Featured Agriculture News

05/26/2017 - Moisture Aids Rangeland Recovery

Timely rains are helping rangelands bounce back from wildfire damage. Extension personnel recently shared what they learned from past wildfires in other counties on the Plains and what were some of the challenges, as well as benefits.

05/26/2017 - Corn Decisions

Don't panic -- cold temperatures and medium- to heavy-textured soils have likely slowed the loss of nitrogen from leaching and denitrification this month.

05/26/2017 - Senators: No Farm Bill Cuts

At what he described as the first farm-bill hearing in Washington, Senate Agriculture Committee Chairman Pat Roberts acknowledged that the national debt is approaching $20 trillion, but he said that, between the savings from the last farm bill and a USDA crop insurance contract negotiation, "Everyone on this committee agrees that ag has already given at the store."

05/25/2017 - Taxes and Export Competition

Congress is debating the idea of a border adjustment tax on imported goods as an offset for lowering corporate tax rates. Proposals have suggested implementing a tax on imported goods as high as 20%. Industries have different takes on the possibilities of a BAT, depending on whether the companies rely more on exports or imports.

05/25/2017 - Kub's Den

In a low-volatility grain market environment, prices on any one day can seem just as unappealing as the next, making it hard to get motivated to make timely sales. Perhaps there is a best time of day or best day of the week to serve as a trigger for those decisions.

05/25/2017 - USDA Weekly Crop Progress

Planting and emergence for both corn and soybeans were running close to the average pace last week, making USDA's weekly Crop Progress report neutral for both crops.

05/24/2017 - Todd's Take

Last Thursday's 6.5% drop in Brazil's real was a black swan event for most, but it may have been a multi-million-dollar bonanza for a few.

05/24/2017 - View From the Cab

Brent and Lisa Judisch of Cedar Falls, Iowa, were able to complete some custom soybean drilling last week before storms brought fieldwork to a halt. Meanwhile, wet conditions near Miami, Oklahoma, prompted Zack Rendel to pull the plug on his remaining milo planting and switch to soybeans.

05/24/2017 - Budget Plan Lands With a Thud

The White House budget plan for USDA essentially puts down a marker for what the White House wants to see in the next farm bill.
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05/26/2017 Moisture Aids Rangeland Recovery

By Russ Quinn
DTN Staff Reporter

ASHLAND, Kan. (DTN) -- Ranchers whose rangeland was affected by wildfires this spring in southwestern Kansas and northwest Oklahoma are seeing the recovery process progress faster than many expected. Since March, moisture has increased. While the destructive fires burnt structures, animals and fences, there could be some long-term positives for the health of the range after the fires.

In a meeting May 18 put on by Oklahoma State University (OSU) Extension and Kansas State University (KSU) at the Snake Creek Ranch south of Ashland, Kansas, Extension personal from both states discussed how wildfires affect range ecology. They also covered how the fires affected livestock and possible grazing practices ranchers could employ after fires. In addition, a panel comprised of Extension educators from counties affected by previous wildfires and local ranchers discussed how the recovery process went in their areas.

MOISTURE IS KEY

Justin Barr, OSU Extension educator in Ellis County, Oklahoma, said moisture after the fire will dictate how quickly the recovery process goes. The entire region has seen plentiful moisture since the fires and this has allowed grass to grow and pastures to turn green.

Barr, who is a volunteer firefighter and runs his own cattle, has seen several wildfires over the last 10 years. Moisture after wildfires will heal the range considerably faster than one would expect, he said.

"Moisture, more so than the duration or intensity of the fire, is the one factor that will dictate how fast or slow the grass recovers," Barr said.

Tim Marshall, KSU Extension educator for Barber County, Kansas, agreed with Barr. After the Anderson Creek wildfires hit part of his county in March of 2016, most producers feared range recovery could take months, if not years.

The range actually recovered much quicker.

"As with this fire, we had timely rains after and the effects to the grass itself was minimal," said Marshall.

For rangeland that was in good shape before the fires, and then got the timely moisture, ranchers did not need to reduce cattle numbers on the affected land by much. However, Barr said, land in poorer shape before the fires or with more sandy soils could see stocking rates reduced to half the number of animals in a normal grazing setting.

BENEFITS OF FIRES

Barr said he is a big proponent of prescribed fires to eliminate unwanted plant species, as well as limit the spread of the eastern red cedar, a pest that can take over rangeland if not controlled. He tries to burn rangeland at least every six to eight years to control red cedar and wishes others would also use controlled burns to do the same against those cedars if they were missed by wildfires.

Another good strategy, in addition to lower stock rates, is to delay when cattle start to graze on rangeland.

Greg Highfill, OSU Extension educator for Woods County, Oklahoma, said allowing the grass a period of rest before grazing will be important for rangeland burnt by fires. Again, the condition of the range before the fires could decree how much delay in grazing is needed, he said.

All three Extension educators stated that a year after the fires in their respective counties there were not many long-term issues with affected rangeland.

EFFECTS ON LIVESTOCK

In addition to how wildfire affected rangeland, there was some discussion on how livestock emerged from the fires.

Cattle that survived the fires face a list of health issues that affect their ability to breed and support a calf down the road. Burnt hooves, hides, udders and teats can all have long-term effects, Highfill said.

Cows that suffered scorched udders or teats need to be examined closely to see if the damage is permanent or if recovery is possible, he said.

Highfill said he has his own cow-calf herd and in previous fires he had cattle with mildly scorched udders. These cattle recovered and were able to support a calf in future years.

However, ranchers who keep cattle with damaged udders and teats could see short-term issues with the cows kicking the calves off when they attempt to suck, he said. Longer-term issues with udders and teats could result in problems with mastitis when the cows have calves a year from now.

Marshall said if there is any doubt about the effects of scorched udders, it is probably better to err on the side of caution; move these possibly affected cows to town now for sale, rather than face issues down the road.

Cattle can also be affected by the amount of smoke inhaled. Smoke in the lungs can lead to several health issues such as bronchitis, congestive heart failure, chronic obstructive pulmonary disease, emphysema and asthma.

"My vet recommended we treat the calves (for possible lung issues) so we ran them through the chute," Highfill said. "We didn't treat the cows and we never really had any issues with them."

MORE WEEDS?

Another topic raised at the meeting was possible weed introduction from donated hay from other areas, including other states.

The rancher who asked the question said he was only feeding the donated hay in one spot in his lots for fear it could have weed seeds in it. He was very concerned he could be introducing a new weed to his area, he said.

All three Extension educators agreed this is a valid concern.

Marshall said he "has no doubt" these donated bales of hay have weeds in them not found in southwestern Kansas and northwest Oklahoma. He recommended producers feed this hay in one spot and then spray herbicides on any weeds that grow later. This will prevent the spread of new weeds.

Barr said when he worked in Roger Mills County, Oklahoma, in the 1990s as the Extension educator, there was a weed found in the county and no one knew what it was. He sent it to the OSU weed scientist and found out it was Scotch Thistle, a weed not found in their county.

"In the 1970s, they air dropped (donated) hay to the dairies in the county during severe winter storms and we speculated that is where this weed came from," Barr said.

