March 22, 2019 | Grain Hedge Insights | Kevin McNew | Views: 415

Recent Flooding Affects Ethanol Capacity

Massive flooding in the Midwest has knocked out 13% of capacity

Recent Flooding Affects Ethanol Capacity

Recent Flooding Shuts Approximately 13% oF U.S. Ethanol Capacity

Massive flooding in the U.S. Midwest has knocked out roughly 13% of the nation’s ethanol production capacity, as plants in Nebraska, Iowa and South Dakota have been forced to shut down or scale back production.

With rail lines washed out, and corn in storage flooded, ethanol production should start to decline which can support prices.

The U.S. has some 200 ethanol plants capable of producing 1.06 million barrels per day, and about 100,000 to 140,000 bpd of capacity has been taken off line.

Among the plants that have scaled back are ADM's plant in Columbus, Nebraska, the largest in the United States, due to flooding of a small rail line serving the plant.

With some rail access in Nebraska, western Iowa and western South Dakota closed ethanol delivered in the Gulf Coast is trading at 15 to 17 cents per gallon above Chicago's benchmark price which is about double the average for this time of year.  

What it means for U.S. Farmers: The recent appreciation in ethanol prices has lent some support to the corn futures market which is positive.  How long the service disruptions last is anyone’s guess as ethanol plants have a plethora of logistical, operational and employee concerns to contend with.  If the margin structure improves, then expect these producers that are idle will be “chomping at the bit” to restart production which can be bullish local corn basis.                        

Export Sales Announcement

Private exporters reported to the U.S. Department of Agriculture export sales of 300,000 metric tons of corn for delivery to China during the 2018/2019 marketing year.

 

Russia Exports Wheat to Algeria as a “Test”

This week Russia exported a trial shipment of 21.88 tonnes of wheat to Algeria as “test”.  

Algeria which imports most of its non-durum wheat or soft wheat needs from the French and other EU countries has been open to diversifying it’s wheat supply chain.

This recent “test” shipment will be used to assess Russian wheat’s physical  quality and to determine if the grain meets Algerian phyto-certification standards.    

What it means for U.S. Farmers: Not bullish the U.S. wheat producer as Russia seeks to expand its wheat export business and to increase its share of the global wheat export market.  While this quality test by the two countries is for old crop wheat, if the results by the Algerian inspectors are positive look for Russia to start making incremental export business into the country.  Any export business that Russia starts to win in Algeria which displaces French wheat has the potential risk of impacting or slowing U.S.wheat exports.

 

The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)

March 21, 2019 | Grain Hedge Insights | Kevin McNew | Views: 600

China’s Pork Imports May Double

African Swine Fever reduces production in world's top hog market

China's Pork Imports May Double

China’s Pork Imports May Double to 2 MT in 2019

China's 2019 pork imports are set to double to 2 million tons (MT) as African swine fever reduces production in the world's top hog market.

China has reported 113 outbreaks of the contagious disease since August 2018 though industry insiders say several outbreaks are going unreported.

Some private analysts estimate that Chinese YoY pork production could decline by 20% during 2019.  2019 production estimates are between 50-51 MT, down from the 54-55 MT produced in 2018.

Currently, the USDA is forecasting Chinese pork production at 51.4 MT for 2019, -5% YoY and with imports seen at 2 million tonnes.  

China's pig feed demand in the 2018-19 crop year that runs from October to September could decline by 12% as soymeal demand is estimated to fall by 5.5%.

African swine fever has a high mortality rate in pigs and has no vaccine.   

What it means for U.S. Farmers: The struggles of China’s hog herd represents a mixed bag for the U.S. farmer. From one perspective China’s need to import more pork can be beneficial to the U.S. hog industry and related feed inputs as pork exports from the U.S. have grown since mid-February despite the Chinese’s 60% tariff on U.S. pork.  On the other hand, slowing meal demand has the ability to temper Chinese soybean imports which would be bearish.

