Featured Agriculture News

02/16/2018 - Trading for Water Quality

Working through Kansas State University Extension, Wichita has developed programs over the last several years to reduce atrazine and sediment loads in the Little Arkansas River watershed through incentives for best-management practices.

02/16/2018 - Crop Tech Corner

In this week's Crop Tech Corner, Minnesota grad students tell Congress that the expensive regulatory process is stifling innovation in GM fuel and fiber crops.

02/16/2018 - Dicamba Under Scrutiny

The environmental and farmer groups behind the lawsuit claim Monsanto inappropriately influenced EPA's registration of XtendiMax.

02/15/2018 - Drought Changes Fertility Plans

Dry conditions are forcing Southern Plains producers to rethink their fertilizer application plans this spring.

02/15/2018 - DTN Retail Fertilizer Trends

Most average retailer fertilizer prices continued their upward trend the first week of February 2018. One area of the country that might see less fertilizer demand this spring due to a shift of acres away from corn to spring wheat is the Northern Plains.

02/15/2018 - Kub's Den

An estimated $9.5 trillion of investment wealth was "created" by the stock market in the two-year rally leading up to this February -- before $3 trillion was "lost" in the recent correction. Commodity markets are affected, too, when investors panic and move their money elsewhere.

02/14/2018 - The Neonic Lowdown

Some of the documents are open for public comment, and EPA wants to hear from farmers.

02/14/2018 - White House Wants Ag Cuts

The White House proposed budget for Fiscal Year 2019 includes 10-year farm-bill program cuts of $47 billion. The White House also sees $213.5 billion in potential savings from overhauling the Supplemental Nutrition Assistance Program.

02/14/2018 - Ethanol Presses EPA on E15

Though Sen. Ted Cruz continues to hold the USDA nomination of Bill Northey, the head of the Renewable Fuels Association said he's not been asked to meet with the senator.
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02/16/2018 Trading for Water Quality

By Chris Clayton
DTN Ag Policy Editor

WICHITA, Kan. (DTN) -- Cities looking to address water-quality challenges in watersheds leading into their drinking water supply may want to see how Wichita, Kansas, works with upstream farmers to reduce pesticide and sediment in the Little Arkansas River watershed.

Litigation over water quality, especially the federal case in Des Moines, Iowa, in recent years, has drawn a lot of attention. Meanwhile, some other more cooperative water-quality efforts have received less attention.

Wichita, with the help of Kansas State University Extension, uses a couple of payment and trading programs to help reduce atrazine and sediment issues in the Little Arkansas River watershed. The Little Arkansas River, which flows into the main Arkansas River in Wichita, is an intensely farmed watershed just north of the city with roughly 75% to 80% of the ground typically farmed.

Ecosystem service trading programs, as they are called, are becoming more popular. American Farmland Trust and the National Association of Conservation Districts released a white paper last month on environmental markets. The report highlighted other water-quality trading markets in the country and explained various recommendations.

While the report spotlighted some major trading projects elsewhere, the white paper didn't touch on some of the work in and around Wichita. That somewhat reflects how quietly the city and K-State have gone about their work with farmers in the watershed. https://goo.gl/…

ADDRESSING ATRAZINE

In 2006, Wichita and the state of Kansas began looking for ways to reduce atrazine problems in the Arkansas River. The city was working to capture high-flow conditions in the river and store water in an underground aquifer for the city to draw on during drier times. Unfortunately, the city can't divert water to store underground unless the water meets certain purity standards. Atrazine was causing a problem there. According to EPA guidelines, atrazine is supposed to remain below 3 parts per billion in waterways, but at times it could spike as high as 30 parts per billion in the watershed, especially when runoff was high.

The atrazine program began as part of the Kansas Watershed Restoration Protection Strategy, known as WRAPS. The state has 36 such watershed projects that operate with funding from the Environmental Protection Agency's Section 319 program, which deals with non-point-source pollution.

Wichita's atrazine program is all about reducing application rates, changing the timing of applications and split applications in fall and early spring. Essentially, the goal is to reduce atrazine use before late spring and early summer when Wichita becomes more prone to heavier rain events.

"Each year we started seeing significant [atrazine] reductions in the watersheds we tried to go after," said Ron Graber, a KSU Extension specialist in Wichita. "So we're convinced it's having an impact. If we can just get it off the surface for runoff, that's the main thing."

Payments for atrazine reduction only average about $3 an acre, but about 20,000 acres are enrolled. The program also allows Extension agents and others to have more conversations with farmers about overall runoff issues. Graber said the programs have a high acceptance rate with growers. The atrazine problem hasn't completely gone away, but it has been reduced.

"Maybe a good way to think about it is we are buying an education," Graber said. "It's pretty obvious if your atrazine is leaving the field, then you aren't getting good weed control. We have not totally eliminated the spikes, but now we're at 8-to-12-parts per billion at times; it's not 30."

Frank Harper, a crop and livestock producer near Sedgewick, Kansas, has been involved in the atrazine task force since it began. The goal is to reduce the soluble atrazine so the city doesn't have to do as much treatment to filter it.

"I think we've had some impacts," Harper said. "Ten or 15 years ago, atrazine was a product that was used more than today. We still need the product, but we were willing as a community of producers to understand the impact we were having and what we could do to reduce that impact.

Harper said farmers have had some good interactions with the city of Wichita and producers have been willing to work in partnership. "It's always better to do these things without something coming down with the heavy hand of the government, that's for sure," Harper said.

Atrazine is water soluble and can move pretty quickly into the water, Harper noted. Sediment has also been a growing challenge over time, he added. It may not be a specific farm or situation that is causing a problem, but river quality becomes an accumulative problem if practices don't adapt, he said.

