USFR Weekly Recap - September 2-3, 2017

HURRICANE HARVEY
NOW FOR THE MARKET REALTED NEWS, HURRICANE HARVEY HAMMERING THE SOUTH THIS WEEK, WITH NEARLY 50 INCHES OF RAIN FALLING IN THE HEART OF THE HURRICANE AROUND HOUSTON. THE HURRICANE CLAIMING LIVES, DESTROYING INFRASTRUCTURE, AND WILL LIKELY HAVE DEVASTATING AFFECTS ON FARMERS AND RANCHERS. TEXAS AND LOUISIANA PRODUCERS STILL TRYING TO ASSESS THE DAMAGE FROM THE HURRICANE. CATTLE RANCHERS TRYING TO GET GRASP HOW MANY OF THEIR CATTLE ARE DISPLACED VERSUS KILLED FROM THE STORM. THE HARDEST HIT SECTOR MAY BE COTTON FARMERS. COTTON LEFT IN THE FIELD VERY VULNERABLE TO THE RAIN AND WINDS, WITH TEXAS A&M TELLING US 400 THOUSAND BALES WORHT OF COTTON WAS STILL LEFT ON THE STALK IN COUNTIES THAT WERE IN THE HEART OF THE STORM. BUT IT’S THE CROP ALREADY HARVESTED ALSO SUFFERING. AS YOU CAN SEE MODULES SITTING IN FIELDS AND AT GINS JUST RIPPED APART AND SWEPT AWAY, WITH COTTON SCATTERED FOR MILES. COASTAL TEXAS FARMERS FACING ONE OF THEIR BEST CROPS EVER, ONLY TO SEE IT RIPPED AWAY. THE UNPRECEDENTED RAIN FROM HARVEY ALSO CREATING INFRASTRUCTURE NIGHTMARES IN TEXAS AND LOUISIANA. THE STORM CLOSING NEARLY ALL TEXAS PORTS, CUTTNIG OFF RAIL TRAFFIC TO THE GULF COAST AND FLOODING NUMEROUS HIGHWAYS.

OPTING OUT OF MPP
MILK PRODUCERS NOT HAPPYW ITHTEH CURRENT MARGIN PROTECTION PROGRAM CAN NOW OPT OUT. THE U-S DEPARTMENT OF AGRICULTURE ANNOUCNING THIS WEEK IT’S ALLOIGN DAIRY FARMERS TO EXIT M-P-P. AMERICAN FARM BUREAU SAYS 24 THOUSAND DAIRY FARMERS REPRESENTING 80 PERCENT OF THE U-S MILK SUPPLY, IS CURRENTLY ENROLLED INT EH PROGRAM. HOWEVER, ONLY 2 PERCENT PARTCIPATED IN LEVELS ABOVE THE BASIC COVERAGE OPTION, WITH FARM BUREAU SAYING THIS IS PROOF THE PROGRAM ISN’T A VIABLE SAFETY OPTION FOR PRODUCERS.

WEATHER
THOSE ARE THE HEADLINES...METEOROLOGIST CINDI CLAWSON IS FILLING IN FOR MIKE HOFFMAN THIS WEEK. CINDI, TEH FOOTAGE OF THE HURRICANE AFTERMATH IS JUST HEARTBREAKING, BUT REMNANTS OF THE HURRICANE STILL LINGER FOR THE EASTERN HALF OF THE COUNTRY. HOW LONG IS THAT EXPECTED TO LAST? WELL TYNE YOU’RE RIGHT IT IS DEFINITELY JUST HORRIFYING TO SEE THOSE IMAGES COMING OUT OF TEXAS AND MUCH OF THE GULF COAST STATES IT IS GOING TO GET BETTER AS THAT HURRICANE. THE REMNANTS OF IT WILL CONTINUE TO WEAKEN AS IT PUSHES OFF TO THE EAST. BUT TAKE A LOOK AT THE DROUGHT MONITOR WE HAVE SEEN A SIGNIFICANT DIFFERENCE OVER THE PAST COUPLE OF MONTHS. THE DRYNESS NOW REMAINS AND MAINLY THE NORTHERN PARTS OF THE COUNTRY ESPECIALLY THE NORTHERN PLAINS AND INTO MONTANA WE’RE STARTING TO SEE SOME DRYNESS THOUGH IN PARTS OF THE EASTERN CORN BELT. LOOK AT WHAT IT WAS A MONTH AGO WHERE WE HAD SOME DRYNESS STILL IN THE SOUTHERN PLAINS. THAT’S ALL BUT GONE AND WE ARE SEEING JUST MAINLY THAT DRYNESS REMAINING VERY STUBBORN