Highfill said during the time after the fires this March, an Extension educator in a county in southern Oklahoma stopped hay donations coming up from Texas from crossing his county for concerns about fire ants being in the transported bales, and thus exposing his county to the pest.

"We need to really think about things like this to keep these unwanted visitors out," Highfill said.

Russ Quinn can be reached at russ.quinn@dtn.com

Follow Russ Quinn on Twitter @RussQuinnDTN

**

Editor's Note:

DTN staff reporters Russ Quinn and Todd Neeley recently traveled to some of the areas in Texas, Oklahoma and Kansas that saw wildfires race through earlier this year. DTN's special coverage coming up includes a closer look at how some of the ranchers and communities were affected by the wildfires, how they responded and recovered, and lessons learned for the future.

(ES/CZ/BAS)

05/26/2017 Corn Decisions

By Emily Unglesbee
DTN Staff Reporter

ROCKVILLE, Md. (DTN) -- Central Indiana grower Mike Starkey has watched rainfall soak, saturate and flood soils across his state with great alarm this spring.

"For everyone who applied nitrogen pre-plant, a lot of it has got to be going right down the tile lines and down to the Mississippi," he said.

Nitrogen loss -- and its crop and environmental consequences -- seem more possible than ever during this wet spring.

Take heart and try to be patient, said University of Illinois crop scientist Emerson Nafziger. He maintains that nitrogen loss is likely far lower than many growers think.

"The biggest danger here is our imagination gets active and tells us there's nothing left out there," he cautioned. "Nitrogen loss is not the biggest factor facing our corn crop right now."

THE UPSIDE TO THE COLD WEATHER AND HEAVY SOILS

Nitrogen is often lost by leaching -- the physical movement of nitrates out of the soil by water -- or denitrification, where bacteria convert nitrates to gas.

The common denominator for both loss mechanisms is that nitrogen must be in nitrate form.

In order for nitrogen to convert from ammonium to nitrates (nitrification), it needs three key ingredients: heat, moisture and aerated soils. Although the winter and early spring supplied some warm temperatures, much of the Midwest has seen cool conditions throughout May.

As a result, some nitrogen has converted to nitrates by now, especially if it has been in soils for many months. Recent University of Illinois soil samples show that about 70% of fall-applied nitrogen and at least half of March- or April-applied nitrogen was in nitrate form by early May, when the wet weather struck.

But cooler temperatures in May have likely slowed nitrification recently, Nafziger said. "Our soil temperatures have risen slowly in Illinois," he said.

Medium- and heavy-textured soils may also have slowed losses from leaching, he added.

"Soil samples taken from the same fields before and after the heaviest rainfall period do not show large decreases in N in the top 2 feet of soil," he wrote in a university newsletter.

Water moves fairly slowly through silt loam soils, silty clay loam and heavier soils, which are found in many parts of Illinois and the Corn Belt. University of Minnesota Extension educator Brad Carlson estimated that nitrogen moves only about 5 to 6 inches for every inch of water that enters soil beyond its holding capacity in silt or clay loam soils. In sandier soils, that movement is closer to 12 inches, however.

So heavy rainfalls will move nitrogen out of already saturated soils, but don't overestimate the rate, Nafziger said.

"An inch of water per acre coming out of tile lines carrying 10 parts per million nitrate-N takes with it less than 3 pounds of nitrogen per acre," he said. "So even in the wettest areas, we would guess loss to be less than 10 pounds of nitrogen per acre," he said of Illinois fields.

Denitrification is also common with saturated or flooded soils, but like nitrification, it requires warm soil temperatures.

"With soil temperatures in the 60s over most of the past month, we don't believe that denitrification has been a very large loss mechanism this spring," Nafziger said.

LOOKING AHEAD

Don't rush to dump more nitrogen on your fields, Nafziger urged. "It's still premature to make a decision to put more nitrogen on right now, especially if you already put your full intended amount on," he said.

Keep in mind that just because nitrogen isn't in the top 2 feet of soil right now doesn't mean it's lost forever to your crop.

"As long as the excessive rainfall stops, water movement will slow down," he said. "Crops bringing up water later in the season might bring some of that nitrogen back to the roots and take it up."

If you farm sandy soils, or your fields stay pale well into June under improved soil conditions, that could be a sign that you need to address nitrogen loss, Nafziger said.

But provided better growing conditions develop, most growers won't see nitrogen loss symptoms before tasseling and will need to make decisions long before then.

"If someone is going out to do a pre-planned sidedress and puts 20 more pounds on, I think that's within the realm of reason if they've been very wet earlier," Nafziger explained. "But people deciding to put on another 50 pounds in a new trip after they've already applied 200 pounds -- that's a decision that should be made only after waiting to see what the crop looks like in mid-June, after plant growth has accelerated and roots are able to get to the nitrogen that's there."

For more help assessing your nitrogen situation, see this tool from Iowa State University: http://bit.ly/….

CHANGING THINGS UP

If nothing else, Starkey thinks the shrinking planting window and the intense rain events he's seen recently are a strong argument to rethink nitrogen management.

He's moved all his nitrogen to planting and in-season applications.

"We need to manage nitrogen differently than in the past," Starkey said. "We don't put a drop of nitrogen down until we plant." Between in-furrow applications and a side-band mix, he puts down about 65 pounds alongside his corn seed.

He also comes back in with a sidedress trip of 65 pounds at V6. Sometimes he will add more at pre-tassel with Y-drops, but only if the fields look like they need it.

"It is scary to see so much nitrogen being applied pre-plant and then have these intense rain events that we can't control, where we lose a lot of nitrogen," he said.

He sees much more than lost money at stake.

"I'm concerned for the environment, the Gulf of Mexico and water quality," he said. "I don't want it to, but I worried it's going to come down to this [nitrogen use] being mandated."

See Nafziger's article on nitrogen loss here: http://bulletin.ipm.illinois.edu/….

See the University of Minnesota video by Carlson here: http://bit.ly/….

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

Follow Emily Unglesbee on Twitter @Emily_Unglesbee

(PS/AG)

05/26/2017 Senators: No Farm Bill Cuts

By Jerry Hagstrom
DTN Political Correspondent

WASHINGTON (DTN) -- As they heard testimony from economists on the problems in farm country, leaders of the Senate Agriculture said Thursday there should no more cuts to farm bill programs.

Committee Chairman Pat Roberts, R-Kan., and ranking member Debbie Stabenow, D-Mich., made the statements two days after President Donald Trump's budget called for massive cuts in money and personnel over the next 10 years.

At what he described as the first farm-bill hearing in Washington, Roberts acknowledged that the national debt is approaching $20 trillion, but he said that, between the savings from the last farm bill and a USDA crop insurance contract negotiation, "Everyone on this committee agrees that ag has already given at the store."

Whoever negotiated the contract cut to crop insurance on top of the farm bill cut had "some relationship with Lizzie Borden," Roberts said, departing from his prepared remarks. "Farmers, ranchers, and rural families understand fiscal responsibility. But, now is not the time for additional cuts. We need to review what is working and what is not working."

"We need to ensure that producers have risk management tools at their disposal. Let me emphasize that crop insurance is the most valuable tool in the risk management toolbox," Roberts said twice -- and then repeated the statement a third time at the request of Sen. Heidi Heitkamp, D-N.D., and Sen. Luther Strange, R-Ala., the newest member of the committee.