"The little things we do can sometimes have a pretty big impact, I think," Harper said.

The funding for the atrazine program initially wasn't significant. It started at $10,000 from the city and state, and grew from there. State funds were replaced with EPA 319 funds that matched $50,000 from the city. The available funds grew to $100,000 with equal matching from the city of Wichita and EPA funds.

In 2013, the EPA 319 funds were shifted to deal with a new sediment program, and the atrazine program became solely funded with $50,000 from Wichita. That was after Graber and others started looking at whether a trading program could reduce sediment, especially from storm-water runoff.

The White House budget for fiscal year 2019 has proposed eliminating the $169.7 million used by local communities for the EPA 319 program, but Congress will determine whether such grants continue to have value.

REDUCE SEDIMENT LOADING

Built somewhat on the success of the atrazine program, Wichita started a sediment trading program in late 2016. Farmers enroll in a five-year best-management-practices program that can pay a maximum of $50 an acre, based on a formula for those practices. Just under 500 acres were enrolled in the trading program last year.

The program allows developers in the city to reduce costs for hydro-dynamic storm-water drainage systems that can run $25,000 each, and reduce sediment in storm-water runoff by roughly 0.2 tons per acre. But after doing some modeling, it became clear it would be cheaper to incentivize upstream farmers to adopt no-till systems and grow cover crops, or double crop, as ways to reduce erosion rates.

"If you look at the economics, it's much more economical to do that in a rural landscape," Graber said. "From a holistic standpoint, we're keeping more sediment out of the system."

Every ton of calculated sediment reduction in town must equate to at least two tons of reduction in the rural landscape. It does require farmers to be inspected every year. No-till practices and intensive crop rotations reduce sediment an average of 3.2 tons per acre in the same Little Arkansas River watershed.

"No-till was a popular option. A lot of farmers picked no-till," Graber said. "We do encourage intensive farming. We think even with no-till, they should grow something as soon as possible. In my view, about 80% of the acres will stay in no-till after five years."

Developers pay a monthly fee equal to $19 an acre per year, as opposed to building a drain system that also costs $500 annually for inspections. About 50% of the new developments in the city are now participating in the program, which translates into 44 developments encompassing about 283 acres. More developers, though, want to enroll, including signing up current developments to eliminate the annual inspection fee on their storm-water systems.

Graber said he's looked at some other programs cities are doing to reduce chemicals and sediment, but hasn't seen any other city and Extension service doing quite what Wichita is implementing.

"We couldn't find anyone who is doing anything quite like this," Graber said.

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

Follow him on Twitter @ChrisClaytonDTN

(AG/BE)

02/16/2018 Crop Tech Corner

By Emily Unglesbee
DTN Staff Reporter

ROCKVILLE, Md. (DTN) -- This bi-monthly column condenses the latest news in the field of crop technology, research and products.

GET GM FUEL AND FIBER UP TO SPEED

A group of graduate students from the University of Minnesota are asking Congress to trim the regulatory process for GM crops that produce fuel or fiber. The seven students, who are doing graduate work at Minnesota's College of Food, Agriculture, and Natural Resource Sciences, believe the regulatory hurdles to commercializing these kinds of traits are slowing down innovation.

In a letter to U.S. Representatives dated Feb. 1, the students pointed out that it costs between $20 million to $30 million to guide a GM crop through the regulatory process, a price tag that limits smaller companies. "Each of us has numerous ideas about genetic modification that could be developed into start-up crop companies and bring more competition into the marketplace dominated by a few mega-companies that can afford the regulatory process," the students wrote.

The letter called for Congress to pass a bipartisan bill that funnels GM fuel or fiber crops through either USDA or EPA rather than both, and trims regulatory costs. By leaving GM food crops out of the equation, the bill could avoid dealing with the FDA, which would simplify the process, the students added.

You can find the letter here: http://bit.ly/…

PACKAGED FOODS SPEAK UP

If your food could talk, what would it say? How about, "Don't sweat that expiration date, I'm still good!" or "Yikes, I'm going sour in a hurry!"

That's the goal of Kay Cooksey, a professor with the Food, Nutrition and Packaging Sciences department at Clemson University, and post-doctoral researcher, Claudia Ionita. The two scientists are working to develop food packaging that could actually detect and alert you to food spoilage.

When the cells in food start to break down, they send out signaling molecules called autoinducers in a process called "quorum sensing." The Clemson researchers have received a $100,000 USDA grant to identify these autoinducers and design a biosensor array that could detect them. "The idea is to take what the microorganisms do naturally, put that with being able to sense that they are starting to create a food spoilage situation and build that in to a sensor," Cooksey said in a university press release.

See the Clemson press release here: http://bit.ly/…

See a description of the research in the USDA grant application here: http://bit.ly/…

PIONEER MINES BACTERIA FOR INSECTICIDAL TRAITS

Farmers owe a lot to bacteria. Genes from the bacterium Bacillus thuringiensis (Bt) created a new generation of insect-resistant crops. Now DuPont Pioneer is turning to a different bacteria species called Pseudomonas for insecticidal genes. Scientists from the company have identified a promising gene from one type of this bacteria, Pseudomonas chlororaphis. The gene, ipd072Aa, produces a protein that can kill certain beetle species when it is expressed in a corn plant.

The Pseudomonas species is familiar to the U.S. regulatory agencies, which have approved several bio-pesticides and GM crops containing it in the last 30 years. The Pioneer scientists are thus optimistic that this potential new source of GM insecticidal traits would pass regulatory scrutiny: "P. chlororaphis is ubiquitous in the environment, lacks known toxic or allergenic properties, and has a history of safe use in agriculture and in food and feed crops," they wrote.

