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Grain Inspections Bullish

06/27/2017

By Todd Hultman
DTN Analyst

OMAHA (DTN) -- Corn, soybean and wheat inspections were bullish again this week in this week's export inspections report, according to DTN Analyst Todd Hultman.

Corn weekly export inspections were 438.0 mb (965,608 mt) for the week ending Thursday, June 22. This is below 57.1 mb for the same week a year ago. Inspections for 2016-17 totaled 1.874 billion bushels, up 41% from the previous year and still well above USDA's projected 17% demand increase. Even though inspections were lower this week, Monday's report remains bullish for corn, Hultman said.

Soybean weekly export inspections were 11.6 mb (315,099 mt) for the week ending June 22. This is above 10.9 mb for the same week a year ago. Inspections for 2016-17 total 1.919 billion bushels, up 18% from the previous year and well above USDA's projected 6% demand increase. Monday's inspections were bullish for soybeans, Hultman said.

Wheat weekly export inspections were 23.1 mb (629,070 mt) for the week ending June 22. This is above 18.9 mb for the same week a year ago. Marketing year inspections for 2017-18 total 82.9 mb, up 32% from a year ago and well above USDA's projected 3% decline. It is still early in the new 2017-18 season, but Monday's report was bullish for wheat, Hultman said.

Todd Hultman can be reached at todd.hultman@dtn.com

Follow Todd Hultman on Twitter @ToddHultman1

(BAS)

China Corn Acreage Down

06/27/2017

By Lin Tan
DTN China Correspondent

BEIJING (DTN) -- There are very diverse survey reports in China recently, showing the disagreement of different organizations in corn crop acreage, but most of the reports showed that Chinese farmers may have cut more corn acreage.

With summer second-crop planting still underway, industry analysts peg China's corn crop at somewhere between 7.7 billion to 8.1 billion bushels, but the official government estimate is around 8.35 bb, or 212 million metric tons.

Meanwhile, USDA has pegged China's 2017-18 corn crop at just under 8.46 bb, or 215 mmt.

If the low end of analysts' forecasts are correct, that could put China's 2017-18 corn ending stocks at 66 mmt to 71 mmt (2.6 billion to 2.8 billion bushels). If that holds, it would be the smallest ending stocks in China since at least 2011-12. And China's demand has grown substantially since then, noted DTN Senior Analyst Darin Newsom.

"Given all that, I could see a situation where China would need to import more corn or DDGs," Newsom said. "A good time for the U.S. to start a food fight, particularly with China pouring money into building Brazil's infrastructure."

The Chinese Ministry of Agriculture said China planted 88 million acres of corn this year, a decrease of 2.9 ma, or 3.2% less than last year's 91 ma. With this acreage, the Ag Ministry is expecting the country to harvest 8.35 bb, or 212 mmt of corn this year.

If that holds, Chinese farmers would average just under 95 bushels an acre.

However, other field surveys showed a deeper acreage cut than the Ag Ministry estimates.

China Corn Industry Technology System, a corn research organization in Chinese Academy of Agricultural Science, did a field survey at the end of April in the planting season. The results showed that Chinese farmers will lower their corn acreage by 10.9% in average, which would come to about a 9.9 ma decline.

That would put Chinese corn production at about 7.7 bb.

A recent survey done by Dalian Commodity Exchange (DCE), which took place in the second week of June, showed that more corn acreage had been switched to ether soybean or rice this year. They reported that the total acreage decrease will be around 15% to 30% in Northeast China, where more than one-third of China's corn is produced.

"Because the farmers are in small scales (mostly less than one acre), the work of data collecting and processing is hard in doing rural statistics," said Dr. Wenge Fu, Professor of China Agricultural University. "Government data is mostly conservative in term of changes while other organizations tend to focus on the changes of the industry. This will lead to some disagreement in planting acreage data."

Dr Fu added that some private companies and organizations do not have the resources to do a survey to cover the whole country. That may be another reason for the disagreement in results. "China is a big country with a huge diverse in corn production," said Fu.

Zhaoshang Futures, a brokerage company based in Beijing, pegs the corn acreage at about 85.5 ma. "Our estimation is that the total acreage decreased 6% in the country," said Zhonghua Wang, a Zhoashang analyst. "This estimation is based on our survey as well as information from corn seed distributors."

The Ag Ministry has a tradition of reporting higher acreage, said Wang. "The ministry said last year that the corn acreage was down 3.6% compared to previous year, but the industry believes that the actual data should be 8.1%."

Adding acreage declines over the past two years, the industry believes China's corn acreage is about 10.5% lower than 2015, Wang added.

Wang estimates that corn output will be 7.9 bb to 8.1 bb (200 mmt to 205 mmt) this year, based on the current acreage and crop conditions, this is also less than the report from Ag Ministry.

China corn production could be divided into three parts: 50% spring corn, mostly in northern China; 40% summer corn (second crop) in the middle of the country; and 10% tropical corn in south China.