In a statement apparently intended for farm lobbyists as well as committee members, Roberts also said, "We need a farm bill that meets the needs of producers across all regions and all crops. The challenges are so great, given the critical times we live in, it is essential that small differences do not get in the way of the larger goal -- to pass a farm bill."

Stabenow focused more directly on the Trump budget. Through the 2014 farm bill, "the Agriculture Department has made historic, targeted investments in rural communities to spur jobs and opportunity over the last several years. As a result, we're beginning to see small towns across our country on the road to recovery," she said.

But, Stabenow continued, "There is much more to do for these communities -- which is why it's deeply troubling that this administration has proposed sharp budget cuts that would roll back a lot of the progress we've seen." The Trump budget, she said, "cuts $231 billion from farm bill programs, which would make a five-year farm bill virtually impossible to pass.

"It cuts crop insurance by $29 billion, which would take away a crucial part of the farm safety net at a time when it's needed most," Stabenow continued. "The budget also calls for sharp cuts to the family safety net, gutting SNAP by nearly 30%. Proposed closings of USDA offices would reduce customer service for our agricultural producers, and make their tough jobs even harder. Elimination of specialty crop and market access programs weaken our farmers' ability to recover from price slumps or pest and disease issues."

Stabenow said she was pleased that Agriculture Secretary Sonny Perdue intends to create an undersecretary for trade and foreign agricultural affairs, but is not pleased that the reorganization proposal includes elimination of the undersecretary for rural development.

"The combination of devastating budget cuts to critical services and the planned elimination of the undersecretary for rural development sends a powerful message that this White House is not concerned with the needs of America's small towns and rural communities," she said.

USDA Chief Economist Robert Johansson and Nathan Kauffman, assistant vice president, economist and Omaha branch executive of the Federal Reserve Bank of Kansas City, testified that conditions among farmers and ranchers continue to worsen, but that conditions are not as bad as in the 1980s.

Sen. Charles Grassley, R-Iowa, asked if farm land values have stayed high because outside investors are buying land. Johansson said that values have held steady first because about 50% of farm land is rented, and land rental contracts are multiyear and therefore not subject to immediate renegotiation.

Farm and ranch land rents are "sticky," Johansson said.

There is some "institutional investment" in land, Johansson added, but not much farmland comes on the market, and when it does, there are producers who want to buy it.

Kauffman added that it is important "to recognize the scale of wealth generated" when commodity prices were high and that farmers and ranchers have "limited alternative investments." Little land has come on the market, he noted, because there have been very few "forced liquidations."

Heitkamp said it would be helpful to lawmakers to know how much farmland is owned by operators and that she believes in North Dakota it is only 25%. Local owners realize that farm land rents should "fluctuate" with commodity prices, but if the owners live far away, they may have the attitude of a New York apartment owner who would not expect rents to go down at any time.

Alec Sheffer, director of retail sales for Agri-AFC in Montgomery, Alabama, who testified on behalf of the Agricultural Retailers Association, said farm retail suppliers have been hit hard by the downturn in the agricultural economy over the past decade. But he said retailers "are confident these winds are beginning to shift. We believe Congress will make changes in the upcoming farm bill to help strengthen the safety net provided by crop insurance programs and assist in improving conservation efforts."

Sheffer also said Congress should be careful to help agriculture in tax reform and that he expects the Trump administration to address regulations.

(CC/AG)

05/25/2017 Taxes and Export Competition

By Chris Clayton
DTN Ag Policy Editor

OMAHA (DTN) -- A border adjustment tax would help make American farmers and exporters more competitive globally, the top executive for Archer Daniels Midland told lawmakers Tuesday.

Juan Luciano, president and CEO for agribusiness giant ADM, told members of the House Ways and Means Committee that current tax policies favor foreign competitors, which is one reason U.S. export market share for crops such as corn, soybeans and wheat has declined over time.

Congress is debating the idea of a border adjustment tax on imported goods as an offset for lowering corporate tax rates. Proposals have suggested implementing a tax on imported goods as high as 20%. Industries have different takes on the possibilities of a BAT, depending on whether the companies rely more on exports or imports.

Congress is trying to decide if a border adjustment tax would reduce the trade deficit and increase U.S. jobs and exports.

Brian Cornell, CEO for the retailer Target, told lawmakers that an import tax could increase the costs of everyday items for all consumers. Target opposes the border adjustment tax, as Cornell said families would pay more so multinational corporations could pay less.

Luciano said ADM competes with a group of well-capitalized competitors globally that gain an advantage by being reimbursed on domestic consumption taxes when those companies export crops such as corn or wheat. Companies exporting out of Ukraine get those consumption taxes -- known as value-added taxes -- reimbursed when they export.

"A competitive tax code will help us continue providing American-made food and feed to our customers in the United States and abroad in the face of robust, and from a tax perspective, ever-strengthening competition from abroad," Luciano said.

He added, "We must have a globally competitive U.S. tax code" and encourage capital to come back to the U.S.

Luciano pointed out that the U.S. used to be the dominate grain exporter globally, but now Russia is the top wheat exporter, and Brazil is the leading exporter of soybeans. At least part of that is due to taxes. Tax reform would give American farmers and ranchers a chance to compete, he said.

"America's antiquated tax system may not be the only reason for this decline, but it clearly contributes," Luciano said.

The U.S. remains competitive because it has better infrastructure, Luciano said. He added, "We have lost in wheat to Russia, we have lost it in soybeans to Brazil."

ADM just this week announced it had completed a major upgrade to its export terminals in Brazil, expanding the facility's storage facilities and unloading docks.

William Simon, former president and CEO of Walmart, told House members he has concerns about a border adjustment tax, but if the tax were phased in over a long adjustment, it could stimulate more manufacturing in the U.S. "With the change, American sourcing will become increasingly viable," Simon said.

Simon also suggested the tax could be set up so a rawer product could be exported from the U.S., then reimported at a lower border tax, because it was produced with a U.S. raw material. Simon specifically pointed to American cotton on the international market as a possible example.

The hearing also included dueling economists, one of whom had worked on a border adjustment tax for decades. Lawrence Lindsey, who served as an economic adviser under former President George W. Bush, praised the tax, indicating it would bring back more manufacturing and further increase wages for people because of the tight labor market in the country.

Competing economist Kimberly Clausing of Reed College, said most trade-law lawyers think the U.S. would lose a World Trade Organization case over a border adjustment tax on imports. "This has given a lot of exporting firms pause in thinking about this proposal," Clausing said.

Lindsey countered that European countries are built around value-added taxes and the WTO would be hard-pressed to rule against such a similar tax plan. "Not even the WTO would be so boldfaced to say a border-adjustment tax is OK for Europeans, but not the U.S.," he said.

Luciano noted crop production is concentrated between the U.S., South America and Eastern Europe. More jobs could come back to rural towns if the U.S. became more competitive. He later said he worries about losing market share and competitiveness for U.S. products.

"The issue is a race between South America, eastern Europe and the U.S.," Luciano said.

