Featured Agriculture News

09/20/2017 - Todd's Take

Commercials are net long corn, soybeans and Chicago wheat.

09/20/2017 - View From the Cab

Zack Rendel and his family of Miami, Oklahoma, have finished the best corn harvest their farm has ever seen, and his sorghum test plot also produced "phenomenal" yields. Meanwhile, Brent and Lisa Judisch of Cedar Falls, Iowa, are about a week away from finding out how their corn performed this year.

09/20/2017 - Bayer Requests Extension

German-based Bayer announced Tuesday that it has asked for an extension on its acquisition of Monsanto.

09/19/2017 - Grain Export Inspections Mixed

Corn export inspections were neutral to bearish, soybean export inspections were neutral to bullish, and wheat inspection numbers were bullish.

09/19/2017 - Taxlink by Andy Biebl

Here are some of the things to consider if you want to avoid tripping over the rules on what to do when donating assets to charity.

09/19/2017 - Cash Market Moves

The FGIS is responsible for ensuring that all grains being exported from the U.S. meets quality standards.

09/18/2017 - Dicamba Questions

How often could growers legally spray dicamba in 2017? Not that often, especially if states and the EPA adopt new use restrictions in 2018, say two Indiana scientists.

09/18/2017 - Tyson Plant Opposition Grows

Tyson Foods has announced plans to build a chicken-processing plant that would create markets for chicken and grain, while creating 1,600 new jobs near Tonganoxie, Kansas. But many members of the community are opposed to the project.

09/18/2017 - DDG Weekly Update

The DTN average dried distillers grains price was unchanged for the week ended Sept. 14 at $108 per ton.
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09/20/2017 Todd's Take

By Todd Hultman
DTN Analyst

After USDA disappointed many again with a corn yield estimate of 169.9 bushels per acre, my first thought went directly to commercials, wondering if they would be buying corn as December prices dipped near their August lows. After all, securing cheap corn supplies that can be moved profitably is the primary interest of commercial grain firms, and we are near that time of year when seasonal lows typically occur.

I was somewhat satisfied to see Friday's Commitments of Traders report say that commercials turned net long in corn for the first time since late June. Corn had 4,831 net long positions, which is small, but it's a start and supports the notion that corn prices are nearing support after the demoralizing month of August, when December corn dropped 27 cents a bushel from prices that were already low.

That does not mean that corn cannot trade lower, and we have yet to see what harvest will hold. However, knowing that spot prices are below the cost of production for producers that have land expenses, and seeing the companies that know the grain market best take long positions on the board, we can reasonably expect that corn's lows should be near.

Corn was the most recent crop of interest for commercials, but not the only one where commercials are finding attractive values in the grain market. After a brief absence this summer, commercials returned to the long side of Chicago wheat on Aug. 8, and as of Sept. 12, were holding 33,995 net longs.

In the case of Chicago wheat, it is not unusual for commercials to be net long when prices are cheap, but it is a sign of support nonetheless. In 2016, the DTN SRW Wheat National Index fell to its lowest level in seven years. Technically, noncommercial longs as a percent of total holdings hit a bearish 36% last year, low enough to make 2016 a candidate for a possible multi-year low. But there is still no bullish argument on the horizon, while USDA is estimating 933 million bushels of U.S. ending wheat stocks for 2017-18.

Readers of this column will not be surprised to hear that soybeans continue to have the most active demand interest of the three crops. Friday's CFTC data showed commercials net long 32,292 soybean contracts on Sept. 12, the same day that USDA predicted a record high 4.43 billion bushel soybean crop. That is not an especially large position, but it is unusual to see with a record harvest supposedly on the way, and the DTN National Soybean Index is already trading above its estimated cost of production.

Brazil's new planting season is starting out dry, but it is still early, and they have overcome dry starts before. Thursday's DTN article from Senior Ag Meteorologist Bryce Anderson, "NOAA Issues La Nina Watch," explained that cooler ocean temperatures are possibly setting Brazil up for drier weather in early 2018. You can be certain DTN will be monitoring that situation in the months ahead.

For producers wanting better prices in 2017, the August sell-offs in corn and wheat were disappointing, but at least here in mid-September, the sector of the market that knows the value of grains the best is giving us clues that support should be near. For corn and wheat, commercials' price sensitive buying is not exactly bullish, but for now, they are the best market clues grains have to show.

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

Follow Todd Hultman on Twitter @ToddHultman1

(AG/BAS)

09/20/2017 View From the Cab

By Richard Oswald
DTN Special Correspondent

LANGDON, Mo. (DTN) -- Fall is the time of year when luxuriant, green fields are painted earth-toned yellow, orange and brown. But for farmers like DTN View From the Cab farmer Zack Rendel of Miami, Oklahoma, fall harvest numbers paint the prettiest picture of all.

Zack and his family have finished the best corn harvest their farm has ever seen. This year's 132-bushel-per-acre crop topped last year's 123 bpa by a wide margin. Now milo numbers are in, and they look good, too!