IN THE NORTHERN PLAINS AND IN MONTANA YOU REALLY SEE THAT EXPANDING ESPECIALLY IN MONTANA. HERE’S A LOOK AT WHAT WE HAVE FOR US THIS WEEK WE DO HAVE A COUPLE OF FRONTS ONE IN THE SOUTH EAST WE’LL SEE SOME UNSETTLED WEATHER ALONG THE GULF COAST. WE’RE ALSO GOING TO BE SEEING A FRONTAL SYSTEM MOVING THROUGH THE GREAT LAKES WITH THE TRAILING COLD FRONT THAT’S GOING TO BE LOOKING AT SOME SHOWERS AND THUNDERSTORMS FOR THOSE AREAS. PRETTY WARM IN THE WESTERN HALF OF THE COUNTRY ESPECIALLY BUT DRY IN THE EAST. AS WE HEAD THROUGH OUR MONDAY UNTIL WE GET TO WEDNESDAY WE SEE THAT FRONT PUSHING TO THE EAST THAT’S GOING TO GET SOME MUCH COOLER AIR FOR A LOT OF THE EASTERN PART OF THE COUNTRY WHILE THAT WARM WEATHER REMAINS OUT IN THE WEST. IT WILL BE FAIRLY DRY AS WE GET INTO THE MIDDLE PART OF NEXT WEEK AND EVEN INTO THE LATTER PART OF NEXT WEEK WITH HIGH PRESSURE IN CONTROL THAT FRONT WELL OFF TO THE EAST SOUTHEAST STILL SEEING SOME SHOWERS AND THUNDERSTORMS MAYBE A LITTLE BIT OF UNSETTLED WEATHER IN THE ROCKIES WITH THE WARM AIR STAYING IN THE WEST AND THE COOLER AIR STAYING IN THE EAST. WE’LL HAVE MORE WEATHER COMING UP LATER ON IN THE SHOW. TYNE

TEASE
THANKS, CINDI. WHEN WE COME BACK, WE’RE OFF TO THE FARM PROGRESS SHOW FOR A MIXED VIEW ON CROP PRICES IN THE MONTHS AHEAD. JOHN PHIPPS TALKS MARKETS WITH MATT BENNETT, CHIP NELLINGER AND BOB UTTERBACK NEXT.

ROUNDTABLE 1
ALL RIGHT I KNEW THIS WOULD HAPPEN SOMEDAY TYNE LOOKED AT THE MAP AND SAID YOU KNOW JOHN YOU’RE ONLY AN HOUR AND A HALF FROM THE FARM PROGRESS SHOW. WHY DON’T YOU DO IT INSTEAD OF ME DRIVING THREE HOURS. AND SO I’M FILLING IN FOR TIME THIS WEEK AND WE’RE TICKLED ADAP HAVE ON OUR PADDLE. GOOD OLD BOB UTTERBACK FROM UTTERBACK MARKETING. MATT BENNETT FROM BENNETT CONSULTING AND CHIP MALINGER FROM BLUE REEF AGRIMARKETING THREE VETERANS WHO ARE GOING TO CARRY ME THROUGH THIS AND I WANT TO START OUT WITH THE CROP TOUR FROM LAST WEEK. WE TALKED THE YIELDS TO DEATH BUT I WANTED TO TALK TO THE TWO GUYS WHO ARE ON THE TOUR. START WITH MATT HERE. MATT YOU ARE ON THE WESTERN SIDE. TELL ME ABOUT THE WHEAT. YEAH. SO NOT ONLY IN THE BEAN FEELS BUT IN THE CORN FIELDS A SIGNIFICANT WATER PRESSURE AND A LOT OF PLACES I WOULD SAY YOU KNOW WHEN WE GOT INTO NEBRASKA I THINK SOME OF THOSE GUYS HAVE IMPROVED A LITTLE BIT FROM WHAT WE’VE SEEN MAYBE THE LAST COUPLE OF YEARS BUT WE’RE STILL SEEING SOME FIELDS THAT ARE JUST REALLY REALLY HEAVILY PRESSURED WHEN IT COMES TO THE WEEDS AND SO IT’S DEFINITELY GOING TO HAVE ANY IMPACT ON YOU. BUT AGAIN I DIDN’T JUST SEE IT IN THE BEAN FIELDS I SAW IT IN SOME OF THE CORN FIELDS. IS TOUGH TO GET THROUGH A FEW OF THEM AND SO IT’S GOING TO BE PRETTY INTERESTING. THAT IMPACTS THEIR YIELDS LATER ON. WELL I THINK THAT’S ONE THING THAT PEOPLE WHO CAME TO THE