THIS WEEK ON U.S. FARM REPORT
JANUARY 21-22, 2012
AL’S OPEN: Hello and welcome to U.S. Farm Report, I'm Al Pell, in for John Phipps. We've got lots to cover over the next 60-minutes. In a few minutes, our marketing insiders will join to break down another very active week in the commodity trade. Also ahead, a trip to Tennessee to visit a dairy operation that has been recognized for innovation - and hospitality. All that's ahead...but first, the headlines. Tyne Morgan is at the news desk with our top stories
HAY PRICES: Thanks Al and hello everyone. A combination of severe drought in the southern plains and historically high grain prices continues to drive hay prices higher. At this time hay is nearly 70-dollars a ton more than a year ago. According to the USDA's recent Ag prices report, the all hay price in December was 177 dollars a ton. That's up slightly from November--but 66 dollars higher than December 2010. At 199-dollars a ton, alfalfa hay is even higher...nearly 80 dollars above the previous year's monthly average.
HUDYE LAND SALE: A mammoth farm that includes acreage in both eastern Colorado and western Kansas has been placed on the market. Hudye farms says it wants to take advantage of strong farmland values, low interest rates and rising commodity prices. That's why the Canadian-based farming operation is putting nearly 18,000 acres up for sale. The property is located near Burlington, Colorado. Some of the tracts are just over the Kansas state line. You may remember the Hudye name. Ben Hudye was a finalist for the Top Producer of the year award in 2010.
KEYSTONE PIPELINE: The Obama administration puts the brakes on a 1,700 mile pipeline project that would stretch from Alberta, Canada to Texas. That said, the white house says the oil company could re-apply for permits to build the Keystone XL. A timeline to approve the project was attached to a piece of tax-cut legislation. President Obama says congressional republicans put an unreasonable deadline on the measure. The pipeline would angle thru Montana, South Dakota, Nebraska and then due south to Texas.
DISASTER ASSISTANCE: After a year of record-breaking weather disasters, USDA says it will provide more than 300-million dollars in additional disaster aid to farmers and land-owners in 33 states. Between the flooding, hurricanes and drought, natural disasters impacted about 55 million acres of farmland in 2011. Ag Secretary Tom Vilsack says the funding will be used to remove debris from waterways and farmland, restore livestock fencing, protect eroded stream banks and restore conservation structures.
CROP WATCH: You may have some snow, but for many farmers it's been a dry winter so far. And they're concerned about going into spring with a soil-moisture shortage. From Iowa State University, subsoil moisture samples were taken at the research station in Monona County. It showed there was no water in their five foot deep soil profile. Monona County is between Sioux City and Omaha. A grower in central Missouri says they were digging up an oak-tree stump with deep roots. They found nothing but dry soil. They also said winter wheat is struggling without snow cover. And winter rains are helping to improve winter forages and stock tanks in Texas. The extension says some parts of east Texas had five inches of rain. The drought monitor index shows 62% of the state is still under a severe to extreme drought. While high, that number was 97% in October.
ROUND TABLE: We have Chip Nellinger of Blue Reef Agri-Marketing, LLC and Mike Florez of Florez Trading. Gentlemen, we can say this about whatever but this has been an unusual week in markets I think this week. You can bring me up to date on how the market finished. It was a choppy day. Finished in corn pretty good and beans kind of soft. Wheat was on the up side. I get asked what is actually moving the markets. I think still the Europe issue. Also on that the USDA report we started finding export business. We are competitive in the world now and that's helping along with the drop on the dollar this week kind of put a supported floor under the market. You stay competitive in a world that lower prices here on the markets actually helping too. Yeah. We had the sharp break offer the USDA report with the dollar dropping. We got competitive in the world market both really all three major grains, wheat is more competitive. We started doing corn business this week. China bought a few cargoes of United States beans. I understand China is probably not going to do much business this week because of the lunar New Year. Probably going to be quiet for the next week or so. When you see the markets moving like this and you look at the technical aspects of this thing what are you looking at now? I'm looking for something that looks really positive. I'm always bullish corn. Essentially we don't have any corn. I don't think we have the ability to go down and stay down. We just had such a lack of supply. When we pull down in price -- we have the demand which is human. A year ago today it was $6.50 on March corn, now it's about $6.10. We are cheaper in price and we have according to the USDA 283 million-bushels less of corn than a year ago. So less corn and a lower price. Doesn't make sense to me. I can't understand the bearish argument. I think we will go higher. You think we will go higher basically on the technical aspects. Yeah that's a fundamental aspect but we have been in a trading range since October and you only want to look at that. Are you agreeing with that? I see you have a different look on your face. Longer term. Very tight stocks domestically and the world in corn. My only problem is after this United States report, USDA report of --there is not going to be much in the near term. The next four to six weeks unless we see rainfall this weekend in South America. There is not much to give us a bullish spark until we get closer to planting, talk about spring weather. I agree that longer term this thing is supportive, cash basis level is strong but my fear is the next four to six weeks may be a choppy grind where the downside might be easier to accomplish than a strong rally but like mike said that support will always be there with the demand lurking. I would take just the other view of that. I see the downside is limited, just because lines of basis is so strong. You can't get corn. There is no corn to be had. Pay more --why would that give you lower prices, if you are having a hard time buying the basis, pushing it to get the corn from the farmer why would that make the market go down. I agree. The basis has been strong all year. Right through harvest and seen a good harvest. The basis is strong. Why would the prices go lower? That's unusual.
