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NFU News Clips December 12, 2011 PLEASE NOTE - Contents in the NFU News Clips are presented from their original sources. National Farmers Union does not have editorial control over the content. NFU does not endorse the views and issues contained in these articles and they do not necessarily represent NFU's official policy and positions. The News Clips are intended to provide news stories as they are presented by the media. ![cid:image001.jpg@01CC63DF.8F63A1F0]()
Click on the title of the story to read the full story In this edition: December 12, 2011 Associated Press
An Illinois farmer made so much money this year he made loan payments on one tractor a year in advance and exchanged some older ones for newer models. An Iowa farmer upgraded his combine and also paid off debt, while an elderly Oregon farmer poured into retirement funds a bundle of his $2 million take from a well-timed sale of much of his turf and equipment. While much of America worries about the possibility of a double-dip recession, such stories of prosperity are cropping up as U.S. farmers enjoy their best run in decades, thanks to high prices for many crops, livestock and farmland and strong global demand for corn used in making ethanol. Read more…
December 12, 2011
Bloomberg Businessweek Hedge funds cut bullish bets on agricultural prices to the lowest level in more than two years on signs of expanding global supplies. A measure of speculative positions across 11 products from wheat to coffee to cattle fell 3.6 percent to 258,071 futures and options in the week ended Dec. 6, Commodity Futures Trading Commission data show. That’s the lowest since September 2009. Bullish wagers on corn fell 11 percent to a 17-month low, and bearish ones on cocoa increased for a fourth week. World food prices tracked by the United Nations retreated for a fifth consecutive month in November, the longest decline in more than two years. Read more… December 9, 2011 Bloomberg Businessweek A bipartisan group of more than 70 House members is urging a congressional block on higher levels of ethanol blended into gasoline. Automakers and other engine makers have clashed with corn growers since 2010 over whether the United States should allow the use of a new blend of ethanol called E15 because it is 15 percent biofuel. The Environmental Protection Agency has approved the use in all vehicles from 2001 and newer. In August, the EPA approved fuel labels designed to warn drivers of older vehicles not to use the fuel, but it still must be registered before the fuel can go on sale. Read more… December 9, 2011
Des Moines Register Congress has cleared the way for horses to be slaughtered once again for meat. But there’s no sign that any companies are going to resume processing horses anytime soon, according to the Agriculture Department. A fiscal 2012 budget bill for the USDA lifted a ban on federal inspection of horse slaughter. But a top food-safety official at the department, Phil Derfler, wrote in a blog post today that no companies have asked the department for inspection services. “To date, there have been no requests that the Department initiate the authorization process for any horse processing operation in the United States. Read more… December 10, 2011 The Detroit News A bipartisan group of more than 70 House members is urging a congressional block on higher levels of ethanol blended into gasoline. Automakers and other engine makers have clashed with corn growers since 2010 over whether the United States should allow the use of a new blend of ethanol called E15 because it is 15 percent biofuel. The Environmental Protection Agency has approved the use in all vehicles from 2001 and newer. In August, the EPA approved fuel labels designed to warn drivers of older vehicles not to use the fuel, but it still must be registered before the fuel can go on sale. Read more… 1. Farmers have one of their best years ever December 12, 2011 Associated Press
An Illinois farmer made so much money this year he made loan payments on one tractor a year in advance and exchanged some older ones for newer models.
An Iowa farmer upgraded his combine and also paid off debt, while an elderly Oregon farmer poured into retirement funds a bundle of his $2 million take from a well-timed sale of much of his turf and equipment.
While much of America worries about the possibility of a double-dip recession, such stories of prosperity are cropping up as U.S. farmers enjoy their best run in decades, thanks to high prices for many crops, livestock and farmland and strong global demand for corn used in making ethanol.
Farm profits are expected to spike by 28 percent this year to $100.9 billion, and the amount of cash farms have available to pay bills also is expected to top $100 billion -- the first time both measures have done so, according to the U.S. Department of Agriculture.
All the while, crop sales are expected to pass the $200 billion mark for the first time in U.S. history, and double-digit increases are expected in livestock sales. "We're just experiencing the best of times," said Bruce Johnson, an agricultural economist at the University of Nebraska in Lincoln.
"It's a story to tell." That's not to say that everyone is sharing in the good fortune. Near Gardner, Kan., a short drive south of Kansas City, a lack of rain and nagging winds conspired to leave Bill Voigts with about half of the soybeans he expected.
His harvest of corn was worse, coming in at about one-third of his normal production. Even with insurance, he didn't quite break even on the 2,400 acres he farms -- most of them rented.