FARM PROGRESS SHOW HERE IN DECATUR ILLINOIS CENTER THE STATE DROVE BY FIELDS THAT NORMALLY WOULD BE PRISTINE AND THEY WORK. WHAT DID TELL US ABOUT WHAT YOU SAW ON THE EASTERN SIDE. YES SIMILAR. I MEAN IT WASN’T JUST THE FIRST. YOU KNOW THREE OR FOUR ROWS EITHER LIKE YOU OR ME SEE AT THE EDGE OF A WATERWAY OR SOMETHING. I MEAN IT WAS CLEAR INTO THE FIELD A LOT OF CORNFIELDS YOU STRUGGLE TO TO GET THROUGH THEM. I MEAN IT WAS SO DEEP AND I THINK SOME OF THAT KIND OF COINCIDED WITH THE IMMATURITY OF THE CROP YOU SAW THERE SO I THINK IT WAS LATE PLANTED FIELDS OR REPLANTED THEY HAD NO TROUBLE GETTING IN EARLY GETTING BACK INTO THE SPRAY THAT CLEAR INTO PARTS OF ILLINOIS AS WELL. GET INTO WESTERN ILLINOIS. IN IOWA IT SEEMED TO GET A LITTLE BIT BETTER AS YOU WOULD EXPECT BECAUSE IT WASN’T AS A LATE PLANTING SEASON RIGHT. BUT YOU KNOW EVEN IN PARTS OF WESTERN IOWA YOU SAW PRETTY SERIOUS PRESSURE IN THE BEANS AS WELL. SO I WAS TALKING TO ONE FARMER IN MY IN MY CAR AND HE SAID HE’S FROM WESTERN ILLINOIS. HE SAID IT TOOK HIM TWO PASSES ON SOMETIMES AND QUESTIONABLY. HE COULD HAVE GONE A THIRD TIME. SPRAYING BEAMS IN IT’S JUST IT’S GETS TOUGHER AND TOUGHER TO CONTROL OF IT. IT’S A COMPLETELY DIFFERENT GAME. AND THAT COULD BE ONE OF THE THINGS THAT ROLLS INTO BOB. LET’S TAKE A LOOK. GOING FORWARD NOW AND. THE OUTLOOK FOR CORN AND BEANS ARE NOT GOING TO BE TRACKING SIDE BY SIDE. AND ONE OF THE THINGS COULD BE HOW YOU’RE TRYING TO DEAL WITH THIS PROBLEM IN EACH CROP. I’VE BEEN SAYING FOR A OUPLE OF MONTHS THAT I THINK THIS IS A 93 CROP YEAR. AFTER. AND WE TOOK OFF AFTER THE SEPTEMBER SUPPLY DEMAND REPORT. WHEN THE COMBINE START TO RUN AND I THINK YOU AS YOU HISTORICALLY RICH FILTERS THAT WHEN MY AND WORK WITH SAID ABOUT THREE AND A HALF BUSHEL OFF FROM AUGUST TO JANUARY IS WHAT YOU EXPECT THESE CROP AND THAT PUTS IS AROUND 165 166. BUT IT’S GOING TO TAKE TIME. AND AFTER THAT FLOREZ THE BS THIS WENT GREEN WE GOT THIS WE GOT A GOOD RAIN LAST NIGHT. I’M HAPPY FOR IT. AND I THINK YOU’RE IS CLOSER TO REALITY THAN WE EXCEPT THAT IT IS APPLIED VERSUS THE FRONT END ON BEANS. AND THEN LONG TERM THE DEMAND SIDE FOR BEANS IS GOING TO BE THE BRIGHTSTAR AS WE GO INTO NEXT YEAR. IS THERE ANY POSSIBILITY THAT WE COULD SEE EVEN MORE OF A SHIFT. WE SAW SOME SHIFT BEANS THIS YEAR. YOU THINK THAT IF. PEOPLE TAKE A LOOK AT IT THAT THE PRICE DIFFERENCE WILL BE OUR COST OF PRODUCTION WILL BE ENOUGH THAT WILL CONTINUE TO SHIFT OUR BASE. I THINK IT’S POSSIBLE ESPECIALLY IN WHAT WHEATS DONE THE LAST MONTH AND A HALF HERE YOU KNOW A HUGE IMPLOSION IN WHEAT PRICES. TALK TO PRODUCERS IN KANSAS SOUTHERN ILLINOIS SOUTHERN INDIANA KENTUCKY UNLESS WE’VE DOES SOMETHING PRETTY DRAMATIC HERE THE NEXT SIX OR EIGHT WEEKS YOU’RE GOING TO HAVE LESS WHEAT ACRES AGAIN. AND SO I DON’T