Grains
09Jan

Agriculture's Viability Relies on Immigration Reform

One of the topics top of mind at the American Farm Bureau Federation (AFBF) convention this week is immigration. Farmers rely on skilled labor to plant and harvest crops, milk cows and manage livestock in a timely manner across the U.S. Zippy Duvall, president of AFBF, had a sit down meeting with President Trump in Nashville this week. The crisis America's farmers are facing related to farm labor was not a subject Duvall was willing to leave out. "We are desperate to have good skilled farm laborers in America,"he says. "It is one of the biggest restraints that we have in American agriculture. We have to find a solution." President Trump says the agriculture industry doesn't have to worry about losing farm workers, even with the border wall. "We're going to be very, very tough at the border because we have to be. But when you have people that come in and have been working on farms for many, many years and all of the sudden the border is closed, we are letting those people come through. They are going to come through from a standpoint of being documented properly," President Trump told Agri-Pulse's Sara Wyant. "We are very cognizant of the fact that we can't take any of [agriculture's] workers away." According to Duvall, the farm labor bill introduced to the House of Representatives by Rep. Bob Goodlatte (R-VA) is a good start. However, ProFarmer's Washington policy analyst, Jim Wiesemeyer says that bill has very little chance of passing even with immigration reform front and center in Washington this month. Deferred Action for Childhood Arrivals is taking the spotlight, Sen. Jerry Moran (R-KS) explains. "Going into January immigration is already front and center because of the issue of DACA,"he says. "We need to make sure that agriculture immigration is not forgotten." Moran recommends congressional leaders from both sides of the aisle start looking at where agreement lies. "Let's deal with the things we can agree on,"he says. "Just because we can't agree on everything doesn't mean we can't agree on something." The opportunity to create a viable short-term and long-term solution for farm worker immigration is possible if everyone is willing to work together, he says. "I know [immigration reform] is going to get caught up in politics but we have to focus on what's affecting the largest industry in this country, and that's agriculture," Duvall says.
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08Jan

NAFTA Talks Hit Rough Patch

With talks slowed by discord and tough demands by the U.S., the hope for a quick finish to a redo of the North American Free Trade Agreement was gone after talks in Washington, D.C. A joint statement by the U.S., Mexico and Canada in mid-October said new proposals have created "challenges" and "significant conceptual gaps." Mexico will host the next round, the fifth round of talks, in Mexico City Nov. 17-21. Additional rounds will be scheduled through the first quarter of 2018, according to the statement. There was some media speculation that President Donald Trump might scrap NAFTA all together if the U.S. demands aren't met. U.S. Trade Representative Robert Lighthizer said in a statement Oct. 17 that Canada and Mexico have not been receptive to U.S. proposals that would reduce U.S. trade deficits. "Frankly, I am surprised and disappointed by the resistance to change from our negotiating partners," Lighthizer said in a statement. "As difficult as this has been, we have seen no indication that our partners are willing to make any changes that will result in a re-balancing and a reduction in these huge trade deficits." Produce has become a big story line in the NAFTA talks, and the Chicago Tribune ran a story Oct. 17 headlined "How a group of Florida tomato growers could help derail NAFTA" describing the efforts by Florida growers and others to put a new trade remedy tool for seasonal perishable producers in the updated NAFTA - a proposal that Mexican negotiators said sink any agreement. Mike Stuart, president of the Florida Fruit and Vegetable Association, said in an e-mail that Lighthizer confirmed in his press conference Oct. 17 that the seasonal and perishable provision has been formally put forward by the U.S. in the trade talks. "We continue to be highly supportive of this proposal and are greatly appreciative to the administration for their strong leadership on this important issue," Stuart said. "It's important to recognize that, in pursuing this proposal, the administration is addressing specific direction from Congress under the Trade Promotion Authority Act that any agreement should seek to eliminate practices that adversely affect trade in perishable or cyclical products, while improving import relief mechanisms to recognize the unique characteristics of perishable and cyclical agriculture." The proposal has met fierce resistance from Mexico. Bosco de la Vega, president of the National Agricultural Council, told the Chicago Tribune the proposal was a "red line" and against the interests of free trade. Exporters of apples, pears, pork and other commodities are concerned the trade remedy, if included in NAFTA, could be used against their exports to Mexico.
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05Jan

