Thursday July 18 Ag News

Rural Mainstreet Economy Grows:  Bankers Say Farm Bill Passage Important

While growth for the Rural Mainstreet economy remains healthy, it slowed a bit in July, according to the monthly survey of bank CEOs in a 10-state area.  The Rural Mainstreet Index (RMI), which ranges between 0 and 100 with 50.0 representing growth neutral, slipped to 57.3 from June’s 60.5, but was well ahead of last July’s 47.3.

“Last year at this time, the drought was having a significant negative impact on the Rural Mainstreet economy. This year, ample moisture has boosted the rural economy and the banker’s economic outlook,” said Ernie Goss, the Jack A. MacAllister Chair in Regional Economics at Creighton University.

Additionally, energy production has taken on an increasingly important role for the rural economy. As reported by Jim Stanosheck, CEO of State Bank of Odell in Odell, Neb., “The area has about 45 wind generators being built in the next six months. This activity should spur the rural economy for next six to seven months.”

Farming: The farmland-price index declined for the seventh time in eight months. The July index fell to 58.2 from June’s 58.4. “Our farmland-price index has been above growth neutral since February 2010.  However, lower farm commodity prices and expected declines in farm income are slowing growth in farmland prices. I expect farmland price growth to continue to weaken as a stronger U.S. dollar weighs on agriculture commodity prices,” said Goss.

This month bankers were asked to project farm income for 2013. On average, bankers expect farm income to be down by 3 percent from 2012. Approximately 59.6 percent of bank CEOs expect farm income to be down from 2012, while only 19.5 percent anticipate an increase in farm income and the remaining 20.9 percent expected no change.

Farm equipment sales also softened for July, with an index of 50.0, down from June’s 53.2. “Farmers are getting increasingly cautious regarding economic conditions. This has been reflected in declines in our equipment-sales index and in the stock prices of agriculture equipment producers,” reported Goss.

Iowa:
The July RMI for Iowa expanded slightly to 62.3 from June’s 62.2. The farmland-price advanced to 54.6 from 49.6 in June. Iowa’s new-hiring index for July improved to 58.0 from June’s 55.3. As reported by Steven Lane, CEO of Security Savings Bank in Farnhamville, “Most of the crops in our area were planted late. It’s now up to mother nature to see if it amounts to much.”

Nebraska: 
After moving below growth neutral for January, Nebraska’s Rural Mainstreet index has now moved above growth neutral for six straight months. The July RMI climbed to 58.0 from 56.5 in June.  The farmland-price index for July fell to 48.5 from June’s 59.2. Nebraska’s new-hiring index stood at 53.9, down slightly from June’s 53.7. Weather remains a problem for some parts of the state. According to Bill McQuillan, president of CNB Community Bank of Greeley, “Pasture conditions continue to deteriorate because of the lack of moisture in the last 30 days.”

Each month, community bank presidents and CEOs in nonurban, agriculturally and energy-dependent portions of a 10-state area are surveyed regarding current economic conditions in their communities and their projected economic outlooks six months down the road. Bankers from Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming are included.

This survey represents an early snapshot of the economy of rural, agriculturally and energy-dependent portions of the nation. The Rural Mainstreet Index (RMI) is a unique index covering 10 regional states, focusing on approximately 200 rural communities with an average population of 1,300. It gives the most current real-time analysis of the rural economy. Goss and Bill McQuillan, president of CNB Community Bank of Greeley, Neb., created the monthly economic survey in 2005.



Leading Landowner Conservationists to Gather for National Symposium

Farmers and ranchers from across the U.S. will gather in Lincoln, Neb., July 25-26, to discuss solutions to critical land, water and wildlife environmental issues that could be voluntarily addressed by motivated landowners.

"Innovations of the Land: Private Conservation for the Public Good," is presented by Sand County Foundation in partnership with Nebraska Cattlemen,  Nebraska Land Trust and the University of Nebraska - Lincoln, Center for Grassland Studies.

Because the majority of the land in the United States is privately owned, America’s farmers, ranchers, and foresters are critical to the health of our natural resources. To exchange ideas about agriculture and the environment, dozens of Leopold Conservation Award-winning landowner conservationists will gather to address successful and emerging voluntary practices that are economically beneficial, public private partnerships that protect and enhance natural resources, and other matters important to the agricultural community and the general public.

