market higher. The survey was taken a few weeks ago so there could be some response time there. Well and that was before the weather turned to summer. Yes, we would have to look at that early corn planting. If this weather gives them the chance they will put more corn in. An interesting thing, on the 28 crops we will see about the 5 million increase from last year on total acres. So we are pulling some out of CRP or prevent plan or something like that. While the government knows how much you've pulled out of CRP, but I'm trying to figure out where that excess acreage is that has been laid and nobody will give me answers. Well there is some flexible acreage and we don't think about that in the prime Midwest but you get to the western edge of the Corn Belt, and there’s maybe a couple million acres that could float in the cookout. Some of that might be land that has idled because of lack of water in the far western Corn Belt. Yes. But this is the small amount. The flooded out of acres last year especially, and then we were nearly down 2 million on the CRP so we will see how much of that when I get back. I think the thing that might be a game changer is when we find out how many people will double crop. I have the guy call me and say, what do I sell, $15 he intended the price stays here, if it goes down I will take the profit on my position. Do you think that will happen next? I think the people who have wheat, there is a lot of wheat in the market this year. Well I remember you were talking about those guys planting we identify beans after that. While up to half of the sweeping acres have been double crop acres. So I think there is 2 million acres that could come back and double crop. And again, hike the prices withdraw it quickly and weather would be the other factor. How high will soybean prices have to go in order to beat the need and, that kind of gets over to where our stocks are, and some people are telling me that’s the wraparound. Now, I will ask you first, will that have been quick.
This particular go-round of $13 or $14 range is certainly a possibility. But you were talking about volatility a while ago and you only said what quick. Well unless there is bad weather. But let me tell you this. The five-year average high closed in November beans average is $13.50. We are about that now. And we don't have the shortage. Especially with shortages. We’ll talk about some opportunities when we come back. Next on the panel we have Chris Hurt and Bill Biedermann. We were talking off camera and it was interesting. I asked you what the odds were that prices were going up and you gave me some historic odds. Well if you know what they are going to do this year, I want to know before you tell anyone else. But historically we went back 25 or 30 years and before we really knew the growing season and only one out of six years will soybean prices higher on August first than they were on June first. So that's five out of six years and you don't end up with the horribly bad crop. I try to encourage producers to play the odds, but five out of six, and it's impressing them with the spring opportunity. This conversation began because no one knows what the weather will do. Is early planting going to help? And we also talked about what he could do and what we need to watch for? Well there are several studies about this. We can get it planted early. We have potential increased odds of the 2-bushel over trend yield. Though at the very least we should be arguing, what should mean my marketing plan if we have attended one -year-old? Because all we hear about now is, where will the market go if there will be a yield? Well it could be of what's the marketing plan going to be? That brings us to the question which we really never have answered and what are the stocks going to be? Well, here's what I believe. I believe we are about 800 or maybe 750. But if we have a normal crop our carryover estimates are -- the range is 13 and 16 in the industry, and that's double what we have today. That's right. Up on corn. So two times the carryover, I don't think end-users are going to chase this market unless there is the weather problem. What about beans? Well either one of you. I think the carryover numbers will be about to get the depending on where we are. I think the beans look drug down the little bit but backed down to a normal price. $13 is not normal. This year we see the tale of two crops. The old crop on corn is very tight and you haven't seen already a lot of pressure out there with the new crop basically hardly doing anything. So we are looking at inverses of that dollar $0.25 in some places from summer over to the fall and I'm not sure that producers have really recognized how low these new crop bids are. I'm with Bill, I think we will see a lot of corn price down in the $5 cash range or below. Those will be down in the $4 range. And the USDA as early as May, their first testament, they do statistically look at early planting and they will add 2 bushels. They started up based on 164 on corn and if you go up death of 14 and half billion dollar corn crop. We were talking off camera about the fact that perhaps could have been sold much and are holding back more because they haven't had that immediate need that they had before and are waiting for higher prices. Do you think there's more corn or beans about there? Guess there is? We only have one minute to discuss it. Well basis levels across the country have been tremendous on corn at record levels. This leads people to say there just isn't much point. On the other hand we have seen garments will very tight. It could be this summer, with the oblique ethanol demand market in the corn comes out and no-space bubbles won't be as strong. I think that's why the stock report is so important because we don't know what sure. It could be dynamite or not. Is there anything the producer needs to do? We are almost out of time to do that. I think you guys should be selling some cash because it's based still wants to be bullish.
