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Factors Influencing Global Grain Production

More than ever before, producers live in a global marketplace. South America came off a record soybean crop, which pressured U.S. prices, and Russia picked up the slack in planted wheat acres. Tracking global grain production and weather lets producers see factors that could affect future cash receipts. Here are several to monitor. United States: Keep Eyes Peeled For Jet Stream Activity The U.S. is in a period of limited grain market activity. “Anything that [affects] the grain markets during winter is anything that could inhibit the transportation of grains to other markets,” says Eric Snodgrass, professor of atmospheric science at the University of Illinois. Domestic corn demand is set to increase in 2017/18, boosted by ethanol production and feed use, USDA says. Lower prices are expected to support more corn for feed and residual use. Exports are forecast to fall nearly 20% from 2016/17 due to competition from Brazil and Argentina. The big thing U.S. farmers should be watching this winter is how much recharge the soil gets. “Over winter, unlike the last couple of winters, we’re starting to see more dominant factors that are really going to set up our jet stream,” Snodgrass says. “If we start to see decent pockets of cold air set up in the Bering Sea, that could signal the Corn Belt would have an average or cooler-than-average winter.” South America: Follow the Effects of Dry Planting Conditions Soybeans will be planted first in South America, but the issue as of late October was a planting delay. “They are a little behind last year, but remember last year was a record year,” Snodgrass explains. “Mato Grosso had some trouble along its northern and eastern region getting the rains they need to germinate the soybeans.” The eastern growing region in Brazil had a dry season, which will lower soybean yield potential, he adds. Argentina is expected to increase corn and soybean area, according to USDA. Changes to soybean export taxes could help Argentinian farmers. South America’s farmers are watching a weak La Niña pattern developing, Snodgrass says. “Big La Niñas tend to produce a lot of drought in almost all of the growing regions in South America,” he says. “Don’t forget that even if they take a bit of a hit to their yields, [South America] will still have one of their largest crops on record because they are planting more soybeans, roughly 6,000 new hectares of land every year.” USDA expects Brazil and Argentina will boost exports for 2017/18, thus potentially decreasing the U.S. share of global corn trade. European Union: Monitor How Wheat Acres Shift Global Trade Exports from the EU, Russia and Ukraine are growing, adding competition to global wheat markets, USDA says. It’s now harder for U.S. wheat to export to countries in Africa and the Middle East. The EU has expanded its share of trade and, combined with Russia, has surpassed U.S. wheat export volume. Australia: Track Path Of Old-Crop Supplies Amid Production Drop Grain production in Australia is down substantially from a year ago, USDA says. Yet Australia has large stocks from the previous record crop, which is expected to be exported as the new crop enters the market. The country’s wheat production forecast fell 1 million tons to a level of 21.5 million tons on persistent dry conditions in most of eastern Australia, according to USDA’s World Agricultural Supply and Demand Estimates published in October. This could be Australia’s lowest wheat output since the 2008/09 crop year, according to Howard Tyllas, a commodity broker and member of the Chicago Board of Trade. China: Chart Soybean Acreage Growth Yet Steady Import Demand China is the world’s second-largest producer of corn, and it is increasing its soybean footprint. In 2017/18, China’s corn area declined and soybean area increased as farmers reacted to local prices, USDA says. But growing soybean production in China is not likely to affect imports because domestically produced soybeans are mainly used to produce soy-based foods such as tofu, while imported soybeans are crushed for animal feed. “Their primary growing regions are north and west of Beijing,” Snodgrass explains. “I pay attention to their weather about the same time I watch the U.S. for trouble.” The latitude of Beijing is roughly the same as that of Illinois, so weather conditions at crucial times in the Corn Belt are also essential for Chinese producers. Although it was hot and dry in China this year, Snodgrass says, U.S. producers didn’t see a major move in grain prices because China tapped into a lot of old grain in storage. The country remains the top global producer of pork and, according to USDA, holds over half of the world’s pork supply. Growing demand for soybean meal to feed hogs and other livestock continues to positivelyaffect the global soybean trade and creates opportunities for U.S. producers and exporters. Russia: Watch How Prices Respond To Booming Wheat Supplies The country produced a robust wheat crop in 2017/18, according to USDA. “They didn’t have any major heat or drought stress,” Snodgrass says. “Their wheat crop came in fantastic. Russia picked up the slack for the rest of the world” this year, and consequently, “markets never really made a recovery in terms of price.” Although it’s too soon to know what will happen during the next growing season, Snodgrass says, the development of drought in Russia would be something for the wheat market to watch.

