THIS WEEK ON U.S. FARM REPORT
FEBRUARY 11-12, 2012
JOHN’S OPEN: HHello and welcome to U.S. Farm Report, I’m John Phipps. It may be linked to our mild winter, but discussions with farmers from Memphis to Lansing this week leads me to a couple of suspicions about the upcoming growing season. First, we're going to plant corn earlier than ever. The lack of late frosts in recent years has let that threat fade in our memory. The simultaneous phenomenon of early corn yielding better adds to the impetus. At the same time corn seems to be the crop of choice, overshadowing rice, cotton, dry beans, and even soybeans. Labor issues, price differentials, and production problems all seem to favor corn. This is not market advice. Real grownups will provide that a little later. I'm just sayin'....Tyne Morgan has the headlines now
SUPPLY DEMAND REPORT: Thank you John. Weather problems in South America are being felt in America’s grain supplies. In the latest supply demand report, USDA projected a dip in domestic corn stocks by 50-million-bushels due to increase in exports. U.S. corn ending stocks came in at 801 million bushels, which was within trade expectations.
SO AMERICAN CORN: USDA cut Argentina’s corn production to 22 million metric tons. That's a four million metric ton dip due to high temps and extensive dryness during pollination. Brazil's corn production was unchanged.
SO AMERICAN SOY: Looking at soybeans, Argentina’s crop is projected at 48 million tons, down 2.5 million. Brazil soybean production is forecast at 72 million tons, which is down two million due to lower projected yields. Again, the dry weather is to blame. Our analysts say it wasn't a real surprise.
WHEAT STOX: U.S. wheat ending stocks for 2011-12 are projected lower this month. Boosted by stronger-than-expected sales, USDA raised exports by 25 million bushels. Projected exports of soft red winter and white wheat are each raised 15 million bushels on strong demand from Mexico and South Korea. Ending stocks for all wheat are projected at 845 million bushels.
BIOTECH ACRES: Also this week - a new report shows a record number of farmers planted biotech crops in 2011. The report from the international service for the acquisition of agri-biotech applications showed nearly 17- million farmers planted biotech last year, up 8% from 2010. Total acreage dedicated to biotech crops reached nearly 400-million. And of the 29 countries that planted biotech crops in 2011, 19 were developing countries.
CROP WATCH: Crop watch this week is a three-state swing...First from Ohio...a grower from summit county reports he finally finished cutting soybeans last weekend. His last field was water-logged for the past few months. From Idaho, the Ag Department's weekly weather bulleting shows the winter wheat crop is in good shape. More than 70% of fields are rated good to excellent. And in Florida, dry conditions continue to hurt pastures. In all, 4% is rated very poor, 60% is poor and 30% fair.
ROUNDTABLE: Roundtable guests today, we have Bryan Doherty who is with Stewart Peterson, Darren Frey with Water Street Solutions and, gentlemen, the first thing I will ask you is, what was the result of the big government report that came out? Because there was a lot of anxiety among everyone before the report came out. It was the non-event. We have supply and demand show that corn got reduced 50 million bushels, which was, little bit and beans were basically unchanged, so it was pretty neutral. America started off higher and after running the resistance I think it was just technical selling the markets lower on Thursday. I guess that's what I was coming to you with. About once, the market could respond that will cause the market to respond. The report was slightly friendly and I think the bulls were out there holding their breath It looks like the mindset is still to sell the rallies. So, we are really talking about their acreage for potential planted acreage, because if we plant as much as everyone says we could plant, our corn will go out of sight. I think we are still looking to figure out how many acres we are going to plant, but I think people are thinking we would hit 94 or 94.5 or even 95 million acres. Thursday we started off higher and selling off later in the day had to do with Greece. There's still a lot of talk about the European Union and their big economy, there are about $5 trillion GDP in the United States. In time to get closer markets respond and there's talk about those conversations and negotiations breaking down. So you brought in on micro market and it's affecting agriculture? Yes it is. There is anxiety and concern and two of the stock markets had the highest anxiety, so if the money flow issue, and what kind of look at the big picture, the corn is struggling right now with the idea of 94 or 95 million acres with potential carryout climbing at 92 billion bushels next year. We are going to have to rationally supply any type of initiative at all as we head into the spring and summer. The problem is turned by the right now suggests an early start to planting. So there's just nothing like enough just yet. So you are telling me that you are just so little bit bullish but no one is working that you? It's hard not to be when you look at the supply and demand. The potential is there but I don't think farmers should be lulled into falling asleep at the switch, they should market the rallies and defend