"Had it not been for insurance in his area, it'd be a disaster. That's the only thing that saves us," said Voigts, 66. But he noted that the drought plaguing farmers like him helped drive up prices for commodities like corn, soybeans and wheat, benefiting those fortunate enough to get a good crop.
"At the expense of some farmers, other farmers become wealthy," he said. "That's really the whole story. That's not the government's fault, it's nobody's fault. That's just the way things happen. "Some people got left behind."
Yet most of the talk about U.S. farming remains bullish, with analysts widely trumpeting "the new normal" in U.S. agriculture: Demand in China, India and other developing countries for U.S. agricultural exports — and hunger for corn for ethanol — has been keeping prices high and farming profitable.
In central Illinois' Morgan County near Jacksonville, Dale Hadden says he was "pleasantly surprised" by the corn and soybeans he got from the some 4,000 acres he works with his brother and their parents, considering they lost about 400 acres of corn to 21 inches of rain in June.
All told, Hadden estimated his crops were worth 10 percent to 15 percent more than in previous years, amounting to tens of thousands of dollars. He spent a chunk of that on an advance full-year payment on a seven-year loan on one of his tractors and to pay down debt on land. Much of the rest he cautiously set aside.
"It was a successful year," said Hadden, a 38-year-old with two children, ages 11 and 9. "But most farmers would tell you that just because you're flush with cash, you don't spend it all."
In Oregon, 79-year-old Warren Haught sure didn't. With four decades of farming under his belt, Haught -- socked by the high cost of electricity to irrigate crops in high desert country -- unloaded his 1,500-acre operation a couple of years ago. He pocketed $1.7 million on the land sale and $300,000 from liquidating everything from haying equipment to plows and tractors, using some of proceeds on two new homes -- one of him, the other for his son and his family -- while saving much of the rest.
"It was a pretty good deal at the time," said Haught, who now has just 72 acres near mountainous Klamath Falls on which he grows alfalfa and grass crops. He'd like to get at least 100 more acres, saying demand for hay in China and other Pacific Rim countries is boosting prices.
"It was kind of the perfect storm-- what you had this year brought a good price," he said. "Everything seemed to be a good price."
In western Iowa near Kingsley, Jeff Reinking and his brother -- partners in a 2,500-acre operation evenly split between corn and beans -- recently traded in a 2006 combine for one three years newer -- spoils from what Reinking called "the best year for me." He also paid off some debt and put some money aside in case things aren't always so rosy.
"I guess we're getting the better end of things right now," Reinking said. "That has not always been the case."
To view this story at its original source, follow this link: http://www.chicagotribune.com/business/breaking/chi-farmers-have-one-of-best-years-ever-20111212,0,3565145.story 2. Funds Cut Bets on Rising Food Costs to 27-Month Low December 12, 2011
Bloomberg Businessweek Elizabeth Campbell Hedge funds cut bullish bets on agricultural prices to the lowest level in more than two years on signs of expanding global supplies. A measure of speculative positions across 11 products from wheat to coffee to cattle fell 3.6 percent to 258,071 futures and options in the week ended Dec. 6, Commodity Futures Trading Commission data show. That’s the lowest since September 2009. Bullish wagers on corn fell 11 percent to a 17-month low, and bearish ones on cocoa increased for a fourth week. World food prices tracked by the United Nations retreated for a fifth consecutive month in November, the longest decline in more than two years. The U.S. government said Dec. 9 that combined global inventories of corn, soybeans and wheat will be 3.2 percent larger than anticipated a month earlier. Cocoa capped its longest slump in 50 years last week on increasing supplies from Ivory Coast, the world’s biggest producer. “We’ve got all the harvest data, and there’s not a lot of catalysts that are going to turn around the direction of agricultural prices,” said Peter Sorrentino, a senior fund manager at Huntington Asset Advisors in Cincinnati, which oversees $14.5 billion of assets. Cattle, Wheat Slide Last week, the Standard & Poor’s GSCI Agriculture Index of eight commodities touched a 14-month low on Dec. 9, for a weekly fall of 1.8 percent. Cattle, wheat and soybeans led the retreat. The MSCI All-Country World Index of shares lost 0.4 percent last week, while the Dollar Index, a measure against the currencies of six trading partners, rose less than 0.1 percent. The yield on 10-year Treasuries advanced 3 basis points to 2.06 percent, according to Bloomberg Bond Trader prices. Cattle prices fell 3.9 percent in Chicago, the most since August. Wheat dropped 4.7 percent, and soybeans declined 2.5 percent. Cocoa tumbled for 12 consecutive sessions through Dec. 9, the longest slide since at least 1961, according to data compiled by Bloomberg. The S&P GSCI Index of 24 commodities, which includes energy products and metals, retreated 1.7 percent. A measure of 55 food items fell 0.4 percent in November, the UN’s Rome-based Food and Agriculture Organization said Dec. 8. World cereal production will climb 3.5 percent to a record 2.32 billion metric tons this year, the FAO forecast. The food- price gauge has dropped 9.6 percent since reaching a record in February, easing a surge in costs that helped spark uprisings across northern Africa and the Middle East this year, ousting leaders in Tunisia, Egypt and