"We finished milo harvest Tuesday (Sept. 12). All we had left Monday was our National Sorghum Producers yield contest plot. I narrowed my plot down to 2 acres. One and a half is the minimum. Our field average this year was 114 bushels per acre. On Tuesday when we harvested it, my plot blew me away. It was good -- 161.2 bpa. This is our farm record. The best Brent (Zack's uncle) has had is 154. For northeast Oklahoma, that is phenomenal," Zack told DTN late Sunday.

One negative number in this year's milo crop came from flocks of migrating birds. Zack told DTN that their feeding begins at the tips of heads, and then they work their way down. Ten-inch heads were pecked down to eight. "It would have been better if the blackbirds left us alone. I probably lost 20%. That's what really pulled the yields down," he said. Adding to feeding pressure was a scarcity of supply. "Ours was the only milo within 75 to 100 miles."

This year's sorghum seeding was lower than usual for the Rendels. Three- to six-hundred acres is closer to normal than this year's 25 acres. But heavy sustained rainfall for two weeks stopped Zack's planting progress dead in its tracks. Once planting resumed, it was all about soybeans.

Last week, Zack put in field time with a scraper, smoothing and leveling. Hired helper Terry continued discing, and Zack's dad, Greg, sprayed trash trees in fence rows, and Johnson grass wherever it was found. Brent manned the office, tending to bills and yield data of this year's corn crop.

Autumn in Oklahoma is both harvest and planting time. With milo and corn in the bin, it's time to go full-bore into canola planting on this year's corn ground. About half the total planned acreage had been prepared for seeding as of Sunday. But soil moisture profiles were declining in fields worked with a disc harrow to cut up stalks and prepare a seed bed. Then a welcome rain fell. "It started this morning (Sunday). Thankfully, we got 2 inches. One probably soaked in and the rest helped fill ponds," Zack said.

Since canola seed is small, if young plants are to emerge, shallow planting of about one-half to three-quarters of an inch deep is a must. Rain on worked ground creates a crust that preserves topsoil moisture for near-ideal planting conditions.

Soybeans with a maturity range of 4.8 to 5.3 are maturing. Some fields are turning yellow while others remain green. That's partly because of this year's wide planting window lasting from April to July. Harvest will likely start before the traditional first frost date in mid-October and possibly beyond.

Over the weekend, Zack saw his son Nathan's elementary school football team score another big win. Brent and his family traveled to Kansas City to enjoy one prominent Midwestern fall color: Kansas City Chiefs red. They had a good day with a 27-to-20 win over the Eagles.

"Uncle Brent enjoyed Sunday afternoon. That sort of sets the tone for the way things go around the farm all week," Zack said.

Meanwhile, outside Cedar Falls, Iowa, where View From the Cab farmers Brent and Lisa Judisch live and work, a little thing like corn harvest can turn into a spectator sport almost as popular as a football game.

"We started picking. My phone has been blowing up with people who saw me, asking 'What's the moisture?'" Brent told DTN late Sunday.

The week started out quiet enough with the Judisches clearing out the last of the 2016 corn crop and attending last-minute fall grower meetings. At one such seed meeting on Monday, about 30 farmers in attendance compared notes on rainfall. The conclusion was that no one has had rain since Aug. 21, with spotty-at-best rains prior to that. Some felt that soybeans might still benefit from a good shower, but it would have little effect on the corn. Wednesday was another meeting day, this time about fungicide options for the coming year. And, on Thursday, Brent and Lisa and their partners, Harold and Charlene Burington, attended an ag supplier customer appreciation dinner.

There was more harvest equipment prep work on Friday. On Saturday, Brent and Lisa tailgated with family before the Hawkeyes game in Iowa City, where their youngest daughter, Ellie, performed at half-time with other high school dance team members.

By Sunday, after checking a soybean head, identifying issues with the drive, and confronting a code-throwing variable-displacement turbo (code throwing means computer fault codes on the operator's display) on one grain cart tractor where an actuator switch was to blame, it was time to wake up the neighbors.

"I got a corn head on and opened up 5 acres behind the house here and another 5 acres down the road. I'll knock the stalks down so we can drive out there (for machinery parking during harvest)," Brent said. Moisture of 111-day corn was 24% with some green color left to the plants. One-hundred-five-day corn was totally brown and tested drier at 18.5%. Brent told DTN that his corn is "standing perfect." Corn cob quality is "very solid. Not spongy at all." That allows clean shelling and a high-quality sample and indicates good plant health.

Harvest work on farms south of Highway 20 where rainfall has been lighter started earlier in the week. Silage harvest in the area is just finishing up.

With no soybeans close to harvest and corn testing on the wet side, Brent will take this week to finish up final touches to harvest and tillage equipment before the big push nest week. Once harvest starts in earnest, a total of three combines will be deployed.

Rainfall on the Judisch farm has turned around with a half-inch overnight Saturday into Sunday. "It was pretty much gone by morning. It'll help the green soybeans," Brent noted. Another two-tenths inch fell on Sunday night, and more than soybeans benefitted.