“Bringing some of the leading minds in private lands conservation together will help identify innovative solutions to environmental challenges whole communities face today,” said Brent Haglund, Sand County Foundation President. “Participants will carry this information beyond the symposium to families across the nation who work the land and to their rural and urban neighbors.”

"Cattlemen are original stewards of the environment," said Dale Spencer, Nebraska Cattlemen President. "It has always been in producers' best interest to be conservationists. We need to preserve the land for future generations and this event will be a great opportunity for participants to come together and discuss ways to keep the lands thriving for generations to come."

The event, part of Sand County Foundation's Workshops and Seminars series, will be held at The Embassy Suites – Lincoln, 1040 P Street, Lincoln, Neb. A day-long symposium, Thursday, July 25, features Nebraska Lt. Governor Lavon Heidemann, and will conclude with a dinner featuring conservation photographer and Nebraska native Michael Forsberg.  A bus tour, Friday, July 26, will take participants to the Rainwater Basin Wetland Complex to highlight the Working Lands Initiative.

Sponsors of the “Innovations on the Land” symposium include Cargill, DuPont Pioneer, Farm Credit, Nebraska Environmental Trust, The Lynde and Harry Bradley Foundation and World Wildlife Fund.



Iowa Learning Farms Hosts Cover Crop Field Day Near Weldon

Iowa Learning Farms will host a field day at the Arlyn Kauffman farm near Weldon, Iowa, on Thursday, Aug. 1, beginning at 5 p.m. The field day will focus on cover crop management and conservation farming practices for southwestern Iowa soils.

he event includes a farm tour and discussion time with David Otte, cover crop expert from Kahoka, Mo. Otte will talk about managing cover crops and conduct a question and answer session. Sarah Carlson, Practical Farmers of Iowa, and local Natural Resources Conservation Service staff Lori Schwalbe will review cost-share opportunities for cover crop usage.

Attendees are asked to meet at the field located at 25705 120th St., Weldon, to begin the farm tour. From Weldon, take R48 (250th Avenue) south out of town two miles to 120th Street. Turn left (east) and travel .75 mile to the field site.

The field day includes a complimentary evening meal immediately after the farm tour. The meal will be at the Kauffman structures, 25186 Popcorn Road (J22), located one mile south of the field site. The event is free and the public is invited to attend. Iowa Learning Farms and Practical Farmers of Iowa are sponsors for the field day.



Wholesale Meat Prices
John D. Anderson, Deputy Chief Economist, American Farm Bureau Federation

Wholesale beef prices have been generally lower over the past month. The comprehensive boxed beef cutout value (a weekly average value which aggregates wholesale prices across quality grades and branding programs) peaked at just over $200/cwt in the week prior to Memorial Day. Since that time, it has declined more-or-less steadily to its current level: $192.22 last week. Wholesale pork prices rose steadily - even sharply at times - until the end of June. The pork cutout has dropped about $7 in value so far this month, working out to $103.16/cwt last week. Wholesale chicken prices have been on the slide for about as long as beef. After topping out at 203.53 cents/lb just before Memorial Day, boneless/skinless chicken breast prices dropped to 180.75 two weeks ago before rebounding to 182.61 last week.

A big part of the decline in meat prices is related to seasonal factors. Aggressive purchasing by retailers in advance of the Memorial Day holiday likely helped pump up beef prices, and prices declined when that buying pressure subsided. This year, pork and chicken prices peaked at about the same time they did last year - though for chicken, the peak was at a price point far above last year's levels in the mid-150s.

It is interesting to dig a little deeper into the seasonality of prices by looking at individual primals within the cutout. Since the late-May peak, among the cutout components the largest decline has been on the loin primal. Its price has declined by almost 9%. Over the past decade, the loin primal (on the comprehensive cutout) has peaked around week 17 (late-April/early-May) and then declined steadily to about week 40 (early-October). This year's peak came about a month later than that average, but the decline so far has been consistent with normal seasonal behavior for the loin. As for the other major primals, rib, chuck, and round prices have declined by 1.5%, 3.2%, and 3.6%, respectively, since the late-May peak. These trends are broadly consistent with normal seasonal behavior. What has been somewhat counter-seasonal has been the behavior of the brisket, short plate, and flank primals. In contrast to the major middle and end meat primals, these have all increased in value over the past month. Brisket, short plate, and flank prices have increased by 3.5%, 1.3%, and 7.7% since the week prior to Memorial Day. Were these prices steady-to-declining as would be more normal seasonally, the boxed beef cutout would have dropped even more than it has over the last month and a half.