China’s Pig Farmers Go North, Upend Meat, Grain Markets

China's largest pig farming companies and new entrants are racing to build vast, modern hog farms in the north-eastern Cornbelt, expanding the world's biggest pork market and upending traditional trade flows in meat and grain. At least eight listed companies have announced or confirmed plans to produce around 17 million pigs annually in the north-east in coming years. Many more companies, including the country's biggest pig farmer, Guangdong Wen's Foodstuff Group Co Ltd, are building farms in the area, suppliers and sources say, adding to China's annual $1 trillion pork market. Some researchers expect output in the northeast to hit nearly 120 million pigs a year, almost double the 69 million head produced in the area by Heilongjiang, Jilin, Liaoning and Inner Mongolia provinces last year. "In the next few years, almost 20 percent of China's hogs will be transferred to new territory. That's equivalent to the number slaughtered in the U.S. annually,” said Feng Yonghui, chief analyst at consultancy China hog production by province Temperatures go well below freezing in the winter in China's northeast, but the area is sparsely populated and allows for setting up large farms that would not be possible in more crowded parts of the country. "The costs in the north-east are higher because of heating. But we can achieve scale there," said Song Weiping, vice president at Beijing Dabeinong Technology, an animal feed firm that is diversifying into pork production. "We're building seven farms in the northeast this year. In total, we'll have around 20 farms in the region." The output increase in the northeastern provinces would take their share of hogs raised in the country to around 17 percent of the 2016 total and would almost match combined production of 129 million from the top producing provinces, Henan and Sichuan, which currently account for 20 percent of total supplies. GOVERNMENT PUSH Ramping up output in the northeast will speed up the modernization of China's hog farming sector, which has been dominated for centuries by smallhold rural family-run operations. It will also create mega integrated farms that produce everything from animal feed to meat and will be equal in size to the hog stations that have transformed the U.S. market in recent decades. The drive fits with Beijing's goal to turn its northeastern grain basket into a meat and dairy hub aimed at boosting demand for the region's main crops, revitalizing some of the country's poorest regions and fighting farm pollution in populated areas further south. Heilongjiang, Jilin, Liaoning and Inner Mongolia produced more than 40 percent of China's corn last year. A three-year campaign to crack down on waste has already pushed many smallhold farms out of business. The campaign coincided with a long period of low prices that had already forced many smallholders, concentrated in southern provinces, to leave the business altogether. But as prices spiked last year on the shrinking herd, large farming companies began expanding rapidly, seeking to capture market share once occupied by backyard farms. The share of pigs produced by backyard farms will fall to below 52 percent by the end of 2017, down from 57 percent in 2015, or a reduction of 66 million pigs, said COFCO Meat, a unit of state-owned agribusiness COFCO Corp [CNCOF.UL] in September, citing "huge development space" for large firms. COFCO and others are now "fighting for land" in less developed regions up north, with environmental laws making it almost impossible to get permits for large-scale farms in much of the south, said Martin Jensen, managing director of Carthage & MHJ Agritech Consulting, which manages pig farms in China. GRAIN DRAIN Not all of the projects announced will be completed, said experts. Frigid winter temperatures mean construction must stop for months, delaying projects. Still, even a handful of them would reshape grain trade. If 20 million more pigs were raised in the north-east each year, corn needs would increase by at least an annual 4.6 million tonnes, according to Reuters calculations based on estimates that a pig slaughtered at 120 kg would consume around 230 kg of corn over its lifetime. That's about 12 percent of the surplus corn expected in the northeast this year, according to forecasts from government think tank CGNOIC, draining grain supplies from the biggest southern hog producers, and potentially forcing them to import grain. "The amount of corn transported out of the north-east will fall, and fall very quickly," said Meng Jinhui, corn analyst at Shengda Futures. Surplus pork output in the north-east should in theory compensate for smaller supplies of grain for feed in the south. But industry experts say farms in the north-east may struggle to get their meat to markets far away. "Consumers still want to consume freshly slaughtered pork that has not been on trucks and trains for several days. That will change, but gradually," said Fred Gale, senior China economist at the USDA Economic Research Service. Trucking pigs long distances can lead to weight loss and raise the risk of disease. Slaughtering pigs in the north and transporting fresh or frozen meat carries risks too. That could be a boon for exporters though. As production shifts north, major consumption centers in the south may increasingly turn to cheaper imports to boost quality meat supplies, said Pan Chenjun, senior analyst at Rabobank. "There will be a surplus in the north and a deficit in the south. That means China will continue to import meat," she said. ($1 = 6.6347 Chinese yuan renminbi)