Minnesota Proposes Dicamba Label Changes

Minnesota joins Arkansas, Indiana and Missouri in the states placing additional restrictions on dicamba products. The Minnesota Soybean Growers Association (MSGA) Drift Task Force recently recommended stricter regulations in the state. "Vapor drift is concerning because once dicamba vaporizes we can't predict where it'll go," says Bob Worth, MSGA secretary and chair of the Drift Task Force. "In order to protect the Minnesota soybean producers our recommendation to the Department of Ag addresses vapor drift. We feel this needs to be addressed at the state level." The recommendations include: New EPA label for Minnesota Set a cutoff date for application by collaborating with academics, Minnesota Department of Ag and industry and implement that cutoff date immediately Will also include temperature cutoff - applicators cannot apply if predicted or actual temperature high is 85° F or greater Provide more education on stewardship and use "Minnesota farmers want to embrace new technologies while continuing to be good neighbors with other farmers and good stewards of the land," Worth says. "We feel these changes will help our farmers accomplish both goals while preventing weed resistance issues through the certified use of new technologies."
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05Jan

2018 Outlook: King Corn Dethroned

In the race for acreage, corn has finally taken a step backward. USDA projects corn and soybeans will both achieve 91 million planted acres next year the first time in years the two have been equal. Keep an eye on more than just soybean acres when it comes to predicting corn total acreage"watch wheat and cotton as well. "We're going to lose some wheat acres and everyone I talk to in the south indicates there will be more cotton acres than in 2017 - some of those acres will come out of corn and soybeans," says Chip Flory, Farm Journal markets expert. "I think we're going to lose corn and soybeans to spring wheat up in the Dakotas. I like 90.5 million acres on both for a 181 corn and soybean total." Corn prices could be better next year. "Corn returns [in 2017] might not have been quite as bad as you expected them to be because we had pretty good yields," says Pat Westhoff, director of FAPRI at the University of Missouri. "Higher prices for 2018 delivery could make the crop look better. "USDA is projecting a $3.20 per bushel average for this year and $3.30 for next year, but futures have been stronger than that," Westhoff adds. Domestically, corn needs continue with ethanol and livestock feed driving potential growth. If you live in an area near ethanol plants or feedlots, planting corn could be the best choice. "Look at hog and cattle prices, if you're a farmer feeder it makes a lot of sense to move that corn off the farm on the hoof rather than on the truck," Flory says. "When you get into corn deficit areas, like Northwest Iowa, when you start looking at cash markets there is a book to be written in opportunity." Be wary of foreign competition. Soybean returns are more promising for farmers than corn still. Keep a close eye on what happens in South America, however, higher-than-expected yields could easily soften soybean prices, making corn more appealing. "The size of the South American soybean crop this winter and early spring will have a lot to do with how U.S. soybean acres come out, which could influence corn acres," Westhoff says. "Also watch exchange rates as they have been moving around a lot and could bring a surprise." In addition, foreign demand for ethanol has been on the rise in recent years and the potential for uptick in demand from China could be encouraging for corn growers. Chinese officials recently announced the country intends expand ethanol use up to 10% of fuel supply, Westhoff adds. China could be a wild card when it comes to U.S. corn demand. As their domestic stocks dwindle, opportunity for U.S. growers could present itself. "The rumor is China bought 10 to 12 cargos of corn from the U.S. already and might be looking to buy even more," Flory says. "They have a plan in place to reduce stocks with ethanol and lower price over time, but the spread between imported corn into south Chinese feed mills is at a record level right now, that's why feed mills are turning down expensive domestic corn and saying they want to import it."
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04Jan