Round Table guests, Mike Florez and Chip Nellinger I just asked you a question, set up a situation for the 2012 crop. Planting a lot more acres and if we have a good crop and you are pretty bullish on this. If we can grow twice as much corn as we did this year are you still bullish? Sure if you are going to have more corn that's an issue but that's what they said about South America and look what happened there. There are so many unknowns until you plant that first acre. I’m thinking that the market will anticipate potential problems and rally ahead of it. We don't know how the crop will be. You don't know how many acres you will plant. You will plant 95 million acres. You have --you have to see how it wraps up. He is making sense on that? Yeah. Agree 100%. I think the way it stands if you look at the last two weeks new crop beans have really gained on new crop corn. At the widest level we have been and $5.50 or under December corn future was unlikely not to plant the 94, 95 million acres that the market expects. There is a lot of give and take over the next three months. What should a producer do right now to be able to guarantee himself a profit? Number one is know what that is. Know where your cost of production is, your break evens at different yield assumptions. I think for the new crop the best thing is be patient and not panic even if we would go a little lower over the next six or eight weeks. You think we will go lower. I think we could. We are in a range like I said earlier. Just not much barring some major news event or presumption of the hot dry condition that will spark this market any time soon barring a sharp drop in the dollar. Outside of that I still see a lot of risk out of Europe. I think we are stuck in a rain shear where it may be easier for the short term to head lower rather than higher. Are you talking about choppy really and flex skill all that sort of thing. As a speculator what you do surrender try to take advantage of that. I try to. You try to. It doesn't work but I try to. So from the producer’s standpoint if you put those shoes on what would you do? If you are --if it's a decision should I sell my new crop corn I would say that I would not do that because I think there is too much worry in front of you. We are at a low price now. The low end of a range. I don't see how it can drop much. I would delay any new crop sales. Think you will get better prices. That would be my advice, wait. Yes. So where are we going to go at the end of the year and you don't know? Dream a little bit. We don't know what the weather will be. All those flexibilities. If you are coming in to the season with really low stocks, and we have to have everything perfect again in the United States, and we are starting the season where a lot of areas don't have ideal conditions, what if something goes wrong? You go to the all-time highs. We don't have any corn in storage. I think you can be dynamically bullish. Have you too much in front of you to make those decisions. I wouldn't lock in any --not cost but I wouldn't lock in any prices on my corn boss of that. There are ways you can protect yourself. Ask opposed to lock in a sale or something like that. Some of those alternatives. Yeah. I agree with mike. I think there is enough worry we will see bounces along the way. I think he we are toward the end of the road. It seems like the last three or four year itself you sit on your hands and do nothing the market rallies. I think there will be rallies ahead of us but producers need to take advantage of them. One of these years the odds will kick in and we will raise a big crop if it happens to be on big acres we will drastically rebuild the stock. I think you hit the nail on the head. There is lot of strategies and tools to lock in those prices when you see those rallies and to profitable levels, put who be one, selling crop, buying calls, couple different ways that you can lock that profit in and retain upside potential. Want to hear you both saying doing nothing is not the answer. We will be back with U.S. Farm Report in just a moment.
JOHN’S WORLD: John is on the road this week, but "John's World" carries on. In his commentary, John tackles a popular subject this time of year - income taxes...