"Lisa actually mowed the yard today," Brent said.

Richard Oswald can be reached at Talk@dtn.com

Follow Richard Oswald on Twitter @RRoswald

(AG/BAS)

09/20/2017 Bayer Requests Extension

By Pam Smith
DTN Progressive Farmer Crops Technology Editor

MONHEIM, Germany (DTN) -- Liam Condon, Bayer's president of the Crop Science Division, said the company is making progress on the planned acquisition of Monsanto. But he told journalists attending a global conference that the company now expects to close the deal in early 2018 rather than late 2017.

Bayer filed an application Sept. 18 to extend the European Commission's review deadline by 10 working days until Jan. 22, 2018. He said the aim of the request was to facilitate "an appropriate evaluation given the size of the transaction."

It's been slightly more than one year since Bayer announced it had signed a definitive agreement to acquire Monsanto for $66 billion. In response to a DTN question, Condon explained that Bayer has also pledged to divest overlapping business assets representing up to $1.6 billion in annual sales if necessary to answer antitrust concerns. In a separate agreement, Bayer has guaranteed Monsanto a $2 billion termination fee if the sale fails to go through, Condon said.

On Aug. 22, the EC initiated an in-depth investigation of the takeover, saying it was concerned about competition in various pesticide and seed markets. Earlier this year, Bayer indicated it would be willing to spin off its LibertyLink herbicide and seeds and traits portfolio. But Condon told DTN during an interview session with American journalists that regulators have yet to rule and that divesting LibertyLink is "not a done deal."

Condon also noted that the company had been in discussion with multiple parties about potential spinoffs. However, he noted that regulators will also be taking a hard look at any sales transaction to makes sure the purchasing company is strong and can provide adequate competition in the marketplace.

Condon refused to divulge what the name of the new combined entity might be. However, he did say that an announcement of the name would be among the first things revealed when the transaction is complete. "I can confirm that we are very proud of the Bayer name," he said.

The Bayer Crop Science Division will face volatile global markets for the rest of the year, Condon predicted. He blamed insecticide and fungicide sales in Brazil over the past two years as the reason for declines in profits.

The conference continues Wednesday. The event, Future of Farming Dialogue, brings together thought leaders and stakeholders from across the agricultural industry to focus on making the world's food system more sustainable.

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

Follow her on Twitter @PamSmithDTN

(ES/AG)

09/19/2017 Grain Export Inspections Mixed

By Darin Newsom
DTN Senior Analyst

OMAHA (DTN) -- Corn export inspections were neutral to bearish, soybean export inspections were neutral to bullish, and wheat inspection numbers were bullish.

Corn weekly export inspections were 26.6 mb (week ending Thursday, September 14) putting the marketing year total at 53.3 mb. The weekly number was below last year's (for the same week) 51.0 mb. The marketing year total is running 54% behind last year's total of 115.4 mb. Both the weekly number and overall pace could be considered neutral to bearish given how early it is in the 2017-2018 marketing year, Newsom said.

Soybean weekly export inspections were 34.1 mb (week ending Thursday, September 14) putting the marketing year total at 74.8 mb. The weekly number was above last year's (for the same week) 28 mb. The marketing year total is running 6% ahead of last year's 70.3 mb. Both the weekly number and overall pace could be considered neutral to bullish given how early it is in the 2017-2018 marketing year, Newsom said.

Wheat weekly export inspections were 17.1 mb (week ending Thursday, September 14) putting the marketing year total at 320.5 mb. The weekly number was below last year's (for the same week) 21.1 mb. The marketing year total is running 2% ahead of last year's 315.2 mb. The weekly number could be considered bearish and the total inspection number bullish, Newsom said.

Darin Newsom can be reached at darin.newsom@dtn.com

Follow Darin Newsom on Twitter @DarinNewsom

(BAS)

09/19/2017 Taxlink by Andy Biebl

By Andy Biebl
DTN Tax Columnist

It's becoming routine to see court cases backing the IRS against taxpayers who trip over the rules when donating assets to charity. Checks are difficult enough. Any single contribution of $250 or more requires a written receipt from the charity at year's end, or the deduction becomes zero. Property has additional hurdles.

CAPITAL GAIN PROPERTY

The most favorable asset to donate to charity is generally property held over 12 months taxed as capital gain. Assets such as stocks, mutual funds and real estate are deductible at their market value. The taxpayer's historical cost is irrelevant. If the property is a publicly traded security, such as a mutual fund or listed stock, the current value on the date of transfer is readily determined and noncontroversial. But any other property, such as a parcel of farmland, must be appraised if the value exceeds $5,000. The charity might sell the asset a week after the donation, but the appraisal valuation determines the charitable deduction.