Regional Economics to Influence Hay Prices Most

For many livestock species, alfalfa is a critical component of the diet. As we look to 2018, national hay prices aren’t expected to soar, but look for regional economics to play a heavy role in the price you pay at the farm gate. Rising highway costs are making the expense of delivering hay more of a consideration, which is resulting in very regionalized hay prices, according to Dan Undersander, a member of the University of Wisconsin Madison forage team. The latest Agricultural Prices Report from USDA shows the national average price for alfalfa was $152 per ton in October. While it’s important to note that price is representative of all quality levels, let’s compare it to the average price in several states: $185/ton in California, $205/ton in Kentucky, $219/ ton in New York and $215/ton in Tennessee. What causes these price differences? Undersander says it is a combination of regional economics and location. The Midwest Despite a rough start to the 2017 hay season, alfalfa stocks in the Midwest are doing ok. “We had bad hay making conditions on the first cutting,” Undersander says. “On the other hand, we had pretty good tonnage the rest of the season. That will tend to keep prices pretty stable throughout the winter season.” A growing dairy herd in the region is expected to support demand and prices. UW Madison Forages reported high quality dairy hay sold for an average of $190 per ton the week of December 3. The South Many southern states are experiencing drought. As a result, more hay is being fed to livestock because there isn’t forage to graze. Undersander says that’s eating into their hay supply. “The region in the south is a one state area,” Undersander explains. “Because they are buying lower quality they can’t afford to haul it very far.” Low stocks and burgeoning demand are driving prices higher. The Northeast Evidenced by the $219/ton average alfalfa price USDA is reporting in New York, hay prices in the Northeast were driven higher by drought in 2017. As a result they are going to be down on supplies. To make problems worse, the region is too far from commercial hay growing regions that might have an abundance of hay to make hauling in hay very profitable, Undersander explains. Instead, he says dairy farmers there will start replacing hay with corn silage as they did in California when hay prices there started to skyrocket in 2016. The West In California, the number of milk cows in the state is declining while alfalfa exports are soaring. “January through September 2017 alfalfa hay exports from the west coast to China were 13% higher than the same period in 2016,” says Seth Hoyt, a hay market expert and author of the Hoyt Report. In addition to China, there are growing markets in Japan, Saudi Arabia and UAE that are soaking up alfalfa hay from California. As a result, Hoyt says early indications are that there won’t be much excess hay carried into 2018 in the West. “Much will depend on winter weather, particularly in higher elevation states where there was very heavy feeding of feeder hay to beef cattle last winter,” he says. “If we have similar weather again this winter, it would be expected that hay carryover would be down as it was on May 1, 2017.” Hoyt says it’s nearly impossible to predict hay prices in the West given the multitude of emerging price factors, but he anticipates the spread between dairy quality hay and lower quality hay to widen. “There are quite a few dairies in central California that are carrying smaller than normal inventories of hay and will have light supplies of higher quality alfalfa hay on hand as we go into early next season,” Hoyt explains. “I believe the spread between the top and bottom of the alfalfa hay market will be wide, especially in central California where many dairies will feed by-product feeds to dry cows and less alfalfa hay if the price on fair quality dry cow hay is above $190-$200 delivered.”
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04Jan