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AL’S OPEN: Hello and welcome to U.S. Farm report, I'm Al Pell, in for John Phipps. As winter returned with a vengeance in many parts of farm country this week, the thought of getting back in the field seems distant on many operations. Even so, we have lots to share with you this week - including stops in Colorado, Tennessee and Wisconsin. All that's ahead - but first, let's get started with the headlines...Tyne Morgan joins us from the news desk.
FOOD PRICE INDEX: Thanks Al and hello everyone. It may be hard to believe for anyone who's been at the grocery store lately, but food prices actually fell through-out 2011. The food price index from the United Nations shows prices peaked in February of last year. Although some prices retreated, the whole year average was the highest in more than two decades. Compared to a year, prices right now are down about 11%. The drop is attributed to lower commodity prices around the world combined with slowing demand and a strong dollar.
TEXAS CITRUS GREENING: Bad news for the Texas citrus industry. State Ag officials say a case of citrus greening has been confirmed in a commercial orange grown in the southern tip of the state. Citrus greening is a bacterial disease that can devastate a citrus crop. It's carried by an insect called a citrus psyllid. Texas ranks behind Florida and California in citrus production. It's a 140-million dollar industry. USDA says this is the first confirmed case of the disease in the Lone Star State.
HONEY BEE DEATHS: In the on-going effort to find out what's behind a serious decline of honeybee populations, a scientist at Purdue University says an insecticide seed coating may be a factor. Entomologist Christian Krupke has been analyzing bees found dead around hives for two years. He's found the presence of certain types of insecticides that are commonly used to coat corn and soybean seeds before planting. Seed makers will coat seeds with talc. The powder helps keep seeds flowing through planters. Krupke says the contaminated talc is quite light and moves easily thru the air. It can float from fields onto flowering plants that honeybees may be pollinating.
PEPSI PRODUCTS: The makers of Pepsi and a host of other well-known food products are looking to the dairy industry to increase revenues. While speaking at the 2012 Dairy Forum this week in California, a Pepsi executive predicted dairy products will play a key role in the company's global growth strategy. The company is looking for new products to fill specific nutritional voids...and dairy could be a key ingredient.
JD RECORD: And you may remember this from last year. John Deere's project--"Can Do"--where a team of employees created a full-sized combine made entirely of canned food. It used 308,000 cans and more than 11,000 bags of food to create the 60 foot wide, 80 foot long model. Guinness World Records has now certified the feat as the largest sculpture ever built from canned food...more than double the number of cans used by the prior record-holder.
HEARTLAND COLORADO AUCTIONEER CONTEST: Where can you find some of the fastest talkers in the world??? Look no further than the Bid-Calling Championship sponsored by the Colorado Auctioneers Association. Anne Herbst with the Denver Post documents an event where history was made. Our thanks again to Anne Herbst of the Denver Post for this terrific story. To learn more about the Colorado auctioneers association, head online to www.coauctioneers.org. We'll post a link on our home page for easy access.
INNOVATIVE DAIRY FARMER: A Tennessee dairy farmer has opened the doors to his operation to help showcase American agriculture. That's one reason John Harrison has been named "Innovative Dairy Farmer of the Year" by the International Dairy Foods Association and "Dairy Today" magazine. Clinton Griffiths has our story. To learn more about this award, head online to the www.idfa.org - the home page of the International Dairy Foods Association. When we come back, it's time for Tractor Tales and our Country Church Salute...please stay with us.
TRACTOR TALES: In this week's tractor tales, we met a tractor owner who's looking for a new owner for his Oliver. We found this Super 55 at a Meecum tractor auction last fall in Wisconsin. Even though the owner enjoyed having this sharp 4-cylindar in his collection, he was hoping to find someone who treasured the Oliver line more than he did. Don't forget, if you would like to watch Tractor Tales, be sure to head to our web site... www.usfarmreport.com ...or find us on Facebook. You can also download these segments as podcasts from i-Tunes. Just go to the i-Tunes store and search Tractor Tales.
CHURCH SALUTE: We only have one submission for this week's Country Church Salute. And it goes to St. Paul's Lutheran church in Roseville, Ohio which is celebrating 175 years of ministry. The church was organized in 1836. It's part of the Evangelical Lutheran Church of America. The beautiful structure is considered English gothic architecture. Church member Dorothy Heckel says St. Pauls is one of a three-point parish currently serving people in three counties. Pastor Alex Brown leads the congregations. 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....John joins us now with that.
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