See the study here: http://bit.ly/…

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

Follow Emily Unglesbee on Twitter @Emily_Unglesbee

(PS/BAS/SK)

02/16/2018 Dicamba Under Scrutiny

By Emily Unglesbee
DTN Staff Reporter

ROCKVILLE, Md. (DTN) -- New details are emerging from a lawsuit calling for EPA to vacate the registration of Monsanto's dicamba herbicide.

Originally filed in January 2017, the lawsuit's newly released briefs claim EPA ignored key requirements of the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) and violated the Endangered Species Act when it registered Monsanto's XtendiMax herbicide, designed to be sprayed over the top of dicamba-tolerant crops.

It also argues that the agency was inappropriately influenced by Monsanto during the registration process.

The lawsuit's plaintiffs -- The National Family Farm Coalition, Center for Food Safety, Center for Biological Diversity, and Pesticide Action Network -- are among a crowded field.

Just two weeks ago, a panel of judges ruled that 11 separate lawsuits on dicamba drift damage should be consolidated in a federal court in St. Louis. (See the DTN story here: http://bit.ly/…). These lawsuits cover a range of complaints, but contain mostly farmer defendants seeking damages for crops injured by off-target dicamba movement and focus on the companies that sell the new dicamba formulations: Monsanto (XtendiMax), BASF (Engenia) and DuPont (FeXapan).

The lawsuit by National Family Farm Coalition et al. goes further by targeting EPA and demanding it scrap the registration of XtendiMax entirely.

"The evidence shows that, rather than protecting farmers and the public interest, government officials rushed this pesticide to market without the rigorous analysis and data the law requires," said George Kimbrell, a lawyer with the Center for Food Safety, in a press release. "There was good reason that decision had such devastating consequences last year: it was illegal."

A report from the University of Missouri estimated that more than 3 million acres of non-dicamba-tolerant soybeans were injured by dicamba drift during the 2017 growing season across 24 states. There were also reports of damage to other crops, such as melons and tomatoes, and non-crop plants such as trees.

The National Family Farm Coalition et al. lawsuit levels these accusations against EPA and Monsanto, among the many claims it makes in its filings with the U.S. Court of Appeals for the Ninth District:

-- EPA relied too heavily on Monsanto's analysis of the risks posed by XtendiMax, while ignoring third-party evidence that suggested it could cause serious non-target injuries.

-- EPA ignored the risks posed to endangered species by XtendiMax

-- EPA took orders from Monsanto, not the states and academic experts, when revising the dicamba herbicide labels for the 2018 season, and did not address the problem of volatility with those changes.

In a statement to DTN, Monsanto dismissed the lawsuit's claims:

"The EPA approved XtendiMax herbicide after a long and careful review process, including years of analysis and a thorough evaluation of data regarding volatility. This lawsuit is nothing more than an attempt by NGO's to take a valuable tool out of the hands of American farmers."

The company is in the midst of training tens of thousands of applicators to apply XtendiMax properly in 2018, the statement added.

The registrations for the three dicamba herbicides, including XtendiMax, are only valid through November 2018; at that time, the EPA will reassess the effectiveness of the new labels and decide whether to continue their registration.

You can read the court filings from the National Family Farm Coalition et al. lawsuit here: http://bit.ly/….

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

Follow Emily Unglesbee on Twitter @Emily_Unglesbee.

(PS/SK)

02/15/2018 Drought Changes Fertility Plans

By Russ Quinn
DTN Staff Reporter

OMAHA (DTN) -- As an Oklahoma Panhandle farmer, Jerod McDaniel almost every year plans for dry weather and hopes for rain.

The Texhoma, Oklahoma, farmer/cattleman said extremely dry fall and winter conditions are changing farmers' fertility plans. Wheat -- usually topdressed in February -- and spring-planted crops could see less fertilizer applied as farmers decide if it is worth investing in crops that could produce considerably smaller yields.

"There is moisture in the subsoil, but just nothing in the topsoil," McDaniel told DTN. "I'm going to guess very little inputs will be put on wheat going forward."

LITTLE MOISTURE

Drought is currently a major issue facing the Southern Plains, according to DTN Senior Ag Meteorologist Bryce Anderson. More than 70% of the region from Texas to Kansas is in at least moderate drought according to the U.S. Drought Monitor map, and over 15% of the region is in extreme drought.

In southwest Kansas, Dodge City has received only .13 inch of precipitation since Dec. 1, down 92% from normal and 96% below the 3.18 inches seen a year ago, Anderson said.

Further to the south in Texas, Feb. 7 marked the 117th consecutive day that Amarillo did not have measurable precipitation; that is a new record breaking the old record of 75 days, according to the National Weather Service (NWS). Records for the region go back to 1892, Anderson said.

Also in Texas, Feb. 7 marked the 91st consecutive day in Lubbock without measurable precipitation, Anderson said. This is only seven days off the 98-day NWS record for that city.

Anderson said the forecast is not favorable for ending this dry pattern anytime soon.

"There will be some light rain and snow in the region during the next week, but actual precipitation will be under 0.25 inches," Anderson said. "In our view, the Southern Plains will continue in drought through the rest of the winter and spring."

WHEAT TOPDRESSING

Farmer Bart Parks, of Johnson, Kansas, said extremely dry field conditions will force farmers to make decisions on the viability of crops beginning with winter wheat. The amount of topdressing wheat sees could be slim to none over a large area of the Southern Plains unless things change rapidly, he said.