EPA Likely To Grant Partial Production Waivers For 39 Ethanol Plants

The Environmental Protection Agency is likely to issue partial waivers to some of the 39 small refineries seeking relief from the nation's biofuel laws for 2018.   

The agency typically either approves or denies a waiver request in full, and has only granted one partial exemption since the start of the U.S. Renewable Fuel Standard program more than a decade ago.

The EPA will decide on the 2018 exemption applications by the end of March, the compliance-year deadline under the RFS.  

The RFS requires refiners to blend certain volumes of biofuels like ethanol each year or purchase blending credits from those that do. But small facilities with a capacity of less than 75,000 barrels per day that can prove compliance would cause them significant financial strain can seek exemptions.      

What it means for U.S. Farmers: The EPA’s granting production exemptions could work two ways. One result would be a softening of local corn basis in the areas where the 39 facilities are located and would be a negative.  The second is that a reduction in production which could help facilitate a draw on stocks would could help ethanol prices rise which would stimulate demand for corn in other markets.         

 

The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)

March 20, 2019 | Grain Hedge Insights | Kevin McNew | Views: 972

Brazil’s Soy Exports Declining

Could benefit U.S. producers

Brazil's Soy Exports Declining

Brazil’s Soy Exports Seen Declining By 17% YoY In 2019

Brazilian ag consultant Safras & Mercado is estimating that Brazil soybean exports will decline by 17% YoY or by 14 MMT on a lower than estimated production.  

MTD March soybean exports have accelerated over the last week and are running at an aggressive pace despite varied reports that local Brazilian soy producers have been holding back supplies in an attempt to stimulate prices.  

According to a weekly report by Brazil's trade ministry, soy exports are averaging 532,000 TMT per “work” day during March, or +26.9% YoY.   

In March 2018 Brazil exported 8.81 MMT of soybeans. With 2 weeks left in the month, Brazil has exported 4.8 MMT.

While the recent trade talks in January and February between the U.S. and China have produced some positive activity for the U.S. export program the Brazilian export pace is attributed to both an early harvest and an existing book of trade commitments.     

What it means for U.S. Farmers: “All else equal” a decline in Brazilian soy production can translate to a decline in exports which can benefit the U.S. producer. Obviously more involved here as the both the political economy, trade negotiations, and Chinese soybean demand structure may have been altered by the African swine flu.

          

Ukraine’s Corn Exports +69% YoY

Ukraine has exported an additional 700,000 MT of grain since last Wed., with corn sales driving total grain exports +20% YoY to 35 MMT.   

Corn exports in 2019 have led Ukraine’s export program higher and at 18.4 MMT are +69% YoY.  

At 12 MMT Ukraine’s total wheat exports, are running -12% YoY but milling wheat exports have been strong at +8% YoY.  The increase in milling wheat exports has been offset by a decline in feed wheat exports which are down 23% YoY.      

What it means for U.S. Farmers: Ukraine’s prioritizing corn over wheat exports this marketing year continues to take its toll on U.S. exports.  We continue to monitor the US/Ukraine FOB spreads for signals of where U.S. corn is competitive.

 

The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)

March 20, 2019 | | Views: 993

The 4 Stages of Growing Pains in Your Sales Territory

Navigating the growth stages of your sales career

The 4 Stages of Growing Pains in Your Sales Territory

Just like anyone or any business, you will go through growing pains as you develop your sales territory over the course of a selling career. Learning to recognize and prepare for these stages in advance can save you considerable time, energy and frustration.

Let’s jump right in with …

Stage 1: Startup

Whether you are brand new right out of school or maybe just new to the company, everyone has a day 1. You’re full of energy and optimism as you approach the market and your future customers with lots of marketing material and ideas from your onboard training.

With all that energy, you want to go everywhere and tell everyone the good news on your products. I call this the, “The sell anybody anything stage”. Because that’s what we do. We are motivated but struggle to get a sale. We also don’t know exactly who our target market is and what our real value is to them. We end up signing customers we probably shouldn’t.

