USFR Weekly Recap - February 12-13, 2011

February 14, 2011 03:36 AM
 

THIS WEEK ON U.S. FARM REPORT
EPISODE #1957
FEBRUARY 12-13, 2011

JOHN’S OPEN: HELLO AND WELCOME TO U.S. FARM REPORT, I'M JOHN PHIPPS. IT SEEMS LIKE I REMEMBER WHEN THE USDA WOULD RELEASE A REPORT AND EVERYONE YAWNED. BUT THAT WAS BACK IN THE DAY OF BIG SURPLUSES AND A FEW HUNDRED MILLION BUSHELS WAS NO BIG DEAL. IT WAS ALSO A TIME WHEN MOST OF THE WORLD'S POPULATION HAD LITTLE CHANCE TO IMPROVE THEIR STANDARD OF LIVING AND ESPECIALLY THEIR DIET. THE GRADUAL PUSH FOR FREEDOM HAS INTRODUCED MARKET FORCES SLOWLY BUT INEXORABLY AROUND THE GLOBE, AND EXPECTATIONS FOR THE WORLD'S POOREST ARE RISING. EVEN WHILE WE HOPED FOR THIS OUTCOME HERE IN THE U.S., IT APPEARS WE UNDERESTIMATED HOW FUNDAMENTALLY IT WOULD TEST OUR INDUSTRY. 2011 IS UNFOLDING AS PERHAPS OUR GREATEST CHALLENGE. TIME NOW FOR THE HEADLINES.....HERE'S AL PELL

CORN STOCKS: THIS WEEK THE USDA LOWERED ITS CORN CARRYOVER PROJECTION ANOTHER 70 MILLION BUSHEL FROM LAST MONTH, DROPPING IT TO A VERY TIGHT 675 MILLION BUSHELS. IN COMPARISON, CARRY-OUT LAST YEAR WAS 1.7 BILLION BUSHELS. THE USDA MADE NO CHANGES TO THE SUPPLY SIDE OF THE BALANCE SHEET. ON THE USAGE SIDE, THE AG DEPARTMENT UPPED FOOD, SEED AND INDUSTRIAL USE. OF THAT INCREASE, 50 MILLION BUSHELS WENT TO ETHANOL PRODUCTION, WHICH IS NOW PROJECTED AT JUST UNDER FIVE BILLION BUSHELS. PRO FARMER ANALYSTS SAY THE WORD "RATION" IS NOW VERY MUCH PART OF THE CONVERSATION.

COTTON ACRES: IT APPEARS A COMBINATION OF ATTRACTIVE PRICES AND A BLOSSOMING EXPORT MARKET WILL PUSH U.S. COTTON ACRES HIGHER IN 2011. IN ITS ANNUAL EARLY-SEASON PLANTING SURVEY, THE NATIONAL COTTON COUNCIL SAYS PRODUCERS INTEND TO PLANT 12.5 MILLION ACRES THIS SPRING...THAT'S A 14% INCREASE OVER LAST YEAR. WHEN YOU APPLY STATE-LEVEL YIELD ASSUMPTIONS, THE NCC EXPECTS A TOTAL CROP OF 19.2 MILLION BALES, ABOUT A MILLION MORE THAN LAST YEAR. THE NCC EXPECTS SUPPLIES TO REMAIN TIGHT AND PRICES WILL REMAIN STRONG. FOR THOSE ON THE FARM, SOME TOUGH DECISIONS ARE AT HAND.