USDA Releases Report on the Adoption of GE Seeds

U.S. farmers have embraced genetically engineered seeds in the more than 15 years since their commercial introduction. Herbicide-tolerant crops, developed to survive application of specific herbicides that previously would have destroyed the crop along with the targeted weeds, provide farmers with a broader variety of options for effective weed control.

Based on USDA survey data, HT-only corn dropped from 21 percent of planted corn acreage in 2012 to 14 percent in 2013. Insect-resistant crops contain a gene from the soil bacterium Bt (Bacillus thuringiensis) that produces a protein that is toxic to specific insects, protecting the plant over its entire life.

Use of Bt-only corn dropped from around 16 percent of planted corn acreage in recent years to 5 percent in 2013.

Adoption of "stacked" gene corn varieties (with both HT and Bt traits), though, increased sharply in 2013, reaching 71 percent of planted corn acres (up from 52 percent in 2012).

Adoption of all GE corn, taking into account the acreage with either or both HT and Bt traits, reached 90 percent of U.S. corn acreage in 2013.



DuPont and National Corn Growers Launch Program to Empower Farmers as Leaders

DuPont and the National Corn Growers Association announced a new program today to develop corn farmers for agricultural leadership opportunities. With more focus on food than ever, the NCGA DuPont New Leader Program will help to empower growers to share their story of their farms and the benefits of a robust agriculture system with key audiences, including consumers, media and decision-makers.

"We're very excited to kick off this new program, sponsored by DuPont, at a time when farmers are critically needed for today's growing conversation about farming and food," said NCGA President Pam Johnson. "Our family farmers are a trusted voice and have a great story to tell, and communications support is especially important for those preparing to get more involved in leadership."

"These next generations of family farmers are critical to feeding a growing world population," said Susan Bunz, leader of Policy and Outreach for the advanced seed business of DuPont Pioneer. "We are excited for the opportunity to work with NCGA to prepare these new farmers to be advocates for agriculture and leaders in agriculture policy at the state and national levels."

The NCGA DuPont New Leader Program will bring farmers from each affiliated state to two sessions to develop and hone their communications and leadership skills. The first session will be held in November at the DuPont Pioneer facilities in Johnston, Iowa. The second session will take place in Washington in July 2014. In between the two sessions, those farm couples involved will be encouraged to be actively participating and honing their skills in state and national programs.

"The time between the two sessions is important for those involved because there are a number of ways they can and should engage - such as Commodity Classic, state association board meetings and events, and programs like CommonGround and the U.S. Farmers and Ranchers Alliance," Johnson said. "NCGA and its state affiliates are actively looking for farming men and women who want to get involved, and this is the perfect opportunity to do so."

Applications for the inaugural class will be available later this summer.



Rhode Island passes statewide Bioheat requirement

The governor of Rhode Island signed landmark legislation recently that will ensure all of the state's heating oil becomes Bioheat® by 2014.  Starting July 1, 2014, every gallon of oil heat in the state will contain at least 2 percent biodiesel.  The Bioheat blend is a greener heating oil gaining popularity in Northeastern and Mid-Atlantic states.

Although other New England states have passed similar bills, Rhode Island is on track to be the first to implement a statewide Bioheat requirement.  

The National Biodiesel Board congratulated the local government and the state's heating oil trade association for the progressive move.  

"I commend the Oil Heat Institute of Rhode Island for not sitting back and waiting for change to come to them," said Paul Nazzaro, who spearheads the Bioheat education program for the National Biodiesel Board. "They recognized Bioheat as the future of their industry that can reverse the contraction of their market, and they took control of their own destiny."

Julie Gill, executive director and CEO of the Oil Heat Institute of Rhode Island, said getting the legislation passed took persistence and commitment.

"We're proud that the Bioheat requirement has passed, because it will benefit not only our industry, but heating oil consumers in our state," Gill said. "Oil heat systems run more effectively with a biodiesel blend, and Bioheat will help heating oil be more environmentally competitive.  We will continue to work towards making our product the cleanest fuel available."