The IRS has learned to closely scrutinize these appraisal situations because of the many detailed requirements that can disallow the deduction. For example, there are strict dates regarding the completion of the appraisal (no more than 60 days prior to the donation and not later than the filing of the tax return). The appraiser must be properly qualified, and the appraisal must state that it was completed for income tax purposes. Further, there is a disclosure form within the donor's income tax return, IRS Form 8283, that requires the appraiser's sign-off, various details regarding the property donated and an acknowledgment of receipt by the charity. Donors may cringe at all these requirements, but when the tax law allows a deduction for the inflationary gain on property, this rigor should not be a surprise.

TANGIBLE PERSONAL PROPERTY

The rules get much trickier when non-real estate property is donated. To claim a fair market deduction, tangible personal property must be retained by the charity for use in its exempt function. For example, a taxpayer who donates artwork to a museum for its collection may secure an appraisal and claim a market value deduction. But donate that same piece to a hospital for its annual auction, and the deduction is limited to historical cost.

DONATIONS OF UNSOLD GRAIN

Farmers have a unique opportunity with respect to their raised grain. An appraisal isn't required because there's no tax deduction for the contribution (technically, the deduction is limited to tax cost, but that is zero to a cash method producer who expensed all growing costs). The tax advantage is legal avoidance of the income and social security taxes for the self-employed that would otherwise trigger from the sale of the commodity. The key point is transferring title of the grain in unsold form and allowing the charity to execute the sale so there is no taxation to the donor. If the sale has been locked in on a deferred payment contract, it's too late for the contribution.

Tax Columnist Andy Biebl is a CPA and tax partner with the accounting firm of CliftonLarsonAllen, in New Ulm and Minneapolis, Minn.

Andy Biebl can be reached at askandy@dtn.com

(BAS, SRK)

09/19/2017 Cash Market Moves

By Mary Kennedy
DTN Cash Grains Analyst

The Federal Grain Inspection Service (FGIS) is the "watchdog" that ensures all grain loaded onto ships or rail to be exported out of the United States grades according to standards established by the United States Grain Standards Act (USGSA) and the Agricultural Marketing Act of 1946 (AMA).

You already know that your grain is graded at the elevator when you deliver it, but from there, when your elevator ships it to an export facility, it is "officially" graded before the export facility dumps it. Then, it faces a mandatory inspection by FGIS as it is loaded out of the export facility before it leaves the country.

The FGIS website said standards for quality assessments and weighing services is established through a network of federal, state and private entities. FGIS is under the governing arm of USDA Grain Inspection, Packers and Stockyards Administration (GIPSA). Recently, Secretary of Agriculture Sonny Perdue, decided to merge GIPSA with the Agricultural Marketing Service (AMS), which administers programs that create domestic and international marketing opportunities for U.S. producers. Currently, GIPSA and AMS both carry out grading activities and "work to ensure fair trade practices," according to the GIPSA website. Basically, the programs complement each other and combining them made perfect sense.

In a news release on Sept. 7, 2017, NGFA President Randy Gordon and NAEGA President and Chief Executive Officer Gary Martin said, "Relocating FGIS within an agency that has a similar mission and function as a service agency is the foundation for its successful future, and we commend Secretary Perdue for recognizing this need and moving expeditiously to bring about this change."

Recently, I attended a session about FGIS at the U.S. Soy Global Trade Exchange and Midwest Specialty Grains Conference in Omaha, Nebraska, in mid-August. Byron Reilly, Director FGIS, Departmental Initiatives and International Affairs gave a presentation on how the soy and grain inspection process works to participants from many of the 58 countries in attendance.

Reilly opened the presentation by informing us of the role FGIS plays in the export market. "FGIS manages the national inspection system and provides the mandatory export inspection and weighing," said Reilly. "They help move our nation's harvest into the marketplace by providing farmers, handlers, processors, exporters, and international buyers with sampling, inspection, process verification, weighing and stowage examination services that accurately and consistently describe the quality and quantity of the commodities being bought and sold."

One of the things Reilly mentioned is that FGIS is required to test all corn leaving the country for aflatoxin, unless the contract stipulates testing is not required and both buyer and seller agree to waive requirements. FGIS has the ability to test for all other toxins at the request of the shipper, but it is not mandatory as the aflatoxin test is.

There are some things that FGIS does not do, added Reilly. FGIS does not market grain, mandate quality, set grain prices, test for GMOs or arbitrate disputes between the parties involved in the export shipments.

Reilly noted that FGIS/GIPSA retains official file samples drawn at the time of the original inspection for 90 days after loading. When an importer reports a discrepancy within that period, samples are sent to their Technology and Science Division (TSD) laboratory for analysis. The field office sends all pertinent documents regarding the shipment to GIPSA for review.

On the GIPSA website it states they analyze data provided from destination, then prepare a report of findings from all available information. The purpose of the review is to verify whether the original quality inspection and certification were in fact correct, and to determine, insofar as possible, what factors may have contributed to a discrepancy in results at destination. "GIPSA does not issue new certificates based on the review, nor is the review intended to replace provisions for claims or arbitration in the contract between the importer and supplier," noted Reilly.