"If nothing changes in the next 30 to 45 days, I'd say fertilizer retailers could count on a 70%-plus reduction in total UAN (urea ammonium nitrate) usually applied to wheat," Parks said.

Farmers who have locked in fertilizer already for topdressing wheat have some options if they choose not to topdress, according to Parks.

Some retailers will allow you to roll chemicals to a different time, he said. Other options include buying out the contract from the retailer or even selling the purchased fertilizer to another farmer who still needs it.

Parks said the region's farmers can still grow "a lot" of wheat without fertilizing the crop. The question is whether it makes 10 or 70 bushels per acre; that is yet to be seen, he added.

As for his own wheat acres, Parks said he would guess he will not topdress a single acre. That could change, however, if wheat prices rise another 50 to 75 cents or maybe a moisture event would happen.

However, he doubts either of those will actually occur, he said.

Further to the south in the Oklahoma Panhandle, McDaniel believes his wheat crop is not in very good shape. He estimates it has been about 125 days since his home area has seen significant moisture.

His wheat will break dormancy fairly soon, perhaps as soon as 10 to 12 days from now. He applied fertilizer after he planted in the fall and, after some growth, ran his cattle on the crop before it entered dormancy.

Like Parks, McDaniel probably will not topdress his wheat unless moisture arrives. Economically, it just doesn't make sense to apply fertilizer, considering the low price of winter wheat, he said. "I think most will just say 'what is there is there.'"

Despite all this doom and gloom, Parks believes the wheat crop in his home area of southwestern Kansas will yield something. He guesses they will have a better than 50% chance of raising an average crop.

"People really like to be negative," he said. "It's not dead yet."

TOO EARLY FOR CORN, MILO

As for spring-planted crops like corn and milo, it is still too early to tell what Southern Plains farmers will decide about fertilizing these crops. Farmers with irrigation may have to run the pivot to moisten the topsoil when fertilizer is applied.

Parks said fertilizer plans for most Southern Plains irrigated acres will most likely remain the same. Dryland acres, however, could see a pullback on fertilizer applications if the dry conditions remain through the spring.

McDaniels believes the yield potential for these crops is greater and thus farmers will continue to fertilize these crops for higher yields. On his own operation, he has shifted the majority of acres to corn and milo and away from wheat in recent years.

"It is about getting a return out of your investment; that is the nature of our business," McDaniel said. "This is why I only have about 5% to 10% of the number of acres of wheat I had five years ago."

Because dry conditions seem to be a regular thing in the Southern Plains, McDaniel has moved to limited and no-till operations. Because of this, more residues remain and they seem to carry various wheat diseases. This is another reason for planting less wheat, he said.

Increased competition from various weeds in recent years has led him back to some tillage, mainly in the form of strip till. This has allowed him to apply some different types of fertilizer that need to be incorporated, he said.

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

Follow him on Twitter @RussQuinnDTN

(CZ/ES)

02/15/2018 DTN Retail Fertilizer Trends

By Russ Quinn
DTN Staff Reporter

OMAHA (DTN) -- Most average retailer fertilizer prices continued their upward trend the first week of February 2018, according to retailers surveyed by DTN.

All but one of the eight major fertilizers were higher compared to a month earlier. No fertilizer was up a noteworthy amount.

DAP had an average price of $458 per ton, MAP $493/ton, urea $355/ton, 10-34-0 $415/ton, anhydrous $492/ton, UAN28 $227/ton and UAN32 $261/ton.

One fertilizer was actually slightly lower for the third week in a row compared to the previous month. Potash had an average price of $344 per ton.

On a price per pound of nitrogen basis, the average urea price was at $0.39/lb.N, anhydrous $0.30/lb.N, UAN28 $0.41/lb.N and UAN32 $0.41/lb.N.

One area of the country that might see less fertilizer demand due to a shift of some acres away from corn to spring wheat is the Northern Plains. Because of higher spring wheat prices and this crop needing less fertilizer, some farmers in the region might consider planting more spring wheat.

One such farmer is Aaron Frerichs, who farms with his brother Jason near Wilmot, South Dakota. While final planting plans could change, depending on what the futures market is telling farmers to plant, Frerichs said corn acres on his northeastern South Dakota farm could be down anywhere from 5% to 10%, as they have decided to plant more acres of spring wheat.

"For our farm, spring wheat works better than corn, as our fields have a majority of lighter soils," Frerichs told DTN.

"The last two years, we've been blessed with late-July and August rains, and so that has made a huge difference on making an excellent corn crop on any lighter soils. So we are hoping to reduce some risk by planting spring wheat on those fields."

Frerichs said they pre-purchased all their fertilizer needs back in September 2017 for the rapidly approaching 2018 growing season. Higher fertilizer prices would not be conducive for increasing corn acres in their region, he said.

Prices for all but three fertilizers are now higher compared to last year with prices pushing higher in recent months. Both urea and anhydrous are now 1% more expensive, potash is 4% higher, DAP is 6% more expensive and MAP is 10% higher than last year.

Three fertilizers are still lower in price compared to a year prior. UAN32 is 4% lower as is UAN28, and 10-34-0 is 6% less expensive looking back a year.

DTN collects roughly 1,700 retail fertilizer bids from 310 retailer locations weekly. Not all fertilizer prices change each week. Prices are subject to change at any time.

DTN Pro Grains subscribers can find current retail fertilizer price in the DTN Fertilizer Index on the Fertilizer page under Farm Business.

Retail fertilizer charts dating back to 2010 are available in the DTN fertilizer segment. The charts included cost of N/lb., DAP, MAP, potash, urea, 10-34-0, anhydrous, UAN28 and UAN32.