October Calves, Feeders 3% to 5% Higher

Feeder cattle and calves continued their fall rally during October, gaining 3% to 5% at auctions. The gains followed similar improvement in September, leaving prices at the beginning of November nearly 9% higher for both calves and yearlings than the August averages. Calf prices in the Drovers auction summary averaged $174.65 per cwt at the end of October, up $9.69, while yearlings averaged $150.80, up $6.14 per cwt. Beef's economic indicators made an abrupt turnaround during October due to higher cattle prices and strong beef sales. October's analysis found just two arrows pointing lower, while September saw four arrows down. While October's overall arrow points up, the worry over increasing supplies of beef and all proteins remains. Production costs are lower still, encouraging the feeding and production of livestock. Packers are earning solid profits, which suggests they'll remain fairly aggressive bidders. Competitive meats remain a concern with increases in pork and poultry production. Overall red meat and poultry production will weigh on markets throughout 2018. U.S. beef exports remain strong, accounting for $325 of the value of a fed steer.

Forage: Create the Future

The well-known saying is something along the lines of “You never know what the future holds.” We all know what that means. It is saying that you don't know what will happen tomorrow, often encouraging us to not worry about what will happen because we can't control it.  And in some ways, the saying is correct. Certain things are out of my control, so I shouldn't spend a lot of time fretting or worrying about things I can't control. Let's just see what happens and we will figure out what to do when the time gets here. When it comes to our forage program, we don't always have to wait to see what is going to happen, however. In fact, it is best to have exactly the opposite attitude. Think about what you want out of your forage program in the future, then put practices in place that will get you there. We can have a huge influence on what occurs in the future based on things we can do today. Here are a couple of examples of choices you may make over the next few months that can dramatically affect your forage future. Which forage species you use. There may not be a more important choice in your operation than the species of forage crops you use. Using red and white clover in tall fescue will dramatically affect your fertilizer needs and your animal production. Choosing a warm-season forage to supplement tall fescue will impact your grazing management and possibly how long your tall fescue stands survive. Scouting fields for weeds. A perfect of example of doing something now to impact future production is weed control. If you don't scout fields now for weeds, then you may not realize you have a weed issue until it is too late to spray and the fields are blooming with weeds. A few minutes walking over your fields can help you determine if a timely application of herbicides now can improve your forage program in several months. Forage testing your hay. Everyone knows that all hay is not equal in nutrient content. Early cut has is better than late cut hay. But without taking a sample of your hay and testing it for nutrient content, there is no way to know if you are meeting the nutrient needs of your animals during the winter. You shouldn't wait until the last minute to get a forage test run. Do it now so that you can plan your winter feeding strategy. There are plenty of things that happen on the farm that can't be predicted. The name of the game is being flexible and adaptable. I guess that is one of the things that makes agriculture such an interesting field. But if you have the opportunity to change the future for the better, why not go ahead and do that. A little work now can make things much easier in the future.

