Hello and welcome to US Farm Report. Remember back in March or as I now call it the summer of 2012? Field conditions were so ideal few of us could stop preparation for and even planting, even though we knew it was early. It may turn out the biggest problem from those choices wasn't possible frost damage but locking in our production option. Only the market continues to whisper we want soybeans, not corn. Despite the faith you may put in the report it was one more hint that users trying to tell producers something.
The USDA offers its first estimates of the supply demand ledger for the current crop year. On the supply side the Agriculture department puts new crop ending stocks at nearly 1.9 billion-bushels higher than expectations, as far as soybeans they are at 145 million-bushels and all wheat stocks are put at 735 million. As for old crop corn ending stocks were bumped higher by 50 million, now estimated at 851 million. Soybean supplies are decreased by 40 million and the old crop supplies to 210 million. And there was slight adjustment on wheat stocks to just 770 million. USDA also issued its wheat production forecast. It puts winter wheat production at just under 1.7 billion. A 13% increase from last year. Based on crop conditions as of May 1st yield is pegged at 37.6 bushels, up one and a half from last year. All wheat forecast is upped at 2.2 billion-bushels, even though drought seems to be letting up in some parts of Texas many areas are still in desperate need of moisture it. Steve is a farmer in the southern panhandle around Plainview Texas and as he plants the crop he said the water situation isn't much better than 2011. This is causing him and others in the area to grow less corn, more drought tolerant crops like cotton, sunflower and sorgum. From harvest of last year we haven't had an inch of rain yet. People go out and dig in the first foot or so and you see a little bit of moisture but under that it's dry.
Crop watch this week starts in southern Michigan. A farmer in Hillsdale said he may have jumped the gun on corn planting in late march, he said only one in three plants has come out so it will be a serious replant. His corn planted on May 1st is coming up well. And we talked to Bob from Montana. He said winter wheat is coming along. There is great moisture and near perfect growing conditions. He expects above average yields if the crop finishes up.
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Up nextal is back to talk market. That in just two minutes. .
Farm report this week we have Bob. Like Flores from Flores Trading. We had a report this week and we have had a very strange market since the report, I’m going to let you start with what the report said and then you are going to kind of summarize. The report came in a surprise to corn stocks, it was expected to be 81 or lower and it was 851 so they found more corn and then 166 on the corn yield so they took the trend yield up because of the increased early planting they had the high yield. Carry oat doubled to 188. At the same time the bean number was lowered to 145 and reduced yield. The bean numbers very positive, corn number bearish, the market initially sold off across the board and then in Friday’s market, the beans were down 40 and then caught the market off guard. We found July around 75, feels like this is the final wash out part of the market, if corn goes off the board then July will bounce. May goes off the board on Monday. That's one of the things. We have the report and results of the report and also the fact that it's going off, also completes in there and that makes any positive that you may have had about the markets a little negative at this point in time. How do you feel about this? I think the negative was two things, the USDA numbers that and the funds, which were long corn. Basically are gone now. You don't I don't think well have them as much more of the head wind because they are basically at zero and the length of long. I think the market going forward has to find its feet and probably will this week. I don't think it's much onto downside left on old crop corn and now crop corn. Beans the funds are long record amount of those and you saw it today. Regardless of bull issue news the market could still fall. You said that the funds are going on corn. Cleaned out and that's one of the things that a lot of the prices but looks like somebody chained out beans on Friday. Long beans- Long beans if they have to sell to get out of that. That's the big negative that potentially is in front of beans. That's another negative. That's the potential. You have bullish fundamentals but at times that doesn’t matter. Market will probably turn quickly to weather, what kind of planting conditions, long term, to just dryness in the west, moisture in the east. There will be weather pockets that will have it and this will put pressure on the market. Early in the planting I think it'll be more pressure on the beans and the corn. Can we get a weather scare? We will have corn, the early planting corn by mid-June, late June. And we won't have anything of any July 4th after. The weather scare in corn will be harder to argue. The bull is basically trying