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

Follow him on Twitter @ChrisClaytonDTN

(AG/BAS)

05/25/2017 Kub's Den

By Elaine Kub
DTN Contributing Analyst

Farmers, tell me if this scenario seems familiar:

You're standing in one of your fields, noting how the plants have popped out of the ground in beautiful green rows, and it occurs to you that, yes, there actually will be a lot of grain to sell this year. More grain than you already have hedged on the books. Decades of experience have convinced you that prices will tend to dwindle lower and lower toward harvest, so you know you'd like to make some sales here this month or maybe next month, or sometime, you guess, but anyway, you know you ought to do it soon. Or sometime. Maybe. You guess.

So you look at the new-crop cash prices on offer at your local elevator one day -- $3.38 for corn and $8.89 for soybeans -- and you think, "Hmm. That ain't so great. I'll wait and see if it goes up a couple cents tomorrow. I'd like to get $3.40, at least. Maybe $9 for the beans."

You put off the sales until the next day, when you go to look at the prices again. Now they're $3.37 and $8.86. "Hmm," you think, "Well, at least they're not going down too fast. I'll wait."

And you wait another day, and another day, and so on and so on in this universal pattern of procrastination, until it's nearly October and the idea of selling cash corn anywhere near a $3.40 price tag seems like something from a dimly remembered sweet dream.

If only there had been some clear signal from the heavens! Something to convince you, once and for all, that THIS is the hour. TODAY is the day. Many occupations have such clear guidelines. Airline pilots must try to get their flights into their scheduled gates at a specific minute of the hour. College professors must assign each student a final grade and report that grade at the end of each semester. CEOs of publicly traded companies have quarterly earnings reports that must be filed on certain dates each year. Journalists, of course, have deadlines. But farmers can procrastinate as long as their bankers will let them. They can pick any business day among an entire year of days to price their grain. When the markets are muddled and seem to be moving nowhere but sideways, how should a farmer pick that day?

One guideline might be the futures trading volume. This quantity isn't steady from day to day; rather, it occurs in spurts. On Monday, May 1, for instance, over 96,000 December corn futures trades were made -- 3 1/2 times as many as were transacted on a quieter random day, like Friday, May 12. It's interesting to note that high-volume days do tend to coincide with the chart's pivot points -- a flurry of activity will frequently occur right when the market is hitting a short-term high or short-term low. So, if a high-volume day occurs after a steady stream of losses, it may turn out to be the worst day to sell (or the best day to buy). But not always.

After examining data from the past couple of years, I can definitively say that the day of the week with the highest average corn futures trading volume has been Tuesdays, when traders tend to be 15% more active (across several contracts) than they are on Wednesdays. I can't guarantee that just because it's true on average, it will always be true on the week that you may feel like selling some grain. Furthermore, even if high trading volume does happen to occur on that particular Tuesday of that particular week, I can't guarantee that high trading volume will translate into a high grain price. Tuesdays were also the day of the week with the highest average volatility numbers, but that could as easily be downward volatility as upside volatility.

Now, from painful personal experience, I know that a person can decide "Today is the day to sell grain," and still sit staring at a flickering computer screen as hour after hour ticks by and the mythical perfect moment to hit 'Sell' never makes itself quite clear. So I took this exercise a step further and examined December corn trading volumes every half hour from the past two months. There is one timeframe that far outstrips any other -- the first half hour once the markets re-open in the morning.

Almost twice as many new-crop corn futures contracts are traded between 8:30 and 9:00 in the morning (Central Time) than during any other half-hour period during the average day. It goes like this: On average, over 4,000 December corn futures contracts are traded during that half hour, then about 2,000 contracts for each half hour until about noon, then a burst of about 2,500 contracts traded right around the close of the day session. During the overnight session, it's more like 20 to 100 December corn futures contracts traded during any half hour.

Again, a study of how trading volumes tend to aggregate on certain days and at certain hours is emphatically NOT a guarantee -- not by any stretch of statistics -- of positive price movement. But if all you need is a specific moment in time to serve as your decision moment, then may I suggest setting an alarm for Tuesday at 8:30 in the morning? In today's low-volatility grain markets, it may be as good a time as any.

**

Editor's Note: Elaine Kub is the author of "Mastering the Grain Markets: How Profits Are Really Made" and can be reached at elaine@masteringthegrainmarkets.com or on Twitter @elainekub.

(AG/BAS)

05/25/2017 USDA Weekly Crop Progress

By Anthony Greder
DTN Managing Editor

OMAHA (DTN) -- Planting and emergence were running close to the average pace for both corn and soybeans last week, while winter wheat conditions saw a slight boost from the previous week, according to USDA's weekly Crop Progress report released Monday.

USDA estimated 84% of U.S. corn was planted as of Sunday, May 21, even with a year ago but slightly above the five-year average of 85%. USDA also said 54% of U.S. corn was emerged, down from 58% a year ago and down slightly from the five-year average of 55% emerged. Monday's report is neutral for corn, said DTN Analyst Todd Hultman.

Soybean planting was estimated at 53% complete, even with a year ago and slightly above the five-year average of 52%. USDA said 19% of U.S. soybeans were emerged, down slightly from 20% a year ago and down from the five-year average of 21%. "Monday's report is neutral for soybeans," Hultman said.

Winter wheat conditions saw a slight boost in Monday's report.

Fifty-two percent of the winter wheat crop was rated in good-to-excellent condition, resulting in a DTN Winter Wheat Condition Index of 126, up 6 points from a week ago. DTN's index is down from 156 a year ago, but above the five-year average of 92. "Monday's crop ratings are slightly bearish for winter wheat," Hultman said.

USDA reported that 72% of winter wheat is headed, down from 74% a year ago, but up from the five-year average of 67%.

Meanwhile, U.S. spring wheat planting reached 90% complete as of Sunday, down from last year's 94%, but above the five-year average of 84% planted. Sixty-two percent of spring wheat was emerged, down from 75% a year ago but up from the five-year average of 59%. "Monday's report is neutral for spring wheat," Hultman said.

In other crop reports, cotton was 52% planted, compared to 45% last year and 50% average. Rice was 91% planted and 78% emerged, compared to 92% and 82% last year and 90% and 76% on average.

Sorghum was 37% planted, slightly behind the five-year average of 41%. Barley was 88% planted and 59% emerged, compared to 93% and 78% last year and 87% and 64% on average. Oats were 95% planted, 83% emerged and 26% headed, compared to 97%, 89% and 25% last year and 93%, 81% and 28% on average.

The following are highlights from weekly crop progress reports issued by National Ag Statistics Service offices in individual states. To view the full reports from each state, visit http://www.nass.usda.gov/…

Colorado

Rain and snow across the state halted fieldwork midweek. Several localities received several inches of rain, with areas at higher elevation receiving moderate to heavy snow. Precipitation continues to improve dryland crop and pasture conditions, as well as soil moisture. In northeast counties, reporters noted that wheat mosaic virus has spread and some wheat is damaged beyond recovery. Isolated severe weather and damaging hail was also reported. A reporter noted that some sugarbeets are being replanted due to a previous damaging freeze. Concern over increased wheat stripe rust infection due to wet conditions was noted in east-central counties. In southwest counties, freezing temperatures were experienced that may have caused damage to wheat. The San Luis Valley also received late snow and freezing temperatures that damaged some growing alfalfa. Barley planting is nearing completion in the San Luis Valley. Topsoil moisture: 0% very short, 3% short, 86% adequate, 11% surplus. Subsoil moisture: 0% very short, 8% short, 89% adequate, 3% surplus.

