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Articles from 2012 In August


Late-Week Selling Did Little Damage to Grain Futures

Late-Week Selling Did Little Damage to Grain Futures

The soybean technical and fundamental picture is the strongest as we turn the calendar to September.

Farm Futures Market Analyst Arlan Suderman and John Jenkinson, The Ag Network, explore the topic.

Listen to the conversation using the audio link on this page.

Traders pocketed profits ahead of the holiday weekend, but little damage was done to the charts by the selling.

Arlan Suderman is a Market Analyst for Farm Futures magazine and FarmFutures.com. He has served on the staff of Farm Progress Cos. Since May 2000, providing market analysis on this site and the sites of 18 regional publications. His Afternoon Recap provides market analysis on this site each afternoon that the grain trade is open. Suderman also provides real-time market commentary via Twitter at twitter.com/ArlanFF101. Suderman brings a wealth of hands-on experience to the table after completing his Certified Crop Advisor status in 1997 while serving in the Kansas Extension Service.

John Jenkinson is the Senior Farm Broadcaster for "The Ag Network." Jenkinson grew up on an irrigated and dryland grain farm in Southwestern Kansas. With an early passion for agriculture, he was active in the FFA, 4-H, and went to college to pursue agriculture. In 1997, someone mentioned that he should look into broadcasting, which began his membership with the National Association of Farm Broadcasting. In April 2008, Jenkinson started "The Ag Network" with three affiliates in Colorado, Kansas and Oklahoma. The network is still growing, and Jenkinson is hosting two live talk shows and providing 12 farm programs a day for affiliates.

R-CALF Alleges Beef Checkoff Abuse

In a letter submitted to the USDA this week, cattle organization R-CALF USA asked Secretary Tom Vilsack to permanently suspend all contracts between the Beef Checkoff Program and the National Cattlemen's Beef Association before the Michael Callicrate v. USDA et al. lawsuit proceeds any further.

The lawsuit was initially announced earlier this month at the Organization for Competitive Markets' annual meeting. It alleges NCBA misuse of checkoff funds and will seek an injunction against NCBA's control of the checkoff, which assesses a $1 per head fee that is intended for beef promotion and education.

OCM has partnered also with the Humane Society of the United States to bring the case against NCBA. The plaintiff, Michael Callicrate, is a livestock farmer and R-CALF member.

In a press release, R-CALF said they have sent eight separate letters to Secretary Vilsack requesting suspension of NCBA's contracts with the Beef Checkoff. But, they say, Vilsack has "abrogated his responsibility to preserve the integrity of the Beef Checkoff."

In the letter, R-CALF alleged unlawful use of checkoff funds to "…successfully undermine your Administration's stated goals concerning country-of-origin labeling and the competition rule proposed by the Grain Inspection, Packers and Stockyards Administration."

R-CALF said in the letter that they have submitted evidence that "demonstrates the NCBA had unlawfully misused beef checkoff dollars." The group called on Vilsack to revoke NCBA's contracts with the checkoff.

"We demand that you, by your own fruition, immediately put a stop to the NCBA's ongoing abuse of the Beef Checkoff by fully implementing the entire remedy sought in the lawsuit, which is the remedy we have unsuccessfully sought from you for longer than two years. We are calling on you to act, and to act appropriately, without the lawsuit having to proceed any further," the letter said.

Agriculture Secretary Tom Vilsack responded to the group's allegations at the Farm Progress Show in Boone, Iowa, on Thursday.

He said he was pleased with the progress towards cooperation and communication that has been made between the entities involved with the checkoff. However, he said also that the USDA was in the process of completing an audit of the checkoff as well.

"I will not make decisions until I have all the information that I need to have" Vilsack said.

On Aug. 10, following OCM allegations, NCBA President J.D. Alexander released a statement "expressing disgust" regarding OCM claims. Alexander cited independent research that indicates nearly 75% of cattlemen and women support the checkoff, and chastised OCM's involvement with HSUS.

Land Values: Fundamental Drivers

Sterling Liddell, vice president, food & agribusiness research, Rabo AgriFinance, said it's fundamental issues driving land values when CSD Editor Kurt Lawton spoke to him the the 2012 Farm Progress show. Commodity prices, interest rates and land availability are all playing a role in the value price spike. From prices going too high, too fast to margins to cover those prices, Liddell talks about what he sees happening with land values.

Corn+Soybean Digest

Drought vs. River Transportation

The drought has had a clear effect on farmers and their crops this summer. It's also affecting river transportation, as water levels fall and barges have to be loaded lighter. Mike Steenhoek, executive director, Soy Transportation Coalition, talks about the effect of the drought on waterway transportation, and how that in turn increases the costs for farmers. Steenhoek says if there is one silver lining to the drought, it's that we need to invest in our waterway system to keep it viable.