Most of the summer corn acres are planted after wheat and rapeseed harvest.

The corn crop in northeast China also was facing drought conditions before this past week, but then some good rains came that changed the situation. "In the middle of the country, though farmers are still planting summer corn, some early planted crops are in very good conditions," Wang said.

DTN Ag Policy Editor Chris Clayton contributed to this article.

(BAS)

Cash Market Moves

06/27/2017

By Mary Kennedy
DTN Basis Analyst

Last week, the National Grain and Feed Association (NGFA) and others responded to the Surface Transportation Board's request for comments on improving procedures, saying that the nature of the SAC standard the board uses is the single greatest source of delay in processing SAC cases.

It's been over two years since the Surface Transportation Board (STB) held a June 10, 2015, hearing in Washington, D.C., to give rail shippers, agricultural organizations and railroad companies the opportunity to express their opinions about improving procedures to set fair shipping rates. Through those meetings, the STB explored the issue of "making the rate-case process more accessible" to all shippers who use rail as their mode of transportation. The Staggers Rail Act of 1980 provides rail shippers with the ability to challenge unreasonable rates.

In a June 11, 2015, news release, the day after the hearing, the NGFA noted that, in 2014, they developed and proposed a new rate-reasonableness methodology, dubbed the "agricultural commodity maximum rate methodology" as one approach that the STB could use to change its existing procedures to resolve rail rate challenges involving agricultural products. The NGFA said that its proposed new approach would "meet the tests of being more accessible and inexpensive to administer, including for shippers with smaller claims; provide a meaningful constraint on the ability of carriers through their rate-pricing practices to make certain facilities uncompetitive in shipping by rail, and provide for more expedited and timely decisions."

The STB continued to hold informal meetings with stakeholders and then issued an Advance Notice of Proposed Rulemaking (ANPRM) on June 15, 2016, seeking formal comment on specific ideas raised in the informal meetings as well as comments on any other relevant matters. Based on the comments, the board proposed specific changes intended to help improve the rate review process and expedite rate cases.

The proposed rules were not intended to be a "comprehensive response" to the comments received on docket No. EP 733, nor were they the "final action" the board planned to take to improve the rate review processes for all shippers. The board noted it would continue to evaluate the comments received and review its regulations generally, and propose additional revisions at a later date if warranted.

That later date came in a decision posted on their website March 30, 2017, where the board announced that, "Pursuant to Section 11 of the Surface Transportation Board Reauthorization Act of 2015, the STB is proposing changes to its rules pertaining to its rate case procedures to help improve and expedite the rate review process." Comments were due by May 15, 2017, and reply comments were due June 14, 2017.

Here is a link to Docket No. EP 733 EXPEDITING RATE CASES: https://goo.gl/…

INDUSTRY ANSWERS BACK AGAIN

There were plenty of comments and replies to those comments sent to the STB from industries who supported the changes and those who did not. The railroad industry understandably is not keen on the possibility of being regulated on how it determines rail rates. The shipping side of the industry, on the other hand, supports a more "fair" and equitable approach to determining rail rates. Shippers also support a change to the current process of challenging rates they feel are unreasonable.

On May 15, 2017, the Association of American Railroads (AAR) in their opening comments, noted that they have a "strong interest in ensuring that the board's rate reasonableness processes do not cause unnecessary delay and expense while facilitating analysis based on sound economics consistent with the national Rail Transportation Policy."

Here is a link to the comments: https://goo.gl/…

In their comments, the AAR said it continues its long support of efforts by the board to "limit the cost and complexity of the Stand Alone Cost ("SAC") test as applied by the board while maintaining the economic principles underlying the test."

On June 14, 2017, NGFA submitted reply comments in response to the opening comments filed by AAR. "While this proceeding properly focuses on procedural improvements to the board's existing processes for adjudicating rate cases, we disagree strongly with the AAR's opening comments in which it states that the "substantive basis of the board's (rate-challenge) tests does not need overhaul," said the NGFA.

The NGFA, along with other shipper organizations reminded the board that many of the inefficiencies and causes of delays associated with the board's current rate rules could be alleviated by the board following through on its proposals to make changes to the substantive rules it applies to test rate reasonableness. The NGFA agreed that the nature of the SAC standard itself is the single greatest source of delay in processing SAC cases.

The NGFA also urged the board to redouble its efforts to change its existing standards and methodologies that have rendered futile the pursuit of rate-reasonableness challenges by grain and other agricultural shippers. The NGFA continues to believe that the Ag Commodity Maximum Rate Methodology it proposed in EP 665 (Sub-No. 1) provides a strong basis for developing an innovative, objective and comparatively inexpensive rate-challenge methodology.