This stage is also marked with over-serving the customer. “How can that be?” “Aren’t we supposed to do everything we can for customers?” Sort of. Actually, no, you shouldn’t. In this stage, we only have a few customers, which gives us a lot of time. Time we should be using to sign new customers. Instead, we focus on our first few accounts and want to make them a huge success. To do that, we over service the account. We end up doing things with them that is not sustainable if you had a full territory to work with.

Stage 2: Gaining Momentum

You are now beginning to understand the market and how your products fit into the scheme of things. You also signed a few bigger accounts. Ones that fit the profile your company is looking for. However, you still have a lot of time on your hands to serve the customer, which is what you do. You are noble in your endeavors and you treat every customer the same, big or small. They all get your full attention.

At some point in this stage, you begin to realize this won’t be sustainable. Providing the same level of sales support to small accounts will burn up your time and prevent you from growing your territory. Whether you start now or wait until you are at 100% of your capacity, you know you need to make a change. You might also be in too many market segments. In one area, you are B2B (business to business). In another B2C (selling direct to farmers). Yet another you have a commissioned sales rep or go through a distributor. All are slightly different business models that require a slightly different approach. This scattered approach takes up valuable time switching between these them. It can also out sell your production capabilities.

Stage 3: Full Throttle

This is the fun stage. But it can also be the most stressful which results in burnout, customer loss or employee turnover. At this point, you found your niche in the market and you focused on that niche to grow rapidly. Word of mouth has spread through your territory that you are the one to work with on this product line. You even have prospective customers calling you to sign up. Most of your new customers are coming in from referrals from your satisfied customers. What could possibly go wrong?

It depends! There are two possibilities in this stage. If you realized the stages of growth early in your selling career, got organized and got focused, then it lead to….

Stage 3a: Found Your Home: You found out where you and your products really fit into the market. Then you focused on growing in that direction. To do so, you reduced your time or quit selling those accounts that didn’t fit into your niche. This focus is making you very effective.

Or …

Stage 3b: Running on Empty: You kept selling and selling, but never focused your efforts on a niche. Maybe, you didn’t want to be rude and stop spending time with them. Maybe you felt you couldn’t afford to lose any sales. Maybe your idea or paradigm of customer service won’t allow you to reduce time and effort in one area to focus on another. As the name of this stage implies, eventually your car quits running if it has no gas. You too, quit running when your gas gauge is on E. You might burnout and become ineffective, over worked and not even enjoy your job anymore. This can lead you to changing jobs, companies or careers fields. It definitely will lead to customer dissatisfaction.

Stage 4: Coasting Downhill

Depending on how you react to stress and how you organized your territory, eventually, you peak and then you back off a little. You no longer go down as many rabbit trails as you used to. Rabbit trails are new markets, new prospects, or any new opportunities. You have, “been there, done that, got the t-shirt”. You are not going to expend the energy to go down that trail again.

While this experience is helpful, overdoing it means you miss out on some possibly profitable customers or markets. The second problem with this stage is that everyone has customer attrition. Without new customers coming in, your territory begins to dwindle, be it ever so slowly. Customers retire, sell out, go out of business, decide to switch to your competition. Your company discontinues products, product lines and services. Industries pop up and then fade away. Examples, the ostrich feed business, the high oil corn, etc.  

Coasting a bit downhill to catch your breath in a hectic selling world is ok. But don’t forget to keep peddling before you run out of momentum.

What to do:

Recognize it: The first step of almost any program or problem is to become aware of it. Understand that it occurs and figure out which stage you are in. As I begin a coaching program with a salesperson, one of the first areas we try to figure out is what stage they are in. We look at years of service, customer segmentation and their business objectives. We also spend a lot of time on capacity. That’s the salesperson’s capacity. Are they new and need to focus on new accounts? Or, are they at peak and have a full territory?