Libya. Soybean Holdings Speculators boosted their bearish soybean bets to 10,193 contracts last week, the most negative since October 2006. Investors are also net-short in cocoa, wheat, soybean meal and soybean oil, as well as copper and natural gas. “Fund managers don’t like to be long the grain markets with rising supplies,” said Dan Cekander, the Chicago-based director of grain research at brokerage Newedge USA LLC. “As long as supplies appear to be adequate, there will be less interest in agricultural commodities.” World wheat stockpiles will total 208.52 million tons by June, 2.9 percent more than forecast a month earlier and the highest in more than a decade, the U.S. Department of Agriculture said Dec. 9. Soybean reserves will be 1.5 percent bigger than last month’s estimate, and corn supplies will be 4.6 percent higher. The supply outlook for all three crops exceeded analysts’ forecasts. Wheat for March delivery fell 0.7 percent to $5.9175 a bushel in Chicago and corn for March delivery dropped 1.1 percent to $5.875 a bushel. January soybeans declined 0.6 percent to $11.005 a bushel. Cocoa Plunges Cocoa prices have plunged 47 percent since reaching a 32- year high in March. Prices had surged after a civil war in Ivory Coast erupted following a disputed presidential election in November. Investors raised their net-short position in cocoa by 35 percent to 7,986 contracts, the CFTC data show. A broader measure showed that funds increased their net- long positions across 18 U.S. commodities by 4 percent to 589,252 contracts. Investors cut bearish bets in copper by the most in five weeks and increased holdings in crude oil on signs that economic growth will be sustained. U.S. consumer confidence reached a six-month high in December, the Thomson Reuters/University of Michigan preliminary index showed Dec. 9. European leaders agreed to a blueprint for closer fiscal union last week to contain the region’s two-year financial crisis. China, the biggest consumer of everything from energy to copper to soybeans, said Nov. 30 it would lower banks’ reserve requirements for the first time in almost three years to encourage lending and shore up growth. ‘Risk-On Trade’ “There’s more of a risk-on trade,” said Walter “Bucky” Hellwig, who helps manage $17 billion of assets at BB&T Wealth Management in Birmingham, Alabama. “Although Europe continues to struggle along and there are still a lot of issues there, on a relative basis they’re better off than they were last week. That puts a boost under the commodities trade.” Investors put $284 million into commodities funds in the week ended Dec. 7, after a net outflow of $122 million a week earlier, according to data from Cambridge, Massachusetts-based EPFR Global, which tracks money flows. Funds reduced bets on lower copper prices by 61 percent to a net-short position of 2,704 contracts, the biggest decrease in bearish sentiment since Nov. 1. Those on higher crude-oil prices rose 4.1 percent to 202,735 contracts, the CFTC data show. Gold Bets Gold wagers climbed 3.5 percent to 151,347 contracts, snapping two weeks of declines. Bullion traders are more bullish as investors buy the metal at the fastest pace in a year. Eighteen of 26 surveyed by Bloomberg expect the metal to advance this week, the highest proportion since Nov. 11. Holdings in exchange-traded products backed by gold rose more than 108 tons since the start of October, the most since the second quarter of 2010, data compiled by Bloomberg show. The amount of metal in ETPs reached a record on Dec. 6. Commodity assets under management rose by almost $40 billion to $365 billion in October, Societe Generale SA said in a report Dec. 5. “If people are feeling better about a resolution in Europe and better about the outlook for China, that portends a better economic outlook,” said Dan Denbow, a co-fund manager of the $2.1 billion USAA Precious Metals and Minerals Fund in San Antonio. “Commodities are a pro-economic bet.” To view this story at its original source, follow this link: http://www.businessweek.com/news/2011-12-12/funds-cut-bets-on-rising-food-costs-to-27-month-low-commodities.html 3. U.S. Agriculture Budget Should Cut Nutrition More, Conaway Says December 9, 2011 Bloomberg Businessweek Whitney McFerron
Government programs including food stamps and school lunches may need to be cut further as lawmakers attempt to rein in spending and trim the federal deficit, U.S. Representative Mike Conaway said. A current farm bill proposal includes $4 billion in cuts to nutrition-assistance programs over 10 years, compared with $15 billion in reductions to commodity programs including direct payments to farmers, Conaway said today in a speech at a rice- industry event in Austin, Texas. That doesn’t represent a “proportionate sharing” of cuts, Conaway said. “There are those of us who believe nutrition has money that is currently being spent that does not need to be spent,” said Conaway, a member of the House Agriculture Committee and a Republican from Texas. “There’s a significant amount of money that we can eliminate and still not affect one beneficiary’s calorie intake. We can keep everybody on that’s there, but we pull out a lot of other stuff. It’s in the billions of dollars.” Agricultural committee leaders from the House of Representatives and Senate recommended to the congressional supercommittee in October that no more than $23 billion be cut from farm programs over the next 10 years. The proposal also included $6 billion in reductions to conservation programs and a $2 billion reinvestment in other areas, Conaway said. The proposed $23 billion in total cuts likely “will be the ceiling in the Senate, and it’ll be the floor in the House,” as lawmakers discuss the farm bill next year, Conaway said.