ROUNDTABLE: MIKE NORTH AND GREG WAGNER

JOHN’S WORLD: FARMS HAVE BEEN GETTING BIGGER FOR MY ENTIRE CAREER. MUCH OF THIS GROWTH HAS BEEN ENABLED BY TECHNOLOGY SUCH AS MECHANIZATION AND PESTICIDES. ANOTHER FACTOR IS SPECIALIZATION INTO GRAIN PRODUCTION FROM DIVERSIFIED FARMS. BUT THE OVER-ARCHING REASON IS IT MAKES ECONOMIC SENSE. ECONOMIST KEVIN DUHYVETTER AT KANSAS STATE IS THE LATEST RESEARCHER TO VERIFY WHAT MOST PRODUCERS FIGURED OUT INTUITIVELY: BIG WORKS. WHILE WE OBSESS ABOUT MARKETING MULTIPLE STUDIES POINT OUT THAT EFFICIENT MARKETS - AND OURS ARE PRETTY EFFICIENT - MEAN THAT BEATING THE AVERAGE IS A MATTER OF RANDOM LUCK. IT IS THE SAME ON WALL STREET OR ROUTE 2. BECAUSE MARKETING SUCCESS IS A HIT-AND-MISS CONTRIBUTOR TO PROFITS, DUHYVETTER RANKS IT BELOW THE MOST POWERFUL DETERMINANTS FOR FARM SUCCESS. UNSURPRISINGLY, SIZE IS THE MOST POWERFUL. IT IS THE VOLUME OF PROFITS MORE THAN THE RATE THAT GENERATES WEALTH FOR FARMS. OTHER MORE IMPORTANT VARIABLES ARE COSTS OF PRODUCTION AND THE ADOPTION OF TECHNOLOGY. BUT THE INSTINCTIVE URGE TO GROW OUR OPERATIONS IS IN FACT WELL BASED IN ECONOMICS. THIS IS NOT THE FIRST STUDY TO POINT OUT THE FUTILITY OF EXPECTING TO BEAT THE MARKET. AND LIKE INVESTORS PRODUCERS WILL LIKELY CONTINUE TO THINK THE ODDS DON'T APPLY TO THEM. BUT IN THE MEANTIME, CONTROLLING COSTS AND ADDING ACRES WILL DETERMINE LONG TERM WINNERS.

2ND HALF:
JOHN’S OPEN:
HELLO AND WELCOME TO U.S. FARM REPORT, I'M JOHN PHIPPS. IN THE MIDST OF RECORD PRICES MANY FARMERS ARE SURPRISINGLY APPREHENSIVE. IN CONVERSATIONS THIS WEEK WITH CORN GROWERS, I WAS STRUCK BY THE UNEASINESS PRODUCERS HELD ABOUT THE REPERCUSSIONS OF $7 CORN. WHILE IT MAKES OUR BUDGETS LOOK BETTER, IT IS BURDENING OUR CUSTOMERS. THE GREAT FEAR WAS INTENSE POLITICAL PRESSURE TO ADJUST OR LIFT THE ETHANOL MANDATE SHOULD ANY PRODUCTION PROBLEM OCCUR EARLY OR EVEN IF INSUFFICIENT INTENDED CORN ACRES MAKE ENOUGH CORN A REAL QUESTION. AFTER THE STOCKS REPORT, THIS RISK IS GROWING. HEREIN LIES THE SLEEPER RISK FOR ETHANOL: IF YOU LIVE BY THE POLITICAL MANDATE, YOU DIE BY THE POLITICAL MANDATE. LET'S GET STARTED WITH THE HEADLINES AND AL PELL....

EGYPT AND FOOD PRICES: THANKS JOHN. THE CONTINUING TURMOIL IN EGYPT MAY BE MORE ABOUT FOOD THAN IDEOLOGY. EGYPTIAN CONSUMERS SPEND OVER 40% OF THEIR INCOME ON FOOD AND FOOD INFLATION HAS BEEN RUNNING OVER 17%. SOARING PRICES OF COMMODITIES SUCH AS WHEAT, RICE AND SUGAR HAVE BEEN IGNITING DISCONTENT WITH THE THIRTY YEAR REIGN OF HOSNI MUBARIAK. EGYPT IMPORTS ABOUT 40% OF ITS FOOD. WORLD BANK PRESIDENT ROBERT ZOELLICK JOINED OTHER VOICES IN LINKING POLITICAL TURMOIL TO FOOD PRICES. HE SAYS QUOTE, "PEOPLE OFTEN IN DEVELOPING COUNTRIES SPEND HALF OR THREE QUARTERS OF THEIR INCOME IN FOOD, SO THEY'VE GOT LITTLE MARGIN."