KNOW IF THAT BODES WELL NECESSARILY FOR BEAN ACRES. I THOUGHT IF YOU HAD NORMAL WHEAT PRICES THAT MAYBE YOU’D SEE A SHIFT OUT OF BEANS TO MORE CORN. I DON’T KNOW NOW WITH WHAT WE’VE DONE IF THAT’S IN THE CARDS SO I THINK THERE COULD BE SOME BIG QUESTIONS IN SPRING ON AND ON ON ACREAGE. THESE ARE JUST TOO MUCH WEAK EVERYWHERE. WELL YOU KNOW YOU CAN GROW WHEAT ANYWHERE IN THE WORLD. YOU KNOW WE’RE ALWAYS NOT DUE FOR A LOT OF LIVES ARE WE WE TRIED IT DIDN’T WORK. WELL I WOULD SAY THOUGH WHENEVER WE’RE LOOKING AT THIS ACREAGE RANGE YOU KNOW THE PRICE RATIO FROM BEANS TO CORN IF IT CONTINUES TO STAY IN A SITUATION WHERE THE SOYBEANS LOOK FAIRLY DECENT. I THINK YOU’VE GOT TO ASK YOURSELF A COUPLE QUESTIONS YOU KNOW ARE PEOPLE GOING TO BE ABLE TO KEEP TURNING MORE PROFIT ON SOYBEANS AND CORN FIRST OF ALL AND SECOND OF ALL THE CREDIT CRUNCH THAT WE’VE SEEN IN THE LAST 24 MONTHS IS NOT GOING AWAY ANYTIME SOON. WITH $3 CORN AND SO I THINK THAT THAT COULD FACTOR IN IN THE LONG RUN. THE WORLD IS ASKING FOR MORE PROTEIN THEY’RE ASKING FOR MORE SOYBEANS AND THAT THAT IS GOING TO CONTINUE. OK WE’LL BE RIGHT BACK WITH MORE US FARM REPORT IN A MOMENT.

ROUNDTABLE 2
OK WE’RE BACK AT THE FARM PROGRESS SHOW HERE IN DECATUR ILLINOIS IN THE CHANNEL SEED TENT, I’M TICKLED TO DEATH TO BE HERE, IT’S NOT TOO HOT, WHICH IS UNUSUAL FOR AUGUST IN DECATUR. AND AS WE LEFT WE WERE TALKING ABOUT THE COST OF PRODUCTION BECOMING ONE OF THE FACTORS OF WHAT HAPPENS NEXT YEAR AND THAT COST OF PRODUCTION WHAT ARE YOU HEARING FROM YOUR CLIENTS BOB ABOUT HOW THEY’RE COPING WITH HOW TO GROW CORN 4 TO 8 OR SOMETHING. I’M GETTING FARMERS CORN THAT PROVERBIAL QUESTION. WE’VE GOT A LAND COMING UP FOR CASH RENT. WHAT CAN I PAY FOR IT. AND WHEN THE NUMBERS COME OUT 275 300 FOR 200 BOOKS AREN’T. WHEN YOU GO TO THE NUMBERS THEY’RE 20 CENTS OR 30 CENTS IN THE HOLE BEFORE THEY EVEN START. SO. IT’S A REALLY TOUGH ISSUE. DO YOU WHEN DO YOU LET LAND GO OR WHEN WOULD IT BE BETTER TO BE LONG DECEMBER CORN AT 3:40 OR AT 3:30 THEN TO CATCH RENDED 300 PLUS LAND. AND THAT’S THE ONLY WAY WE’RE GOING TO GET BETTER PROBABILITIES. THAT YOU KNOW COULD COST AND I DON’T SEE THAT HAPPEN SO I THINK A MARGIN SQUEEZE IS COMING WHICH LEADS TO THE BIGGER QUESTION. WE COULD GET BULLISH WHEN FARMERS DON’T HAVE CORN IN THE BIN AS WE COME IN APRIL MAY. WILL THAT HAPPEN THIS YEAR OR NEXT YEAR. AND. I DON’T THINK IT’S GOING TO HAPPEN THIS YEAR. UNFORTUNATELY I DON’T THINK FARMERS WILL GET ENOUGH CASH FLOW RESERVE STOCK AND THOSE ARE UP 14 PERCENT IN THE 80S WAS 23 25. WE STILL GET A LOT OF MONEY EVEN THOUGH THE DEBTS BUY OUR DEBT TO EQUITY RATIOS ARE STILL PRETTY GOOD SHAPE. WE CAN WE COULD BURN THROUGH THAT PRETTY FAST SO CAN WE MATT AND WE’VE BEEN BURNING THROUGH A LOT OF EQUITY HERE THE LAST COUPLE OF THREE