Bob Zelenka, executive director of Minnesota Grain and Feed Association, told me that, "The previous process was extremely time-consuming and very expensive to pursue. This proposal would streamline the rate challenge process and certainly make it more accessible to the smaller captive shipper, which are the ones most likely to be facing what could be deemed as an unfair or excessive rate."

"We believe it is very important for rail users to have access to some reasonable recourse, to challenge a rate (and service level) that is deemed as unfair, unacceptable or excessive. It is good to finally see the STB become more of an advocate for the rail user, which hasn't been the case up until now, since the advent of the STB in 1996," added Zelenka.

It is interesting to note that despite concerns about "high" rates from shippers of grain over the years, no such shipper has filed a rate complaint with the STB since 1981. Shippers cited some of the reasons were that the current formula was arbitrary, too costly and onerous, which discouraged them from taking part in the current process. If a shipper feels rates are unreasonable compared to others, it has not been cost-effective or easy to dispute rates. If you are a rail shipper, it's no secret that rail rates continue to creep higher. If you are a farmer, you also know that when rail rates creep higher, shipper margins are thinner and that cost is passed on to you.

The rail rate case issue has actually been under discussion since late 2013. Ann Begeman, STB acting chairman, told participants March 19 at the NGFA annual convention in New Orleans more than once during her presentation that it is important to establish deadlines for cases, saying that "deadlines matter." However, she added, "Congress doesn't want us to be moving too quickly on some of our more substantive rulemaking proceedings."

After a near four-year wait and countless comments and revisions, it's time for the board to make a final decision on this issue.

Here is the link to the STB filings where you can view all opening comments filed May 15, 2017, and reply comments on June 14, 2017: https://goo.gl/…

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow Mary Kennedy on Twitter @MaryCKenn

(BAS/AG)

Hoping for Premium Relief

06/26/2017

By Chris Clayton
DTN Ag Policy Editor



OMAHA (DTN) -- Farmers aren't certain if they would fare better under the health care bill in the U.S. Senate, but they are looking for relief from a steady rise in premiums and wider spread of deductibles they've seen over the past several years.

Matt Stalzer, who farms corn and soybeans with his family near Marshalltown, Iowa, just got a letter from Wellmark Blue Cross in Iowa stating he could see a 14.2% increase in his premiums next year. Stalzer, 34, is single and has an unsubsidized insurance plan that was grandfathered into the Affordable Care Act. If the premium increase goes into effect, he will pay about $8,000 in premiums next year.

"It's kind of crazy how expensive it gets," Stalzer said. "If you are self-employed, it's just terrible."

Young and healthy, Stalzer said he would forego insurance if he didn't have the farm with the rest of his family. "But I have all of these assets to protect, so I have to have it unless I want to risk losing everything," Stalzer said.

The struggle for insurers in rural states is there are too few young people enrolling in health care compared to older residents who have more medical conditions. Wellmark, for instance, is likely to leave the exchange and not sell more individual policies in Iowa. Wellmark leadership has indicated more flexibility is needed in how policies are designed, which is one of the elements of both the House and Senate reform bills. In both bills, states would be allowed to reduce the essential benefits offered in an insurance policy.

Stalzer said he would be willing to buy a policy that doesn't offer all the bells and whistles of an Obamacare plan. He thinks that, too often, people go to the doctor or use benefits under a health plan when it's not necessary. "I think that would lead to a lot of savings in the system," he said.

The Senate bill eliminates both the employer and individual insurance mandate. The House bill eliminates those mandates as well, but also would allow insurance companies to charge up to a 30% penalty for people who drop coverage but then buy a new plan.

The Senate bill also allows insurers to charge premiums five times higher based on a person's age. That doesn't bode well in an industry where the average principal farmer in an operation is approaching 59 years old. The bill would offset some of those possible premium costs by proposing to increase limits on health savings accounts to the amount of a person's deductible and out-of-pocket cap.

The Senate structures tax credits for insurance buyers that are based on age, income and where they live. The tax credits, however, have lower income caps than current law. Along with that, insurers would lose subsidies in 2020 that help offset some costs.

Jerod McDaniel, who farms near Texhoma, Oklahoma, said he would like to see more transparency in health costs, but he's also concerned about the impact of a health bill on rural medical providers. McDaniel said he is paying $20,000 a year for a high-deductible plan for himself and four kids. His rates started rising more quickly after the Affordable Care Act was passed, and he doesn't think the rate increases are finished.

"Is the insurance high because the health care costs that much, or is the health care high because the insurance will cover that much?" he asked. "That's what I think about as an end-user who has to pay for insurance on my own."

Yet, some farmers have already found ways to lower their premiums compared to insurance costs under the Affordable Care Act.

Kyle Goeman, an insurance agent in Clara City, Minnesota, who specializes in health insurance, also has brothers who farm and knows the struggles with health care in south-central Minnesota.

"For farmers who can reduce their income, they can qualify for help," Goeman said.

