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USFR Weekly Recap - August 31 - September 1, 2013

August 31, 2013

                                                                                                                                                                                          

THIS WEEK ON U.S. FARM REPORT

EPISODE # 2090

AUGUST 31 - SEPTEMBER 1, 2013   

 

JOHN’S OPEN:

HELLO AND WELCOME TO U-S FARM REPORT, I'M JOHN PHIPPS. OVER THE AUGUST RECESS, CONGRESS HEARD FROM LOTS OF CITIZENS, MOSTLY ANGRY ONES. IN FACT, THE WHOLE IDEA OF TOWNHALL MEETINGS IS FALLING OUT OF FAVOR AS DISRUPTIVE HECKLERS AND SINGLE-ISSUE FANATICS MAKE GIVE AND TAKE WITH REPRESENTATIVES A THING OF THE PAST. COMPARE THIS WEEK'S POWERFUL DEBATE OVER SYRIA IN THE BRITISH PARLIAMENT TO THOSE LOCAL SHOUTING MATCHES. OUR PUBLIC DISCOURSE IS AIMED AT YOU-TUBE, NOT EXCHANGING REASONS OR ATTEMPTING TO PERSUADE. BECAUSE POLITICS IS CENTERED ON WINNING ELECTIONS RATHER THAN GOVERNING, I SEE CONGRESS AS LESS LIKE A LEGISLATURE AND MORE LIKE TWO SIMULTANEOUS POLITICAL CONVENTIONS. TIME NOW FOR THE HEADLINES.....HERE'S TYNE MORGAN.

HEADLINES:

THANKS JOHN. IT WAS AN OPPRESSIVE WEEK THROUGH-OUT THE NATION'S MIDSECTION, PUTTING FURTHER STRESS ON THE CROPS. LOWER GRAIN PRICES WILL REDUCE 2013 FARM INCOME FROM A PREVIOUS GOVERNMENT ESTIMATE, BUT AT 120.6 BILLION DOLLARS, IT WILL STILL BE THE SECOND HIGHEST INFLATION-ADJUSTED INCOME SINCE 1973.  OTHER HIGHLIGHTS OF THE REPORT INCLUDE: RECORD HIGH EXPENSES, CONTINUING A STRING OF LARGE INCREASES FUELED BY FERTILIZER, SEED AND FEED; RECORD LOW DEBT-TO-EQUITY AND DEBT-TO-ASSET RATIOS; AND BETTER RESULTS ACROSS ALL GRAIN AND LIVESTOCK SECTORS.

CROP WATCH:

CROP WATCH THIS WEEK BEGINS IN NORTHERN AROOSTOOK COUNTY, MAINE, THE F--S-A OFFICE SAYS EARLY-VARIETY POTATOES ARE NOW BEING SPRAYED TO KILL VINES AND READY FOR HARVEST WHICH BEGINS IN ABOUT THREE WEEKS.

ROUNDTABLE:

WE RETURN TO THE FARM PROGRESS SHOW FOR THIS WEEK'S MARKETING ROUND-TABLE.

THIS WEEK'S MARKETING ROUNDTABLES TAKES US TOTHE FARM PROGRESS SHOW, HELD THIS YEAR IN DECATUR, ILLINOIS OUR GUESTS INCLUDE ALAN BRUGLER OF BRUGLER MARKETING AND MANAGEMENT, AND GREGG HUNT OF ARCHER FINANCIAL SERVICES. FARM DIRECTOR AL PELL PICKS UP FROM THERE.

JOHN’S WORLD:

GOODNESS KNOWS THERE HAS BEEN PLENTY OF NEWS ON THE GLOBAL FRONT TO OCCUPY OUR ATTENTION BUT SOMETHING THAT COULD HAVE A BIG IMPACT FOR AMERICAN FARMERS HAS BEEN OVERSHADOWED BY TENSIONS OVER SYRIA AND THE CHINESE ECONOMY. AS GREG HUNT MENTIONED IN OUR ROUNDTABLES, THE FINANCIAL PROBLEMS IN ASIA, ESPECIALLY INDIA ARE GROWING. THE RUPEE HAS LOST OVER OVER 20 PERCENT OF VALUE COMPARED TO THE DOLLAR IN THE LAST TWO MONTHS. MEANWHILE IN BRAZIL, DOMESTIC UNREST HAS CAUSED THEIR CURRENCY TO DROP AS WELL. IN FACT, THE INVESTOR LOVE AFFAIR WITH SUCH EMERGING MARKETS IS UNDERGOING A ROCKY PERIOD. THE CAUSES ARE THE USUAL SUSPECTS: FISCAL IMBALANCES AT HOME, RISING OIL PRICES AND INTERNATIONAL TENSION. THE REASON THIS MATTERS FOR FARMERS HERE IS THE IMPACT ON FERTILIZER PRICES. INDIA AND BRAZIL HAVE BEEN FIERCE COMPETITORS FOR RELATIVELY SCARCE POTASH AND PHOSPHATES, CONTRIBUTING TO SKYROCKETING PRICES. NOW, ALONG WITH NEW FERTILIZER PLANTS COMING ON-LINE, THEIR CHEAPER CURRENCIES COULD SLOW FERTILIZER COMPETITION. THE FERTILIZER INDUSTRY HAS YEARS OF STRONG PROFITS, BUT AS FARMERS FACE THE PROSPECT OF SIGNIFICANTLY LOWER PRICES, WE ARE ENTITLED TO APPLY THE SAME MARKET LEVERAGE THEY USED ON US. I THINK A GOOD POLICY WOULD BE TO DELAY FERTILIZER PURCHASES THIS FALL UNTIL PRICES DROP COMMENSURATE TO COMMODITIES OR MY DEALER CAN GUARANTEE A REBATE IF FERTILIZER IS CHEAPER IN THE SPRING. AFTER ALL, WHAT GOES AROUND COMES AROUND.

2ND HALF

JOHN’S OPEN:

HELLO AND WELCOME TO U-S FARM REPORT, I'M JOHN PHIPPS. WHILE FARMERS WERE GLUED TO GRAIN PRICE SCREENS THIS WEEK, A RAFT OF OTHER ECONOMIC INDICATORS WERE RELEASED AS WELL - MOST OF THEM PRETTY GOOD NEWS. FOR EXAMPLE, THE SECOND QUARTER GDP WAS REVISED UPWARDS TO 2.5% FROM 1.7%. WHILE THAT'S PERRY SLUGGISH GROWTH IT IS GROWTH AND THE REVISION WAS ONE OF THE LARGEST EVER. MEANWHILE, INFLATION INCREASED A TINY POINT-8 PERCENT. NEW CLAIMS FOR UNEMPLOYMENT CONTINUED TO CREEP DOWNWARD. BUT BEST OF ALL, THE INFAMOUS 47 PERCENT OF AMERICANS WHO PAY NO INCOME TAX HAS SHRUNK TO 43% AND COULD DROP TO 34% IN A FEW YEARS. GOOD NEWS FOR THOSE WHO THINK TAXING THE ELDERLY AND POOR WILL SOLVE OUR BUDGET PROBLEMS. TYNE MORGAN IS HERE WITH THE HEADLINES...

HEADLINES:

THANKS JOHN. FARMERS IN THE MIDWEST MAY BE HAVING A FLASHBACK OF LAST YEARS DROUGHT-YEAR. A NEW GOVERNMENT REPORT SHOWS AFTER A VERY WET SPRING, THAT AUGUST HAS DRIED-UP SIGNIFICANTLY. NATHAN WENTWORTH FARMS OUTSIDE OF DECATUR, ILLINOIS. HE SAYS HIS SOYBEAN CROP IS LOSING YIELD BY THE DAY. MEANWHILE, APPLE GROWERS ARE ENJOYING MUCH BETTER GROWING CONDITIONS THIS YEAR, ESPECIALLY IN MICHIGAN. WE'VE SEEN THE GROWING USE OF UN-MANNED AERIAL VEHICLES - OR DRONES - NOT ONLY IN THE MILITARY BUT IN AGRICULTURE. FROM ORCHARDS TO ROW CROPS, SCIENTISTS ARE LOOKING FOR TROUBLE SPOTS.

FARM PROGRESS SHOW:

MEANWHILE FARMERS WHO MAY BE IN THE MARKET FOR NEW EQUIPMENT WERE "KICKING THE TIRES" AT THE FARM PROGRESS SHOW THIS WEEK. THE ANNUAL EXPO HAD NO SHORTAGE OF LOOKERS.