YEARS HAS DEFINITELY BEEN TOUGH ON THE PRODUCER. I THINK ONE THING WHENEVER I LOOK OUT FOR THERE YOU KNOW WE STILL HAVE PRETTY STRONG DEMAND. I MEAN THERE’S NO QUESTION ABOUT IT. AND SO IF I’M A CORN PRODUCER I’M ARE GOING TO CONTINUE TO BET ON THE COME WHICH A LOT OF US HAVE DONE IN THE LAST FEW YEARS AND IN MY OPINION I THINK THAT KEEPING THE SIMILAR ACREAGE RATIO IS PROBABLY THE THING TO DO. IT IS A TOUGH QUESTION THOUGH FOR A PRODUCER. AM I GOING TO PAY. THE AVERAGE EVEN CASH RENT BECAUSE RIGHT NOW THE AVERAGE CASH RATE REALLY DOESN’T LOOK SO HOT. BUT ONE THING THAT I’VE NOTICED IS THE LAST SEVERAL YEARS I MEAN WE’RE GETTING FORECASTED NOW OF SIX YEAR LOWS FOR CORN WHEAT AND CATTLE RECEIPTS NET CASH RECEIPTS. THE ONE THING THAT’S REALLY BAILED US OUT THESE LAST SEVERAL YEARS IS HAVE A LOT OF BUSHELS. AND SO IN MY OPINION I’M STILL GOING TO TRY TO PLANT CORN. I’M STILL GOING TO GO FOR THE BEST DEAL THAT I CAN AND THAT I WOULDN’T TRY TO MANAGE MY RISK AS MUCH AS I CAN BECAUSE RIGHT NOW IT DOESN’T LOOK GOOD BUT WE HAVE HAD OPPORTUNITIES THE LAST THREE YEARS TO MAKE MONEY. WE HAVE TO BE BETTER MANAGE OUR RISK. WE HAD AN OPPORTUNITY EARLIER THIS SUMMER THAT AT LEAST YOU KNOW GET TO GET WITHIN A DISTANCE OF $4 CORN BUT IT’S STILL A QUESTION THAT AS A RULE. CASH RENTS AREN’T ON THE AVERAGE. YOU’RE ALWAYS ON THE MARGIN. YEAH. CASH RENTS ARE PROBABLY THE BIGGEST ISSUE OF IT THAT PROBABLY NEED TO BE ADDRESSED. OBVIOUSLY EVERY EVERY LANDLORD I’M NOT GOING TO BE IN GOOD GRACES WITH LANDOWNERS EVERY LANDLORD THINKS THEY HAVE AN ABOVE AVERAGE FARM. RIGHT. AND SO CATHERINE NEEDS TO ADJUST AND ARTIST PRICES HAVE STARTED COME DOWN PRETTY DRAMATICALLY. SEE PRICES PROBABLY NOT SO MUCH. I AGREE I’M GOING TO KIND OF TAKE A MATH ATTITUDE HERE. YOU KNOW THE GLASS IS STILL HALF FULL. I THINK THERE’S A CHANCE FOR IT SAID AND DONE IN THE JANUARY CROP REPORT. WE END UP CLOSER TO 160 THAN 170 ON OUR NATIONAL AVERAGE CORN YIELD. IF THAT’S THE CASE WE’RE GOING TO GET SOME CHANCES. WE HAVE TO BE GETTING BETTER AT STORAGE MANAGING STORAGE MANAGING BASES MANAGING CARRY. I THINK THAT’S GOING TO BE CRITICAL GOING FORWARD TO MANAGE RISK AND TO HELP THOSE MARGINS HOLD TOGETHER. THAT LEAD AT BOB THOUGH. I ALWAYS THOUGHT ABOUT THIS. OK WE DO GET A SHOT AT RUNBACK UP $4 THOUGH. THERE’S SO MUCH CORN THAT COULD BE RELEASED THAT THIS COULD BE A YOU KNOW A 20 MINUTE WINDOW. I THINK WE’RE SETTING UP ALMOST EXACT SAME PATTERN FOR NEXT YEAR AS WE’VE SEEN LAST YEAR. AND TWO THINGS I40 CENT CARRY MARKET IS TELLING TO STORE ROLL TO CARRY CAPTURE TO CARRY WEIGHT FOR BASS’S IMPROVEMENT. BUT THE QUESTION I ASK YOURSELF WHY DO YOU BELIEVE YOU’RE GOING TO BE BETTER NEXT JUNE-JULY TO TAKE ADVANTAGE OF THE WEATHER SCARE EVENT. IF YOU TAKE THE SAME BEHAVIOR IN THE PAST YOU’VE GOT