Prepare: Surviving and thriving in each subsequent stage is best done by preparing prior to getting into that stage. We look at how sustainable their current path is. Then we project that path into the next stage and ask, “If you doubled or tripled your customer list, could you sustain the current level of service?” “Would you have the time and resources to do it?” If the answer is no, then we begin planning ways to streamline their territory.

Change: Actually, do the change you know you need to do. Seems obvious, but this is the bigger struggle as I coach salespeople. They know what they need to do, but either don’t want to or can’t make themselves do it. This eventually leads to burn out and turnover (customer and salesperson).

Take a few minutes today and think about yourself. What stage are you at? What are the indicators? How can you prepare for the next stage? It’s always a rewarding moment when coaching someone and the light comes on. That moment when they realize it’s not a unique problem. They aren’t the only ones going through these stages. Most importantly, when they discover there are ways to improve and get better, more efficient and don’t have to leave their territory and company.

For more Ag sales training topics and discussions, go to www.GregMartinelli.net.

March 19, 2019 | Grain Hedge Insights | Kevin McNew | Views: 875

Crop Progress Condition Scores

General improvement seen in Texas and Oklahoma scores

Crop Progress Condition Scores

Brazil to Possibly Negotiate Wheat Tariff-Free Import Quota With U.S.

Brazil is considering granting an import quota of 750,000 MT of U.S. wheat per year without tariffs in exchange for other trade concessions when the U.S. and Brazil meet in Washington, D.C. this week.  

The 750,000 MT is about 10% of Brazilian annual wheat imports and is part of a twenty year old commitment to import 750,000 tonnes of wheat a year free of tariffs that Brazil made during the World Trade Organization Uruguay Round of talks on agriculture but never adopted.

Both initial and unofficial estimates believe that the quota of 750,000 tonnes of wheat exports from the U.S. to Brazil could generate between $75-120 million a year.

Brazil buys most of its imported wheat from Argentina, and some from Uruguay and Paraguay, without paying tariffs because they are all members of the Mercosur South American customs' union. Imports from other countries pay a 10% tariff.

On the table for the U.S. would be allowing some type of arrangement for beef and sugar imports.  Sugar is one of the most protected agricultural commodities in the U.S.

What it means for U.S. Farmers: Allowing 75,000 tonnes of tariff-free annual wheat exports into Brazil could be an immense benefit to the HRW producer.  Because Brazil strongly desires to enter the U.S. market for beef, wheat seems like a strong commodity to bargain with.  

Crop Progress Condition Scores: HRW Improving, SRW Status Quo

Aided by rain last week, Monday’s USDA’s weekly crop progress scores saw a general improvement in HRW’s Texas and Oklahoma scores.  

The rain last week helped deliver moisture which elevated the index to a 62 vs a 57 last week.  In Texas, the percentage of crop rated “excellent” rose by 5 percentage points while the percentage of the crop rated “very poor” and “poor” declined by 7 percentage points to 23%.

In Oklahoma the percentage of the crop rated “very poor” and “poor” declined by 4 percentage points to 4%.  None of the survey has the crop rated “very poor”.

SRW crop in Mississippi and Louisiana showed incremental improvements as a lack of rain and wind helped.

Arkansas’s condition scores remain a concern as 30% of the crop is rated as “very poor” and “poor” due to an abundance of field water.         

What it means for U.S. Farmers: While the condition scores are generally an arbitrary measurement the numbers can be traded values by speculative entities.  With SRW vulnerable to downside risks in the delta the opposite is true in HRW. Timely rains for Texas, Oklahoma and south-west Kansas in the most recent 5-7 model runs should continue to deliver moisture and aid production.        

 

The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)

March 18, 2019 | Grain Hedge Insights | Kevin McNew | Views: 794

Chinese Hog Herd Declines

African Swine Flu continues to wreak havoc on herd size

Chinese Hog Herd Declines

Chinese Hog Herd Declines By Estimated 16% YoY   

African swine flu continues to wreak havoc on the Chinese hog herd as the total size continues to contract amid rampant mortality rates.   

