USFR Weekly Recap - June 2-3, 2012

June 2, 2012 09:43 AM



EPISODE # 2025
JUNE 2-3, 2012





Hello and welcome to US Farm Report. I'm John Phipps. There is a misguided morality tale intertwined with the Greek drama in Europe which is roiling our own AG markets. It boils down to this: the Germans have been working hard and prudent as they built a rich economy and abundant savings. The Greeks have been comparative grasshoppers, spending and borrowing way too much. So why should the virtuous Germans have to bail out the profligate Greeks? The answer is simple not because the Greeks deserve it, but because the Germans loaned them the money in the first place seeking higher interest rates. What were the Germans thinking? If you loan enough money you're not a creditor, you're a partner.



The export outlook for American Agriculture continues to shine bright. This week the AG Department announced exports for the 2012 fiscal year are now projected to hit 134 ½ dollars, the second- highest level on record. This updated figure is 3 ½ billion dollars higher than the previous forecast. Leading the way are horticultural and livestock products with wheat and soybeans also performing well. In terms of top customers, both Canada and Mexico are on pace to set new records, and exports to China are up more than a billion dollars thanks to strengthening demand for cotton, pork, dairy and poultry and tree nuts. Harvest of the Winter Wheat crop in the central and southern plains is rolling right along. Nationally 9% of the crop has already been cut. In Oklahoma the wheat harvest is 41% complete. The 5 year average is just 3%. Good growing weather has given way to good harvest conditions around the state. Yields in many places are 20% or more above-average, giving machines a workout. The combines are running 1 ½  or 2 miles per hour in the field, they are just crawling. They are bigger machines but it's taking twice as long to get the crop because we have twice the bushels out there. Rozen says last year's severe drought stifled the States wheat crop and depleted hay supplies for livestock. That's why many producers are baling the crop for hay rather than harvesting for grain. Mostly due to higher prices, the Livestock Marketing Information Center says Hay use this past winter was at its lowest level since 1980. The center says many producers chose lower cost options including baled cornstalks. With hay stocks expanding prices are expected to soften in the coming months. The lack of rain is becoming quite obvious, especially in the eastern cornbelt. Overall 72% of the nation's corn crop is rated good to excellent, down 5 points from last week. In Illinois there is a 13 point decline, while Indiana has seen a 14 point decline. In the western belt Iowa’s crop has dropped 4 points, but 77% is still reported to be good to excellent shape. The USDA has finalized its plans to consolidate and close down some Farm Service Agency County offices. Those offices will be rolled into other USDA service centers. The AG Department says most of the targeted offices are within 20 miles of another FSA office. In total they will consolidate 125 of the more than 2,100 offices nationwide.



Crop watch this week shows just how early the corn crop is this year. Tyne Morgan is on the road and she sent us a photo from Caraway, Arkansas, in the northeast area of the state. You can see the crop is already tasseling. A farmer told her that it's unheard of to see tassels in May in that part of the state. A farmer from Sampson County, North Carolina sent us this photo. He says corn planted on April 2nd now stands 8 foot tall, the result of 1 to 2 inches of rain per week. And in Maine, potato growers are off to a good start. “Nass” says the crops are nearly all planted with 15% already emerged.