TO CHANGE YOUR BEHAVIOR. YOU’VE GOT TO HAVE A PLAN PUT ON THE BLACKBOARD PUT A SIGN UP IN THE FRONT OF THE GOLAN AND SAY I’M GOING TO SELL CORN STARTING MID JUNE AND BY JULY 15TH I’M GOING TO BE DONE. SELL AT THIS PRICE AND HAVE EVERY NEIGHBOR PICK ON YOU. WE’RE NOT SELLING AND IF YOU DO IF YOU GET THAT PRICE OUT THERE JOHN THAT’S NO IT WON’T WORK. SOME OF US COULD EVEN RESIST THAT. BUT IT IS THAT KIND OF WHAT YOU’RE THINKING TO AIR MAN OR WHERE DO YOU. FALL ON THAT. WELL I THINK THE LAST THREE YEARS A COUPLE OF THINGS THAT WE’VE SEEN THAT’S HELPED PRODUCERS BE ABLE TO NAVIGATE THIS IS SIMPLY BY SOME CALLS WHENEVER VOLATILITY WAS LOW IN COSMOLOGY AND THEN WHENEVER WE GET INTO A SUMMER WEATHER MARKET PEOPLE WANT TO PLACE OUR HEDGES IN PLACE WE’RE NOT GOING TO BE TOO AWFULLY WORRIED ABOUT PUTTING THOSE HEDGES IN A BAD SPOT. WE’RE GOING TO TAKE MARGIN WITH BECAUSE WE’VE GOT THE CALLS TO COVER THE MARGIN RISK AND SO I CALL THAT AN INSULATED LIKE USING THOSE AS MUCH AS POSSIBLE. I KNOW SOME PRODUCERS ARE A LITTLE BIT WARY OF ANY SORT OF RISK MANAGEMENT. BUT WE ARE GOING TO HAVE TO GET BETTER AT OUR RISK MANAGEMENT SKILLS BECAUSE THE WAY THAT WE’RE DOING IS NOT WORKING AND YOU KNOW WHAT THE DEFINITION OF INSANITY IS RIGHT NOW. AND WE’RE WAIST DEEP IN RISK. SO YOU DON’T HAVE AN OPPORTUNITY TO SAY WELL DO I WANT TO GET INVOLVED WITH HALING RISK OR NOT. WE’RE ALREADY THERE. OK. WE’LL BE BACK IN JUST A MOMENT AND WE’LL FIND OUT WHAT WE NEED TO DO. AND WITH MARKETS NOW.

MARKETS NOW
WE’RE BACK AT THE FARM PROGRESS SHOW AT THE CHANNEL SEED TENT, AND WE’RE GOING WITH THE MARKETS NOW. WHAT’S THE ONE THING YOU WANT TO TELL PEOPLE BOB. IT’S TIME FOR THE BEAR TO TAKE IT. TO THE SIDE IN THE FEED BUYERS WHO STARTED THINKING ABOUT THE CUMULATING A LONG POSITION ESPECIALLY BEANS FOR EIGHTEEN POINT BEING BELOW 920. OK. BUT MATT I THINK YOU KNOW WE’RE COMING RIGHT UP HERE ON HARVEST AND RIGHT NOW THE MARKETS LOOK AWFULLY TOUGH. A COUPLE OF THINGS I’D LIKE TO LOOK AT IS FIRST OF ALL WE’VE GOT TO BE LIKE THE FARM LIKE THEIR GRAIN ELEVATOR. YOU KNOW I WANT TO SELL THE CARRIER IN THE MARKET AND WATCH THE BASES COME BACK TO ME FIRST OF ALL AND SECOND OF ALL WE HAVE TO GET BETTER AT OUR RISK MANAGEMENT SKILLS LEARNED FROM THIS YEAR AND CARRY THAT INTO NEXT YEAR. OK. THAT’S A TOUGH HILL TO CLIMB. BUT I THINK YOU’RE EXACTLY RIGHT. WE DON’T HAVE ANY CHOICE. CHIP I THINK RIGHT NOW DON’T PANIC. THAT’S THE KEY. DON’T PANIC. PRICES ARE LOWER EVERY DAY. DO NOT PANIC RECALCULATE WHAT YOUR COSTS ARE AND FIGURE OUT WHAT YOUR YIELDS ARE BECAUSE YOU MIGHT BE CLOSE TO CROP INSURANCE PAYMENT HERE IN SOME AREAS. AND DON’T PANIC AND BE READY TO TAKE THAT NEXT OPPORTUNITY ON 17 AND 18 MARKETING. WHEN WE GET THE CHANCE IN THE NEXT FEW MONTHS PROGRESS SHOW. THANK YOU FOR COMING.