U.S. To Renegotiate Free Trade with Korea

This week the U.S. Trade Representative Robert Lighthizer announced that negotiations on amendments and modifications of the United States-Korea Free Trade Agreement (KORUS FTA) will begin Friday in Washington, D.C. The Trump Administration has long-voiced their desire to take another look at the agreement, which was first signed in on March 15, 2012. This trade agreement between the U.S. and South Korea has resulted in gains of market share for U.S. agriculture products in the Asian Pacific region due largely in part to the reduced tariffs for U.S. exporters to send goods to South Korea. However, a trade deficit still exists. Trade deficits are a well-known target of the Trump Administration. In July 2017, Lighthizer initiated talks with Korea to discuss matters affecting the operation of the KORUS FTA, including amendments and modifications. However, Korean trade officials just recently received approval from parliament to begin renegotiation, says Jim Wiesemeyer, ProFarmer's Washington policy analyst. He says there likely won't be much to come out of the Friday meeting, but he's paying attention to whether or not any progress is made. "The U.S. has already said when it comes to agriculture they want zero tariffs across the board, and South Korea has already said they don't want to do that," Wiesemeyer explains. "But South Korea is an important market for the U.S. I think last year they were number three for corn and overall they were our fifth largest farm export market." The U.S. delegation at the Friday meeting will be led by Michael Beeman, assistant U.S. Trade Representative for Japan, Korea and APEC.
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02Jan

Buyers Learn About U.S. Grains During South Asia Trip

More than 70 nutritionists, purchasing managers and other decision makers attended the South Asia Trade Exchange, jointly organized by the U.S. Grains Council (USGC) and the U.S. Soybean Export Council (USSEC), in Colombo, Sri Lanka, last month. The U.S. Grains Council collaborated with the U.S. Soybean Export Council to conduct the South Asia Trade Exchange in Sri Lanka. Attendees from Bangladesh, Sri Lanka, Nepal, Pakistan and India traveled to the meeting to hear expert views on the U.S. production and trading systems. Participants also received the latest market and industry information, including outlooks for the global commodity sectors as well as supply and demand drivers. "The buyers learned why U.S. feed grains and co-products are valuable to their operations," said Manuel Sanchez, USGC South & Southeast Asia regional director. "It is not only the grain they purchase, but also a commitment to services that help them confidently use these commodities in their feed rations - a win-win situation for both U.S. farmers and suppliers as well as the end-users here in South Asia." Exports of U.S. corn, distiller's dried grains with solubles (DDGS) and the corn equivalent of meat products to the five countries totaled nearly 520,000 metric tons in 2016/2017. The Council expects this demand potential to grow significantly as the result of new investments and a growing population. The South Asian region is home to 1.7 billion people with an average economic growth much higher than the world average, exceeding 6.5 percent annually. The region continues to invest in the feed industry as meat consumption grows at a healthy pace, particularly with poultry consumed in all three of the major countries in the region - India, Bangladesh and Sri Lanka. The region also has encouraging new interest in aquaculture. "Southeast Asia's macro-economic factors offer significant potential for increasing demand from the livestock sector," Sanchez said. "This opportunity for growth, combined with the region's diminishing ability to grow feed grains locally, could lead to significant opportunities for U.S. feed grain and co-product exports to the region." The conference in Sri Lanka was the second annual event organized by the Council and USSEC to bring together grain buyers, traders and end-users from across the region with the goal of enhancing understanding of world grain flows and trends as well as facilitating dialogue on how U.S. feed grains and co-products can meet future regional demand. The first conference brought together 120 executives from major feed, livestock production and grain trading companies and provided opportunities for decision makers, both importers and exporters, to interact on trade and product issues.
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02Jan

