Markets and government offices closed Monday... All markets and government offices are closed Monday for Martin Luther King Jr. Day. Grain markets resume trade at 7:00 p.m. CT on Monday, Jan. 20, while livestock markets will reopen at 9:05 a.m. CT on Tuesday, Jan. 21. There will be no Pro Farmer reports on Monday due to the holiday. We'll be back on Tuesday, starting with "First Thing Today."
USDA needs to provide greater clarity into domestic corn use... That's the bottom line from an evaluation of USDA reports released by the University of Illinois today. Based on the analysis by researchers, the authors offer the following recommendations regarding USDA corn and soybean forecasts and estimates:
- The World Ag Outlook Board (WAOB) should describe in a written document the exact process used to determine corn and soybean yield forecasts for each month, including the roles of crop weather regression forecasts, subjective judgment, and any other inputs, and this document should be available on the WAOB website and explicitly referenced and hyperlinked in the footnotes of the relevant supply and demand tables in May, June, and July World Agricultural Supply and Demand Estimates (WASDE) reports.
- National Ag Statistics Service (NASS) should institute an internal review of soybean yield forecasting procedures to determine the source of any bias and make changes needed to insure it is eliminated.
- NASS should "open up the black box" for each monthly corn and soybean yield forecast as much as possible. This should include: i) presentation of state and national yield forecasts derived from the agricultural yield survey (AYS) and the objective yield survey (OYS), as well as the usual composite forecast derived from the two surveys, ii) presentation of assumptions regarding fruit weights used in deriving OYS yield forecasts during forecast months when these measurements are not available, and iii) some form of recognition of the degree to which weather and crop condition data influence composite forecasts.
- NASS should initiate a research project to study how yield monitor data could be incorporated into crop yield estimation procedures.
- NASS should initiate an internal review of corn stock estimation procedures in an effort to determine whether any methodological problems are apparent.
- NASS should provide the same instructions regarding weight per bushel that it provides to off-farm survey respondents to on-farm survey respondents.
- NASS should investigate the possibility of adding grain stocks questions to the Agricultural Census.
- NASS should engage market participants in a discussion of the appropriate interpretation of grain stocks estimates and consider what means might be available to improve the general understanding of the limits of stock estimates for implying usage.
- WAOB and NASS should evaluate the potential costs and benefits of adding a survey of corn feed use that would allow a fuller accounting of corn usage similar to what has been historically possible for soybeans.
- WAOB and NASS should investigate the potential costs and benefits of adding a survey of ethanol plants to provide more accurate estimates of corn used in ethanol production.
- WAOB and NASS should seek funding to replace the former monthly Census Bureau M311J Fats and Oils: Oilseed Crushings report.
For more details about the study and its findings or a link to the full report, click here.
Infrastructure issues excluded from RFS... When the Renewable Fuel Standard (RFS) was written, the House version included language that would have allowed insufficient infrastructure (the blend wall) to be used as a reason to waive mandated usage levels. The Senate version did not. The blend-wall language was purposely excluded from the final bill to send a clear message that insufficient infrastructure could not be the basis of a waiver. In short, the language of the final version told refiners to get the infrastructure in place to meet blending requirements.
A University of Illinois FarmDoc analysis concludes EPA will break the law if the 13-billion-gallon corn-based ethanol mandate for 2014 is EPA’s final decision. The analysis includes three examples in which the Supreme Court ruled against government agencies after an attempt to modify the Congressional intent of a law — one of those rulings was against EPA. And because EPA is modifying the intent of the law, "It is therefore difficult to see how EPA is doing anything other than legislating a policy in place of — if not contrary to — Congress," concludes the University of Illinois analysis.
RFS comments must be in EPA’s office by Jan. 28 for consideration. The National Corn
Growers Association provides access to submit comments. Click here.
Informa raises corn, lowers soybean planted acreage projections... Informa Economics today said it expects U.S. growers to plant 93.319 million acres of corn in 2014, which would be down 2.046 million acres or 2.1% from the 2013 growing season. In December, Informa projected 2014 corn acreage at 91.846 million acres. On the other hand, Informa projects soybean acreage in 2014 will rise 4.731 million acres (6.2%) from year-ago to 81.264 million. This is down 665,000 acres from the firm's December forecast.
The firm expects winter wheat plantings for 2014 to decline by 1.198 million acres or 2.8% from the year prior to 41.892 million acres. This is down 974,000 acres from the firm's December projection of 42.866 million winter wheat acres. Other spring wheat is expected to total 12.098 million acres -- up 502,000 acres from 2013 but down 960,000 acres from its December forecast, while durum wheat plantings are expected to total 1.808 million acres, up 338,000 acres from 2013.
Informa expects cotton plantings to rise 674,000 acres from 10.880 million acres last year. This represents a 6.6% increase from year-ago and a 223,000-acre increase from the firm's December projection.