JOHN’S WORLD
FROM THE HORRIFIC HURRICANE DAMAGE IN TEH SOUTH, TO THE DIRE DROUGHT SITUATION TO THE NORTH, IT SESMS LIKE IT’S A YEAR OF EXTREMES THIS YEAR. HERE’S JOHN PHIPPS. I’M RECORDING THIS JOHN’S WORLD RIGHT IN THE MIDDLE OF WHAT SEEMS SURE TO BECOME AN EPIC WEATHER CATASTROPHE - HURRICANE HARVEY. THE INSANE AMOUNTS OF RAIN ALREADY DUMPED ON COASTAL TEXAS COULD BE MATCHED BY EVEN MORE TO COME. WHILE I CERTAINLY DON’T DOUBT THE REPORTS, OUR LACK OF RAIN FOR THE LAST TWO MONTHS MAKES IT HARD TO TRULY ABSORB THE SCALE OF THE DISASTER. ECONOMISTS AND PSYCHOLOGISTS CALL THIS THE AVAILABILITY HEURISTIC. IT MEANS THE FACTS THAT ARE CLOSEST TO US AND EASIEST TO SEE SWAY OUR OPINIONS AND JUDGMENT MORE. WE SAW THIS EFFECT IN THE REACTION TO THE USDA AND FARM JOURNAL CROP REPORTS. WITH THE EXCEPTION OF PLACES LIKE MINNESOTA, WHICH IS LOOKING AT A VERY GOOD CROP, MOST OF US LOOKED OUT THE KITCHEN WINDOW AND PROTESTED, “THE CROP ISN’T THERE!” I COULD LIST EXAMPLES LIKE CLIMATE CHANGE OR SOLAR POWER EXPANSION AS WELL. UNLESS WE CAN SEE IT OURSELVES, WE HAVE A HARD TIME USING NUMBERS AND EVEN OTHER VISUAL DATA TO BELIEVE WHAT IS GOING ON. MOST OF US HAVE BEEN AWARE OF THIS “BACKYARDITIS”, BUT ANOTHER TREND WILL MAKE IT MORE PRONOUNCED. DE-LEGITIMIZING MEDIA, GOVERNMENT AGENCIES, AND ACADEMIC EXPERTS AS FAKE NEWS OR CORPORATE SHILLS MEANS WE ARE CLOSING OFF COMMUNICATION CHANNELS THAT CAN BALANCE OUR AVAILABILITY BIAS. IF THE USDA IS UNFAIRLY AND INACCURATELY CONDEMNED AS CORRUPT OR MANIPULATED, WE WILL BE LIMITED TO WHAT WE CAN SEE WITH OUR OWN EYES TO INFORM OUR MARKET DECISIONS. OR WORSE YET, WE COULD BUY INTO DUBIOUS RUMORS OR OUTRIGHT SCAMS. THE SAME GOES FOR EVERYTHING FROM WEATHER FORECASTS TO SPORTS SCORES. DISMISSING INFORMATION THAT DOESN’T FIT WITH OUR VERSION OF REALITY AS FAKE WON’T HELP US COPE WITH REALITY WHEN IT COMES CRASHING THROUGH OUR BELIEFS. IT REALLY IS RAINING FEET OF WATER IN TEXAS; THE CORN DROP IS MUCH BIGGER THAN IT LOOKS FROM HERE; AND THE ARCTIC IS MELTING. THE SAFEST APPROACH SEEMS ME TO BE TO ASSUME BAD NEWS IS REAL UNTIL PROVEN OTHERWISE.