to find support right now and can't and I think we will find support at these levels. I talked to others and you all know that and that sort of thing and almost all of them has said that the markets, things happening outside and I’m talking about the bank’s that are getting in trouble and what is happening in Europe. It's affecting our commodity markets just as much as what you said supply in demand. It has, the Europe story is an old story. It’s been going on for years. You can't say it doesn't have an effect; it has less of the effect than it once did. I don't worry about it. It's just the same news. Okay. That's not new. You think that's affecting that much? I think it is I know the public is not excited about being long in the market. We don't have inflationary pressure like we had back in 2007, 2008 bubble and 2010. Everybody thought it was going to come around and everybody was buying for that. So there is not any bullish excitement so corn will have to lift on its own and it'll have to do it with the yield weather scare event. Weather has been almost perfect. So the market now needs something to really grab on. I think if it gets itself it wants to rally. It would like the balance but it's going to be difficult to get as high. If you have been short you are enjoying it, not short it'll be hard to get to levels where you are comfortable. Our guest, we were talking about basically what happened last week and I guess what I would like to do is thinking over to what may happen, this week and then eventually, I will ask you how can a producer or what should we do in order to take advantage the way the market is right now. In your judgment, what would be a good position to take this week in order to --I’m looking at profit. Right, I think the corn probably put in a low Friday. Kind of feel that way. I would be looking to be a buyer on both old and new crop. I think you will get a bounce. Its major sickles we will get a larger rally. So, you look at the supply demand report. I know you look at it but Texas indicates. I think you will get a bounce of new crop corn.
What do you think will happen? I don't disagree. I think corn is ready. I think would probably stay away from wheat, Beans are probably the wild card. Fundamentally I want to arc it has the best potential but it's over bought soy would stay away from that. I would buy corn. Livestock, they will kind of basically they correct we should have a bounce in that. I think next week the market will want to try to rally, now can it? That would be the thing but I couldn't press the market. We have a lot of market correct from precious metal, stock market, Livestock, crude oil. A lot of markets have corrected. There is room, I don't know what the catalyst will be though there is room for another surge to up the received I think they will probably do some kind of thing sooner rather than later. You have the election and I think they Obama wants to get elected and he will do anything he can and the austerity programs aren't working in Europe. I don't think that is what people are going to take right or wrong. If innocent do you think they will accept it? I think the other thing, throw I think that could spur things. What kind of producer regular marketer but what can they do in order to get a profit? Some of them will switch all their corn to beans but they didn't sell at the high prices. Picked up immediately. Especially the guys haven't got corn planted in the northern corn belt are already switching acres. I would be very, very cautious about switching and not selling. I think $13, based is a fair price to sell the cash beans. If you are going to switch sell and then defend if you have to. I would be on old crop corn basis. I think we are seeing the tightest basis levels you want to see. If you have HDA contracts and have locked in your basis you better take a hard look, get them locked in. I would sell $6.40. Beans maybe I would hold the old crop bean back. They are still the wild card. It's at 145. Any weather scare and we have to make sure they get double crop bean acres. If we get that then they are, I think okay. It's difficult to separate a producer who gets involved in the hedging operation and all the sudden he wants to speculate. What should a speculator think about next week? I would buy the markets with up and Friday low. If it gives you a pull back on Monday buy them with stops under Friday lost. Ever get on the other side and see something to high? Sure. You aren't in that position?
The market, they have been in arranged corn fortunate a long time and it's the low end so why sell now. I don't know. Right, I think it's more, more of an opportunity to buy than sell and I think you will see cash markets very strong. How do you prove to me July prices are right, base levels are strong across the Midwest and it doesn't seem to go away? I don't think that you have the corn there. You don't have the corn there and that's my last question. About 30 seconds, you think still strong basis where we get the corn? No. When we get past August, September will get to go there tight to wide. I think the basis will get wide enough for the farmers to put corn in the bin.