DTN's average of retail fertilizer prices from a month earlier ($ per ton):

DRY
Date Range DAP MAP POTASH UREA
Feb 6-10 2017 431 448 330 354
Mar 03-10 2017 436 460 336 361
Apr 3-7 2017 438 466 338 354
May 1-5 2017 436 466 339 351
May 29-Jun 2 2017 436 471 340 339
Jun 26-30 2017 437 470 340 333
Jul 24-28 2017 434 462 338 308
Aug 21-25 2017 434 458 338 304
Sep 18-22 2017 429 452 345 312
Oct 16-20 2017 432 452 348 340
Nov 13-17 2017 435 459 342 339
Dec 11-15 2017 439 479 343 340
Jan 8-12 2018 456 491 346 352
Feb 5-9 2018 458 493 344 355
LIQUID
Date Range 10-34-0 ANHYD UAN28 UAN32
Feb 6-10 2017 440 485 238 273
Mar 03-10 2017 441 503 246 279
Apr 3-7 2017 441 505 248 280
May 1-5 2017 436 508 247 280
May 29-Jun 2 2017 436 503 248 280
Jun 26-30 2017 435 484 238 268
Jul 24-28 2017 425 423 229 265
Aug 21-25 2017 419 417 216 248
Sep 18-22 2017 416 402 211 248
Oct 16-20 2017 413 397 205 262
Nov 13-17 2017 403 410 216 272
Dec 11-15 2017 403 434 218 256
Jan 8-12 2018 410 479 220 258
Feb 5-9 2018 415 492 227 261

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

Follow Russ Quinn on Twitter @RussQuinnDTN

(AG/BAS)

02/15/2018 Kub's Den

By Elaine Kub
DTN Contributing Analyst

Pretty much all of us -- anyone who owns some stocks, ETFs or mutual funds -- went through the same emotional rollercoaster during the past several weeks. Checking the balances of our investment accounts or IRAs became a pleasant daily ritual during the month of January: "Look how much more it's worth today than yesterday!"

Then it stopped being pleasant.

The volatile recent correction in the global equity markets has flushed trillions of dollars of wealth into oblivion. It was so violent, and involved so much money, that its spillover effects can be observed in the commodity markets, too, even though the fundamental worth of the energy contained in a bushel of corn hasn't shifted.

First of all, let's consider the stock market itself. It's debatable whether we should say that a rise in the S&P 500 Index, for instance, really represents wealth being "created." Perhaps we should consider real wealth being passed to investors only when it's paid out as dividends, or we should stipulate that gains and losses can only be realized once an asset is sold. But let's relax our interpretation a little bit and talk about the market capitalizations of the 500 companies included in that index, as they show up in the market value of millions of investors' brokerage accounts. Then we can say that between the last stock market correction (Jan. 20, 2016) and the recent all-time high (Jan. 26, 2018), the S&P 500's market capitalization grew by an estimated $9.5 trillion, of which $1.8 trillion was added on during the first month of 2018 alone. That represents a 58.5% gain over the past two years, followed by an 11.8% drop during nine trading sessions this February. That drop is equivalent to $3 trillion of wealth that has simply disappeared.

That's a lot of money!

Similar math can be done for the investment positions seen in various commodity futures markets, and it's eerie how closely investor behavior has echoed throughout multiple asset classes. Total open interest in crude oil futures on Jan. 26 was 55.8% higher than it was two years ago, then it fell 4.6% during the February stock market correction. In those same timeframes, total open interest in gold futures rose 35%, and then dropped 9.6%. Total open interest in cotton futures rose 68.0%, and then dropped 14.5%. Total open interest in corn futures rose 20.1%, and then dropped 1.3% during those panicky February days. Total open interest in soybean futures rose 18.1%, and then dropped 4.8%. Total open interest in wheat futures rose 40.1%, and then dropped 7.6%.

That's not to say there is or isn't a long-term correlation between the stock market's values and the total open interest in commodity futures -- there have been other, unrelated ups and downs in investors' participation in commodity futures over the past couple of years. But during this one, brief flash of fight-or-flight behavior, all these markets did seem to share some activity.

To put the commodity futures activity in dollar terms, in the soybean futures market, for instance, that 4.7% drop in open interest since the February stock market crash began could represent the equivalent of up to $49 million in margin deposits. Each time a speculator wants to buy or sell a soybean futures contract, it must deposit $1,300 of margin money in its brokerage account, which is not the full value of the soybeans being represented, but which serves as good-faith money to cover potential losses in the open position. When the speculator closes the futures position, it can get its margin money back and repurpose the cash for something else (covering stock market losses, for instance). This math isn't as direct as the wealth that's "created" or "lost" by stock market fluctuations, but it's still an observable flow of investment money.

However, just because investors' money was flowing out of the commodity futures markets this month, that doesn't automatically force prices to go down. Margin deposits are required for both long futures positions and short futures positions, so these formerly open positions that were closed in order to pull out margin money could have gone in either direction.

In fact, the most recent Commitments of Traders report from the CFTC showed that in the week leading up to Feb. 6, speculators (in the "managed money" category of trader) closed only 1,085 long soybean futures and options positions, but they jettisoned 12,956 short soybean futures and options positions. In the corn, SRW wheat, and HRW wheat futures and options markets, speculator activity has been similarly focused on covering short positions.

That is to say: Speculative investors were indeed pulling their cash out of futures and options, but they were doing so by buying back previously-established short positions. That buying activity -- for instance, the 11% (at least) decline in the number of short speculative corn futures and options positions -- may go a long way toward explaining the grain markets' remarkable recent success.