The legislation gradually increases the blend from 2 percent to 5 percent by 2017.



National Biodiesel Board Applauds McCarthy Confirmation

The National Biodiesel Board (NBB) issued the following statement from Anne Steckel, vice president of federal affairs, after the Senate voted to confirm President Obama's nomination of Gina McCarthy as the next EPA administrator.

"Gina McCarthy is a strong, dynamic leader who knows the intersection of environment and energy issues as well as anyone in the nation. She understands that we must move beyond fossil fuels to meet our objectives on these issues and has demonstrated a practical, balanced approach for doing so, including strong support for the Renewable Fuel Standard (RFS). We are thrilled to see her confirmed and believe she will provide outstanding leadership at the EPA."



ACE statement on the confirmation of Gina McCarthy to head up the EPA

The Executive Vice President for the American Coalition for Ethanol, Brian Jennings today released the following statement on Gina McCarthy’s confirmation by the Senate to become Administrator for the U.S. Environmental Protection Agency (EPA).

“We are pleased that the Senate has approved Gina McCarthy as Administrator of EPA, we feel the Obama Administration and the EPA will continue the  nation’s commitment to ethanol and other renewable fuels. Gina McCarthy understands the Renewable Fuel Standard to be the linchpin to our continued success reducing petroleum use and greenhouse gas emissions. She’s also familiar with how E15 passed the tests EPA administered before approving it as a safe option for 2001 and later model year passenger vehicles. ACE members are looking forward to working with McCarthy as EPA Administrator.”



ACE praises AAA’s demand to remove inaccurate API E15 ad

The Senior Vice President for the American Coalition for Ethanol, Ron Lamberty today is thanking Triple A and locally based ethanol supporters for speaking out against the American Petroleum Institute’s (API) new anti E15 campaign.

“We are pleased with the reactions to these inaccurate ads. I think what this shows is the amount of support here in the heartland of the nation for ethanol and higher ethanol blends like E15. We salute and thank our members and supporters of ethanol who called, emailed and texted their local AAA office to complain about the ads. To have an office state their support for ethanol within hours of the ad airing in this market indicates how much people want their choice at the pump and should indicate why Big Oil is running such a dishonest campaign. Let’s face it, people know the truth and they are starting to see through Big Oil’s lies on E15 and the Renewable Fuel Standard,” said Lamberty.



Japan Starts Releasing Held-Up US Western White Wheat to Millers

Japan has started releasing the stocks of U.S. Western White grade of wheat that it was earlier holding back due to the recent discovery of an unapproved genetically engineered strain at an Oregon farm, a senior government official said Thursday.

Japan banned new imports of Western White wheat after the U.S. Department of Agriculture made the GM discovery public on May 29. The previously contracted imports continued to be delivered at Japanese ports but were kept in government custody.

The purchases of Western White wheat that were made prior to the controversy are now being supplied to millers if testing of samples don't reveal any presence of genetically engineered strains, Toru Hisazome, who heads the wheat imports department at the Ministry of Agriculture, Forestry and Fisheries, told Dow Jones.

Before the GM wheat discovery, Japan had contracted imports of more than 750,000 tons of U.S. milling wheat in 2013, of which 29% was of Western White grade. Most of this wheat hadn't arrived in Japan when the controversy broke out because purchases are made a few months ahead of delivery.

The U.S. Department of Agriculture has provided a method for testing samples from cargoes that are arriving in Japan and so far no genetically engineered strains have been detected, Mr. Hisazome said.

However, he said Japan won't make any new purchases of U.S. Western White wheat until both countries agree on an extensive pre-shipment testing protocol for the grade.

There is no shortfall of Western White because processors are using existing inventories and the government has now started to release the stocks it was holding in quarantine, Mr. Hisazome said. Japan will also buy alternative wheat grades including U.S. Club White, he said. Club White is usually blended with other soft white wheat varieties to form Western White grade that is used to make biscuits and cakes.



NASS and Statistics Canada Suspend Joint August Cattle Statistics Publication

The U.S. Department of Agriculture’s National Agricultural Statistics Service (NASS) will not publish the United States and Canadian Cattle report scheduled for 3:00 p.m. August 22, 2013. Due to reduced funding caused by sequestration, NASS did not collect nor publish the July Cattle inventory data. Those estimates are therefore not available for inclusion in the joint 2013 United States and Canadian Cattle report, which is normally produced annually in cooperation with Statistics Canada. The next joint release of cattle estimates for the United States and Canada is scheduled for February 2014 (The February report also includes sheep).