"We do not have individual plans anymore unless you go through the Affordable Care Act exchange. That's where an individual can pick up coverage, but we have found so many people who have employers who do not want to offer coverage because it's too expensive. So we have had a number of people who are stuck in this gray area because we only have one company and they are no longer taking new enrollees."

Goeman said more farmers and other individuals are signing up for high-deductible short-term medical plans that renew every three months. Short-term medical may run $100 to $150 a month with a $3,000 deductible. Such plans do not meet the minimum essential requirements under the Affordable Care Act, but that's a lot more reasonable than paying $900 a month with a $10,000 deductible that people are being offered by the full-coverage insurer.

"There are people playing that game just to have some catastrophic policy," he said. "They know they are going to pay a tax penalty."

Some farmers are buying those short-term policies just until they can reach eligibility for Medicare, Goeman said. The problem with short-term insurance is pre-existing conditions normally aren't covered.

"We've had probably 10 to 13 farmers do that, and if they have a year where they stay healthy and don't use the deductible, it probably saves them $13,000 to $15,000 in premium."

There are alternatives to actual insurance as well. Matthew Bennett farms near Windsor, Illinois, and does marketing seminars for farmers. Lately, Bennett has been talking more about family living expenses in those events and finding ways to save. In 2016, with premiums, out-of-pocket costs and uncoverable expenses, Bennett said the family spent $37,000. "Because of my income, we did not get subsidies," Bennett said. "After last year, we knew we just had to do something different."

In his own family of seven, Bennett found a way to save thousands by switching from a traditional health insurance plan to a health care sharing plan called Samaritan Ministries. Under the Affordable Care Act, members of such a health sharing plan are not subject to the insurance mandate. Under such a plan, enrollees pay any medical costs under $300 themselves. Bennett said that under the plan, he pays $500 a month, but also gets discounts with health providers as much as 65% because the family is paying cash for doctor visits.

There are a growing number of these faith-based health programs cropping up around the country. They each have specific caps on what they will pay for, and there are a lot more restrictions than an actual insurance policy. These faith-based programs are careful to stress they are not actual insurance. Still, they can provide a health safety net that's more affordable than insurance costs in rural America.

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

(AG/BAS)

A Sickly Harvest

06/26/2017

By Emily Unglesbee
DTN Staff Reporter



ROCKVILLE, Md. (DTN) -- The winter wheat harvest will be a lot shorter than usual this year for Kent Eddy.

The western Kansas farmer estimates he will only harvest 60% of his wheat crop where he farms near the town of Syracuse.

The culprit?

Wheat streak mosaic virus (WSMV), which spread across the western third of Kansas this year, yellowing fields and decimating yield potential. While there's little that can be done about the 2017 damage, wheat disease experts say the situation this year could lead to even more problems in 2018.

"It is by far our biggest concern of the year," said Kansas State University wheat and forages production specialist Romulo Lollato. "Area abandonment of infected fields will be especially big this year."

Eddy destroyed 20% of his worst acres and planted sorghum. He estimates another 40% of his acres have some level of infection and will not yield well.

Several factors united in 2016 to cause the widespread outbreak of wheat streak mosaic this year, Lollato said. First, a wet summer allowed abundant volunteer wheat growth, which can house the wheat curl mite. The mite carries the virus.

The long, warm fall permitted mites to survive and spread through winter wheat extensively. At the same time, unusually high fall temperatures broke down the genetic resistance in varieties available to farmers.

THE VOLUNTEER PROBLEM

Volunteer wheat plants that survive into the fall can provide a home for the wheat curl mite until the new crop emerges. Usually, wheat farmers can get away with spraying volunteer wheat plants just once or twice each summer, Eddy noted. A herbicide pass in July controls the early post-harvest flush, and a second spray in August kills off any stragglers.

With plenty of moisture and a record large wheat crop coming out of the field, volunteer wheat plants came up continuously last summer, Lollato said.

"We heard of farmers that had to control it four times in the summer," he said. "It becomes really cost prohibitive," he added, noting how low wheat prices have fallen.

As a result, many missed the later flushes or simply didn't spray at all. The unusually warm fall weather helped the mites spread and hampered the effectiveness of the two WSM-resistant genes available in certain wheat varieties.

"When daily temperatures -- day and night -- are averaging above 65 to 70 degrees (Fahrenheit), then that genetic resistance is broken down," Lollato said. "Generally, we wouldn't see that break down until later in the spring."

ABANDONED FIELDS AND FALLING YIELDS

Wheat streak mosaic can cause a range of yield loss, with fall infections ranking as the most damaging.

Many fields this year will be completely lost to the disease, particularly in western Kansas, Lollato said. He recalled driving a 50-mile stretch in west-central Kansas without seeing a single healthy field this week.

The disease turns leaves yellow, often with faint green stripes from the veins, which give infected fields a pale, sickly appearance from the road.

"Every single field was completely overtaken by wheat streak mosaic," he said. "Most of those fields will be abandoned."