the sales. We have had to pour crops in the row and chance of getting the third one is going to none. If we had 94 million acres I would imagine they would go down at 50 and, farmers can't get too bullish here. We are going to end up talking a lot about corn during the show. How will that affect soybeans? Of course, we talk about South America and are the report was pretty positive, was it not? Probably more friendly with longer-term beans because of more demand. If corn goes lower, feeds will go with them. But if you look at balance sheet and the carryout, if we lose acres from beans to corn, we will have less of the carryout. What about wheat? About the mother probably raise a lot of and we have had a lot of dryness out west, it doesn't look that good in some areas but it always produces. The world is not ready to run on the wheat. The problem right now, we did away with some Ukrainian issues but some of the reports do not show any of that this month. There's ample world inventory and the U.S. only produces about 10% of their crops, so we are more of the world prop. But getting back to beans, just about at this time exports were about four or 5 million bushels stronger than they were at this time last year, so you can see the prospect teams have had despite the projects with less acres. Just more near-term inventory. What about South America? Well I think they will probably have to downsize to crop some more. They will do that again in March and April, but they definitely took the edge off of the crop back to the problems they had from November through December and into January. They have gotten some rave but a lot of smaller crop than they first thought. They are in harvest crop right now. So we should know before too long, but we haven't seen those pages rise out of South America that we have seen before, fight China primarily. While China has been putting about, the world economy is slowing and when the trend starts moving lower, you will find less inventory and that's where China has been. An interesting scenario that could be working for them right now, the key is whether it is right now. So we have are really good feel on that, but that's something and, I would anticipate recent rains made bigger crops in South America for soybeans. Great, because corn is pretty much done. Yes. Now China, I saw some information that they got inflation over there and are having the problem with their general economy. Is the big problem for us because they not only sell a lot around the world to pay via a lot of the United States? Well I think the slowing economy, notice it's not growing backwards. Just have less of the steep curve. The need is still there and they will be in our market for long time to come. One thing that I saw here last week is the exports for the last 11 months across about half of a percent. Their imports are down about 15%. I would say that has to do with the EU and some of the slowing economy throughout the world. This is the future market and we are also always looking out past what we know today. It happened to me, or to tell our producers we need to do next year? We will go ahead, look to be about 50% sold, and be topside open on the half. We will be back with more U.S. Farm Report in just a moment.
JOHN’S WORLD: The love-hate relationship with regulation on farms continues unabated across much of farm country. For example, while railing about intrusive electrical inspections for farms, Iowa producers are urging their legislature to enact stiff penalties for fraudulent trespassers. We're going to regret some of these decisions, I fear. Consider the BLS child-safety regs that have incensed producers recently. If I employed children, and employees are what the regs would apply to, I would welcome the regs a protection against our voracious litigation industry. While farmers are shrugging off our industry's appalling child safety workplace record, they may discover that adherence to accepted standards of due diligence could be their only defense in the awful case of a tragedy and an ensuing legal action. A friend of mine recently had the unfortunate experience of a fatal accident while hauling grain. Had his truck and driver not met every single regulation such as weight, logs and licenses, both the law and his insurance company could have shifted full liability to him, even though he was clearly not at fault. As farms become wealthier, they loom as inviting targets for the legions of personal injury lawyers. Compliance with regulations may be the only thing that protects us from those predators, as well as liability insurance rates that resemble life insurance for elderly, skydiving chain-smokers.
JOHN’S OPEN: Hello and welcome to U.S. Farm Report, I'm John Phipps. As I said to mike a few weeks ago, I am obviously getting to be even tougher as I age. Winter, with its snow and ice used to be a mostly grueling endurance match. But this season, I've barely noticed any problems at all. Of course, there might be an alternative explanation, and Tyne has some interesting news that suggests that might be the case. But whatever the reason it is fun for me to converse with buddies who have an annual warm-weather get-away location they try to mention several times during chats this time of year. But when they are playing January golf in North Dakota, who wants to listen about Boca Raton? Let's check in now with Tyne Morgan for the news.