The latest herd size estimate comes from the Chinese Ministry of Agriculture and Rural Affairs showing that in February the hog herd had declined by 16.7% YoY.  The sow herd contracted by an estimated 19% YoY.

Month-on-month changes saw an estimated 5% decline in the sow herd and a 5.4% decline in the pig herd from January.      

Reflecting the decline in the hog herd, has been a major reduction in government buying for the state pork reserves.  State buying for the national pork reserves for the month is down to 10,000 MT from 100,000 MT.

What it means for U.S. Farmers: Weekly U.S. pork export volume to China has been strong over the last few weeks but the 60% tariff structure on U.S. pork imports is holding back potential business. Using the latest weekly export information it is difficult to determine if the Chinese are buying for reserves or restocking following the annual nation-wide New Year celebration. Given the declining pork and hog numbers, any resolution between China and the U.S. could be beneficial for the U.S. pork producer.

 

F.C. Stone Estimates 2019/20 U.S. Corn Acres At 90.4 MA

F.C. Stone is estimating 2019/20 U.S. corn acres at 90.4 MA and soybean acres at 87.7 MA.  

F.C. Stone’s corn acres are up 1.3 MA YoY while the soybean estimate has acres down 1.5 MA YoY   

What it means for U.S. Farmers: Compared to the other estimates F.C. Stone’s corn numbers are in the “middle of the pack." We expect the frequency of the private estimates to accelerate over the current week heading into USDA’s March 29th Planted Acres estimate. At FBN we will keep abreast of all the major acres estimates and report in a timely manner.

The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)

March 15, 2019 | Grain Hedge Insights | Kevin McNew | Views: 890

Global Wheat News Continues to be Bearish for U.S. Producer

Germany and Iraq wheat production to experience sharp year-over-year gains

Global Wheat News Continues to be Bearish for U.S. Producer

Germany and Iraq Wheat Production to Experience Sharp YoY Gains

Germany's 2019 wheat harvest will rise by 19.4% YoY and is estimated at 24.20 MMT.   

Germany is the European Union’s second largest wheat producer after France.

The German harvest in 2018 was sharply reduced by a drought but the mild winter has helped wheat crops after planted wheat acres were increased.

Iraq expects its wheat crop to almost double to 4-4.5 MMT this year after enhanced precipitation stimulated increased acres.  

The country produced around 2.17 MMT of wheat in 2018 and had expected to grow 3 MMT in 2019. But better rainfall provided more fertile land to grow the crop outside of the areas originally planned.  

What it means for U.S. Farmers: For the moment the global wheat news, albeit early, continues to be bearish for the U.S. producer.  The early season European weather and the hydrological configuration is ideal and the return to a normal production cycle after last year’s drought should put production back in the 5 year range.  The Iraqi production estimate can also be a net-negative for the U.S. export program as the political economy helps favor U.S. wheat exports.

U.S. Ethanol Exports to Brazil May Slow on Increased Corn Production

U.S. ethanol exporters are likely to face increased competition in the largest export market, the North and Northeast regions of Brazil.

Brazil is the top destination for U.S. ethanol. Exports to the country in 2018 reached 499 million gallons out of total exports of 1.37 billion gallons.

The competition would come in the form of corn-based ethanol common in the United States, not sugar-based ethanol that dominates in Brazil. Corn ethanol production is accelerating in Brazil's Mato Grosso, where corn production is expected to rise by 50% YoY.     

Corn ethanol production in Brazil is expected to grow to 1.4 billion liters in 2019 from 840 million liters in 2018. Most of that increase will come from three new projects in Mato Grosso, including a large plant in Sinop with capacity to produce 530 million liters per year when fully operational.

Logistics will play a major role as a major bridge and highway improvements are scheduled for completion this year.    

What it means for U.S. Farmers: Brazil’s increasing corn based ethanol production is an obvious negative for the export business.  With Brazil and U.S. trade representative set to meet next week to discuss agricultural trade items, including ethanol, there should be more immediate upside for the U.S. producer.                       
 