Last year I suggested we watch Europe, especially Great Britain to compare strategy. The move to slash government spending was more aggressive there. Britain, Spain, Italy and of course the Greeks now back in recession. Germany and France are probably not far behind. No matter how much you want to reduce deficits negative growth isn't the way to do it. We have seen cut backs in government spending here, mostly led by state government. The federal spending as a part of GDP has decreased more than any time in the last 40 years. The cut backs haven't completely stalled the economy. Excessive reductions are unwise. We learned that in 1937. They will show it again. Our recent practice of fuel deficits during boom times is also something we can't afford. It may help that even with the current fervor for budget reform all we see are details for tax breaks, while how spending will be cut is vague. For example the Agriculture lobby may produce a farm bill with hidden exposure to larger cuts continued growth will better let us tackle our long term finances, the important thing now is to keep growth and employment trends going up. Let us know what you think. Send e-mail to mailbag at USFarmReport.com or call and leave us a voicemail. Coming up in the next half hour Bob will rejoin us as we discuss his life saves transformation. The second half is coming right up. .
Hello. There are many curious ongoing market situations where producers and traders are watching closely. Some of them are in the protein sector. For example, despite okay prices dairy production defies my expectations to slow down. Why isn't the supply curve work be the way my profess ire said it should? Obviously there are other factors involved. The dairy sector seems to be defying gravity but it could be we need better tools to look at agriculture. Let's get started the headlines.
Thank you John, May producers announced Monday it'll close procession plants in three states, this following the controversy around its meat product. About 650 jobs will be lost when the plants close. On May 25th in Texas, Garden City Kansas and Iowa. The company suspended operations, based in South Dakota they said unfounded attacks led to the decision to close the plants, after the story broke many major grocery chains stopped using the product even though it meets federal food safety standards, USDA gave school systems the choice to use it or not. Cattle markets still fighting to recover from the stampede of bad press from the pink slim controversy to a BSE case in dairy cow, consumers pulled back and prices fell. Now live cattle futures trending up, climbing about 3% since last month. June contracts hit a three month high, or three week high, grilling sea responsible improving demand looms. The industry fundamentals are quite sound. I think just a lot of turn lens in the water. Once we get past that will be a lot of reason to be optimistic. He said gas prices and summer promotions of beef should help with demand. He also expects the year's large corn crop to it help lower feed cost. Farmer's markets will soon be able to accept the electronic version of food stamps. USDA is helping them to get wireless point of sale equipment. The technology needs to read debt style cards used by food stamp customers, fewer than a quarter of the 7100 farmer markets are set to set up to use the electronic benefit transfer system. That's it for news.
There is an idea that eating healthy costs more which is why a lot say they make less healthy choices. University of Missouri recognizes the problem is and is trying to help. Kent with Missouri extension has more on the project to improve nutrition. Families with limited incomes often turn to food pantries for help but this one provides clients with more than just food. Jennifer is with the University of Missouri food pantry nutrition project. Families get a chance to taste some easy, healthy recipes from items at the pantry. Coming to all these pantries everybody is great and they want to learn. They want to be healthy especially people with kids, they want to help their kids eat healthy. Missouri is 11th nationally in obesity, low income families tend to eat cheaper foods with bigger calories, they so they are trying to address the problem by providing better access to fresh produce. Fruits and vegetables normally aren't that cheap and families have to make choices. Bill is the coordinator of the MU Food Pantry project. He wants pantries to reach out to farmer's markets and produce auctions; also the MU College of Agriculture Food and Natural Resources will donate 20,000 ears of sweet corn to the local food bank. He encourages pantry clients to garden. A free packet of seeds can grow into a summer supply of fruits and vegetables helping families stretch their dollar. A fixed income and when you are short on money it's a big help. They are thankful for all the help they receive. He shows by volunteering at the pantry. The MU program also encourages communities to hold healthy food drives. Instead of just grabbing something from the back of the pantry think about the type of foods that promote good health, donate those. The pantry nutrition project involves eight pantries in Missouri. The education part of this can help steer people back toward preparing more basic meals at home. If you just take a little more thought than you can prepare a lot of healthy foods at very low cost. To learn more about this project head online. We will post the link on the home page for instant access.
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THIS WEEK ON U.S. FARM REPORT
EPISODE # 2022
MAY 12-13, 2012