Does Residue Grazing Affect Later Crop Yields?

Stalk grazing appears to have no negative effect on subsequent corn or soybean yields. Grazing on harvested corn fields provides a fall and winter management option for cattle owners and an income opportunity for landowners. Baling corn residue also provides an option for farmers to sell bales for feed or bedding.  Either process does, however, remove nutrients and organic material from a field, while grazing also recycles some nutrients and organic material in manure. Grazing or baling practices could affect subsequent crop-management decisions, and thus influence equitable lease rates for stalk grazing or bale prices. University of Nebraska researchers recently conducted a two-year study to evaluate the effects of grazing on subsequent yields and nutrient removal from baling at five locations in Nebraska. Their report, titled "Effect of Corn residue Grazing or Baling on Subsequent Crop Yield and Nutrient Removal," is published in the 2017 Nebraska Research Report. The researchers compared three treatments on each site:
  • Control fields with no grazing or baling
  • Grazing residue, with a target of removing 50% of husk and leaf components, with stocking rates determined using the University's Corn Stalk Grazing Calculator.
  • Baling residue following harvest, with bales sampled and analyzed for nutrient content.
Corn and soybean yields varied widely between sites, based on weather, soil types and management systems, the researchers note. Yields between treatments at each site however, did not differ significantly. The researchers did find a difference in residue cover following each treatment, with control fields averaging 88.7% cover, grazed fields averaging 77.5% and baled fields averaging 45.8% cover. They note that baled fields in this test had a slight numeric yield advantage over control fields. They speculate that baling might have resulted in better nitrogen availability in the short term, and possibly allowed the soil surface to warm up more quickly in the spring. The amount of nutrients removed by baling residue varied between sites, but averaged 42 pounds of nitrogen per acre, 60 pounds of calcium expressed as CaCO3 equivalent and 4.3 pounds of phosphorus (P2O3). Potassium (K2O) removal varied widely, from 22 to 285 pounds per acre. The researchers conclude that grazing or baling corn residue provides a feed resource without negatively affecting subsequent corn or soybean yields. Baling does, however, remove nutrients, and the amount varies widely. Farmers should weigh and sample bales to create an estimate of nutrient removal and fertilizer requirements in the long term.  

Milder Air to Surge into Midwest, Northeast as Polar Vortex Shifts

AccuWeather reports a break from the waves of cold air hammering the Midwest and Northeast is on the way, but it will not be until next week. While record warmth is in store for the West and parts of the Plains this week, waves of cold air from the polar region will intervene farther east through this weekend. "Another significant blast of cold air with wind will rotate through from the Midwest to the Northeast from Saturday to Monday," according to AccuWeather Lead Long-Range Meteorologist Paul Pastelok. Cold winds may make venturing out a little painful this weekend. The best bet for a few days in a row with temperatures near or above average will be early next week for the North Central states and the middle of next week in the Northeastern states. Temperatures are likely to reach the 40s to lower 50s F in Chicago and New York City for a few days next week. The less harsh conditions expected will allow people who mind or cannot handle the cold to get outside as holiday shopping and outdoor decorating kick into high gear. "The coldest air in the Northern Hemisphere, relative to average, is likely to be centered over parts of Europe and Asia during the first part of December, due to the anticipated position of the Polar Vortex," Pastelok said. The Polar Vortex is a storm high in the atmosphere that typically hangs out near the North Pole. When this storm is strong, it tends to keep frigid air contained around the Arctic Circle. However, when the storm weakens, it can become displaced and allow frigid air to plunge into the mid-latitudes in North America, Europe or Asia. "There is still room for part of the Polar Vortex to stretch toward the Hudson Bay, Canada, area during the first half of December," Pastelok said. If this occurs, then waves of cold air will resume in the North Central and Northeastern states during early December. "However, these cold shots would likely be rather short in duration and not as potent as the blast coming in this weekend," Pastelok said. "One thing we are very confident of is above-average warmth for much of the West and southern Plains into the first half of December." Temperatures from the Ohio Valley to the mid-Atlantic may not be too far from normal during the first part of December when averaging the approximate two-week period. The air is still likely to be cold enough for brief episodes of lake-effect snow around the Great Lakes to the central and northern Appalachians during early December. If cold air plunges again, the ingredients may be present for a storm to develop near or along the East Coast during the Nov. 30 - Dec. 1 time frame. Wintry weather could not be ruled out if all of the right factors come together.