KOREA FMD: AN OUTBREAK OF FOOT-AND-MOUTH DISEASE IN SOUTH KOREA IS A GOOD NEWS - BAD NEWS PROPOSITION FOR U.S. AGRICULTURE. SO FAR, TEN MILLION SWINE AND THREE MILLION HEAD OF CATTLE HAVE BEEN DESTROYED. AS A RESULT, THE AG DEPARTMENT EXPECTS U.S. PORK IMPORTS TO KOREA COULD JUMP AS MUCH AS 40%. AT THE SAME TIME, THE DRAMATIC DROP IN THEIR SWINE HERD MEANS KOREA IS EXPECTED TO IMPORT MORE THAN A MILLION LESS TONS OF U.S. CORN.

KOREA TRADE: ALSO THIS WEEK, A RENEWED PUSH TO SIGN A FREE TRADE AGREEMENT WITH SOUTH KOREA. ON TUESDAY, A BI-PARTISAN GROUP OF EIGHT FORMER AG SECRETARIES SENT A LETTER TO CONGRESS URGING LAWMAKERS TO RATIFY THE AGREEMENT. THE LETTER STATES ONLY 14-MILLION DOLLARS OF U.S. AG PRODUCTS ENTER KOREA DUTY-FREE RIGHT NOW. WITH THE FTA IN PLACE, THAT NUMBER COULD INCREASE TO THREE BILLION DOLLARS.

NEW DIET GUIDELINES: AS WE REPORTED LAST WEEK, NEW FEDERAL DIETARY GUIDELINES ARE CALLING ON AMERICAN'S TO EAT MORE FRUITS AND VEGGIES, AND CUT BACK ON SALT. THE GUIDELINES ARE REVISED EVERY FIVE YEARS. THE GOAL IS TO EQUIP CONSUMERS WITH A ROADMAP FOR HEALTHY EATING.

HEALTHIEER EGGS: GOOD NEWS FOR EGG LOVERS...THEY APPEAR TO BE EVEN HEALTHIER THAN LONG ADVERTISED. WHEN THE AG RESEARCH SERVICE RAN TESTS FOR NUTRITIONAL CONTENT, THEY FOUND THE AVERAGE LARGE EGG CONTAINED 185 MILLIGRAMS OF CHOLESTEROL...14% LOWER THAN PREVIOUSLY RECORDED. THE RESEARCH ALSO SHOWS LARGE EGGS CONTAIN 64% MORE VITAMIN "D" THAN PREVIOUSLY THOUGHT. WHY THE IMPROVEMENT? SOME RESEARCHERS BELIEVE IT MAY HAVE TO DO WITH BETTER FEED FOR HENS - INCLUDING CORN, SOYBEAN MEAL AND MINERALS.

HEARTLAND: TO LEARN MORE, HEAD ONLINE TO WWW.ABCATTLE.COM . WE'LL POST A LINK ON OUR HOME PAGE FOR INSTANT ACCESS.

BAXTER BLACK: IT'S TIME NOW FOR OUR BI-WEEKLY VISIT FROM BAXTER BLACK. THIS WEEK, HE BRINGS US THE STORY OF "WANDA AND THE WILD HEIFER". BAXTER IS BACK WITH ANOTHER STORY IN TWO WEEKS...UNTIL THEN, CHECK OUT HIS WORK ONLINE AT WWW.BAXTERBLACK.COM . WHEN WE COME BACK, A TRACTOR TALES FROM PENNSYLVANIA PLUS OUR COUNTRY CHURCH SALUTE...PLEASE STAY WITH US.

TRACTOR TALES: TRACTOR TALES THIS WEEK IS ALL ABOUT FAMILY. WHILE VISITING THE PENNSYLVANIA FARM SHOW IN HARRISBURG, WE MET A "YOUNG" MAN WHO IS VERY PROUD OF HIS 1936 ALLIS CHALMERS.  DURING WORLD WAR TWO, ALLIS CHALMERS BUILT ELECTRONIC MOTORS FOR SUBMARINES...A LONG WAY FROM THEIR START IN THE 1840'S BUILDING WATER-MILLS AND GRIND-STONES.