Thanks to the strict grading standards set by USGSA and the AMA, the U.S. is able to retain its reputation of exporting the highest quality of grain. That reputation in turn creates demand and allows competitive markets where farmers can sell their grain and oilseeds.

Here is a link to the full FGIS/GIPSA presentation from the 2017 U.S. SOY Global Trade Exchange/Midwest Specialty Grains conference in Omaha; https://www.grainconference.org/…

Here is a link to the USDA GIPSA website with more specific requirements for exporting grain and oilseeds: https://www.gipsa.usda.gov/…

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

Follow Mary Kennedy on Twitter @MaryCKenn

(BAS/SK)

09/18/2017 Dicamba Questions

By Emily Unglesbee
DTN Staff Reporter

ROCKVILLE, Md. (DTN) -- Among all the buzz and blame surrounding the dicamba injury crisis of 2017, Purdue University weed scientists Bill Johnson and Joe Ikley have tried to answer a simple question for farmers.

How often could an applicator legally spray dicamba this summer?

The answers they found are important, especially for growers weighing seed and herbicide decisions this fall.

In the 2017 summer, under the current federal dicamba herbicide labels, the researchers found that growers had 334 hours to spray in June (46% of the month) and 267 hours in July (36% of the month) at their test location near West Lafayette, Indiana.

But under more restrictive rules, namely the ones Missouri passed this summer in response to injury complaints, that window shrank considerably. When spraying was limited to 9 a.m. to 3 p.m. and within wind speeds of 3 to 10 mph, applicators had only 49 hours in June (7% of the month) and 101 hours in July (14% of the month) to legally spray dicamba.

Dicamba use restrictions are already under consideration at the state level for 2018, and the EPA is expected to add its own changes soon. With Monsanto aiming for 40 million to 50 million Xtend soybean acres next year, that leaves growers with a dire reality, Johnson said.

"Growers need to understand how very hard it is to use this technology safely," he said. "We do not have the sprayer or sprayer operator capabilities in any of these states to spray all the necessary acres within these spray windows."

THE FICKLE SPRAY WINDOW

Johnson and Ikley combed through 2017 weather data from the Purdue Automatic Weather Station (PAAWS) at the Agronomy Farm for Research and Education near Lafayette, Indiana.

They used wind speeds taken every two seconds along with rainfall data to figure out which days this summer were safe to spray under the XtendiMax label. That meant no sustained wind speeds over 15 mph -- including gusts.

"One of the big things we learned is applicators are looking at weather forecasts and looking at sustained wind speeds rather than gusts," which are a dangerous source of physical drift, Johnson pointed out. His analysis included wind gusts, which reduced the number of safe spray hours.

The researchers also ruled out wind speeds below 3 mph, as the XtendiMax label requires. Data from the University of Missouri has shown that 90% of temperature inversions in June and July of 2015 and 2016 occurred when wind speeds were below 3 mph, said MU weed scientist Mandy Bish.

"It seems like a pretty reliable indicator of inversions," which have also been fingered as a source of dicamba drift this year, she said.

Johnson and Ikley also eliminated days with rain in the 24-hour forecast, as the label specifies, as well as days when the ground was too wet to hold a sprayer.

The result was 13 "ideal" days to spray in June (a day with more than eight safe spraying hours), 13 days that were unsafe to spray and four with a scattered amount of safe spray hours. In July, that Indiana location had 18 ideal days and 13 no-spray days, but that number did not account for the R2-growth-stage cutoff on the XtendiMax label, Johnson noted.

"Around here, a lot of beans were planted in late April, so my guess is most fields were into R2 by the Fourth of July," he said.

But Johnson is confident that growers sprayed beyond the R2 cutoff in Indiana this year. "We had spraying even into August," he said.

NEW DICAMBA RULES

No one knows exactly what the EPA will release regarding dicamba use in 2018. But recent state actions give us good insight into the possibilities, Johnson noted.

Indiana is in the process of making dicamba a restricted use pesticide, and a state task force is weighing additional label requirements for next year.

Missouri instituted an emergency set of rules this summer that limited spraying to the hours of 9 a.m. to 3 p.m. and narrowed the wind speed window to 3 to 10 mph.

These restrictions are well within the realm of possible EPA and state restrictions for 2018, so Johnson and Ikley also crunched the weather data with them in mind.

The results -- just five safe days to spray in June and not a single June day with eight consecutive safe spraying hours -- were alarming, Johnson said.

"June is the ideal time to spray weeds," he noted. Once aggressive weeds like marestail and waterhemp grow past 4 inches high, they are far harder to kill, and spraying them is technically an off-label action.

With 11 safe spray days, July fared better under the Missouri rules, but at that point in the season, weeds are often too large to control, and the R2-growth-stage cutoff looms, Johnson pointed out.

Growers should carefully consider these narrow spray windows under restrictive dicamba use rules as they purchase seed for next year, Johnson warned.

Consult carefully with your seed dealer over any purchases, he said.