The Touchy Issue of Pesticide Drift

It’s been 20 years since the RoundUp Ready soybean revolutionized crop production, providing farmers with a powerful tool to control yield-robbing weeds and usher in widespread adoption of conservation tillage methods. However, nature has caught up with the herbicide-resistant technology. Glyphosate-resistant weeds now pose a major challenge for producers, especially in the Southeast. Dicamba has been heralded as the solution to add to farmer’s repertoire to combat RoundUp resistance. Studies have demonstrated dicamba is effective used in conjunction with RoundUp, killing glyphosate-resistant broadleaf weeds. However, dicamba’s relatively high volatility has proven challenging since dicamba-resistant soybeans hit the marketplace. The extent of the dicamba drift incidents caught regulators, pesticide companies and producers off guard. Now, they are all scrambling to ensure the same incidents don’t hamper the 2018 growing season. While label changes and application limits will hopefully reduce future dicamba drift incidents, the damage caused in 2017 cannot be ignored. Many operators now seek options to compensate their damages. Fortunately, farmers have options to combat pesticide drift and receive compensation for their damages. Most of these remedies are available through state law, as drift is considered a local matter. As is the case with state laws, these can vary substantially from jurisdiction to jurisdiction. If you are a victim of pesticide drift and desire to receive compensation for your damages, or prevent future drifts, hiring a lawyer can be helpful in providing an assessment of your legal options, such as trespass or negligence claims. Some worthwhile things to consider include: Crop insurance. The federal crop insurance program does not insure losses attributed to chemical damage, such as pesticide drift. EPA reporting. EPA is the federal agency responsible for regulating pesticides. Injured parties can report pesticide misuse incidents via phone. This will not result in direct compensation for the producer, but it could lead to enforcement and penalties that deter future violations. State reporting. State pesticide regulatory agencies play a primary role in enforcing against unlawful pesticide drift. Calls to state agencies can prompt investigations that result in enforcement against violating applicators, including fines and injunctions. The enforcement authority of state regulatory agencies varies by state. National Pesticide Information Center (NPIC). A cooperative program operated by EPA and Oregon State University, NPIC serves as a clearinghouse for information on each state’s pesticide regulations and the state agency with pesticide oversight authority. Applicator versus manufacturer liability. Many plaintiffs are tempted to sue manufacturers for damage resulting from pesticide drift. However, the prevailing case law typically assigns liability to the applicator as opposed to the manufacturer. This is because many drift incidents can be traced to misuse of the pesticide and the applicator’s failure to abide by the product’s label. Class actions. Despite this presumption, a number of attorneys have filed lawsuits against dicamba manufacturers on behalf of purported classes of plaintiffs, on the basis the manufacturers’ sales representatives urged farmers and applicators to engage in off-label uses.