 

The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)

March 14, 2019 | Grain Hedge Insights | Kevin McNew | Views: 1109

Shift in Global Export Demand and Supply Economics

U.S. wheat remains the residual supplier to the world

Shift in Global Export Demand and Supply Economics

France’s AgriMer Raises French Wheat Exports to 9.5 MMT   

French farming agency FranceAgriMer raised sharply its forecast for French soft wheat exports outside the European Union for the 2018/19 marketing year.  The agency said that upside room exists as French wheat is competitively priced and has drawn late-season demand from importers.

French soft wheat shipments to non-EU countries are expected to reach 9.5 MMT, +7% from 8.85 MMT projected last month and +17% YoY.  The 9.5 MMT estimates could be moved higher to 10 MMT for the marketing year as the export pace in March has been torrid.

French wheat has become competitive as supplies from Russia, Romania and Ukraine have been drawn down causing a rise in FOB prices.    

French wheat exports have been strong into north African countries like Morocco, Egypt and Algeria, which has imported close to 5 MMT of French wheat this year.    

French ending wheat stocks are expected to be dragged down to 2.4 MMT or -18% YoY.  

What it means for U.S. Farmers: The shift in the global export demand and supply economics is occurring as anticipated and that is not bullish for the U.S. wheat producer.  Aside of the Iraqi business, which given the political economy was a high probability sale, the shift from the black sea origins to the French indicates that U.S. wheat remains the residual supplier to the world. With the French next in line, the U.S. exporters and futures are stuck waiting to see what the world does next. With the marketing year coming to a conclusion in May, any volume to the U.S. just gets pushed further back.  

                

U.S./Chinese Push Back Trump/Xi Trade Summit to At Least April

A meeting between U.S. President Donald Trump and Chinese President Xi Jinping to resolve the ongoing trade war won't take place this month and is more likely to occur in April at the earliest.

Political pundits were projecting that Chinese President Xi could possibly meet President Trump around the close of March at Mar-a-Lago after the Chinese President concluded a working trip to the EU.     

Negotiators from both countries have been working towards a deal to resolve the trade dispute.

What it means for U.S. Farmers: The delay toward finalizing a trade deal is a certainly a negative for U.S. agricultural commodities.  Combine this delay with a lack of details that includes such essential items like: procurement commitment times, volumes and products and all that is left to do is wait.  We have written here many times that financial markets do not like “vague”. This recent development adds more uncertainty into the markets.
 

 

The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)

March 13, 2019 | Grain Hedge Insights | Kevin McNew | Views: 1105

Brazil’s CONAB Lowers Soy, Raises Corn Production

Brazilian and U.S. representatives meet to discuss agricultural trade

Brazil's CONAB Lowers Soy, Raises Corn Production

Brazilian and U.S. Representatives Meet to Discuss Agricultural Trade   

U.S. and Brazilian officials will meet next week to discuss increasing market access for beef, sugar and ethanol.

Beef-The top priority for Brazil is to regain U.S. market access for fresh beef imports which have been banned since 2017.  

Brazil is the world's largest beef exporter with about 1.6 MMT sold in 2018.  

Ethanol-Brazil currently gives the U.S. a tariff-free quota of 600 million liters of ethanol per year which is limited to 150 million liters per quarter. Volumes above that are taxed at 20%. The current quota/tariff system ends in August 2019. If the current structure is not renewed, all imports will be taxed by 20%.  

The US taxes Brazilian ethanol imports at 2.5%.

Sugar-Currently Brazil is allowed to export between 150,000 tonnes and 170,000 tonnes of sugar to the United States per year, paying a $14 tariff per ton. Quantities above that limit are taxed at $300/ton.  U.S. sugar is one of the most protected agricultural commodities.

What it means for U.S. Farmers:  Brazil’s desire to regain U.S. market access for beef exports is well known.  Renegotiating the tariff for U.S. ethanol exports could help establish a more consist export program as Brazil is a top 5 export client.  FBN will report details of the trade talks as they become public.               