"Hopefully, their seed suppliers offer them flexibility if new label restrictions render these products unusable in some specific situations," he said. "The other reality is potential cut-off dates, meaning some states may say growers can't spray this in June or July at all."

Arkansas, for example, is currently weighing an in-season ban on dicamba spraying that would only permit applications from Jan. 1 to April 15 in 2018. See the DTN story here: http://bit.ly/….

See Johnson and Ikley's spray day calculations here: http://bit.ly/….

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

Follow Emily Unglesbee on Twitter @Emily_Unglesbee

(PS/AG)

09/18/2017 Tyson Plant Opposition Grows

By Todd Neeley
DTN Staff Reporter

OMAHA (DTN) -- Rolling hills dotted with cattle paint the horizon to the north and south of I70 just west of Kansas City, Kansas.

It's the place rancher Kirk Sours calls home.

Tailgate Ranch Co.'s 2,000 acres sit atop some of the best-quality aquifers in the state, and Sours would like to keep it that way.

When Tyson Foods announced plans last week to build a chicken-processing plant near Tonganoxie, Kansas, Leavenworth County residents were taken by surprise.

State and agriculture interests tout the plant as a jobs-producer while also expanding the market for grain and chicken.

Tyson announced it would build a processing plant, hatchery and feed mill near Tonganoxie, and contract with eastern Kansas farmers and ranchers to raise chickens. The facility expects to begin production in mid-2019 if it receives the needed zoning and economic development permits.

Tyson did not respond to DTN's requests for an interview.

Tyson already employs more than 4,900 people across Kansas at five processing facilities, including beef processing in Emporia and Garden City, Kansas, and other food processing in a pair of plants in Hutchison, Kansas, as well as Kansas City. The Tonganoxie project would be Tyson's first chicken processor in the state and employ as many as 1,600 people.

AG AND ECONOMIC BENEFITS

The Tonganoxie plant would process 1.25 million birds a week, and Tyson noted when it announced the facility that it was attracted to eastern Kansas because of the availability of grain and labor.

The Kansas Corn Growers Association has come out in support of the proposed plant, because it is expected to generate demand for feed grains.

"This facility will create strong demand for feed grains in a high corn production area," KCGA said in a statement following the Tyson announcement.

The KCGA said the plant would increase demand for Kansas corn by about 175,000 bushels per week, or about 9.1 million bushels per year.

Leavenworth and the surrounding counties of Johnson, Jefferson, Atchison, Douglas, Wyandotte, Jackson, Shawnee, Osage, Franklin and Miami, were home to 104 broiler and meat-type chicken farms, according to 2012 U.S. Census data.

Tonganoxie Mayor Jason Ward said in a statement last week his city was excited about the announcement.

"Tonganoxie is looking forward to a successful partnership with Tyson Foods," he said.

"We have planned for a development of this type for many years by making strategic investments in public infrastructure targeted to support future industrial growth. This project will bring much anticipated opportunities for local residents to enjoy the quality of life benefit of working close to home. Tyson has a long history of support for small towns and local markets. They will be a great fit for our community."

Leavenworth County Administrator Mark Loughry said in a statement that the county board of commissioners supports the project.

"This represents a significant investment by Tyson and creates new jobs at the plant for our citizens," he said. "More than that, it provides an opportunity for area ag producers that was previously unheard of in Kansas."

ORGANIZED OPPOSITION

Leavenworth County residents who talked to DTN said the economic benefits touted are just one part of the bigger story. There are doubts the community can handle an influx of hundreds of new residents to fill the jobs, including concerns about available housing and classroom space. There are also concerns about the impact on local property taxes and on the environment and the expected pounding on country roads from increased truck traffic.

Additionally, about 5,000 area residents have come together in opposition to the plant, citing Tyson's environmental record at other plants across the country as another reason to sound alarm bells.

Sours' Tailgate Ranch Co. abuts the proposed 240-acre Tyson property on three sides. The ranch runs a cow/calf operation that includes 350 to 400 mother cows, a heifer development program that breeds and sells replacement females.

"This property has old-growth timber and is a wildlife haven," Sours said about the proposed site for a plant. "There are large deer out there. I've seen as many as 28 deer in one herd."

Sours is part of a group organized in opposition to the plant. The group calls itself "Citizens Against Project Sunset," named after a code word used by county officials to describe the project they were bound by non-disclosure agreements not to discuss publicly. Though it is common practice for environmental groups to organize protests against local projects, Sours said opposition to the Tyson project is as "organic as it gets."

"We have so many levels of opposition," Sours told DTN.

"Demographics of the county population is a dense, semi-urban county. Tonganoxie is a bedroom community to Kansas City; we're between Kansas City and Lawrence. There are people who commute to Topeka. We have a lot of economic development. The median income is $63,000. Tyson has six plants in Kansas with a $210 million payroll, average $36,000 for 5,700 employees. You're bringing in $36,000 incomes into a $63,000 area.

"This plant will sit on top of the richest aquifers in the region, some of the best water around. Everybody out here is on wells. There's been no need to bring in rural water."