Illinois

Producers continued planting soybeans last week while some began replanting corn. There were 4.0 days suitable for fieldwork last week. Statewide, the average temperature was 67.7 degrees, 3.1 degrees above normal. Precipitation averaged 1.61 inches, 0.73 inch above normal. Topsoil moisture 1% short, 64% adequate and 35% surplus. Subsoil moisture: 1% short, 71% adequate and 28% surplus.

Indiana

Farmers received a short break from the rain, and were able to make significant progress with corn and soybean plantings. Warm temperatures and high winds dried out fields, allowing farmers access to plant and replant fields. The break in weather was short-lived, as the rain returned later in the week leaving fields saturated in some areas. The statewide average temperature was 69.7 degrees, 6.0 degrees above normal. Statewide precipitation was 1.40 inches, above average by 0.49 inch. There were 4.0 days available for fieldwork last week, up 2.2 days from the previous week. Farmers rushed to the fields to get corn and soybeans planted, and in many cases, replanted before the rains returned. The high winds that swept across the state did bring some damage to emerged cornfields, although it does not appear to be widespread. Many farmers were not able to spray due to the high winds. There were some reports of cutworms in cornfields. Topsoil moisture: 0% very short, 1% short, 53% adequate and 46% surplus. Subsoil moisture: 0% very short, 1% short, 61% adequate and 38% surplus.

Iowa

Iowa farmers had only 2.3 days suitable for fieldwork last week. Those few days came early in the week as rain throughout the rest of the week made conditions too wet for planters to enter the fields. Topsoil moisture: 0% very short, 0% short, 65% adequate and 35% surplus. Subsoil moisture: 0% very short, 1% short, 71% adequate and 28% surplus. Corn planting is three days behind last year but two days ahead of the five-year average. Corn emerged reached 59%, four days behind last year. Soybean planting is two days behind last year but one day ahead of average. Soybean emergence is one day behind average. Oat emergence is two days ahead of average.

Kansas

Temperatures in the western half of the state averaged 2 to 4 degrees below normal last week, while temperatures in the east averaged 2 to 4 degrees above normal. Rainfall continued across the entire state, with totals exceeding 1 inch in most areas. There were 2.9 days suitable for fieldwork. Topsoil moisture: 0% very short, 1% short, 70% adequate and 29% surplus. Subsoil moisture: 0% very short, 2% short, 82% adequate and 16% surplus.

Michigan

There were 5.1 days suitable for fieldwork last week. The week began with warm, dry conditions which allowed producers to make good planting progress. Cool, wet conditions returned by the end of the week halting fieldwork, although the moisture was welcomed in some areas. Despite the cool mornings and variable weather, producers made good progress planting row crops last week. Both the corn and soybean planting progress surpassed last year's pace. The nice weather allowed oat seeding to advance, but progress lagged behind last year and the five-year average. High winds midweek limited spraying operations and caused some damage to sugarbeets and other emerged crops. Winter wheat development had just started to progress into the heading stage in some areas. The crop remained in good condition. There were no major disease or insect problems reported. Many producers experienced good fieldwork conditions a majority of the week until late week rains left some fields inaccessible. Topsoil moisture: 0% very short, 4% short, 73% adequate and 23% surplus. Subsoil moisture: 0% very short, 3% short, 70% adequate and 27% surplus.

Minnesota

Cool temperatures and precipitation limited farmers to only 2.5 days suitable for fieldwork last week. When conditions allowed, field activities involved planting and spraying. Topsoil moisture: 0% very short, 1% short, 72% adequate and 27% surplus. Subsoil moisture: 0% very short, 1% short, 79% adequate and 20% surplus. Spring wheat emergence was eight days ahead of the five-year average. Oat emergence is 12 days behind last year. Oats jointing is one day ahead of last year. Soybean planting was four days behind last year, yet ahead of average.

Missouri

Warm weather and above-average precipitation were prevalent across the state last week. Temperatures averaged 68.7 degrees, 3.0 degrees above normal. Precipitation averaged 2.09 inches statewide, 1.07 inches above normal. There were 4.0 days suitable for fieldwork. Topsoil moisture supply was rated 3% short, 70% adequate and 27% surplus. Subsoil moisture supply was rated 3% short, 74% adequate and 23% surplus. Corn planting was 93% complete, 4 percentage points behind the previous year but 3 percentage points ahead of the five-year average. Corn emerged progressed to 79%. Corn condition was rated 52% good to excellent. Soybean planting was 42% complete. Soybean emerged progressed to 20%. Cotton planting was 68% complete. Rice planting progressed to 92% complete. Rice emerged progressed to 81%. Rice condition was 68% good to excellent. Sorghum planting was 30% complete. Winter wheat headed reached 97%. Winter wheat condition was rated 61% good to excellent.

Nebraska

Temperatures averaged 3 to 5 degrees below normal across the state last week. Significant rainfall of 2 inches or more was recorded across the majority of counties; however, rainfall totals of 3 inches or more was recorded across the southeast. Producers made planting progress during the early part of the week, but wet conditions kept farmers out of the field for the remainder of the week. There were 2.1 days suitable for fieldwork. Topsoil moisture supplies were rated 5% short, 74% adequate and 21% surplus. Subsoil moisture supplies were rated 1% very short, 6% short, 80% adequate and 13% surplus. Corn planted was 87%, near 91% for the five-year average, and emerged was 52%, behind 57% average. Soybeans planted was 52%, behind 61% average, and emerged was 13%, behind 21% average. Winter wheat jointed was 99%, ahead of 86% average, and headed was 61%, ahead of 36% average. Winter wheat condition was rated 45% good to excellent. Sorghum planted was 18%, behind 36% average, and emerged was 6%. Oats jointed was 46%, near 43% last year, and headed was 6%, near 4% average. Oats condition was rated 78% good to excellent.

North Dakota

Cooler temperatures prevailed most of the week as they averaged 2 to 6 degrees below normal across most of the state. Planting progress slowed in the eastern third of North Dakota, as rainfall was received. Less rain fell over the western two-thirds of the state, and had a smaller effect on fieldwork activities. There were 5.6 days suitable for fieldwork. Topsoil moisture supplies were rated 3% very short, 21% short, 70% adequate and 6% surplus. Subsoil moisture supplies were rated 1% very short, 14% short, 78% adequate and 7% surplus. Corn planted was 82%, ahead of 73 for the five-year average, and emerged was 38%, ahead of 31% average. Soybeans planted was 57%, ahead of 49% average, and emerged was 10%, equal to average. Winter wheat jointed was 60% and headed was 6%, near 3% last year. Winter wheat condition was rated 74% good to excellent. Spring wheat planted was 88%, ahead of 75 average, emerged was 56% and jointed was 4%. Barley planted was 89%, emerged was 57% and jointed was 5%. Oats planted was 87%, emerged was 54%, jointed was 9% and headed was 1%. Durum wheat planted was 72%, emerged was 36% and jointed was 10%. Canola planted was 72%, ahead of 63% average, and emerged was 30%, near 32% average.