Grain Futures Sink on Russian News

Grain Futures Sink on Russian News

The markets will be closed for the Labor holiday on Monday, with the electronic trade reopening at 5 p.m. CDT on Monday evening.

Farm Futures Market Analyst Arlan Suderman and John Jenkinson, The Ag Network, explore the topic.

Listen to the conversation using the audio link on this page.

Traders take profits in grain futures ahead of three-day holiday weekend

Arlan Suderman is a Market Analyst for Farm Futures magazine and FarmFutures.com. He has served on the staff of Farm Progress Cos. Since May 2000, providing market analysis on this site and the sites of 18 regional publications. His Afternoon Recap provides market analysis on this site each afternoon that the grain trade is open. Suderman also provides real-time market commentary via Twitter at twitter.com/ArlanFF101. Suderman brings a wealth of hands-on experience to the table after completing his Certified Crop Advisor status in 1997 while serving in the Kansas Extension Service.

John Jenkinson is the Senior Farm Broadcaster for "The Ag Network." Jenkinson grew up on an irrigated and dryland grain farm in Southwestern Kansas. With an early passion for agriculture, he was active in the FFA, 4-H, and went to college to pursue agriculture. In 1997, someone mentioned that he should look into broadcasting, which began his membership with the National Association of Farm Broadcasting. In April 2008, Jenkinson started "The Ag Network" with three affiliates in Colorado, Kansas and Oklahoma. The network is still growing, and Jenkinson is hosting two live talk shows and providing 12 farm programs a day for affiliates.

Iowa grower, Lynn Hagenson, discusses fertilizer efficiency.

Corn+Soybean Digest
Aug. 27 Crop Progress: Corn Harvest Slowly Progresses, Soybeans Dropping Leaves

Aug. 27 Crop Progress: Corn Harvest Slowly Progresses, Soybeans Dropping Leaves

 

Nearly all corn has reached dough stage, and nearly all soybeans have set pods. As corn harvest begins, the corn crop condition lost another point in good/excellent condition. Soybeans are starting to drop leaves, and overall soybean condition also lost a point in good/excellent condition.

The corn crop continues to progress well ahead of average. Ninety-five percent of the crop has reached dough stage against a five-year average of 81%. The crop is just over three-fourths dented compared to a 46% five-year average. All states are seeing mature corn at this point. Just over one-quarter of the crop is mature now. This is significantly more than the 8% five-year average. Corn harvest has started in many of the major corn-producing states. States yet to harvest any corn include: Colorado, Michigan, Minnesota, North Dakota, Ohio, South Dakota and Wisconsin. Overall, 6% of the corn crop has been harvested, 4 points ahead of the five-year average.

Just under one-fifth of the corn crop is in good/excellent condition. At 22%, the corn in good/excellent condition lost a point in the last week. The overall corn crop now sits at 52% very poor/poor. For reference, the crop last year at this time was about opposite with 19% in very poor/poor condition and 54% in good/excellent condition.

The overall soybean crop is also progressing ahead of average, although not as fast as the corn crop. Ninety-six percent of the crop has set pods, 4 points ahead of the five-year average. All but two states (Illinois and Wisconsin) are seeing leaves drop on soybeans. So far, 8% of the crop has started losing leaves, ahead of the 4% five-year average.

Soybeans in good condition lost a point over the last week, bringing the overall good/excellent condition to 30%. Thirty-eight percent of the overall soybean crop is in very poor/poor condition. Last year, only 15% of the crop was in this condition, while 57% of the overall soybean crop was in good/excellent condition at this time in 2011.

Defaults send chilling signal to cotton shippers

As world cotton supplies dwindled in 2011, nervous end users in foreign countries bought hundreds of thousands of bales of high-priced U.S. cotton to insure ample supplies. Then later, after cotton prices receded, those same buyers walked away from signed contracts in record numbers.

It sent a chilling message to the U.S. businessmen who sell and buy cotton – that in some countries, and even some judicial systems in those countries, a signature is hardly worth the paper it’s written on.

Addressing the National Cotton Council’s mid-year board of directors meeting, Richard Clarke, chairman of the American Cotton Shippers Association, said the defaults have cost U.S. exporters nearly $1 billion. He said that over 400 arbitrations were conducted by the International Cotton Association in 2011-12, and he wouldn’t be surprised if the number reaches 500 by the end of the year.

Earlier this month, the American Cotton Shippers Association conducted a survey of Amcot and ASCA members, two trade associations which represent nearly all cotton exported from the United States.