CHURCH SALUTE: TODAY'S FIRST COUNTRY CHURCH SALUTE GOES TO THE WESTMARK EVANGELICAL FREE CHURCH IN LOOMIS, NEBRASKA.  THE CONGREGATION CELEBRATED THEIR 130TH ANNIVERSARY LAST NOVEMBER. THE CHURCH WAS BEGUN BY SWEDISH HOMESTEADERS IN 1880 UNDER THE GUIDANCE OF FREDRICK FRANSON, A SWEDISH EVANGELIST. FOR MANY YEARS THE SUNDAY CLOSEST TO THE FOUNDING DATE HAS BEEN KNOWN AS INGATHERING SUNDAY WHEN THE CONGREGATION GAVE THANKS FOR GOD'S GOODNESS. OUR THANKS TO DON AND LOIS HOLEN. WE ALSO HONOR THE BEULAH BAPTIST CHURCH IN KENT'S STORE, VIRGINIA. LAST SEPTEMBER WAS THEIR 150TH ANNIVERSARY OF MINISTRY. THE CONGREGATION WAS ORGANIZED WITH HELP FORM A SISTER CHURCH - LYLES BAPTIST IN WILMINGTON. THE CHURCH WAS SUBSTANTIALLY BUILT WITH HEART PINE, MORTISES AND PEGGED TENONS, AND HAND CUT NAILS. NUMEROUS IMPROVEMENTS HAVE BEEN ADDED SINCE. THE CURRENT PASTOR IS JASON TAYLOR. PHOEBE JANE GRUBBS PROVIDED THE INFORMATION ABOUT HER GROWING AND VIBRANT CHURCH FAMILY. 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....THOMAS OBRIEN COMMENTS ABOUT GMO'S AND OUR COVERAGE: "I FEEL THAT THE US FARM REPORT IS A MOUTHPIECE FOR MONSANTO AND DOW CHEMICAL. BOTH DEKALB AND PIONEER CORN ARE "GENETICALLY MODIFIED" GRAINS FOR MONSANTO. I NOTICE THAT YOU NEVER SAID ANYTHING ABOUT THE "GMO " HAY THAT IS ALSO BEING PRODUCED AND MARKETED." THOMAS, THANKS FOR WRITING. I ADDRESS YOUR POINTS IN REVERSE. WE DID NOT MENTION THE APPROVAL OF ROUNDUP-READY ALFALFA BECAUSE IN MY OPINION, IT WASN'T BIG ENOUGH NEWS. IN FACT, THE WHOLE GMO CONTROVERSY IS FADING RAPIDLY IN THE GENERAL POPULATION. AFTER TWENTY YEARS OF GROWING G-M SOYBEANS AND ALMOST AS LONG WITH CORN WE SEE NO EVIDENCE OF HEALTH OR ENVIRONMENTAL HARM, DESPITE THE BEST EFFORTS OF SERIOUS RESEARCHERS DETERMINED TO PROVE THEM DANGEROUS. PEOPLE ARE NOT DROPPING IN THE STREETS FROM EATING APPROVED GMO'S AND ENVIRONMENTAL PROBLEMS HAVE NOT DEVELOPED. THERE ARE ISSUES, SUCH AS RESISTANT WEEDS, BUT THESE ARE NOT HEALTH RISKS. MORE TELLINGLY, I USED TO RECEIVE A SIGNIFICANT PREMIUM FOR NON-GMO CORN, FOR EXAMPLE. NO LONGER - A CLEAR MARKET SIGNAL OF ACCEPTANCE. THERE ARE ALWAYS RUMORS THAT BIG CORPORATIONS CONTROL THE CONTENT OF MEDIA, AND FRANKLY I HAVE SEEN OCCASIONAL EVIDENCE OF TIPTOEING AROUND TOPICS MYSELF, NOTABLY ETHANOL. BUT THE OPINIONS EXPRESSED ON U.S. FARM REPORT ARE MINE ALONE, AND IF THEY SEEM TO AGREE WITH SPONSORS ON OCCASION, IT IS BECAUSE I DO. AS ALWAYS, WE WANT TO HEAR FROM YOU, SEND COMMENTS TO MAILBAG@USFARMREPORT.COM OR LEAVE US A VOICE MAIL AT 800-792-4329.
 

 

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