Ohio

High temperatures at the beginning of the week helped dry out fields for some planting but spotty rains toward the end of the week delayed further planting. There were 4.4 days suitable for fieldwork. Producers were able to plant corn and soybeans before the rain set in but now are experiencing problems with excess moisture. A significant number of fields had to be replanted, and many farmers had to return to fields to handle soil crusting. Statewide, topsoil moisture was rated 2% short, 67% adequate and 31% surplus. Subsoil moisture was rated 2% short, 65% adequate and 33% surplus. Corn was 73% planted, even with the five-year average, and 41% was emerged, behind the average of 44%. Soybeans were 43% planted, behind the average of 47%, and 17% were emerged, near the average of 18%. Winter wheat was 97% jointing and 81% headed. Winter wheat condition was rated 81% good to excellent. Oats were 96% planted, 85% emerged and 1% headed. Oats condition was rated 65% good to excellent.

Oklahoma

Severe storms produced large tornados, up to softball-size hail, damaging winds and heavy rainfall last week. All districts recorded above-normal precipitation. According to the OCS Mesonet, the panhandle and northeast districts experienced the wettest 60-day period since 1921. Drought condition was rated 7% moderate-to-exceptional drought, up 3 points from last week but does not yet reflect last week's rainfall totals. Statewide, temperatures averaged in the low 80s. Topsoil moisture was rated 1% very short, 3% short, 88% adequate and 8% surplus. Subsoil moisture was rated 1% very short, 11% short, 86% adequate and 2% surplus. Winter wheat headed reached 98%, up 2 points from normal, and harvested reached 1%, down 4 points from normal. Winter wheat conditions were rated 49% good to excellent. Canola coloring reached 80%, up 17 points from normal, and harvested reached 1%. Oats headed reached 67%. Corn emerged reached 70%, up 2 points from normal. Sorghum planted reached 34%, down 5 points from normal. Soybeans seeded reached 26%, down 5 points from normal, and emerged reached 9%, down 4 points from normal. Cotton planted reached 38%, up 9 points from the previous year and up 10 points from normal.

South Dakota

Cool, wet weather limited fieldwork across parts of South Dakota last week. Daytime high temperatures were 15 to 20 degrees below normal for many locations during the latter half of the reporting period. Rainfall totals varied widely across the state. Some heavier rainfall amounts were located in already saturated areas of the southeast, causing ponding and flooding in planted and to-be-planted fields. There were 3.0 days suitable for fieldwork. Topsoil moisture supplies rated 5% very short, 24 short, 66 adequate and 5 surplus. Subsoil moisture supplies rated 6% very short, 27 short, 64 adequate and 3 surplus. Winter wheat jointed was 56%, well behind 79% last year, and headed was 10%, behind 16% average. Winter wheat condition was rated 54% good to excellent. Spring wheat emerged was 95%, ahead of 76% average, and jointing was 8%, behind 16% last year. Spring wheat condition was rated 44% good to excellent. Oats emerged was 95%, ahead of 81% average, and jointed was 20%, equal to last year. Barley emerged was 94%, well ahead of 65% average. Corn planted was 88%, near 84% average, and emerged was 47%, near 43% average. Soybeans planted was 56%, ahead of 50% average, and emerged was 11%, near 13% average. Sorghum planted was 19%, equal to average, and emerged was 1%.

Texas

Many areas of the state received from 0.5 inch to 2.0 inches of rainfall with isolated reports of up to 5.0 inches of rain. The Trans-Pecos, panhandle and the Lower Valley reported the lowest total precipitation for the week. There were 6.3 days suitable for fieldwork. Statewide, topsoil moisture supplies were rated 10% very short, 36% short, 48% adequate and 6% surplus. Subsoil moisture was rated 8% very short, 32% short, 56% adequate and 4% surplus. Corn was 87% planted, near the five-year average of 86%, and 76% of the crop was emerged, also near the average of 75%. Twenty percent of corn was silked, equal to the average. Cotton was 42% planted and 8% squaring. Rice was 86% planted and 84% emerged. Sorghum was 82% planted 65% emerged and 35% headed. Soybeans were 85% planted, ahead of the five-year average of 73%, and 74% of soybeans were emerged, also ahead of the average of 60%. Winter wheat was 20% harvested as of Sunday, well ahead of the average pace of 7%. Oats were 45% harvested, also well ahead of the average of 14%.

Wisconsin

Fieldwork was slowed last week as heavy rain and severe thunderstorms lashed the state. Northern Wisconsin was the hardest hit, with reporters noting up to 12 inches of rainfall for the week. Farms in Barron and Rusk Counties were struck by a tornado on Tuesday evening. Flooding, large hail and strong winds also damaged fields, trees and farm buildings around the state. Cold temperatures and standing water had farmers in many areas concerned for recently planted fields. Statewide, topsoil moisture supplies were rated 56% adequate and 44% surplus. Subsoil moisture supplies were rated 65% adequate and 35% surplus. As of May 21, spring tillage was 81% complete statewide, 11 days behind last year but one day ahead of the five-year average. Corn planting was 65% complete, 10 days behind last year, and three days behind the average. Corn emerged was at 21%, five days behind last year and two days behind the average. Twenty-nine% of the state's expected soybean acres have been planted, eight days behind last year, and four days behind the average. Three percent of the state's soybeans have emerged. Oats planting was reported as 88% complete, eight days behind last year, but one day ahead of the average. Oats emerged was at 61%, seven days behind last year and two days behind the average. Winter wheat was 67% in good-to-excellent condition statewide, compared to 71% the previous week.

National Crop Progress Summary
This Last Last 5-Year
Week Week Year Avg.
Corn Planted 84 71 84 85
Corn Emerged 54 31 58 55
Soybeans Planted 53 32 53 52
Soybeans Emerged 19 8 20 21
Winter Wheat Headed 72 63 74 67
Spring Wheat Planted 90 78 94 84
Spring Wheat Emerged 62 40 75 59
Cotton Planted 52 33 45 50
Sorghum Planted 37 32 36 41
Oats Planted 95 91 97 93
Oats Emerged 83 72 89 81
Oats Headed 26 NA 25 28
Barley Planted 88 78 93 87
Barley Emerged 59 42 78 64
Rice Planted 91 83 92 90
Rice Emerged 78 73 82 76
National Crop Condition Summary
(VP=Very Poor; P=Poor; F=Fair; G=Good; E=Excellent)
This Week Last Week Last Year
VP P F G E VP P F G E VP P F G E
Winter Wheat 4 11 33 44 8 5 12 32 43 8 1 7 30 51 11
Oats 1 5 31 55 8 2 4 32 55 7 1 3 23 64 9
Rice 5 6 24 49 16 NA NA NA NA NA 3 6 24 54 13

Please send comments to talk@dtn.com

(AG)

05/24/2017 Todd's Take

By Todd Hultman
DTN Analyst

I realize much has already been written about last Thursday's unexpected 6.5% drop in the Brazilian real and the bearish effect it had on soybean prices. On Friday, DTN Senior Analyst Darin Newsom talked about some of the market clues and advised us to keep an eye on the July/August soybean spread moving forward.