The numbers of defaults are huge. According to the survey, cotton companies and cooperatives have over $850 million of open contracts that are either at-risk, an arbitration is ongoing or there is an unfulfilled award. “We believe this number probably would have exceeded $1 billion had we included all of the countries with defaults or everyone had reported their issues,” Clarke said.

Four countries, Bangladesh, Indonesia, Thailand and Vietnam, have over 450,000 bales hung up in arbitration or awaiting an award to U.S. exporters.

What is particularly worrisome to the cotton industry is that judicial systems in foreign countries don’t seem to be in a hurry to enforce decisions made in favor of U.S. exporters. To restore an appropriate sense of urgency in defaulted countries, Clarke suggests sending in a high profile government official similar to Henry Kissinger, who in the 1970s was responsible for opening doors with the Soviet Union and China.

“We do feel like additional assistance from the U.S. government is necessary,” said Clarke, who called the default issue unprecedented. “We are not asking for legislation. We’re not asking for additional regulation. We’re not asking for appropriation. The U.S. government currently has the tools in place.”

Clarke said some of the countries involved in the Trans-Pacific Partnership, for which new negotiations begin in Leesburg, Va., in September, are among the most egregious of the defaulters. “These governments all want greater access to our markets, particularly for textiles. We feel that with this access to the U.S. market, there are certain responsibilities and obligations and most important, contract sanctity of the rule of law,” Clarke said.

Darci Vetter, USDA’s deputy undersecretary for Farm and Foreign Agricultural Services, said the defaults “have been a significant burden and have created real uncertainty in the market when certainty would be more welcome.”

Reneging on a contract is serious business. It’s time for these defaulted trading partners to make things right, or it may be time to send in a heavy hitter.

Vineyards of the future — think automation

Vineyards of the future — think automation

In orchards and vineyards of the future, one sensor will measure the amount of photosynthetic energy being absorbed by tree and vine canopies at any time of day. Still others will sense moisture levels from leaves and soil. A variable-rate irrigation system can then supply just the right amount of water and fertilizer, depending on what a particular plant needs. And all the information can be collected, processed and seen by growers in real time through their mobile devices so they can make informed decisions quickly.

Washington State University’s Center for Precision and Automated Agricultural Systems is working with University of California at Davis and others on a three-year, $2.6 million U.S. Department of Agriculture project to bring this future to the present.

“This research is aimed at developing and integrating soil- and plant-based sensors to monitor the state and condition of plant canopies for optimizing management within orchards and vineyards,” said Qin Zhang, WSU CPAAS director. “The importance of this research to Washington’s wine grape and tree fruit industries is that the profitability of the industry is strongly dependent on the production of high-quality fruit, which is associated with a proper balance of canopy and crop load.”

Project researchers are developing a farm-based, precision management system to help specialty crop growers improve quality and increase production efficiency while reducing their environmental footprint. The project has seven objectives, of which WSU is participating in five:

Mobile platform for measuring canopy architecture and photosynthetically active radiation (PAR) absorption. PAR is necessary for photosynthesis and plant growth. In orchards, researchers have studied the relationship between the amount of this energy canopies absorb and increasing productivity. The information gathered from the platform—equipped with a GPS receiver, radar and infrared thermometers—can be used to determine the effect of canopy management on yield, quality and more.

WSU researchers took the PAR absorption study a step further when they evaluated sweet cherry trees trained to new, two-dimensional fruiting wall architectures at the WSU Roza Research Orchard near Prosser. They found that trees trained to a Y trellis absorbed more light over the course of a day than trees trained to an upright fruiting offshoot (UFO) system.

“It could provide the fundamental information needed to improve both fruit yield and quality in a UFO system by carefully planning the pruning of trees,” Zhang said.

Sensor suite for detecting plant and soil water status. Sensors for infrared temperature, PAR, wind speed, relative humidity and ambient air temperature make up the suite. An in-ground probe measures soil moisture, electrical conductivity, organic matter and compaction.

WSU is also investigating modifications to the suite to monitor water stress of grapevines. Additions include infrared thermography to detect temperature distribution patterns of sunlit and shaded canopies, as well as a handheld light bar and multispectral camera to measure PAR absorption under different water stress levels.

Decision support system. WSU has created a prototype software analysis tool so participating growers and university researchers can assimilate and rapidly act on the information they receive from sensing devices in the field. The tool can import and integrate a wide variety of data in different formats, including time, location, temperatures and other readings; process the information and show results specific to a grower’s farming operation; and support a range of Internet-connected mobile devices, such as a smart phone or tablet.