Farmers Withstood Year 4 of a 7-Year Down Cycle

Farmers are facing a reality that’s gripping the majority of agriculture today. “The price of corn seems to be still in that downward trend,” said Joe Shirbroun, Farmersburg, Iowa farmer. Lower prices aren’t budging to finishing out 2017. Ag economists like Jackson Takach of Farmer Mac are watching the price situation closely, as 2018 may play out to be more of the same. “I think we're going to have to sustain a few more years of the current economics,” said Takach. “I think this year and 2019 there's probably not enough to move the needle. There's not going to be enough demand over the next two years to eat up all the supplies. We have record stocks for both corn, soybeans and wheat. It’s going to take a few more years to churn that out.” Purdue and the Chicago Mercantile Exchange (CME) team up to produce a monthly ag economy barometer. This year it showed a slump in farmers’ moods. After peaking at 153 to kick off 2017, farmers sentiments slid nearly 30 points, remaining in that range to finish out the year. “As we wrap up the year 2017 and look back in agriculture, it was a year of continued adjustment,” said Chris Hurt, an economist at Purdue University. “When we talk about continued adjustment, I think everybody in U.S. agriculture knows that we've been through a boom cycle followed by a moderation cycle.” Hurt says despite net farm income projected to improve slightly in 2017, overall net farm income has dropped 40 percent from the highs farmers saw between 2011 and 2014. This year he coined as a “year of adjustment,” with farmers trying to realign operations to face the realities of lower prices. “We've also seen adjustments in 2017 in the animal industry,” said Hurt. “Once feed prices dropped, we’ve seen very strong profitability for the animal sector, and that profitability has meant expansion of the livestock sector by rebuilding the reduced production we had from about 2007 to 2014.” Even with a better picture for livestock overall cash flows remain tight. “Farm families have turned to their lenders and they continue to do that in 2017 to help bridge the cash flow and income gap that we're seeing at this point,” said Hurt. Hurt says in order to look forward, agriculture needs to take a hard look at the past. That includes the 1970s and 1980s, as that was the last major boom and bust cycle in agriculture. “As we look back to historical boom and moderation cycles we see have some sense that maybe a five to seven year time period is required to work through these downward adjustments.” “It's really about the debt levels and the interest expense on that debt today,” said Takach. “Back in the 1980s you had rising debt levels, but also rising interest rates and it was a deadly combination. Today you might have rising debt levels certainly, farmers have needed that additional leverage to try to offset some of the lower incomes. Well, you haven't seen the interest levels rise at the same rate.” Hurt says during the 1980s, it took about 6 years for prices and the overall agriculture economy to recover. “How long have we been in this moderation cycle? Well it seems like forever to many farm families, but actually for crops it was the 2014 crop where we really saw prices of grains dropped sharply below cost and production.” He says struggling prices hit farmers for the 2014, 2015, 2016 and 2017 crops, which means agriculture is in year four of a downward adjustment. He projects the cycle to last 7 years total, meaning 2018 could help agriculture start to turn a corner. “As we roll out to 2018, let's think about what we have in store for agriculture,” said Hurt. “We expect to see continued adjustments trying to drive down cost of production on the cropping side, expect follow- through to expansion of the livestock numbers.” For farmers, prices may be out of their control, but changing aspects of the operation they can control is now becoming even more top of mind. “We know the business side of farming is very difficult some days, but we just continue to look ahead and at our potential or opportunities in the market,” said Shirbroun. “We miss our opportunities at times, but we've got to continue to remind ourselves to take advantage of them and just continue to work on costs.” It’s managing costs while working to become even more efficient on every acre that could help farmers survive another year.
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29Dec