Brazil’s CONAB Lowers Soy and Raises Corn Production

On Tuesday, March 12, Brazilian agricultural statistics group CONAB lowered their soybean production estimate to 113.459 MMT from 115.343 MMT in February.  

USDA’s MARCH WASDE estimates soy production at 116.5 MMT down .5 MMT from 117 MMT in February; -4.3 MMT YoY.

CONAB raised Brazil’s total production to 92.8 MMT vs 91.6 MMT in February. First crop estimated at 26.2 MMT and Safrinha, Brazil’s second crop, at 66.6 MMT.

USDA estimates Brazil’s corn production at 94.5 MMT; +12.5 MMT YoY.

What it means for U.S. Farmers: CONAB’s soy estimates are not a surprise but some private sector production numbers have varied over the last few weeks.  Some analysts have Brazil soy production making an incremental recovery on late season rains. On face value, Brazil’s soy numbers could be positive for the U.S. producer while the corn production could be another bearish input.             
 

 

The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)

March 12, 2019 | Grain Hedge Insights | Kevin McNew | Views: 750

USDA Crop Progress Reports

Trump Budget proposes to cut farmer subsidies

USDA Crop Progress Reports

USDA Crop Progress Reports: Dryness in HRW, Wet in South

  • HRW-  Condition scores in Texas showed a decline in wheat from the previous week 30% VP/P vs. 24% VP/P as dryness persists.  Oklahoma’s HRW crop saw a moderate improvement: 9% VP/P vs. 11% VP/P the previous week.
  • SRW-  States reporting condition score for SRW: Arkansas, Louisiana and Mississippi showed a slight weakening of condition score as wetness persists.  At 31% VP/P the Arkansas crop was the lowest rated of the three.
  • Field Conditions- As spring continues in the south, reports of wet fields and rain have slowed the preparation and ground work in most of the Delta.  
  • Texas Corn and Sorghum-  Corn planting in North Texas was reported as slow and at 11% vs. the 5 year average of 16% is slightly behind.  Sorghum planted at 11% is on par with the 5 year average. Corn is beginning to emerge in the Coastal Bend.

What it means for U.S. Farmers- The HRW conditions in Texas are not a surprise but with the 5-day forecast showing more than 1-inch of rain in the region some relief appears to be on the horizon. The same applies for HRW in Oklahoma and up through western/central Kansas.  Dryness does not appear to be in the short term forecast for the Delta which will continue to slow field work and ground preparation. Meanwhile the futures markets are ignoring these early state reports for corn as they represent a small portion of the total production.           

Trump Budget Proposes Cut To Farmer Subsidies

President Trump's 2020 budget on Monday proposed a 15% reduction for the U.S. Department of Agriculture (USDA), calling its subsidies to farmers "overly generous".  

The President's budget requested $20.8 billion for the USDA, a cut of $3.6 billion, or 15% from the 2019 estimate. The initial proposal reduces premium subsidies for crop insurance by limiting the number of producers who would be eligible and tightening commodity payment limits.

The budget proposes to reduce the average premium subsidy for crop insurance to 48% from 62% and limits subsidies to producers that posted an adjusted gross income of $500,000 or less.

The proposal also requests tightening commodity payment limits, including eliminating an "unnecessary and separate" payment limit for peanut producers and limiting eligibility for commodity subsidies to one manager per farm.  

The budget also proposes fiscal cuts to the food stamp program known as Supplemental Nutrition Assistance Program (SNAP).  

What it means for U.S. Farmers: Kind of a surprise to the American farmer but the proposal demands further interpretation as most of the cuts appear to be directed at the always hotly contested food stamp program.  The cuts to the insurance programs and making adjustments to limit subsidies to producers with smaller incomes is interesting and demands further analysis.  Please contact your FBN representative with any questions about how the budget could impact crop insurance programs.        
 

 

The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)

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