Eddy feels fortunate to have been able to replant 20% of his worst fields and recoup some of the losses. But another 40% of his winter wheat has varying levels of infection, which can drop yields dramatically.

Lollato recently viewed a yield map from one western Kansas producer from a field with severe wheat streak mosaic infection.

"Yields were ranging from zero to 35 bushels per acre, with the majority being below 10 or 15 bushels," he said. "Producers that will take many of these fields to harvest -- that is the level they will see probably."

LOOKING AHEAD

One Kansas State researcher, Bernd Friebe, has developed another source of genetic resistance to wheat streak mosaic. This gene, first found in wheatgrass, tolerates higher temperatures and should prove valuable to Great Plains growers, he told DTN.

However, any wheat lines with the new gene, Wsm3, are likely several years from commercialization.

For now, wheat growers must make volunteer wheat control a priority this summer if they want to avoid the same problem next year.

Lollato stresses that growers must think of their neighbors as well of themselves, given how easily the mite can blow from field to field in the fall.

"It's a community problem and we have to act as a community," he said. "If you see neighbors that have volunteer wheat, talk to them and have a conversation about it."

Fields hit by hailstorms during grainfill periods will be most at risk for heavy volunteer populations, he added. Hail damage at this stage can leave many viable seed heads on the ground, which will sprout later in the summer.

"So producers who had hail any time from May on will have a lot of volunteer wheat," Lollato warned.

For more information on controlling wheat curl mite and the viruses it carries, see this Kansas State article: http://bit.ly/….

Emily Unglesbee can be reached at Emily.unglesbee@dtn.com

Follow Emily Unglesbee on Twitter @Emily_Unglesbee

(GH/ES)

Jury Rules Against Syngenta

06/26/2017

By Todd Neeley
DTN Staff Reporter



OMAHA (DTN) -- A Kansas jury has awarded farmers $217.7 million in compensatory damages in the first of several class-action lawsuits filed against Syngenta over the shipment of Viptera corn to China.

The jury in the U.S. District Court for the District of Kansas in Kansas City took less than a day to render a verdict.

A spokesperson for Syngenta told DTN that punitive damages were not awarded in the case. Instead, damages were awarded on actual losses as determined by the jury.

"We are disappointed with today's verdict because it will only serve to deny American farmers access to future technologies even when they are fully approved in the U.S.," Syngenta said in a statement to DTN. "The case is without merit and we will move forward with an appeal and continue to defend the rights of American farmers to access safe and effective U.S.-approved technologies."

Syngenta went on to say in its statement that it commercialized Agrisure Viptera "in full compliance with U.S. regulatory and legal requirements, including USDA, EPA, and FDA regulations.

"Viptera had also received approval in the key import markets recommended at the time by the National Corn Growers Association and other industry associations.

"Syngenta believes that American farmers should have access to the latest U.S.-approved technology to help them increase their productivity and yield. American farmers shouldn't have to rely on a foreign government to decide what products they can use on their farms."

Donald L. Swanson, an attorney with Koley Jessen in Omaha who follows the Syngenta cases, told DTN the Kansas case is the first of what may be a "half-dozen" cases.

"The idea is to try a number of cases like this and get a jury verdict in each," Swanson said. "The jury verdicts will then inform the parties on how the overall case should settle. That's what happened, for example, in the prior rice cases. A positive jury verdict in the first Bellwether trial is, obviously, a very good thing for the plaintiffs. Syngenta will appeal this ruling."

Swanson said the appeal process could take a couple of years to complete.

"What the appeal process will do is allow time for the other Bellwether trials to occur," he said.

The lawsuit was filed by four Kansas farmers who represent more than 7,000 farmers in the state. It is the first of multiple lawsuits claiming Syngenta should have inspected and prevented harvested Viptera (MIR 162) corn from being shipped to China in 2013 and 2014.

Plaintiffs in the case allege Syngenta sold corn with Agrisure Viptera and Duracade traits prior to the traits receiving import approvals in several countries, including China. China claims it found and rejected corn shipments containing the traits, which plaintiffs say led to lower corn prices.

The second case is set for trial on July 10 in Minnesota state court. That case was brought on behalf of about 60,000 farmers.

The official lawsuits filed on behalf of corn producers include cases in Alabama, Arkansas, Colorado, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Nebraska, North Carolina, North Dakota, Ohio, Oklahoma, South Dakota, Tennessee, Texas and Wisconsin.

All farmers in the United States who priced corn for sale after Nov. 18, 2013, were approved last fall as a major class in the ongoing lawsuit.

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @toddneeleyDTN

(AG/CC)

Dicamba Drama

06/23/2017

By Pam Smith
DTN Progressive Farmer Crops Technology Editor



DECATUR, Ill. (DTN) -- Dicamba herbicide could have its own mini-series in the state of Arkansas. The question of whether to ban in-crop use of dicamba for the remainder of the growing season will be back on the table in the state on June 23 because of a voting discrepancy.