Grain owners have seen the actual value of their corn, soybeans and wheat rise more than 2.5% during the exact same timeframe that the sky has been falling around the ears of stock market investors.

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/BE)

02/14/2018 The Neonic Lowdown

By Emily Unglesbee
DTN Staff Reporter

ROCKVILLE, Md. (DTN) -- EPA doled out hundreds of pages on the risks and benefits of neonicotinoid insecticides on Dec. 15 -- an early Christmas "gift" of sorts for farmers.

Tempting as it to ignore these data-heavy documents, most corn, soybean and cottonseed in the country is coated with these chemicals, so the majority of row-crop farmers have a serious stake in the agency's registration review of them. EPA wants to hear from these farmers; many of these review documents are open to public comment.

To refresh, neonicotinoids are insecticides most commonly used in seed treatments to control a variety of soil and foliar insect pests in field crops such as corn, cotton, sorghum, sugar beets and soybeans. These are the neonicotinoids under EPA review: clothianidin (Poncho, from Bayer), thiamethoxam (Cruiser, from Syngenta) and imidacloprid (Gaucho, from Bayer and Valent USA).

So let's dig in, starting with the most significant and pressing items for growers:

COTTON: FOLIAR APPLICATIONS UNDER SCRUTINY

Last year, EPA released pollinator-only risk assessments for the neonicotinoid insecticides. They concluded that the foliar use of these chemicals in the pre-bloom and bloom periods of cotton could pose a risk to honey bees. (See DTN's story here: http://bit.ly/….)

Now the agency is releasing the other side of the equation -- an assessment of the benefits cotton growers see from foliar applications of neonicotinoids and how losing access to them might affect their operations.

EPA is breaking its own protocol by asking for grower input now (just as they did with the risk assessments), before they make a final decision on whether to restrict neonicotinoid use in cotton.

In this assessment, EPA considers how spraying restrictions at different times of the growing season would affect growers. For example, they conclude that a restriction on spraying the chemicals from pinhead square through harvest would affect 1.2 million acres of cotton and, on average, cost producers an extra $5.70 per acre, for a total industry loss of $6.9 million a year. A restriction from the beginning of bloom through harvest, on the other hand, would only affect 500,000 acres of cotton and cost producers $1.7 million a year. You can read the full document here: http://bit.ly/….

Farmers can comment on this document and are encouraged to do so by the agency. Using this EPA press release, select the link for the chemical you wish to comment on here, which will take you to the official EPA docket: http://bit.ly/…. The public comment period closes April 21, 2018.

For a guide on how to comment effectively on an EPA document, see this DTN story: http://bit.ly/….

SOYBEANS: SEED TREATMENT VALUE QUESTIONED

Just over three years ago, EPA released a document titled "2014 Benefits of Neonicotinoid Seed Treatment to Soybean Production," which concluded that farmers saw no significant economic benefit from neonicotinoid seed treatments on soybeans. It set off a firestorm in the industry. Many academic entomologists from Midwestern and some Southeastern states announced that they largely agreed with this conclusion, with a few exceptions for serious soil pest problems. The registrants of the neonicotinoids in question -- Bayer, Syngenta, and Valent USA -- disagreed strongly and released their own analysis of soybean seed treatment benefits.

Fast forward to 2017. After poring over 40,000 public comments on this controversial document, EPA responded to them and released a revised conclusion. See it here: http://bit.ly/….

The agency acknowledged two key situations where soybean neonicotinoid seed treatments are likely to benefit farmers: in the Midsouth, where pest pressure is high, and in Midwestern fields where the bean leaf beetle is an established pest.

But beyond those scenarios, EPA has mostly stuck to its guns, concluding: "...the benefits of neonicotinoid seed treatments are generally low for most soybean growers in the United States."

The registrants continue to disagree with this, but the document is not open for comment anymore. EPA has said its piece, and now farmers must wait until the agency finalizes its registration review of neonicotinoids sometime in 2018 to see what effect this revised conclusion will have on soybean seed treatments.

EPA'S ECOLOGICAL RISK ASSESSMENTS OF THIAMETHOXAM AND CLOTHIANIDIN

As part of its ongoing registration review, EPA also released its analysis of the potential risks posed to aquatic species, mammals, birds and plants from thiamethoxam (Cruiser, from Syngenta, mostly used on corn and cottonseed) and clothianidin (Poncho, from Bayer, mostly used on corn and soybean seed).

These risk assessments are highly technical analyses of toxicology and usage data on these insecticides. The registrants of the two products, Bayer and Syngenta, are busy reviewing them and preparing similarly technical responses for the public comment period, which closes April 21.

Farmers should also comment if they feel their experience with the chemicals will be relevant to these risk assessments: http://bit.ly/…. For help on making your comment matter to the EPA, see this DTN story: http://bit.ly/….

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

Follow her on Twitter @Emily_Unglesbee

(PS/AG)

02/14/2018 White House Wants Ag Cuts

By Chris Clayton
DTN Ag Policy Editor

OMAHA (DTN) -- Farmers would pay a larger share of crop-insurance premiums and a range of ag industries would have to pony up fees for USDA services under the Trump administration's latest budget proposal released Monday.

The White House proposed budget for Fiscal Year 2019 includes 10-year farm-bill cuts of $47 billion for farmer programs. The White House also sees $213.5 billion in potential savings from overhauling the Supplemental Nutrition Assistance Program to include commodity box shipments to SNAP recipients.