WEATHER EXTREMES: Thank you john and hello everyone. At farm meetings across the country this winter a popular topic is the generally mild weather...and a new government report will add fuel to that discussion. In a new report just released from NOAA, January was the fourth warmest on record...just over 36-degrees...for the 48 contiguous states. NOAA reports nine states -primarily in the plains and western corn belt - had temps ranking among their 10 warmest. This was accompanied by below-average precipitation for much of the country.
MCMANUS: Snowfall in the northern tier of states was also below average in January. According to the Rutgers global snow lab, it was the third smallest amount of snow cover in 46 years of recording that data.
COLD ALASKA: In contrast to the lower 48, several towns across Alaska lived through a record cold snap in January. Nome was on average 16-degrees below zero...McGrath was 29 below...and Bettles on average was 35 degrees below zero.
WALMART LOGO: The nation's largest retailer has unveiled a new logo aimed at convincing shoppers their food products are healthy. Wal-Mart debuted its "Great for You" logo. The image will now appear on its store-brand products, such as the "Great Value" canned goods. Wal-Mart says the front-of-pack" label is intended to make it easier for customers to find healthier food. To qualify for the logo, Wal-Mart says the food must meet the 2012 dietary guidelines set by the federal government.
SALT INTAKE: From soup companies to the school lunchrooms, it seems everyone is trying to cut down on salt. Now the CDC has come up with the top ten sources of salt in our diet. Surprisingly at the top of the list, bread, that's followed by rolls, cold cuts, pizza and poultry. The Centers for Disease Control says the top ten foods account for nearly 45 percent of the sodium Americans eat. Sodium in the diet mainly comes from salt which can lead to increased risk of high blood pressure. The CDC says salt intake should be limited to about a teaspoon per day. Most of us eat quite a bit more.
HEARTLAND HOG HUNTERS: Destructive and out of control, feral hogs are the scourge of the lone star state. A show that airs on the A&E network features the Campbell's - a family that wages war on these wild and unwelcomed invaders. Nathan Smith with the Texas Farm Bureau heads to the small town of Early to witness these American Hoggers in action. According to the American Hoggers web site, there are some six million feral hogs in the U.S...with more than half living in Texas. We'll post a link on our home page so you can learn more about the show - including air times on A&E.
BAXTER BLACK: Horses have long played a vital role on farms and ranches coast-to-coast...some are even considered to be a part of the family...just ask Baxter Black. When we come back, al returns with Tractor Tales and our Country Church Salute...please stay with us.
TRACTOR TALES: Al is back...what's on tap for tractor tales this week? John, we meet a collector with a rare John Deere "D". There were only 19 "D's" manufactured in 1928. Each were stamped with an "X" on the serial number. Our story takes us to Glendale, Arizona to meet the man who owns this rare piece of history. As always, you can watch Tractor Tales online at www.usfarmreport.com or on Facebook. You can also download segments as podcasts from iTunes.
CHURCH SALUTE: Today's Country Church Salute goes to Countryside Chapel United Methodist Church in Convoy, Ohio. The congregation came together more than thirty years ago when four churches in Van Wert County decided to merge. Ground was broken in march of 1972, and the first service was held in January of 1975. Less than two years later the mortgage was paid off and the building was officially dedicated. Lee and Audrey Debolt tell us their church is thriving under the leadership of the reverend Wayne Karges. 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....Senator Santorum said that there was a loophole that allowed Corzine through MF Global the ability to take funds that they had access to and use for their own investment purposes." Phil Gallup Fort Wayne, Indiana. One of the aspects of the MF Global failure has been what it means to hold the assets of others. It's not as clear cut as you might think. In this case such assets were legally (we think) used for collateral to secure other financing. This is called re-hypothecation and I don't pretend to understand the nuances. Which leads me to my point. When a broker, or a bank, or a pension fund holds your money, what exactly does that mean? The rules vary, but often it means not just pure cash like a checking account, but near-cash equivalents like money-market funds or AAA-rated bonds. These generate income from otherwise idle assets. But the amount of money that by law must be invested in such safe instruments now dwarfs the available supply, since so much sovereign debt has been downgraded. The result is investors are earning negative interest rates for U.S. debt. In other words, the demand for safe investments means you must pay to loan our government money. The MF Global meltdown undoubtedly involved bad judgment or even malfeasance, inadequate regulation and investor ignorance. But the root cause of the meltdown is an astonishing abundance of global wealth chasing too few safe investments. As always, we want to hear from you, send comments to email@example.com or leave us a voice mail at 800-792-4329.