Algorithms Investigated:  Regulators Study High-Speed Trading Pitfalls

Regulators are ratcheting up their focus on the complex computer systems deployed by high-frequency trading firms, with an eye on whether the systems have adequate safeguards against chaotic trading that can destabilize markets and harm investor confidence.

The Financial Industry Regulatory Authority is conducting a probe of high-speed firms' trading algorithms -- the computer formulas that juggle the firms' rapid-fire trades -- and the controls surrounding their trading technology, according to an examination letter sent to about 10 firms this week and reviewed by The Wall Street Journal.

The review follows last year's trading malfunction by Knight Capital Group Inc., which lost nearly half a billion dollars in about 45 minutes when a high-speed trading algorithm malfunctioned. In July, Knight merged with Getco LLC, a top high-frequency firm, forming the trading powerhouse KCG Holdings Inc.

The widening look at high-speed algorithms was sparked by Finra's recent investigations of high-speed trading mishaps, according to a person familiar with the agency's thinking.

The exams are the latest step in an ongoing effort by regulators to increase scrutiny on the high-powered computer systems that control daily trading in U.S. markets. The heightened focus follows a series of disruptive glitches last year, including a malfunction at Nasdaq OMX Group Inc. that impeded the public rollout of Facebook Inc. in August. The SEC fined Nasdaq $10 million for the malfunction, one of the largest penalties levied against an exchange.

High-frequency traders, whose activity accounts for about half of all market volume, have been a rising force in markets in recent years. While the trading follows many patterns, it's typically marked by extreme speeds and rapid turnover of positions. Market overseers have grown concerned that the warp- speeds can harm regular investors and potentially disrupt the broader market.

Regulators' ramped-up their focus on disruptive computer trading following the May 6, 2010, "flash crash," when the Dow Jones Industrial Average plunged 700 points in minutes amid a burst of chaotic trades and computer glitches. A 2010 report by the SEC and the Commodity Futures Trading Commission on the flash crash said moves by high-speed traders helped fuel the day's rapid selloff.

In October, disruptions caused by Hurricane Sandy led to the closing of U.S. stock exchanges, raising concerns about the markets' ability to weather extreme events. The SEC in March proposed a set of new rules to require key market players to implement comprehensive policies and procedures to guard against trading malfunctions.

Finra is focusing on the development and deployment of trading algorithms, including the personnel involved in writing and testing the code, according to its letter, which asks for a list of "all personnel who develop, test, deploy, maintain, and/or modify algorithms."

The probe follows a series of cases in which firms had poor risk controls of their high-speed trading systems. Last year, regulators fined Octeg LLC, a market making unit of Getco, $450,000 for failing to maintain adequate risk control procedures related to its high-frequency trading system. Octeg didn't admit or deny the findings.

Finra is asking questions about how firms handle malfunctions, including whether they use so-called kill switches that automatically stop trading as well as "who is responsible for the automatic shut off or kill switch." It is also asking for instances of algorithm malfunctions "which had a material impact to the Firm or any instances in which the algorithm's malfunction caused a market disruption."

Another focus is on malfunctioning algorithms, known as "algos gone wild," that can jam exchanges with multiple buy and sell orders. This so-called "quote stuffing" can create confusion for other investors and potentially distort the market. Finra asks about what type of risk controls are built into algorithms designed to prevent "quote stuffing and quote bursts."

The regulator is asking the firms to provide internal reviews of algorithms and software control systems from January to the present.

Finra is also increasing its scrutiny of "dark pools," private trading venues, frequently operated by sophisticated computer systems that don't disclose investors' buy and sell orders. Last week, the regulator approved a plan to require dark pools to disclose and detail trading activity on their platforms, a move that would give it the clearest view yet into the private markets that account for about 15% of all stock trading, triple the total five years ago, according to Rosenblatt Securities Inc.

In May, Finra sent examination letters to 15 dark pool operators seeking details about how the venues operate, what they disclose to clients and whether the adequately police trades. The regulator has so far received responses from about one-quarter of those firms, according to people familiar with the matter.