The White House budget proposal is somewhat convoluted considering Congress just last week passed a two-year budget deal to boost domestic and defense spending by $300 billion. The White House proposed budget would still lead to $3 trillion in higher deficit spending over the next decade despite calling for cuts in major federal medical programs and other safety nets such as SNAP.

The Trump administration budget proposal recommends several legislative changes to farm programs, making it timely as Congress drafts a new farm bill this year. The major cuts that would affect farmers are proposals to cap crop insurance premium subsidies, which would reduce federal spending on insurance by roughly $22.4 billion over 10 years. Cuts to conservation programs would reduce spending $13 billion over 10 years.

USDA did not issue any statement about the budget proposal from Agriculture Secretary Sonny Perdue, who is touring western states this week. However, USDA did issue comments from Perdue praising President Trump's infrastructure proposal.

The chairmen of the House and Senate Agriculture Committees issued a joint statement Monday on the budget proposal that wasn't filled with the normal praise. Sen. Pat Roberts, R-Kan., and Rep. Mike Conaway, R-Texas, said they will write a farm bill, but don't expect the president's budget to be reflected in that final legislation.

"As chairmen of the Agriculture Committees, the task at hand is to produce a Farm Bill for the benefit of our farmers, ranchers, consumers and other stakeholders. This budget, as with every other president's budget before, will not prevent us from doing that job. We are committed to maintaining a strong safety net for agricultural producers during these times of low prices and uncertain markets and continuing to improve our nation's nutrition programs," the two lawmakers said.

Some agriculture groups weren't exactly jumping to praise the budget. The National Sustainable Agriculture Coalition called the proposal "the most anti-rural, anti-farmer proposal the agriculture community has seen in years." Sen. Debbie Stabenow, D-Mich., ranking member of the Senate Agriculture Committee, also criticized the proposal as "out of touch with our farmers, families and rural communities."

The White House wants to cap commodity conservation and insurance payments for farmers with adjusted gross incomes above $500,000. In 2013, when farm income was a record high nationally, the White House stated this would affect just 2.1% of farmers. As the White House Office of Management and Budget wrote in its proposal, "It is hard to justify to hardworking taxpayers why the government should provide assistance to wealthy farmers with incomes over $500,000. Doing so undermines the credibility and purpose of farm programs."

Besides lowering the AGI cap for farmers, the budget proposal also calls for eliminating commodity certificates and the special, separate $125,000 payment limit for peanuts. Further, the Trump administration wants to limit all farms to a single farm manager collecting farm-program payments. The Obama administration spent years on rules regarding actively engaged farmers to limit payments to three farm managers and some trade associations have sought to get that rule overturned.

Looking at insurance, the Trump administration also wants to see insurance premium subsidies limited to farmers with $500,000 AGI or lower, and reduce the premium subsidy for the Harvest Price Option by 15 percentage points. The White House wants the average premium subsidy lowered from 62% for an insurance policy down to 48%. The White House also wants to cap underwriting gains under the federal crop insurance programs to 12% of return on retained premiums, saving about $2.99 billion over 10 years.

In another set of conservation proposals tied directly to the farm bill, the Trump administration proposes eliminating the Conservation Stewardship Program and eliminating funding for the Regional Conservation Partnership Program (RCPP). The White House pointed to a USDA Inspector General report on CSP stating that some producers should have been ineligible while others receive too much. "These indicators demonstrate that CSP funding is not always spent in the taxpayers' best interest," the White House stated.

To offset some of those conservation cuts, the White House proposes boosting the Environmental Quality Incentives Program by $60 million annually, but capping conservation participation to farmers making $500,000 a year or lower AGI.

The Trump administration also calls for better targeting the Conservation Reserve Program to more specific environmentally sensitive areas and limiting the enrollment of whole farms. Further, CRP payments should be limited to 80% of the average county rental rate determined by the National Agricultural Statistics Service.

National Resources Conservation Service technical assistance, both discretionary and mandatory under farm programs, would be reduced a total of $229 million, with most of the burden going to cutting discretionary conservation technical assistance. USDA expects more technical assistance would be picked up by the private sector.

Looking at SNAP, the Trump administration believes there is an average of $21.4 billion a year in annual savings on the program that can be shaken out. That would include eliminating SNAP payments for people to no more than $90 a month in benefits and instead sending SNAP recipients a USDA Foods package instead with staple items in it such as "shelf-stable milk, ready to eat cereals, pasta, peanut butter, beans and canned fruit, vegetables, and meat, poultry or fish." The White House states this is a cost-effective approach that would provide significant savings to taxpayers. Further reforms would seek to reduce SNAP benefits for people considered able-bodied adults.

The Trump administration also again proposes dropping the McGovern-Dole International Food for Education program, which would eliminate $202 million. In the State Department, the budget also calls for eliminating an international food aid program that spends $166 million annually.

The Trump budget also calls for several new user fees for industries using USDA services. The big one would be $680 million a year to cover costs for inspection, import inspection and operation costs at the Food Service and Inspection Service for programs overseeing inspection of meat, poultry and eggs. The "inspected by USDA" stamp on meat and poultry labels provides industry with a special government service which justifies their payment because "this increases consumer confidence, potentially increasing sales," the budget document states.

On top of that, USDA wants livestock markets, dealers and packers to pay $23 million annually to fund the Packers and Stockyards Act program. Further, a $20 million annual user fee program would be set up for companies needing the testing and measuring services offered by the Federal Grain Inspection Service. Another new fee would cover $23 million in USDA spending on the Animal and Plant Health Inspection Service programs, including oversight of biotechnology.

The Trump administration also wants USDA checkoff programs to pony up $20 million a year in user fees to fund the Agricultural Marketing Service's oversight of marketing orders.