Any wastewater from the plant is likely to find its way south to Johnson County, one of the wealthiest counties in the Midwest.

Sours said the truck traffic the plant will generate is also a concern.

"Taking feed out to grower houses, and you have to have 210,000 to 220,000 birds in the pipeline," he said. "Logistically, this county is broke" and cannot afford to repair and maintain roads.

As part of a state economic package, Tyson would receive an 80% property tax abatement. Sours said Leavenworth County leaders in the past 30 years have been "slow and calculated" about growth. "We want a rural, small-town feel," he said. "This breaks that model."

ENVIRONMENTAL RECORD, BUSINESS PRACTICES

Tyson's environmental record at its food-processing plants across the country has raised eyebrows in northeast Kansas.

Basehor, Kansas, resident Doug Conrad, who lives 10 miles east of the proposed Tyson plant site, said he's concerned about potential pollution.

"My biggest concern about Tyson is their callous disregard for the environment and the communities they invade," he said in an email to DTN.

In January 2015, Tyson settled a civil lawsuit with the state of Missouri in connection with the May 2014 discharge of a feed supplement from the company's chicken plant in Monett, Missouri.

The release led to a fish kill and odor issues at the plant, according to the company's Oct. 1, 2016, financial filing with the U.S. Securities Exchange Commission, http://bit.ly/…. Tyson paid the state of Missouri $540,000 as part of the settlement. The EPA has opened a criminal investigation into the incident.

In 2013, Tyson reached a $3.95 million settlement with the U.S. Environmental Protection Agency for alleged Clean Air Act violations at plants in Kansas, Missouri, Nebraska and Iowa. A Tyson employee died in 2006 as a result of an anhydrous ammonia leak at a Kansas plant. A similar leak happened at a Tyson plant in Nebraska.

In addition to its environmental law violations, Tyson has also run into legal problems in regard to the company's business practices.

Tyson Foods and affiliated companies are defendants in a federal class-action lawsuit filed last February in Oklahoma against the nation's largest poultry companies.

A number of poultry growers in Oklahoma allege in the lawsuit that Tyson and other companies colluded to suppress grower compensation. The lawsuit continues in the U.S. District Court for eastern Oklahoma. Growers argue the companies disclose and share compensation rates for growers and also have agreed to prevent farmers from growing for other companies. Other defendants include Pilgrim's Pride, Perdue Farmers, Koch Foods and Sanderson Farms.

In that case, the farmers from Oklahoma, North Carolina, Alabama, Mississippi and Texas each have similar stories of borrowing several hundred-thousand dollars to build broiler houses to company specifications, only then to be asked to later spend more money on upgrades. Farmers complain the companies had threatened to stop delivering pullets if farmers did not make upgrades. Some of the farmers ended up going out of business with substantial debt.

SUSTAINABILITY EFFORTS

Despite Tyson's documented violations of environmental laws in the past, the company, in recent years, has touted its efforts to improve its environmental record.

In a 2016 sustainability report posted on Tyson's website, the company touts improvements in wastewater permit compliance at its plants across the country. http://bit.ly/…

From 2014 to 2016, Tyson reduced the number of wastewater permit exceedances from 134 to 68. The company reports receiving fewer notices of violation, dropping from 40 in 2014, to 19 in 2016. In 2014, Tyson paid more than $350,000 in penalties on those releases, dropping to about $92,000 in 2016.

TOWN VOWS TO FIGHT PLANT

Tonganoxie resident Christine Parker told DTN in an email that the community was taken by surprise by the Tyson announcement.

"We're devastated, to say the least about this announcement," she said.

"This town is gathering the greatest force we can to fight this tooth and nail from writing our Congress, meeting, gatherings, petitions -- anything to keep this from coming to our community. This was a horrific surprise with no input from the people in Leavenworth County, nor the residents in Tonganoxie."

Tonganoxie resident Janet Hofmeister said she's concerned the plant would change the face of the rural community.

"Kansas' heritage is small towns and without them, Kansas will lose its identity," she said.

Hofmeister added, "Our town is too small to handle all the problems that Tyson will bring. We are not against economic development, just against this type of economic development."

Read DTN's coverage of the Tyson announcement here, http://bit.ly/…

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

Follow him on Twitter @toddneeleyDTN

(BAS/AG/CC/CZ)

09/18/2017 DDG Weekly Update

By Mary Kennedy
DTN Basis Analyst

OMAHA (DTN) -- The DTN average dried distillers grains (DDG) spot price from the 39 locations DTN collects bids from was $108 for the week ended Sept. 14, unchanged from one week ago.

Based on the average of bids collected by DTN, the value of DDG relative to corn for the week ended Sept. 14 was at 88.48%, and the value of DDG relative to soybean meal was at 34.98%. The cost per unit of protein for DDG was $4.00, compared to the cost per unit of protein for soybean meal at $6.50.