Roundtable guest this week are Bryan Doherty and Darren Frye. I don't know where to start. Give me two things that we ought to be talking about today and I will ask you for two things and then we'll talk about what I want to talk about. Well, we could talk for us where we are weather-wise with the corn crop. I think we got more moisture than most were expecting. So I would start with that and then the overall general pessimism in the market overall. Now what are two things did you want to talk about? While I’m pretty bearish because I don't see a lot of pricing, the other thing is, it goes along with his pessimistic outlook. We have a meltdown going on in Europe and more of that is to come. So I would talk on that. I’m surprised neither of you said anything about soybeans. It just took a nose dive. Well bullish market's peak at some point. The market responded and turned right around and went downward. The very big signals at the top of the market, and, it was the only game in town for a while and now it's not even a game anymore. It's very just like the other agriculture commodities. I think the trade is getting more comfortable. There was a lot of switching. Maybe the market is trying to digest all that and I think we still have lower to go. While the funds were a big part of that thing. And I think they are learning to try to take care of themselves at that time? Yes, and that could be trying to get to the sidelines. The other turnaround we didn't talk about was the US dollar, and a 6% increase in its value. It's a significant jump when you look at it, it's a 2 year high and consequently, the chiefs took a bit of a pass because of that. Yes, the dollar did not have a good close on Friday, but they will see what that means longer term. I heard another commentator talking the other day about the fact that the crew oil going down is not good for agriculture, and I couldn't understand that. Which side are you on that site? Its probably the best thing for our economy, but they were probably thinking a small margins viability of that. I think that would be the best in stimulus we have is a country. Let's get to this corn situation. I know you were going to tell me about your feeling on corn. Well, corn, the new crop especially has been a slow and slippery slope for months and it just hasn't had anything kick this winter. And, they are starting to get where they need it, and, it has a rough road ahead of it to get any real scene, so farmers need to look at where they are and realize that this scenario plays out for the crop at 96 million acres comes in close to 164 or 165 bushels per acre. Farmers have to realize though that that's if the good weather scenario plays out. What do you think we could go to? I think the downside is under $4. The whole thing in Europe, the fact that we are ahead of schedule and if we went along with a few ratings here and there and temperatures don't get out of control, I still think that 166 is doable, or higher. That's where are you appear that we are also talking about that the people in China grow a lot of corn. And thus demand is faster in the world. Brian Doherty and Stewart Peterson and your drive from water street solutions are here. We were talking off camera and you mentioned $4 corn or maybe less this year, both of you were talking about that. And I asked a stupid question, what does it cost to be able to grow a bushel of corn? Yes, we were talking about our discrepancy there. It depends on whether they are looking at the cost or breakeven but somewhere around $5 would be fair for the last year. So what does that do to the guys that have to sell? You can't sell up at $4, what should you do? How do you market to get that profit? Well I would probably right now approach the option market a little more aggressively. I would probably put that at a $5... But talk to your lender and be prepared to meet your margin because of the corn goes up to $6.20, you could be exercising against short futures. That would give based on cost reduction at $4.75 per bushel a good investment at 25%. That's a good place to be that these rain events continue to come through, we will continue to slide. I would go that route. Another thing you can do, if we do rally up into your window, then you could do some scale up selling of the physical, or from this point you could have that be only. I don't see the economy getting stronger to see things rally. I only see weather coming in and lowering our yield. So maybe just sell it and buy calls if you need to. Let's talk about week. One guy called me the other day and asked where people were getting a good week. So it depends on where you are at this point. But do you think we will plan all of those beans? We were talking a little bit about week earlier. We don't know if the low is in today but technically the market will go lower here in the harvest. We had that big rally here couple of weeks ago and he blew everyone out with dryness in the former Soviet Union and I think that's all over now, but if they have moisture they will plan double crop beans. I think we have seen below. When we look up for potential that has already been hindered this year. So we should be close to low from a more macro perspective if it's not already in place. The other thing I would add to that is, it doesn't trade as much fundamentals as it does have one. So it ends sundown in Europe, maybe the low is in, but if more troubles come, I could see it going into the lows. These lower prices, it's not going to be better for the livestock producers? Cheaper price is? Yes, cheaper prices and more feed, and livestock producers will be a better situation. I'm trying to look at the up side on this. While corn growers need a better market. And corn prices are cyclical. But when prices moved lower that's real opportunity for their demand base to grow and we have that trough of prices in the late 90's through the mid-two thousands when it developed an ethanol industry and livestock expanded and was all positive things coming out of that. We saw 3 or 4 years of demand driven markets. But it's cyclical. It will come back. We see corn prices go down, let's see if they to 350 or 355. You might be looking at the price of $4.50 or $5. Just because we are talking lower price doesn't mean it will stay there.



The relentless stream of disappointing news and investor unrest frommajor stock exchanges around the world has investors looking for places that seem to offer a return. It turns out; Agriculture is becoming a prime target. This week, Japan’s Marubeni Corporation acquired Gavilon, a major grain and input supplier in the western cornbelt. The bold move doubled size of the firm, placing it on equal footing with global giant Cargill at about 40 million metric tons of volume. But this is just the latest example of acquisition in the input and grain sectors. From Australia to Russia to Canada, big firms are getting even bigger and there is a simple reason. As the saying goes. “there is gold in those hills of grain”. These corporate maneuvers have local consequences too. My own tiny elevator will soon balloon into a major grain terminal, as a new joint venture between Cargill and Mitsubishi will expand its capacity from about 2 million to nearly 10 million bushels. The facility will dwarf greater metropolitan Dana, Indiana and dominate the market for tens of miles. It won't be operational until the fall at least, but it serves as proof of my role. If it's happening in my corner of the world is probably happening everywhere. When the globe shows up at your gate, it finally dawns on you how important our work is too many people, and how enticing our profit potential is too hungry investors. Let us know what you think. Send e-mails to the mailbag at or call and leave us a voicemail.