JOHN’S WORLD: Last week, I spent far too much time comparing my thermometer and the calendar. If I hadn't known exactly which day of the year it was, my senses would have led me to think it was late May - not mid-March. Adding to the tension are stern warnings from seed companies that any replant seed is either non-existent or still plodding through security at some South American airport. I'm not the first farmer to face this kind of planting paradox. Consider our ancient predecessors. Suppose we didn't have calendars and that our seed supply was also our food supply. Losing a mis-planted crop to frost wasn't just bad business, it was brutal population control. No wonder the guy who discovered how to tell where we were in the solar year was immediately promoted to "smartest guy in the cave". Connecting the dots between the stars and sun and when to plant was really, really important. While I have been lucky enough to see Mayan ruins and places like Stonehenge, I had sort of written off early fascination with astronomy as a mixture of superstitious religious mumbo-jumbo and not much else to do when the sun went down. The idea of lugging huge stones hundreds of miles just to identify the equinox looked like religious extremism to me. But it was actually good agricultural research in progress. So, since I seem to have plenty of time on my hands right now, maybe I'll stay up late tonight, stack up some rocks and see where the sun rises. Let us know what you think.... Send emails to firstname.lastname@example.org or call and leave us a voice mail.
JOHN’S OPEN: Hello and welcome to U.S. Farm Report, I'm John Phipps. I am not allowed to endorse products, but I can't help but be reminded of the Steak & Shake motto frequently as we survey the ag news. Written in script at the top of the menu and often lit up in neon, it proclaims, "In Sight it Must be Right”. Up til now I've always considered it lame commercial doggerel, but it has come into its own. Look at the food disputes we've been following. From pink slime to caged hens to gestation crates, appearance has triumphed over arguments of economy, safety, and jurisdiction. How practices look to the public now overrides all. You don't have to like it, but you do have to respect it. Let's get started with the headlines. Tyne Morgan is off today, Al Pell has the duty, Al.
BUFFALO ROAM: Thanks john. Bison are now roaming an Indian reservation in northeast Montana...but a court ruling will block any further re-location of the herd. This week Indian tribes on Fort Peck Reservation celebrated the arrival of 63 buffalo. The animals came from Yellowstone National Park. The day after their arrival, a Montana judge granted a restraining order that blocks further relocation of bison. The tribe wants to re-introduce buffalo to the plains. Ranchers and property owners have been at odds with the Indian tribes and government over the plan to re-introduce bison to the area.
Half the fort peck animals were to be transported to another reservation, but the ruling blocks those transfers. A hearing is set for next month.
BEE PETITION: Commercial beekeepers and environmental groups are taking action to stop the use of clothianidin, an insecticide thought to be linked to the death of bees. The groups filed an emergency legal petition with the EPA late last week. In the petition, the groups state the EPA has failed to follow its own regulations by not conducting a full study on the effect of the insecticide to bees. It's thought the insecticide is lethal to bees by weakening the insects' immune system, in turn, making bees susceptible to pathogens. More than two dozen beekeepers filed the petition with the EPA.
USDA SCAM: We've all received those "scam" letters, faxes and emails, and it appears the department of agriculture is not immune. The USDA says fraudulent letters are being sent by fax to individuals and businesses in at least four states. The 'scam' letter comes from a USDA procurement officer and seeks personal information.' it asks for personal and financial information. It bears the agency's logo and seal. It also includes the name "Frank Rutenberg". USDA says these letters are false. So far, the faxed letters have shown up in Alabama, Nebraska, Pennsylvania and Wisconsin.