Tuesday, June 20, it initially appeared Arkansas State Plant Board (ASPB) did not have enough votes to carry the measure, despite eight members voting for the dicamba ban and six against the proposal. It was assumed nine yes votes were needed for passage since there are 16 voting board members on the 18-member board.

As an alternative measure, the group then decided to recommend tacking additional application restrictions on Engenia, the only dicamba product that can be legally sprayed over the top of soybeans and cotton in Arkansas. The ASPB voted 11 to 3 to require applicators to use hooded broadcast sprayers when spraying Engenia and increased the downwind buffer to 1 mile (originally 0.25 mile).

However, soon after the special session adjourned, the vote on the proposed ban was called into question when it was realized that only 15 voting board members had participated in the meeting either in person or by phone and that the original 8-to-6 vote should have carried the measure. Adriane Barnes, communications director for the Arkansas Agriculture Department, told DTN via email it was then decided that the board would re-vote to consider a ban of in-crop use of dicamba due to this "procedural error."

The follow-up meeting is scheduled for Friday in Little Rock. Any proposal that might be passed would require the signature of Arkansas Governor Asa Hutchinson.

EYES ON ARKANSAS

While the actions would apply to Arkansas farmers only, the drama is being closely followed on many fronts. Dicamba drift complaints in 2015 and 2016 were often blamed on the fact farmers were able to plant dicamba-tolerant varieties, but had no low-volatility dicamba herbicide available to use in the crop.

Arkansas took a harsher line than other states when the Environmental Protection Agency (EPA) finally approved new herbicide formulations for the 2017 season to be used with what is known as the Xtend cropping system. The state cut off the use of DGA-based dicamba herbicides (XtendiMax and FeXapan) after April 15 until more studies could be conducted. Engenia was sanctioned because it had weathered university testing. Arkansas also required mandatory applicator training, extended Engenia buffer zones around the entire field at application and established a 0.25 mile downwind buffer to sensitive crops.

"The thought during development of these restrictions was an attempt to minimize the amount of injury from off-target movement this season," said Tom Barber, University of Arkansas weed scientist. "Unfortunately, that has not been the case."

At end of day June 20, the Arkansas Agriculture Department (AAD) had received 141 dicamba misuse complaints. Arkansas farmers told DTN herbicide spraying is likely to continue for the next week or so and that the crop is late in some regions after being replanted due to flooded conditions.

It generally takes one to three weeks for the cupped soybean leaves characteristic of dicamba injury to appear. How much yield loss is associated with injury depends on the dose the plant receives. In the case of soybeans, plants injured in the reproductive stage have larger yield losses, but may have less visual injury. Tomatoes, peanuts, sweet potatoes and many other plants are also highly susceptible to the herbicide.

Reed Storey, who farms near Marvell, Arkansas, traveled to Little Rock to testify in support of the ban on Tuesday. He had 600 acres of soybeans damaged by dicamba drift last year that amounted to an estimated $70,000 in unrecoverable losses.

Storey said he planted some Xtend soybean varieties this year as a defense mechanism in fields where he knew neighbors would be spraying dicamba nearby. "I don't intend to spray dicamba on my own fields, but I paid for the protection against drift," he said. While those fields got by unscathed, he has already found dicamba-puckered-up beans in some of his other fields that did not contain the trait protection.

He said he understands why farmers that chose to pay for and plant varieties containing the Xtend technology would prefer not to be told they can no longer use the tool. Without dicamba, they are limited to glyphosate and PPO-inhibitor post-emergence options and tough-to-control weeds like Palmer amaranth have shown an increasing ability to resist those types of herbicides. "However, if we all start planting Xtend, that technology will likely become resistant too," he said. "And I really don't want to be forced to plant a technology to protect myself."

The ASPB allowed eight testimonies -- four on each side of the proposal for a temporary ban, according to Terry Walker, ASPB director. Additional written comments were received from farmers and citizens and presented to board members regarding the emergency proposal for 120-day halt to dicamba spraying.

OTHER STATE REPORTS

On June 19, the state of Missouri was reporting 52 pesticide misuse complaints statewide for the year. As of June 20, the Mississippi Department of Agriculture and Commerce told DTN it was investigating 28 complaints of suspected off-target movement of dicamba, compared to 13 cases in 2016.

For Arkansas dicamba updates go to: http://www.aad.arkansas.gov/…

Pamela Smith can be reached at Pamela.smith@dtn.com

Follow her on Twitter @PamSmithDTN

(AG/)

Ag Lenders Take Caution

06/23/2017

By Elizabeth Williams
DTN Special Correspondent



KANSAS CITY (DTN) -- The winter/spring of 2017 did not see the financial shake-out many financial experts expected after three consecutive years of declining net farm income. In fact, lenders and other ag industry representatives at the Kansas City Federal Reserve Bank's annual Ag Symposium last week were not wringing their hands -- yet.