“This is a very challenging task,” Zhang said. “We’re giving growers the basic algorithm, and they can choose the interface. Some want a paper copy of the data analysis; others want it on their iPhone. Some want results in color; others in black and white. Some want to see something in 3-D; others in 2-D. It’s difficult to please everybody. The important thing is to make the information available visually in real time.”

Variable-rate irrigation

Variable-rate irrigation system. A network of wireless sensors and controllers manages irrigation so a tree or group of trees receives only the amount of water and fertilizer needed. WSU is evaluating the system on grapes in a test plot at the WSU Roza Research Orchard. Part of the evaluation will include studying the effects on berry size and phenolic content when grapes are not irrigated early in the growing season.

Social impact study. WSU has developed a 22-question survey to assess what growers think of the sensors and technologies that are part of the project. Questions address canopy and irrigation management in orchards and vineyards, the two major needs stakeholders have identified.

According to UC Davis, the long-term goal of the project is to establish the foundation for precise management of specialty crops at levels unattainable with satellite-based and aerial sensing. For details about its full scope, visit the project website.

“We envision the creation of an information-based, decision-making infrastructure that will drive Washington’s tree fruit and wine grape industries into this new precision agriculture revolution, an era of precision crop management,” Zhang said.

University of Arizona, New Mexico State University, Veris Technologies Inc., Oregon State University, AgInformatics LLC and Trimble Navigation Ltd. are also project investigators. Other participating agencies and producers include the Almond Board of California, California Walnut Board, Christensen Farms LLC, Constellation Wines, Olsen Brothers Ranches Inc., USDA and the Washington Tree Fruit Research Commission.

WSU CPAAS, established in 1999 as the WSU Center for Precision Agricultural Systems, promotes creative research and extension activities for more effective growing, harvesting and processing of specialty crops through mechanization and automation. For more information, visit the WSU CPAAS website.

Pork industry facing record losses

Pork industry facing record losses

The nation's pork industry will continue to experience some of its worst economic losses in recent history as record-setting drought decimates feed supplies, says Purdue Extension agricultural economist Chris Hurt.

Producers could lose about $30 per head this summer and nearly $60 per head during the final quarter of the year as continued liquidation of herds drives down market hog prices and drought drives up feed prices. This exceeds the previous record quarterly losses of $45 per head in the final quarter of 1998.

In the next 12 months, losses could average $33 per head, meaning about $4 billion in losses for the U.S. pork industry.

"A tsunami of red ink is about to wash across the pork industry, which is facing losses unseen even in the fall of 1998 when hog prices approached zero value," Hurt said. "Stressors include more hogs than expected in the market, rapid sow liquidation and record feed prices."

The market anticipated a 1 percent increase in slaughter numbers, but in recent weeks, slaughter has jumped by 6 percent. The unexpected addition of hogs to the market has caused a more than $10 per hundredweight drop in prices since late July with prices now in the high-$50s.

A number of factors could be driving the slaughter increase, but, according to Hurt, it's likely related to the high cost of feed and a desire by producers to sell pigs before market prices tumble even further.

Based on current lean hog futures, prices for the final quarter this year are predicted to fall to the mid-$50s per hundredweight. But the cost associated with raising hogs continues to rise.

"Tragically, costs of production are expected to be above $75 per live hundredweight for the remainder of this summer, fall and winter," Hurt said.

Hurt referred to it as a "short-term carnage" and said he expects losses to continue through the winter but for the industry to return to near the break-even point by late spring.  He expected losses near $38 per head in the first quarter of 2013, but by the second quarter those should fall to $5 per head.

The first wave of national hog breeding herd reduction began in early August and has continued to intensify. Slaughter data show that in August alone nearly 30,000 sows were sent to market. That's a reduction of about 0.6 percent of the national sow herd in just one month. That rate will continue to increase if corn prices stay at current levels or move higher. Hurt said the breeding herd could decline 4 percent to 6 percent from now until January, but sow liquidation should slow sharply after the winter.

In the short term, however, hog producers should focus on cost-saving management for market hogs.

"The dilemma for the industry is that enormous losses are going to occur for pigs that are already born," Hurt said. "Short of euthanizing young pigs, reduction of market weights could be a viable option for the industry. The weight reductions would reduce total pork supplies, use less feed and enhance hog prices."

President Barack Obama authorized the government to buy a small portion of the nation's pork supply, but Hurt doesn't think it will be enough to significantly change falling prices.

"The volume of pork the government will purchase is so small it will reduce the losses by less than $1 per head," he said.

Hurt's more in-depth projections for the pork industry are available in his podcast and article, "Pork Industry Faces Record Losses," in Farmdoc Daily's Weekly Outlook at http://farmdoc.illinois.edu/marketing/weekly/html/082712.html.