Merchandisers told me demand is starting to pick up in the domestic market as cooler weather arrives in the upper Midwest, causing feeders to use more product. Also, the market feels firm ahead of some of the plants taking fall maintenance downtimes.

CIF NOLA (New Orleans, Louisiana) DDGS prices were firm with September at $143 to $150, and October at $143 to $150. Merchandisers noted that trade volume is increasing for shipments to Vietnam, with activity expected to pick up in October. The Coast Guard reopened the Port of Savannah Tuesday, Sept. 12 with no restrictions after closing ahead of the arrival of Irma. Container shipments were able to resume as the port was fortunate enough to not have extensive damage from the storm, but captains were cautioned to watch for any hazards that may surface in the water.

U.S. Grains Council (USGC) noted in a press release Sept. 13 that members of the 2017 Taiwan Agricultural Goodwill Mission pledged to purchase 5 million metric tons (197 million bushels) of U.S. corn and 500,000 tons of U.S. DDGS between 2018 and 2019. The commitment was made during a signing ceremony at the U.S. Capitol in Washington, D.C., on Wednesday.

According to the USGC Sept. 14 weekly newsletter, the U.S. accounts for 95% of the DDGS imported by Taiwan. Almost all large feed mills in Taiwan currently utilize DDGS, but typically at extremely conservative inclusion rates. "As a result, the council is working with local nutritionists to better formulate diets to optimize caloric and nutritional efficiency using U.S. DDGS. Taiwan purchased nearly 240,000 tons of U.S. DDGS thus far in the 2016-17 marketing year, a 23% increase year-over-year."

CURRENT PREVIOUS CHANGE
COMPANY STATE 9/14/2017 9/7/2017
Bartlett and Company, Kansas City, MO (816-753-6300)
Missouri Dry $122 $120 $2
Modified $60 $60 $0
CHS, Minneapolis, MN (800-769-1066)
Illinois Dry $115 $115 $0
Indiana Dry $113 $113 $0
Iowa Dry $110 $110 $0
Michigan Dry $103 $103 $0
Minnesota Dry $110 $110 $0
North Dakota Dry $110 $110 $0
New York Dry $115 $120 -$5
South Dakota Dry $108 $108 $0
MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253)
Kansas Dry $108 $105 $3
POET Nutrition, Sioux Falls, SD (888-327-8799)
Indiana Dry $108 $108 $0
Iowa Dry $105 $105 $0
Michigan Dry $108 $108 $0
Minnesota Dry $105 $105 $0
Missouri Dry $115 $115 $0
Ohio Dry $108 $108 $0
South Dakota Dry $105 $105 $0
` `
United BioEnergy, Wichita, KS (316-616-3521)
Kansas Dry $118 $118 $0
Wet $50 $50 $0
Illinois Dry $127 $127 $0
Nebraska Dry $118 $118 $0
Wet $50 $50 $0
U.S. Commodities, Minneapolis, MN (888-293-1640)
Illinois Dry $111 $110 $1
Indiana Dry $105 $103 $2
Iowa Dry $105 $103 $2
Michigan Dry $105 $100 $5
Minnesota Dry $105 $100 $5
Nebraska Dry $105 $102 $3
New York Dry $120 $120 $0
North Dakota Dry $105 $100 $5
Ohio Dry $110 $105 $5
South Dakota Dry $105 $100 $5
Wisconsin Dry $105 $105 $0
Valero Energy Corp., San Antonio, TX (402-932-5901)
Indiana Dry $110 $110 $0
Iowa Dry $100 $108 -$8
Minnesota Dry $100 $105 -$5
Nebraska Dry $105 $105 $0
Ohio Dry $110 $110 $0
South Dakota Dry $95 $100 -$5
California $165 $170 -$5
Western Milling, Goshen, California (559-302-1074)
California Dry $180 $180 $0
*Prices listed per ton.
Weekly Average $108 $108 $0
The weekly average prices above reflect only those companies DTN
collects spot prices from. States include: Missouri, Iowa, Nebraska,
Kansas, Illinois, Minnesota, North Dakota, South Dakota, Michigan,
Wisconsin and Indiana. Prices for Pennsylvania, New York and
California are not included in the averages.
VALUE OF DDG VS. CORN & SOYBEAN MEAL
Settlement Price: Quote Date Bushel Short Ton
Corn 9/14/2017 $3.4175 $122.05
Soybean Meal 9/14/2017 $308.70
DDG Weekly Average Spot Price $108.00
DDG Value Relative to: 9/14 9/7
Corn 88.48% 88.48%
Soybean Meal 34.98% 35.71%
Cost Per Unit of Protein:
DDG $4.00 $4.00
Soybean Meal $6.50 $6.37
Notes:
Corn and soybean prices take from DTN Market Quotes. DDG price
represents the average spot price from Midwest companies
collected on Thursday afternoons. Soybean meal cost per unit
of protein is cost per ton divided by 47.5. DDG cost per unit
of protein is cost per ton divided by 27.

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

Follow her on Twitter @MaryCKenn

(BAS/CZ)