DTN Columnist and long-time observer of all things ag, Philip Shaw pointed out that Thursday's black swan looked more like a black duckling and, judging by soybeans' ability to rebound since Thursday, I suspect he is right.

Finally, DTN Ag Policy Editor Chris Clayton delved into the world of JBS SA late Friday, explaining to us a complicated array of corruption charges, bribery scandals, and the plea bargain which tarnished Brazil President Michel Temer and led to Thursday's lower real.

One other aspect related to JBS SA worth noting is that several news sources, including Brazil's largest newspaper, Jornal O Globo, cited anonymous sources which say that JBS Group bought "large amounts of dollars in the foreign exchange market" shortly before news broke that they were turning over tapes to the Supreme Court which implicated President Temer in bribery payments.*

To be fair, the paper's sources may be wrong and no formal charges have been filed to date, but keep in mind that when it comes to currencies, JBS SA is no slouch. Last year, Bloomberg news reported that in 2015, the currency desk at JBS SA "generated more profit than the company's beef, poultry, and pork operations combined."**

As a market analyst, I have to admit that manipulation is a darker subject we don't often talk about, but it is an important part of market risk. Whether we call Thursday's drop in the real a black swan or duckling, the point is that, for most of us, it came out of the blue. But for the Batista brothers that run JBS Group, it may have been a well-planned and highly profitable day at the office.

For U.S. producers that watched soybean prices drop 3% in the blink of an eye, the thought of some guys in an office profiting off of their pain and laughing all the way to the bank is enough to make anyone see red, but we also have to admit that this isn't the first time markets may have been gamed, and it won't be the last.

For those dependent on grain markets for their livelihood, what can be done to protect oneself from a malicious bearish raid? My best advice is really the same for all forms of risk: Keep a broad perspective, pay attention to market clues, understand seasonal influences, look for low-cost ways to minimize risk (aka buying puts), and recognize that uncertainty is always a significant threat -- whether it comes from unexpected events or billionaires bribing politicians.

A lot of things in life aren't fair -- just ask producers in the Midwest looking at lakes where corn fields should be. Last week's quick drop in soybean prices may have been another. But if it woke us up from any illusion that life or markets are predictable, it was a cheap lesson.

* "JBS would have bought large volume of dollars before report leak" by Rennan Setti of Jornal O Globo, May 18, 2017 at: https://glo.bo/…

** "JBS Made a Fortune on Its Currency Bets. Then, the Tide Turned" by Gerson Freitas Jr., April 6, 2016 at: https://bloom.bg/…

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

Follow Todd Hultman on Twitter @ToddHultman1

(SK/AG)

05/24/2017 View From the Cab

By Richard Oswald
DTN Special Correspondent

LANGDON, Mo. (DTN) -- DTN View From the Cab farmer Brent Judisch of Cedar Falls, Iowa, had a couple of pretty good days last week. "Monday was productive," Brent told DTN late Sunday evening. "We were able to run Tuesday. We finished our custom work."

Brent and his wife, Lisa, do custom soybean drilling. Brent is support while Lisa and helper Rusty Zey share duties keeping two drills going -- 14 hours netted 600 acres each day. "(The) rest of the time (was) service and refueling," Brent said.

Then the rains came.

"Wednesday morning it rained, then about suppertime, storms blew through. We had wind, hail and rain. There are quite a few trees down, and I have a (neighbor's) horse barn to get out of my corn field." Rain amounts were modest. "Wednesday we had four-tenths of an inch, Thursday a half-inch, Friday thirty-five hundredths, and Saturday seven-tenths. It's been cool. Yesterday (Saturday) it never got out of the 40s. Monday and Tuesday were in the low 80s. Since then, we've been in the 40s and 50s. The only thing growing is grass," he said.

Public power was interrupted during the storm on Wednesday. Officials warned it could be Friday before service was restored. Brent started the backup generator Thursday morning. Power was restored soon after. "We didn't have any damage, but town was a mess. Trees were down, streets were blocked. I had to go in and help a few people clear them," he said.

Soils are saturated without standing water or flooding. Skies have been overcast and conditions are damp. It'll take at least two dry, sunny days before fieldwork can resume. "Drying is zero. We're in an area where we don't have a lot of ponding. Everything has enough grade that water pretty well gets away," Brent explained.

Brent estimated planting progress in the area at 90% done. Corn stands look good but with some yellowing due to weather. Hail in the area had little effect on corn where growing points are still beneath the soil surface. First-planted beans, planted in April, are emerged. Stands are good. Later-planted soybeans have been slow to come.

Brent estimates his soybean planting can be finished in half a day. But the remainder of his fields are in an area to the north that's been wetter than average this spring. "This year you get two or three days and then out again. In 2014, 2015 and 2016, it was the last week of May before we got all the beans finished. It feels like we're behind, but we're really not."

"We've been very fortunate here. I have friends in Illinois with replanted fields under water. Friends in Nebraska (are) still trying to plant corn. In '93 we hardly even got to spray or sidedress. It rained every three or four days and never did dry out," he said.

For View From the Cab farmer Zack Rendel of Miami, Oklahoma, rainy days equal shop time.

There's been plenty of that this year.

"I'm out in the shop today installing a Y-drop system on our Hagie sprayer," Zack told DTN Monday afternoon. "It's going pretty fast. About 4 or 5 hours to put it together. We'll be able to do 24 rows, 60 feet, at a time." (Y-drops split liquid nitrogen flowing through drop hoses so that it flows closer to either side of rows rather than right down the middle.)

Zack and his uncle, Brent Rendel, had just 200 acres of milo left to plant last week before switching to soybeans. "Last Monday we checked the ground to see if we could finish. There just wasn't any way. So we held off until Tuesday. We thought we could get the milo in, but it was gonna be very hard. There was 3 to 5 inches of rain in the forecast. We thought 'it's just 200 acres,' so we pulled the plug (on milo planting)," Zack said.

"Tuesday through Thursday, we worked ground and got all our soybean acres ready (including the 200 acres originally intended for milo). We decided to wait until after the rain to plant. We ended up getting right at 4 inches Thursday night through Friday evening."

Zack said storms were moderate at his place, but worse to the east where trees were uprooted by strong winds.

Monday a check of canola fields showed only about 10% mature. Tuesday the planter was switched to soybeans. On Wednesday, some cornfields were checked ahead of side-dressing, and another look at canola fields showed maturity advancing to about 70%. "Wednesday I started swathing canola. I got 230 acres swathed down by Thursday evening. We'll finish the last 200 acres when the ground settles," Zack said.

After drying in windrows for about 10 days, a combine will follow.

Wheat is turning fast. Not much green remains in those fields. Harvest should start in two weeks. Corn is enjoying higher heat units, and is "blowing out of the ground." Milo planted between rainy spells is doing the same. Corn stands have survived without being replanted, but there are drowned-out areas on low ground. "We could have had 600 acres of soybeans planted, but it just would have been 600 acres to replant after all the rain," Zack told DTN.