A look back at the 'frustrating' farm bill process as completion nears... As reported in "First Thing Today," Rep. Collin Peterson (D-Minn.), ranking member, has signaled he will not block the farm bill if the compromise dairy subsidy provision is as he has heard. With this signaling the farm bill is essentially at the finish line, Washington Consultant Jim Wiesemeyer has the following to say about the lengthy and rocky process of getting to this point:
"In my over 36 years of covering the business of agriculture, this bill goes down as the most perplexing, frustrating and time-consuming topic. It began with hearings in 2010 -- you read that correctly. It then faced an aborted attempt to hitch a ride on the failed Super (Stuper) Committee in 2011. It faltered in 2012 due to House GOP leadership not bringing a measure to the floor because the votes simply were not enough. And in 2013 recall the initial failed vote in the House due to bewildering farm bill strategy by Majority House Leader Eric Cantor (R-Va.), then lingering farm bill issues like dairy pushed the saga into this year -- the fifth calendar year of a five-year farm bill. How about that for dysfunctional?"
Jim also says that the farm bill process included some of the worst lobbying among some groups that many farm bill veterans say they have ever witnessed. He also notes that some lessons were hopefully learned by rookie farm bill press, but that the hype and drama of newer ag-media may well be the direction ahead for the industry. Get more details.
On-watch for CBO scores, possible WTO challenges... Whenever the details of what is in the nearly $1 trillion farm bill are released, it will be interesting to see what commodity prices and participation levels the Congressional Budget Office (CBO) used for scoring what could be some big safety net payouts in the years ahead. And wait until some World Trade Organization (WTO) members assess whether coming optional "base reallocation" and a "generic cotton base" along with some hefty payouts will distort production and acreage. If so, expect WTO challenges.
But many farmers, commodity groups and farm-state lawmakers disdain any such suggestion. They say a new farm bill could be in place before any WTO challenge runs its course. But just ask a U.S. cotton producer if a successful WTO challenge doesn't change things. The Brazil case against U.S. cotton policy started in 2002 and is still not over.
Omnibus spending bill heads to White House after Senate passage... As expected, the Senate followed the House in passing the massive, $1-trillion-plus omnibus spending package to fund the government for Fiscal Year 2014. The measure now heads to the president, who is expected to sign the bill.
Martell notes weather extremes and their impacts on ag... Meteorologist Gail Martell of MartellCropProjections.com says high-amplitude waves, cold troughs and a warm ridge are encircling the Northern Hemisphere. "The problem is jet stream waves have become entrenched, persisting for many weeks," she says. "North America has been especially affected by weather extremes, which have a negative impact on agriculture." Martell notes the following:
- Forest fires sprang up from tinder-dry conditions in the western United States. At one point in August, 2013, more than 50 wildfires were burning in 10 different states, scorching the landscape and forcing residents out of their homes.
- California experienced its driest year on record in 2013. Fruits, nuts and vegetables produced in the Central Valley are in jeopardy, increasing food prices. Forage for cattle grazing is virtually nonexistent, leading to the need for expensive supplemental feed. Water supplies are being rationed.
- Winter wheat in Washington, the 3rd largest U.S. wheat state, has been subject to the driest growing season since the mid 1960s. The winter season is normally very wet, boosting field moisture for wheat development in the spring. Soft wheat exports to Pacific Rim destinations, including China and Japan, may be sharply curtailed.
- Drought has expanded into the U.S. "breadbasket" -- the HRW Wheat Belt -- as indicated on the Drought Monitor. "Extreme" to "exceptional" drought has developed in patchy areas of the High Plains, the Texas panhandle, western Kansas and southwest Oklahoma. Temperatures at times were bitterly cold, raising concerns about the potential for winterkill. Wheat areas that were extremely dry were especially vulnerable.
- Corn consumption in animal feed is up sharply. This is related to the widespread drought. The lack of forage for beef cattle, due to dry pastures and rangelands, means that supplemental feed must be supplied. In the January S&D update, USDA raised U.S. corn feed consumption.
- The Midwest is experiencing one of the coldest winters in decades. This is boosting natural gas and heating oil consumption in homes and businesses. Shipping on the Great Lakes has been severely limited by thick ice in the Mackinaw straits. Ice is said to be nearly two feet deep in the narrow passage between Lake Huron and Lake Michigan.
Banker survey finds more slowdown in farmland values... LandOwner Editor Mike Walsten reports that according to a monthly survey of rural bankers, demand for farmland continues to soften. Dr. Ernie Goss of Creighton University's most recent survey found its farmland and ranchland price index plunged to its lowest level since October 2009.
"This is the second straight month that the farmland and ranchland price index has moved below growth-neutral. As agriculture commodity prices have moved lower, so have farmland prices. On the other side of the economic coin, ranchers and livestock producers are experiencing record prices and a very healthy economic outlook," says Goss. More here.