Hello and welcome to US Farm Report. As anyone who has struggled with an unwanted name or worse yet nickname knows, trying to change it is almost always futile unless you move. One of my neighbors carried the label all the way to his obituary. It was only then that many of us discovered his given name was Earl. And so this precautionary tale for parents should have been a warning for the corn processing industry when they casually allowed a chemist to label high fructose corn syrup. We’ll have the rest of that story in a moment. Ancients used to believe that names held great power. It turns out that they were not superstitious savages but marketing geniuses ahead of their time.



The government has decided sweetener made from corn will not be getting a new name. The Corn Refiners Association had sought FDA approval to rename “High Fructose Corn Syrup” as “Corn Sugar” on food labels. The group has been running commercials to explain that the syrup is a form of sugar and has the same national value as granular table sugar. But the FDA says it has defines sugars as a solid, dried and crystalized as food, not a syrup. If you are at risk for Osteoarthritis, you may want to add tart cherries to your diet. Research conducted by Oregon Health and Science University shows drinking tart cherry juice twice daily for three weeks led to significant reductions in important inflammation markers. Osteoarthritis is the most common type of arthritis. New data shows a shortage of large animal Vets remains an issue and it's not only farmers who are feeling the impact. A study completed by the National Research Council shows that while the supply of Veterinarians is actually growing, more than half of them want to take care of companion animals, like dogs and cats. The study found there is still a shortage when it comes to diagnostic labs and government labs.From Ohio a new and potentially effective tool is being developed in the fight against Cancer. Scientists are studying how a chemical released in the brain whenever you have a positive experience could be used to target tumors. Clark Powell explains in the report provided by the James Cancer Hospital at Ohio State University.For more than 4 years, Sandra battled Cancer and says beside her faith in God it was often the love for her work that kept her going. It was huge. I want to walk to the barn or groom a horse today. Thanks in part to a lifelong love of animals and to a chemical known as Dopamine. Doctors have known that Dopamine acts as a reward chemical in the brain. We find out that it is a very important role into this. The doctor and his team injected Dopamine into tumors and noticed vast new webs of blood vessels taking shape. In cases like Sandra’s, that could be crucial. Is not the blood flow to the area where the cancer is the third is doing normal organ, and that was a big challenge. With new blood vessels created by the Dopamine, the Doctor was able to double the medicine that got into tumors which could make chemo and radiation treatments more effective and Dopamine much more efficient. The most important thing is, Dopamine costs $0.33. When you compare it with the drugs being used in the comics nowadays it's very expensive. It could someday prove to be invaluable to those who needed first. While initial experiments have focused on colon and prostate tumors, researchers say there is a reason to believe that Dopamine could play a role in helping to treat several other types of Cancer. We will post a link on our homepage for more information. If your child is headed to the national FFA convention this November they could be a part of a major effort to fight hunger. The idea is to have the “Blue Jackets” package 1 million meals at Lucas Oil Stadium during the 3 day gathering. As many as 10,000  FFA members are expected to take part. Half of the meals will be donated to Indianapolis to say thank you to the host city. The rally as part of the FFA’s “Feeding the world, starting at home” initiative. An anti-hunger campaign sponsored in part by “Farmers Feeding the World”. As part of the same initiative, Farmers Feeding the World partnered with the Howard G. Buffett foundation to provide $2500 in grants to 140 chapters nationwide to fight hunger in their local communities.



With spring comes spring cleaning. But what if you could pick things up and make money while you're at it? As Norm Hyde with the Virginia Farm Bureau Reports farmers can turn scrap and forgotten equipment into cold hard cash. Recycled scrap metal is going for about $11 per 100 pounds. Scrap copper is $3.30 per pound. The recycle is also a way for farmers to clean up their land and environment. Eugene Baer says there is a lot of old equipment lying around. There's old equipment, buildings that have fallen down because of the age or a storm, and most of these buildings have metal siding and metal roofs, and aluminum is more viable than see also their substantial money that's sitting in the way. Ii is definitely the case on his farm. Baker has used recycled management in the past and likes the idea of cleaning up his property at the same time. Every day you find something that has to be thrown away, and right now the price of metal, its extra income on the farm, but they bring it to the farm. Baker can earn up to a thousand dollars. Snakes love it, and the weeds grow around them. They take the weed eater and cut the weeds, so sometimes you are losing a quarter acre of ground. It is a win for our business of course, a win for the environment and also a win for our customers. If it is a farmer he can put that money back into his operation. In Peach County Virginia, I’m Norm Hyde. The recycling company says environmental improvements will be an added bonus to your property if the materials you are recycling are being removed from a watershed or other sensitive wetland.