There are pockets of more severe financial strain, such as dryland wheat country in the western Plains and in the Southeast U.S., though lenders at the symposium did not report an excessive amount of troubled loans.

"We've had to rely on equipment equity and land equity as farmers re-balanced their loan portfolios [this winter]," reported Rob Keil, senior vice president and chief credit officer with Dacotah Bank in Aberdeen, South Dakota. "Working capital has disappeared," said Keil, "as we are in our fourth year of [cash flow] bleeding."

LAND VALUES SUPPORT LOANS

Land values are staying relatively stable -- on highly productive ground. For example, central Iowa land sales in May brought $10,000 to $10,500 per acre on highly productive (CSR2 above 90) 80-acre parcels, according to Peoples Company, based in Clive, Iowa. This, despite farm incomes that are about half of their peak of 2013, said Nate Kauffman, assistant vice president and Omaha Branch Executive, Federal Reserve Bank of Kansas City.

Kauffman reported, "Despite increases in financing needs by farmers and ranchers, we're not seeing delinquencies rising much" in the 10th Federal Reserve Bank district. That district covers Nebraska, Kansas, Oklahoma, Wyoming, Colorado and parts of Missouri and New Mexico.

"Soybeans paid the bills last year," noted White Cloud, Kansas, farmer Ken McCauley, president of the Kansas Corn Growers. "As for corn, I'm still trying to sell last year's crop."

Lower input expenses helped, McCauley said. "Fertilizer was the big one; seed costs were stable for a change, and cash rents declined some. Our cash input costs this year went down $50 an acre compared to last year. That really helped, especially with our banker," McCauley added.

McCauley reported a northeast Kansas row-crop farm sale of $7,600 per acre, down from peak levels of $10,000 per acre, which is relatively strong for his area.

Jim Farrell, president of Farmers National Company based in Omaha, Nebraska, agreed that row-crop farmers dodged a bullet last year. "Soybeans made money last year, and a lot of 2016 grain still has to be sold. We didn't see very many financial issues crop up over the winter. But there is definitely some troubled pockets."

Farmers National Company provides farm/ranch management and real estate services in 28 states.

"Dryland wheat areas did not have a good crop, subsequently land values have deteriorated," Farrell said. "It is hard to sell dryland wheat ground right now in many areas. It could be a stressful fall."

In cattle country, the outlook is more upbeat. Cattle prices have recovered. In fact, "the cow/calf, stockers and feeders are all making money now. That doesn't happen very often," explained Todd Welch with the Bank of Kremlin in Kremlin, Oklahoma.

That scenario could change later in the year if feedlot placements continue to increase, said John Harrington, DTN livestock analyst.

"My guess is relatively aggressive placement activity will continue through the balance of the summer, setting the stage for much larger beef supplies in the second half of 2017," Harrington said. Solid evidence of ongoing expansion in the pork and poultry sectors means that total meat supplies in 2018 and 2019 will make sustained cattle profits very challenging, he said, without steady growth in domestic and foreign beef demand.

FINANCE MAKEUP CHANGING

Keil, with Dacotah Bank, said 40% of its loan portfolio in North Dakota, South Dakota and western Minnesota is in agricultural loans, making it the 16th largest U.S. ag lender. The makeup of those loans are changing along with the rural economic landscape.

"Ten years ago, a good portion of our operating lines were half a million dollars. Now, that's risen to over $1 million, and some are in the $4 million to $6 million range," said Keil.

The bank is now offering more "inventory notes," versus traditional cash shortfall notes, as producers take longer to market grain.

On the downside, Keil is seeing more cash-flow leverage problems. "Operators who mostly rent their land are more challenged and have fewer options to weather the storm," he said. Keil has also seen some large operations dramatically drop in net worth in the past four years. One 15,000-acre operation saw its net worth fall $4.2 million, a 59% drop in net worth, since 2013; another 8,000-acre operation lost $2.5 million, or 47% of net worth, in the past two years, Keil noted.

The Farm Service Agency guaranteed loan programs have "absolutely been a saving grace for rural banks and young farmers," said Keil, allowing banks to stay with their younger borrowers who don't have the capital to service loans. Farmer Mac has also helped agricultural lenders reduce risk in these tough times. "We're watching these loans carefully," explained Keil. He adds that loan officers are working closely with farm borrowers to cut expenses to the bone and to keep track of where every penny is going.

But bankers are nervous. "At a recent credit conference I attended, the general consensus was a normal crop would produce a stressful year," said Farrell with Farmers National Company. That makes it another year of touch-and-go for ag lenders and their borrowers.

Elizabeth Williams can be reached at elizabeth.williams@dtn.com

(GH/BAS)

Trump Salutes Ag

06/23/2017

By Todd Neeley
DTN Staff Reporter



CEDAR RAPIDS, Iowa (DTN) -- President Donald Trump told Iowa farmers and ranchers Wednesday evening that he will continue to stand with them on a number of issues.