Warmer temperatures and moist conditions breed fungus. DTN asked Zack if that's a problem. He said canola was sprayed this year for the first time. "There are a couple diseases that can hit canola. There's stalk rot and mildew. You can tell when you run the swather there's some fungus out there. Last year (without fungicide), white dust came off everything. I'm pretty sure it was powdery mildew. There's some this year, but not like that," he said.

Eastern Oklahoma hasn't exactly been cold, but highs in the 80s is about as warm as it's been this spring. In at least one instance, that's cooler than last winter.

"There was a day in January when we were flirting with 90 degrees. We went from one extreme to the other ... from drought to flooding in two weeks' time," Zack said.

Richard Oswald can be reached at Talk@dtn.com

Follow Richard Oswald on Twitter @RRoswald

(AG/CZ)

05/24/2017 Budget Plan Lands With a Thud

By Chris Clayton
DTN Ag Policy Editor

OMAHA (DTN) -- President Donald Trump's 10-year budget proposal for USDA handed down Tuesday essentially serves as the White House's marker, calling for roughly $240 billion in cuts in the next farm bill.

The Trump administration wants to lower federal spending over the next decade on the farm safety net, food aid, rural development and foreign market promotion. The farm bill cuts are needed to help achieve the president's goal of balancing the federal budget in 10 years.

Budget cuts like those proposed by the White House can only happen by rewrite of existing law, which would most likely happen via the next farm bill.

Agriculture Secretary Sonny Perdue told USDA employees in a video that he wasn't going to sugar coat the situation. USDA will likely see a significant funding cut at the end of the budget process. "This shouldn't be a surprise to anyone as the president promised before the election that he would realign government spending, attempt to eliminate duplication or redundancy, and see that all government agencies are efficiently delivering services to our customers, the taxpayers of America."

Perdue noted President Trump campaigned that he would reduce the deficits, and that is what he is proposing in the budget.

"I believe the people knew what they were doing when they elected President Trump," Perdue said. "They understand, and believe, as I do, that I just don't think it's moral to continue to kick a $20 trillion debt down to our grandchildren without any relief."

The USDA budget was essentially crafted without Perdue's input, as he was on the sidelines while the White House Office of Management and Budget drafted the plan. "This is a process that happens through the Office of Management and Budget," said Michael Young, acting deputy secretary for USDA.

Young stressed that most of the cuts would require legislative change, primarily through the farm bill. Yet he disagreed when DTN asked if the specific plans to cut farm programs and food stamps should be considered the Trump administration's marker for the farm bill. "That's a process that will happen in a different timeframe," Young said.

Groups such as the Heritage Foundation praised the overall White House proposal as an opportunity to enact needed reforms in the social welfare systems. The plan landed with more of a thud for agricultural groups, which pointed to the decline in farm income and questioned how the White House could continue to find cuts in the farm safety net.

Zippy Duvall, president of the American Farm Bureau Federation and a fellow Georgian like Perdue, said the budget fails agriculture and rural America. The White House fails to give agriculture any credit for prior cuts and would gut the crop insurance program.

"Farm income is down substantially since Congress passed the last farm bill," Duvall said. "USDA cuts of this magnitude in the current economic cycle would be unwarranted and unwise. AFBF will work with the House and Senate Agriculture, Appropriations and Budget committees to protect programs that are critical in managing risks inherent to production agriculture, and maintain programs that are vital to rural communities."

For farm programs, the budget proposes several changes in the farm bill. They include:

-- Cap crop insurance premium subsidy at $40,000, which would save an average of $1.6 billion a year. The proposal would affect about 33,000 farmers, or about 6% of all policies sold.

-- Eliminate the Harvest Price option, saving an average of nearly $1.2 billion a year. The White House stated farmers could hedge their risks with unsubsidized harvest price insurance or use futures and options markets instead.

-- Eliminate premium subsidies, commodity payments and conservation technical assistance for farmers with adjusted gross income over $500,000. The proposal would save about $100 million a year. The current income cap for farm programs is $900,000 and there is no means testing for crop insurance. The White House stated, "It is hard to justify to hardworking taxpayers why the federal government should provide assistance to wealthy farmers with incomes over a half-million dollars."

-- Tighten the Conservation Reserve Program by ending the general signup period through 2020 and rely on continuous signup. In other conservation programs, the White House wants to increase funding by $1.9 billion over 10 years for the Environmental Quality Incentives Program while at the same time end any new acreage enrollment in the Conservation Stewardship Program, saving roughly $7.9 billion over 10 years.

-- Eliminate the Market Access Program and Foreign Market Development Program, saving over $1.8 billion over 10 years.

-- Reduce the Supplemental Nutrition Assistance Program by $191 billion over 10 years, mainly by shifting up to 25% of the costs to states over the decade. States would also have more latitude about changing food-stamp eligibility.

Roger Johnson, president of the National Farmers Union, called the budget proposal "an assault on the farm safety net and rural communities."

Johnson said, "It is deeply disappointing that the president would propose such cuts, especially in the midst of a farm crisis that has family farmers and ranchers enduring a drastic, four-year slide in farm prices and a 50% drop in net farm income."

The crop insurance industry -- companies, reinsurers and agents -- said the plan would weaken crop insurance and make it harder for farmers in tough times to recover. Further, the industry stated such a plan "will find little support in rural America or on Capitol Hill." The industry added that insurance reduces taxpayer risk -- minimizing calls for disaster aid -- as the farmer safety net has largely shifted from direct farm payments to crop insurance over time.

The combined insurance cuts add up to about $28.5 billion over 10 years, or as much as 36% of the spending. The American Soybean Association cited that 99.4% of revenue policies bought by soybean growers last year had the harvest option.

"This is a program that exists to sustain farmers who suffer catastrophic losses," said Ron Moore, president of ASA and a soybean farmer from Roseville, Illinois. "Coupled with the arbitrary caps the budget would impose on premium subsidies, it's clear that this budget was written without input from farmers who would be severely affected."

Senate Agriculture Committee Chairman Pat Roberts, R-Kan., and House Agriculture Committee Chairman Michael Conaway, R-Texas, were among the GOP lawmakers caught opposing a budget plan by a president they support. Roberts and Conaway said in a joint statement they support the president's goal of 3% economic growth. Their vocabulary responding to Trump's plan was more measured than when President Barack Obama proposed to cut farm programs.

"As we debate the budget and the next farm bill, we will fight to ensure farmers have a strong safety net so this key segment of our economy can weather current hard times and continue to provide all Americans with safe, affordable food. Also, as a part of farm bill discussions, we need to take a look at our nutrition assistance programs to ensure that they are helping the most vulnerable in our society," Roberts and Conaway stated.

The overall USDA budget would cut $4.8 billion from discretionary spending for USDA in 2018 as well as see a reduction of mandatory spending by $7 billion. The White House did call for increasing USDA farm loans to nearly $7 billion, a $616 million increase in spending from 2017. That would support an estimated 42,400 loans.

According to the budget plan, it would also cut USDA staffing by about 5.5% next year, mainly through attrition and early retirement, Perdue said.

"Obviously, the budget in the final form has yet to be determined by the Congress and the president, but I want everyone to know my job as agriculture secretary [is] to manage and implement that plan," Perdue said.

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

Follow him on Twitter @ChrisClaytonDTN

(AG/CZ)