TPP-11 Agreement Heightens Concerns about Market Access

The 11 remaining members of the Trans-Pacific Partnership (TPP)* recently announced plans to move forward with a modified trade agreement. U.S. Meat Exporter Federation (USMEF) Economist Erin Borror explains that if the agreement, now known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), is implemented without the United States as a participant, it will create significant tariff rate advantages for competitors of U.S. beef and pork. The U.S. has free trade agreements in place with several CPTPP countries, but the major exceptions are Japan and Vietnam. Borror notes that Australia, Mexico and Chile already have economic partnership agreements with Japan, but the CPTPP would provide even more tariff relief for beef imported from these countries, and would lower tariff rates on Japan's imports of Canadian and New Zealand beef. Japan's beef import safeguards, which are administered on a quarterly basis for countries that do not have trade agreements with Japan, would shift to annual safeguards for beef imports from CPTPP countries, making them less likely to be triggered. Under Japan's frozen beef safeguard, the tariff rate on U.S., Canadian and New Zealand beef was recently increased from 38.5 percent to 50 percent, where it will remain through March 31, 2018. CPTPP would provide tariff relief for Canadian pork, the United States' largest competitor, in Japan's imported chilled pork market. Pork from Mexico and Chile would also make market access beyond their current economic partnership agreements with Japan. Perhaps the largest breakthrough in the CPTPP's pork provisions is Japan's gradual elimination of tariffs on processed pork products  something Japan has never previously included in a trade agreement. Borror adds that while the European Union is not included in CPTPP, the EU and Japan are expected to finalize an economic partnership agreement in the next few months, which includes similar terms. This would leave the United States as the only major pork supplier to Japan without a trade agreement in place. *The full list of CPTPP participants is: Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

Cattle Groups Glad to Continue ELD Conversation

Two national cattle industry groups are supporting the Department of Transportation's (DOT) decision to delay implementation of electronic logging devices (ELD) for livestock haulers. The United States Cattlemen’s Association (USCA) and the National Cattlemen's Beef Association (NCBA) both believe continuing discussions on how ELDs will impact hours of service for cattle transport is important. On Nov. 20, DOT's Federal Motor Carrier Safety Administration (FMCSA) announced a 90-day waiver period would be allowed for agriculture commodity transport starting Dec. 18, 2017. The 90-day window will allow FMCSA to better hear the concerns of producers and truckers who would be impacted. Steve Hilker, transportation committee chairman for USCA, has been to Washington, D.C. to discuss the issue with both Congressmen and officials from FMCSA. Hilker, owner of a cattle hauling business, is happy the conversation will continue and hopes it will result in a positive action for cattle raisers and haulers. "We're confident that upon further examination, the Administration will find that livestock haulers need additional flexibility in the mandate, specifically in the restrictive hours of service (HOS) rules. USCA will continue to be an active participant in these discussions and asks its members to do the same by submitting comments and keeping pressure on their elected officials to support the industry in securing these needed changes," Hilker says. Craig Uden, president of NCBA and a cattle feeder from Nebraska, believes the FMCSA announcement is good news for cattle and beef producers. "We've maintained for a long time that FMSCA is not prepared for this ELD rollout, that there needs to be more outreach from the Department of Transportation to the agricultural community, and that there's currently still major confusion on the agricultural exemption on hours of service known as the 150 air-mile rule. "This rule would certainly be helpful to our cattle haulers across the country. We want to thank Transportation Secretary Elaine L. Chao for listening to our concerns, and we'll continue to work with her and FMCSA to make sure that our cattle are delivered safely, and that our drivers and others on the road are safe as well," Uden says. ELDs are a record keeping device synchronized to a truck engine that logs information digitally. In real-time an ELD records data such as time spent on the road, miles driven, location and engine hours. Under the ELD rule, truckers have an hours of service limit of 11 hours of driving in a 24 hour period. Drivers can be on-duty a total of 14 hours consecutively, including the 11 hours of drive time. After 11 hours are reached, drivers must rest and be off-duty for 10 consecutive hours.