During a campaign-style rally, Trump said he will defend attacks on ethanol, work to eliminate the estate tax, continue to cut back regulations that hurt farmers and ranchers, all while lauding now-former Iowa Gov. Terry Branstad as the next U.S. ambassador to China.

Ahead of the rally that was filled to the rafters, Trump made a stop at nearby Kirkwood Community College to recognize the school's precision-agriculture program. There, Trump was joined by Branstad and new Iowa Gov. Kim Reynolds.

In the nation's largest ethanol-producing state, the president gave a nod to an industry that wants expanded markets.

"Your ethanol industry has been under attack," he said during the rally, although he stopped short of providing details.

The U.S. Environmental Protection Agency may soon release the latest renewable volume obligations in the Renewable Fuel Standard, the first such release by the Trump administration.

When the president nominated Scott Pruitt to head the EPA, there were concerns in some agriculture circles that the pro-oil Pruitt might dismantle the RFS.

Trump seemed to lay that notion to rest.

Maynard, Iowa, corn and soybean farmer and Iowa Corn Growers Vice President Mark Recker attended the Trump event at Kirkwood. Recker said it was good to see the president visit Iowa and show support for agriculture.

Now, he said, it's time for action.

"We want to see action steps, moving away from campaign rhetoric," Recker said. "Let's get to selling E15 year-round. Let's take care of trade agreements. Let's start talking about locks and dams. If we're going to grow larger crops, we need infrastructure. I wish he would have mentioned locks and dams."

Although the president "pushed all the right buttons" when it comes to talking agriculture, Recker said there still is concern on the ethanol front about EPA's Pruitt who was a noted critic of the industry.

"We're still on the defensive a bit," Recker said. "I hope we can build and get policies in place. I take him for his word that he wants to build rural America. The fact that he came to Iowa and talked agriculture issues is good."

The president received uproarious applause when he talked about his decision to eliminate the waters of the United States, or WOTUS, rule. The EPA has started a process that could lead to a rewrite of the rule.

Agriculture groups were against the rule because it expanded federal jurisdiction on private land. The rule was placed on hold nationally as part of a number lawsuits filed.

In offering red meat to his supporters, the president essentially mocked the WOTUS rule.

"If you have a puddle in the middle of a field, it's considered a lake," Trump said. "Can't touch it. If you touch it, bad, bad things happen to your family. We got rid of that one too."

Trump said his administration is working to reform the EPA. Another media outlet this week reported the agency is set to offer a buyout for some 1,200 EPA employees as part of a downsizing of the agency.

"No longer will EPA be telling you how to run your life or your business," he said.

When it comes to Branstad, the president said he was impressed by the nation's longest-serving governor's relationship with the Chinese.

"He has been making good deals for Iowa, and he will make good deals for America," Trump said.

Before Trump won the presidency, he said he had a conversation with Branstad about China.

"He said, 'Donald, can you do me a favor and don't say anything bad about China?'" Trump said.

"I remember a year ago I called him up and said, 'How would you like to be the ambassador to China? He wants to do what's right for the country. He said, 'When my president calls me to help with our great country, I do it.'"

For years agriculture interests have called for the elimination of the estate tax. Trump said the tax is hurting family farms.

"We're working hard to get rid of the death tax so you can pass along your farms to your children and your grandchildren," he said.

Farms make up about 2.6% of all assets declared by estates that paid the tax in 2015, the last year of available data. Real-estate and partnerships assets made up about 9% of all assets claimed in estates that paid the tax. The bulk of assets involved in estate taxes are stocks or bonds held by the deceased.

On trade, Trump reiterated that he's willing to re-examine trade deals made by the previous administration. He pointed to backing out of the Trans-Pacific Partnership, renegotiating the North American Free Trade Agreement, reversing the previous administration's policy on Cuba and backing out of the Paris Accord, as successes.

"It (Paris Accord) would have cost millions of lost jobs, billions of lost dollars and put us at a big disadvantage," Trump said.

While declaring Democrats as "obstructionists," Trump used the occasion to press Republicans and Democrats alike to work together to pass health care reform, tax cuts and infrastructure legislation.

"We will rebuild rural America," he said. "In this great national rebuilding, we will buy American and hire American."

Following the president's stop at Kirkwood Community College, Iowa Gov. Kim Reynolds said in a statement Wednesday the president's visit was positive for agriculture. Reynolds highlighted the president's comments on rural broadband.

"He understands the important role technology plays in that mission and is committed to helping innovation thrive," Reynolds said. "On our visit to Kirkwood Community College, President Trump and I saw the high-tech equipment used in the school's precision agriculture program. Precision agriculture optimizes yields while conserving resources. Each advance made in technology is another step in the right direction for both farmers and the environment."

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @toddneeleyDTN

(CC/AG)

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