TENNESSEE VOLUNTEERS:

NOTHING DEMONSTRATES THE GOOD HEARTS OF PEOPLE IN A COMMUNITY QUITE LIKE THEIR WILLINGNESS TO GIVE THEIR TIME. IN ONE TENNESSEE TOWN, VOLUNTEERS ARE HELPING OTHER VOLUNTEERS IN A SPECIAL PROJECT. IN THIS REPORT FROM THE U-T INSTITUTE OF AGRICULTURE, CHUCK DENNEY TELLS US - AS HOUSES GO UP, STOMACHS ARE FED.

BAXTER BLACK:

TIME NOW TO HEAD WEST FOR OUR BI-WEEKLY VISIT FROM BAXTER BLACK.  THIS WEEK, BAXTER HAS THE STORY OF A BAR-ROOM DEAL GONE BAD..

TRACTOR TALES:

TRACTOR TALES CROSSES BORDERS THIS WEEK AS WE CHECK OUT A CLASSIC MACHINE THAT ORIGINATED IN CANADA, BUT FOUND A HOME IN NORTH CENTRAL IOWA.

CHURCH SALUTE:

TODAY'S COUNTRY CHURCH SALUTE GOES TO FARRAR UNITED METHODIST CHURCH IN MAXWELL, IOWA. THE CONGREGATION IS GETTING READY TO CELEBRATE ITS 125TH ANNIVERSARY NEXT YEAR. THE CHURCH STARTED IN 1889 IN A WOODEN STRUCTURE. AT THE TIME, MEMBERSHIP NUMBERED 88 PEOPLE. A NEW BRICK CHURCH WENT UP IN 1925 AND IT REMAINS IN USE TODAY. OUR THANKS TO CHURCH MEMBER KAREN CARNEY FOR SHARING THE NEWS OF FARRAR UNITED METHODIST CHURCH.

MAILBAG:

TIME NOW FOR OUR WEEKLY LOOK INSIDE THE FARM REPORT MAILBAG. CAROL KIRKHORN IS CONCERNED ABOUT MY BELIEF THE BAILOUT WAS A GOOD IDEA. "WHY ARE YOU A FAN OF OUR OUT-OF-CONTROL-SPENDING (THE BAILOUT)?" CAROL, FOR MANY PEOPLE, IT IS HARD TO IMAGINE ANY GOOD OUT OF GOVERNMENT SEEMINGLY THRWOING MONEY AT A PROBLEMS, BUT NOT ONLY IS THAT AN INACCURATE DESCRIPTION, WHAT SECRETARY PAULSON AND PRESIDENTS BUSH AND OBAMA DID WILL, IN MY OPINION, BE A TEXTBOOK EXAMPLE OF PROMPT ACTION TO STOP A PANIC. BUT THE MAJOR POINT IS IT CANNOT BE OUT-OF-CONTROL SPENDING IF YOU GET YOUR MONEY BACK.  LOOK AT THE NUMBERS: WE SENT ABOUT 250 MILLION DOLLARS TO BANKS TO SHORE UP THEIR LIQUIDITY, 187 TO FANNIE ANDS FREDDIE, 80 TO CAR COMPANIES, 70 BILLION TO AIG, 19 BILLION TO BUY QUESTIONABLE ASSETS LIKE CDO'S, AND ANOTHER TEN TO SUBSIDIZE HOMEOWNERS FOR A TOTAL OF 608 BILLION. MEANWHILE, LOOK WHAT WE'VE GOTTEN BACK. BANKS HAVE REPAID 367 BILLION AS OF AUGUST 27, AND THE DESPISED  MORTGAGE GIANTS AND OTHER HAVE SENT 187 BILLION IN DIVIDENDS AND INTEREST TO THE TREASURY. ANOTHER READER POINTED OUT THE U-S PROBABLY WILL LOSE MONEY ON THEIR GM STOCK, BUT THE CASH STILL POURING IN WILL SOON MAKE THE WHOLE 608 BILLION DOLLARS A REMARKABLY GOOD INVESTMENT. INCIDENTALLY, THIS ACTION IS EXACTLY WHAT FARMERS DEMAND THE GOVERNMENT DO FOR THEIR SECTOR WHEN SUGAR AND DAIRY PRICES DROP. AND IN THIS INSTANCE I REMAIN CONVINCED IT WAS A COURAGEOUS AND LUCRATIVE DECISION.

 

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