World Beer Prices Could Rise if NAFTA Fails

In January negotiators are scheduled to restart discussions on the North American Free Trade Agreement. In late 2017 rumblings began that the U.S. may opt to withdraw from NAFTA triggering an outcry from many corners of the ag community. But, according to brewers in Mexico, ending NAFTA could make the world's bar tab go up; at least for Mexican based brews. Currently, Mexico is in the midst of a beer revolution. "I think what it's happening right now in Mexico is similar to what happened 25 years ago in the U.S.," says Jaime Andreu, CEO of the Primus Brewery in San Juan del Rio Craft brewery's like Primus are popping up across the country. "We were home brewers originally and we made home-brew for our friends and for our family," says Andreu. "Eventually people started asking if we could sell them a keg or a couple of bottles and that's when we started thinking about starting a business." But for his business and others, it's the duty-free access to U.S. grains that are helping fuel that growth. "80% of Mexican craft breweries, roughly 400 of them, import our base malts mainly from the U.S.," says Andreu. "Mexico is not self-sufficient in producing barley and we have to source it from other places in the world." A product and a quality Primus says they can't source locally, malted barley is a key ingredient in the beer making process. According to the U.S. Grains Council, the U.S. Shipped more than 31 million bushels of U.S. Barley to Mexican brewers over the last 10 marketing years worth $220 million dollars. The big beer makers in Mexico, the owners of brands like Dos Equis and Corona, are using a lot of U.S. Grain as well. "Mexico is the biggest exporter of beer in the world," says Andreu. "It's not that Mexican beer is cheaper its that Mexican brands are very popular." For these businesses, the U.S. is the cheapest source of raw material because of the transportation and price breaks afforded by NAFTA. If that changes and there are disruptions in the supply chain Andreu says costs will likely go up for Mexican beer across the globe. "If these imports get duties or taxes, Mexico will either have to raise the prices of beer for all the world or we'll have to source from other other other places from the world," says Andreu. Prior to NAFTA, Mexico set base tariffs for barley and malt at 128% and 175% respectively. The primus team hopes that doesn't return. "It could be chaotic," says Andreu. "I don't think we are really aware of what will happen if we see more taxes or duties on grain." Rather than worry, this beer based entrepreneur is choosing to see negotiations as a glass half full and proudly recognizes the end product requires a team effort. "I think of craft beer neither as Mexican or American but as a North American product," says Andreu. A North American product brewed by NAFTA. Fresh negotiations resume in Canada at the end of January.
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29Dec

USGC Rolls Out 2017/2018 Corn Harvest Quality Report

An excellent growing season resulted in record yields and good quality for the 2017 corn crop, according to the U.S. Grain Council's (USGC's) latest corn quality report, released recently. The 2017/2018 Corn Harvest Quality Report is the seventh in the Council's annual corn quality survey. The report revealed that the majority of 2017 corn crop conditions were rated as good or excellent during the growing season, leading to strong plant health, good kernel size and a projected record yield of 370.3 million metric tons (14.58 billion bushels), the second-largest crop on record. "The Council's mission is one of developing markets, enabling trade and improving lives, and as part of this mission, the Council is pleased to offer this report as a service to our partners," wrote Deb Keller, USGC chairman and farmer from Iowa, in the report's greetings. "We hope this report continues in its role of providing accurate and timely insight into the quality of the 2017 U.S. corn crop." The report showed 95.1 percent of U.S. corn samples tested rated at U.S. grade No. 2 or better, largely the result of the extended planting period; a warm, wet vegetative period; a cool, dry and prolonged grain-filling period; and a warm, wet and slow harvest. Average test weight of 58.4 pounds per bushel (75.2 kilograms per hectoliter) was higher than the five-year average and indicates good kernel filling and maturation. Average 100-kernel weight of 36.07 grams was higher than the previous two years, signifying larger kernels than in previous years. About 98 percent of samples tested below the U.S. Food and Drug Administration (FDA) action level for aflatoxins (20 parts per billion). One-hundred percent of the samples tested below the FDA advisory level for vomitoxins for chicken, cattle, hogs and other animals. The corn harvest quality report provides timely information about the quality of the current U.S. corn crop at harvest as it enters international merchandising channels. This information will be supplemented by a second report, the 2017/2018 Corn Export Cargo Quality Report, scheduled for early 2018, which will measure corn quality at export terminals at the point of loading for international shipment. "The Council's series of quality reports uses consistent and transparent methodology to allow for comparison with past years' quality," Keller wrote. "This enables buyers to make well-informed decisions and have confidence in the capacity and reliability of the U.S. corn market." As the report is released, the Council is also beginning its annual roll-out events to present its findings to buyers around the world, starting in Southeast Asia. These presentations, meetings and conferences will continue through the first quarter of 2018 and aim to arm participants with clear expectations regarding the quality of corn for this marketing year. Recently-completed corn quality events in Colombia covered six cities and included participants representing major commercial feed producers, the country's largest broiler producer, the largest layer producers and traders, government representatives, port authorities and private customs agencies. The crop quality information was accompanied by presentations on U.S. corn grading and handling, which helped provide a better understanding of how U.S. corn is moved and controlled through export channels.
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