WHITE RICE DIABETES: The U.S. rice industry is raising questions about the validity of a scientific study that links rice with diabetes. Last week, Harvard University released the results of a study that associates eating more rice with a significantly higher risk of type 2 diabetes, especially for Asian populations. Rice is grown worldwide and feeds more than half of the globe. The U.S. Rice Federation is arguing the study. It says the research didn't factor in the lack of activity, obesity and other growing diabetes risk factors.
COFFEE IS THE CURE: And while more people are facing the threat of diabetes, coffee drinkers may have an upper hand. German researchers reported in the American Journal of Clinical Nutrition, that consuming at least 4 cups of coffee per day lowered the drinkers risk of type two diabetes by 23-30%. The study of more than 42,000 people also found no link between coffee consumption and heart disease nor the risk of cancer.
HEARTLAND: One of the keys of life - especially for those in their golden years - is to remain active. That free piece of advice comes from Lillian Solbue - a 94 year old South Dakota resident who uses 88 keys to remain young at heart. As KTIV's Al Joens tells us Lillian isn't ready to slow-down at the keyboard or in life--any time soon. Thanks Al. He says Lillian still lives at home, helps with meals on wheels, is president of her local seniors club, does all her own house work and even mows her own lawn.
BAXTER BLACK: Farming and ranching requires many skill sets...unfortunately for Baxter Black, master mechanic is not on his list. He joins us now from his Arizona ranch... When we come back, Al is back with Tractor Tales and our Country Church Salute...please stay with us.
TRACTOR TALES: Al is back with Tractor Tales - where are we headed this week? This 1940 Ford 'N' is one of four for our collector. No doubt, he's particular about this make and model. Next week, find out how new technology is connecting with old iron. I got a guy that has a tractor. Think you might be interested, so my dad told the guy put your cell phone up to the engine while it's running and let me hear it run. And if it sounds good, tell him I'll take it. We'll take you to the sunshine state to hear more about this unique purchase. That's next week on Tractor Tales.
CHURCH SALUTE: Today's Country Church Salute goes to the Dewitt Community Church in Dewitt, New York. The congregation is celebrating its bicentennial. In 1808, John Young - along with a group of other Revolutionary War veterans - met for religious services. In 1811, they organized the "Young Society", which eventually became the Dewitt Community Church. In 1886 the church building burned and was re-constructed. During the great depression, the church was re-located. Generations later, the congregation decided they had outgrown their little white church. In the 1950's, a new church was constructed and it still stands today. Our thanks to church member Karen Fayloney for sharing the story of Dewitt Community Church. As always we want to learn about your home church as well... Salutes can be sent to the address on the screen. Stay with us - the mailbag is next.
MAILBAG: Time now for our weekly look inside the farm report mailbag....Jay Gilbert provides some real time corroboration of comments from our market analysts last week: "I have a dairy feed mill in California. For the last few months the corn usage at our mill has been replaced by 35% wheat which we are steam rolling." Thanks for your input, jay. The issue here is how well the USDA is able to account for this substitution in the supply and demand reports that will be out this week. My sense is there is eroding industry confidence in those numbers. Grain inventories would seem to be easy to measure, but with the boom in on-farm storage and declining farmer participation rates - especially among large producers - on-farm stocks become more doubtful. Add in shifts in consumption like feed wheat substitution and using past patterns to estimate becomes problematic as well. Since the procedures are essentially fixed by law, the agencies involved have neither the incentive nor latitude to get better at their job. This makes USDA reports some of the few examples of information products that have not gotten faster or better in the last forty years. Moreover, I predict it will get worse. Budget cuts anywhere close to the amounts unveiled in the Ryan proposal this week will prompt farm bill negotiators to throw NASS and its counterparts under the bus to save other subsidies. Given the unimpressive ag reporting record, I don't blame them. As always, we want to hear from you, send comments to email@example.com or leave us a voice mail at 800-792-4329.