The budget for FY 2019 would lead to $300 million less in salary for Farm Service Agency staff, some of which would be due to transfers to the Agricultural Marketing Service and a new USDA computer business center. USDA plans to realign headquarters and field staff and make "strategic reductions in staff years throughout FSA." Referring to staff years, USDA's budget calls for cutting federal and non-federal FSA employment by roughly 19%.

The budget proposes $938 million in eliminated funding programs for USDA in 2019, including eliminating $509 million in Rural Water and Wastewater grants, but maintaining the $1.2 billion loan program.

The administration also calls for eliminating interest payments in the accounts of the Rural Utilities Service. That would generate about $129 million in savings annually. The White House notes USDA pays nearly twice the interest rate to rural utilities in that program than the current prime interest rate.

In the budget addendum because of the congressional agreement, the White House proposed keeping $192 million at USDA for a facilities account mainly going to research labs.

White House budget https://www.whitehouse.gov/…

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

Follow him on Twitter @ChrisClaytonDTN

(CZ/ES)

02/14/2018 Ethanol Presses EPA on E15

By Todd Neeley
DTN Staff Reporter

SAN ANTONIO (DTN) -- Though President Donald Trump has supported the ethanol industry, U.S. Environmental Protection Agency Administrator Scott Pruitt has yet to address perhaps the most important issue to the industry, the lead lobbyist for the nation's largest ethanol interest group said on Tuesday.

The future of biofuels will depend on having markets available, most notably by expanding the industry's ability to sell E15 year-round.

"What I want is real simple," Renewable Fuels Association President and CEO Bob Dinneen told reporters here.

"RVP parity. Regulatory reform. Things happen in D.C. I want the president to understand that his EPA administrator is not fulfilling the president's promise to address this issue."

Right now, E15 sales are limited to certain times of year because of ozone concerns, although the science shows little or no difference between E10 and E15.

Pruitt recently told a U.S. Senate committee the agency is considering its legal authority to make administrative changes to allow year-round E15 sales.

"I think EPA Administrator Pruitt needs to take a key from the boss and provide volatility parity for E10 and E15, allowing consumers to make the choice of which is the best fuel for their vehicle and their pocketbook," Dinneen said.

"They want to know if they've got the legal authority to make that change, they do. They need to get about the business of doing it. This administration in particular begins and ends at the top. And the president of the United States has been unambiguous."

TED CRUZ EFFORTS

During the past several months, Sen. Ted Cruz, R-Texas, has held up the nomination of Iowa Agriculture Secretary Bill Northey to an undersecretary position at USDA in an attempt to get what he wants on Renewable Fuel Standard reform. Northey's nomination remains in limbo.

On the Senate floor in recent weeks, Cruz made the claim that ethanol interests have been unwilling to meet with him and petroleum interests to talk about federal biofuel policy.

"What Ted Cruz said on the floor of the Senate was that we were refusing to meet to talk to him," Dinneen said. "I'm sorry, that's simply not true. We've not had an invitation from Ted Cruz to go talk to him about it. Anybody that knows me, knows I'll talk about ethanol anytime, anywhere with anybody. And I would tell Ted Cruz that he's wrong. The facts do not support what he is suggesting. Ted Cruz was inaccurate in suggesting that the ethanol lobby was refusing to meet. That's not the case at all."

Cruz has suggested capping the price of renewable identification numbers, or RINs, at 10 cents as a way to control the costs for refiners to comply with the RFS. That proposal has been roundly rejected by ethanol interests, who say it would essentially end the RFS.

In addition, Sen. John Cornyn, R-Texas, has been circulating on Capitol Hill proposals to reform the RFS. Dinneen, however, said he's not aware of the details of those proposals.

Dinneen was asked what the ethanol industry would be willing to give up to the oil industry for year-round E15 sales.

"I'm just not going to negotiate in public," he said. "In fact, I don't believe that the RFS needs to be fixed. I don't think it's broken. If there are issues that some refiners want to have addressed, tell me what they are and we'll see what we can do to address them."

Dinneen said refiners who have "complained" about the high cost of RINs have not all invested in the necessary blending infrastructure.

"If the administration ultimately decides that's an issue they want to address, the way to address it is by providing volatility parity," he said.

"That would get more free RINs into the marketplace. You can address the RIN price in one of two ways. You can destruct demand. You can lower the RFS in some form or fashion. Pick your way of doing it. Or you can increase the use of biofuels because that's what would drive the price of RINs down as well."

WASHINGTON PROPOSALS

Either way, Dinneen said, he wouldn't support any changes to the RFS that would hurt biofuels demand.

"I've not seen what Cornyn is up to," he said in reference to the proposals the senator from Texas has been circulating on Capitol Hill. "I hear lots of rumors about it. But what I hear ultimately is he just wants to end the program. No, that's in my view not constructive and probably not going to go anyplace."

Philadelphia Energy Solutions recently blamed RFS compliance costs for filing Chapter 11 bankruptcy protection. On Monday, PES released a statement to the press countering criticisms by the RFA and others who say the company's woes have nothing to do the RFS.

"But what is also lost in that they're prioritizing some refinery jobs in an antiquated facility outside Philadelphia, and are giving no consideration whatsoever to the hundreds of thousands of farmers across the country that are today being asked to sell their commodities below the cost of production," Dinneen said.

"And they're comfortable ripping away that important value-added market to save some jobs in Philadelphia. I'm sorry, I find that offensive."

On Tuesday, the American Petroleum Institute called on the EPA to reject small refiners' request for RFS waivers.

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

Follow him on Twitter @toddneeleyDTN

(AG/SK)