It seems weddings come in all shapes and sizes these days, and when you live and work on a ranch. Nuptials can get really interesting. Baxter Black takes it from here. There are two things a Cowboy is afraid of. Being stranded a foot and a decent woman. I went to a wedding where I had found a woman. This was not your normal walk down the aisle and kiss the bride kind of wedding. This was the merger of two ranching families complete with weak brain is made up barb wire and a fiddle playing here comes the bride. Two days before the event they set up a tent up in the meadow. The bridesmaids looked beautiful in their long dresses but the groomsmen presented a different picture. Putting a suit coat on some of those cowboys was like putting croutons on a cow pie. The sisters had made them all powder blue suit coats with bandannas. Weddings seem to make cowboys uncomfortable. These fellas looked like they were still hanging in the closet paralyzed. Part of their condition could be attributed to the 48 hour bachelor party which preceded the knot tying. The groom was maneuvered around on the wedding day like a NASA space walker. The Priest got up and explained this was not a normal catholic wedding. He was wearing a sport shirt and jogging shoes. But it would be legal just the same. Everyone got seated in this pretty little code compete with the lagoon in the background. It was like God had made this thought just for the wedding. It rained a little but no one cared. The bride looked lovely. She stood out like a penguin in an asphalt parking lot. The Priest said, who gives this woman in matrimony? And her Dad replied, her Mother and I and Valley Bank. And when the time came to kiss, the groom spit out his chew but the bride chose not to. The barbecue and dance followed and the place was a wreck when I left. And we played walking the dog which was fitting because Billy’s old dog caught the bouquet. This is Baxter Black from out there.



We’ve got a sharp looking Ford *-N from west central Michigan. This model came off the line for 5 years in the early 50’s a new one had a price tag of around $1400. It's a favorite of today's collector. This is one of my favorite tractors, with a four speed that steps up and step down. They are neat tractors. I thought distracted from my neighbor, and --I bought this tractor from my neighbor. He does a lot of auctions and I bought it from him probably five years ago. This one doesn't get used too much. It sits around, and possibly one of the kids or grandkids might want it later on, but I’d like to see it stay in the family. I like to keep it around. It's a very pretty tractor. You could hook something up to the front and back into the barn rather than put the tractor in reverse. It's probably taken best of show all the way down through third. Does that come with a big check or just bragging rights? Bragging rights and a trophy.



Tonight's country church salute goes to the St. Paul Lutheran Church and School in Chuckery, Ohio. Founded in 1982 they are celebrating 120 years of service. After settling what is called “Darby Plains”, original members wanted their kids have access to a Christian education and that's when St. Paul's got its start. The Church and Schools shared the same space until a separate church building was dedicated in 1902. Then in 1964 the present structure was dedicated. The church has grown to 540 members. Our thanks to Harold Burns, a member for 84 years for telling us about St. Paul's. As always we want to learn about your home church as well. Salutes can be sent to the address on the screen.



This is embarrassing, viewer Wayne Martin points out a teensy flaw in my comments about ethanol and gas mileage. “I cannot find corroborating evidence that any gasoline can reliably be found to contain no ethanol. Can you tell me where you got your information?” Wayne, I based my answer on years of filling up at the same convenience store in my hometown where the pump clearly stated “Contains no Ethanol” by the premium button or at least it did. After your e-mail arrived, I checked, and to my surprise the sign says, “May contain Ethanol”. When I asked when this had changed, the attendant said, I don't know, five years ago. You are right; there is no link I can find between Ethanol free fuel and Premium grade. Now how our earlier viewer made his mileage comparison, I don't know. But I was simply blithering based on a dusty memory. I wish I could tell you this is not happening more often these days.Regardless, it appears that any effort to increase the blend voluntarily to E-15 would require labeling. And I stick by my prediction that identification, along with easier and more accurate ways to keep track of mileage will present a problem for growing that market. Oddly, better fleet mileage may be another factor. A 5% drop at 15 miles per gallon looks trivial, but with the car getting 32, the difference of 2 miles per gallon looks larger. And of course all of this speculation also hinges on how much corn you can grow. As always, we want to hear from you. Send comments to .




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