TEASE
THANKS, JOHN. STILL TO COME, THE HISTORIC RAINFALL AMOUTNS CREATED NIGHTMARES IN THE SOUTH, BUT FOR OUR FRIENDS TO THE NORTH, THE DEVASTATING DROUGHT IS CUTTING DEEP, CREATING DIFFICULT FINANCIAL PAIN. WHEN WE COME BACK, WE HEAD TO SOUTH DAKOTA TO SEE THE SITUATION FIRST HAND.

HEADLINES
FROM THE STUDIOS OF FARM JOURNAL BROADCAST, THIS IS U.S. FARM REPORT. WELCOME BACK TO U-S FARM REPORT THIS LABOR DAY WEEKEND. WE HAVE MUCH MORE AHEAD. NEW SIGNALS POINT TO POSSIBLE BETTER DAYS AHEAD IN THE FARM ECONOMY. IT’S A DEVESTATING DROUGHT IN SOUTH DAKOTA, EATING INTO OUTLOOKS AND FARMERS’ BOTTOMLINE. REVISITING HISTORY WITH A LITTLE MULE POWER AS WE TRAVEL TO THE SHOW-ME STATE WITH AMERICAN COUNTRYSIDE. AND BATTLING RESISTANCE... BUT IS IT A ONCE IN A CENTURY EVENT? THAT’S CUSTOMER SUPPORT.

FARM ECONOMY COULD HAVE BOTTOMED
NOW FOR THE HEADLINES, DESPITE CORN PRICES PLUMETTING AROUND 70 CENTS SINCE MID-JULY, USDA FORECASTING THE FIRST NET FARM INCOME GAIN IN FOUR YEARS, WITH THE LIVESTOCK SECTOR HELPING BOLSTER OVERALL INCOMES THIS YEAR. AND NOW SOME ECONOMISTS ARE SAYING SIGNALS POINT TO BETTER DAYS AHEAD. IT’S BEEN A VICIOUS CYCLE FOR AG, WITH NET FARM INCOME FALLING SINCE 2013. BUT USDA SIGNALING HOPE, FORECASTING PRODUCERS MAY NET 63 POINT 4 BILLION DOLLARS IN 2017. THAT’S A 13 PERCENT BUMP OVER LAST YEAR. USDA CITING INCREASES IN SALES OF INVENTORY OF GRAIN IN BINS. BUT IT’S REALLY HIGHER THAN EXPECTED REVENUE FROM LIVESTOCK AND MILK HELPING BOOST THE OVERALL PICTURE. FARMERMAC TELLING U-S FARM REPORT USDA’S AUGUST NET FARM INCOME FORECAST TENDS TO BE THE MOST RELIABLE ONE, AS IN FEBRUARY, THE AGENCY IS USUALLY MORE PESSIMISTIC ON HOW THE YEAR COULD PAN OUT. WHAT WE DO KNOW NOW THAT WE DIDN’T KNOW THEN IS HOW MUCH BETTER THE LIVESTOCK SECTOR IS, SO THE EARLIER PROJECTIONS HAD A LOT OLOWER CASH RECEIPTS FOR VIRTUALLY EVERY AREA OF HTE LIVESTOCK SECTOR AND PRICES HAVE HELD UP MUCH BETTER DEMAND HAS HELD UP MEUCH BETTER FOR LIVESTOCK PRODUCTS, SO THAT’S REALLY BEEN THE BOOST. AND I THINK IT WOULD BE REALLY HARD TO GO BACK WITHOUT IN HINDSIGHT, AND SAID THAT’S WHAT WOULD HAVE TOLD US THAT. SO I THINK WHAT THEY PROJECTED BACK IN FEBRUARRY WAS A BASE CASE, IF THINGS STAY STEAD, ALL THOSE TYHPES OF TERMS, KNOWING WHAT THEY KNEW RIGHT THEN, BUT WE GOT BETTER, AND MORE INFORMATION CAME OUT WITHHOW THE YEAR PROGRESSED AND THEY INCORPORATED THAT INTO THE AUGUST REVISIONS. > USDA ALSO FORECASTING SOME LIFE IN FARMLAND VALUES, COMING AS A SURPRISE TO ECONOMISTS LIKE TAKASH. USDA SSIGNALING VALUES MAY RISE 2 POINT 3 PERCENT, FOLLOWING A VERY MINOR DECLINE, NOT EVEN A HALF OF A PERCENT, IN 2016. <"SO THIS IS OUR ONCE IN A GENERATION OPPORTUNITY TO REAL TAX REFORM TO EVERY DAY HARDWORKING AMERICANS.">