To view this story at its original source, follow this link: http://www.businessweek.com/news/2011-12-09/u-s-agriculture-budget-should-cut-nutrition-more-conaway-says.html 4. No plans to restart horse slaughter, USDA says December 9, 2011
Des Moines Register Congress has cleared the way for horses to be slaughtered once again for meat. But there’s no sign that any companies are going to resume processing horses anytime soon, according to the Agriculture Department. A fiscal 2012 budget bill for the USDA lifted a ban on federal inspection of horse slaughter. But a top food-safety official at the department, Phil Derfler, wrote in a blog post today that no companies have asked the department for inspection services. “To date, there have been no requests that the Department initiate the authorization process for any horse processing operation in the United States. In the two states where horse processing took place prior to the congressional ban, Illinois and Texas, there are laws in place prohibiting the slaughter of horses,” Derfler said. “Even if these laws were changed, any processing facility will still need to satisfy a significant number of requirements, including developing a plan for controlling food-safety hazards. To view this story at its original source, follow this link: http://blogs.desmoinesregister.com/dmr/index.php/2011/12/09/no-plans-to-restart-horse-slaughter-usda-says/ 5. Lawmakers: Block ethanol blend December 10, 2011 The Detroit News David Shepardson
A bipartisan group of more than 70 House members is urging a congressional block on higher levels of ethanol blended into gasoline. Automakers and other engine makers have clashed with corn growers since 2010 over whether the United States should allow the use of a new blend of ethanol called E15 because it is 15 percent biofuel. The Environmental Protection Agency has approved the use in all vehicles from 2001 and newer. In August, the EPA approved fuel labels designed to warn drivers of older vehicles not to use the fuel, but it still must be registered before the fuel can go on sale. In February, the House voted 285-136 to block the EPA from moving ahead with E15 regulations. Now, in a letter to the top Republican and Democrat on the House Appropriations Committee, members of Congress want the block on higher ethanol levels included in a spending measure to fund the government's operations through Sept. 30. "E15 is not ready for prime time," said the letter signed by Reps. Gary Peters, D-Bloomfield Township; Mike Rogers, R-Brighton; John Conyers, D-Detroit; Tim Walberg, R-Tipton; Bill Huizenga, R-Zeeland; Darrell Issa, R-Calif.; and Loretta Sanchez, D-Calif., among others. The amendment to block the fuel is co-sponsored by Peters and Rep. John Sullivan, R-Okla. "More thorough research and testing are necessary to ensure that E15 will not harm consumer investments," the letter said. "The desire to allow for more ethanol to enter the transportation fuel pool should not trump sound science." Automakers and other groups have opposed approval of E15, warning it could damage engines in some models. Automakers "unanimously expressed concerns that E15 is likely to harm engines, void warranties and reduce fuel efficiency," said the congressional letter. The letter noted that the National Renewable Energy Laboratory says E15 causes significant damage to marine engines. Automakers have twice filed suit challenging approval of use for the fuel. Growth Energy, an ethanol trade group that first sought the approval for the fuel in early 2009, said previously it expected E15 to be at pumps by the end of 2011. That seems unlikely now. The group says it is essential to move to the higher blend in order to use the higher amounts of ethanol required by Congress under a 2007 energy act. It says more than 136,000 new green-collar jobs will be created nationwide by moving to E15. Opponents of ethanol argue that the use of more than 40 percent nation's corn has boosted food prices for consumers and feed costs for farmers. For the first time this year, more corn was used to produce ethanol than to feed animals in the United States. To view this story at its original source, follow this link: http://www.detnews.com/article/20111210/POLITICS03/112100322/1025/POLITICS03/Lawmakers--Block-ethanol-blend
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