Friday August 9th Ag News

Devastating Swine Disease Hasn't Hit State Yet, but Affecting Bacon Prices Nationwide

            A devastating swine disease new to the United States hasn't shown up in Nebraska yet, but it's already forcing bacon prices nationwide to new highs.

            The University of Nebraska-Lincoln's Veterinary Diagnostic Center stands ready to test piglets for the Porcine Epidemic Diarrhea virus, said Dr. Bruce Brodersen, assistant professor in the center and the School of Veterinary Medicine and Biological Sciences.

            Porcine Epidemic Diarrhea – PED for short – has been around since at least the 1970s but first showed up in the U.S. this summer.

            "Since the swine population has never been exposed before to this virus, they're very susceptible," Brodersen said. "The disease outbreaks are very severe because there's no immunity to it at all. So, it's been devastating as far as pig mortality is concerned."

            Brodersen said he expects PED to turn up in Nebraska eventually, but swine producers can take steps to avoid it coming to their facilities.

            Surveys show PED may be spread when trucks gather anywhere there are common loading and unloading chutes such as buying stations.  From those common areas, the virus can be tracked back to individual operations.  Brodersen urged producers to be very careful to clean their trailer or truck before they go home.

            "You should always follow very strict biosecurity steps," he said. No vaccine is available in the U.S. yet.

            Piglets infected with PED experience diarrhea and vomiting violent enough to kill them. The U.S. Department of Agriculture has confirmed only about 400 cases of the disease in the lab, but its toll has already been estimated in the hundreds of thousands.

            As a result, pork price futures have risen to historic levels, with hundredweights of pork going for about $105 in recent trading at the Chicago Mercantile Exchange. The USDA reports that the same amount of pork went for $78 in March.

            Fox Business News reported that the prices for pork bellies, which are cured into bacon, have risen particularly fast. On Tuesday, the wholesale price of a hundred pounds of fresh pork belly topped $189, 5 percent more than it was five days earlier and apparently at or near all-time highs.

            Retail prices for bacon don't track one-to-one with belly prices, Fox Business News reported, but they also have risen. The Bureau of Labor Statistics estimated the price of a pound of bacon in urban supermarkets at $4.92 in June – up 14 percent from June 2012 and another all-time high.



Environmental Stewardship Award Program Regional Winners Announced

Seven cattle operations from across the country were recognized as 2013 regional Environmental Stewardship Award Program (ESAP) winners during the 2013 Cattle Industry Summer Conference in Denver, Colo., today. The seven regional winners will compete for the national ESAP award, which will be announced during the 2014 Cattle Industry Annual Convention and Trade Show in Nashville, Tenn.

ESAP, now in its 23rd year, was created to recognize beef producers who make environmental stewardship a priority on their farms and ranches while they also improve production and profitability. The ESAP award is sponsored by Dow AgroSciences; USDA-NRCS; U.S. Fish and Wildlife Service; the National Cattlemen’s Beef Association (NCBA); and the National Cattlemen’s Foundation.

The regional winners are Mountain Meadows Farm, Sudbury, Vt.; Kissimmee Park Properties, St. Cloud, Fla.; BitterSweet Acres, Greenville, Iowa; Frank and Sims Price Ranch, Sterling City, Texas; Padlock Ranch Company, Ranchester, Wyo.; Kualoa Ranch, Kane‘ohe, Hawaii; and Gracie Creek Landowners Association, Burwell, Neb.

Regional and national award winners have been commended for their commitment to protecting the environment and improving fish and wildlife habitats while operating profitable cattle operations. The common trait among all winners is the desire to leave the land in better shape for future generations while also inspiring the next generation of land stewards.

“America’s farmers and ranchers are passionate about their land, and it shows through conservation and environmental stewardship efforts,” said NCBA President Scott George. “The cattle industry is continually improving upon our environmental sustainability, and these seven finalists set an example that we should all strive to achieve. We look forward to naming one of these seven great cattle operations as our 2014 national ESAP award winner in Nashville next year.”



Iowa cattle family is finalist for national environmental award

A Clay County farm family was selected as the Region 3 winner of the National Cattlemen’s Beef Association’s 23-year-old program that highlights exceptional work done by cattle producers to protect and enhance the environment.

Greg and Lola Wood and their son Chris were announced as the Region 3 winner in the Environmental Stewardship Award Program (ESAP) at the Cattle Industry Summer Conference in Denver on Thursday (Aug. 8). They and their cattle and hay farm, BitterSweet Acres near Greenville, will compete for the national ESAP title with six other regional winners. The national winner will be announced during the Cattle Industry Annual Convention and Trade Show in Nashville, TN, in February 2014.

One practice that makes BitterSweet Acres a stand-out in environmental stewardship is that they have maintained forage production on more than 400 acres in the face of increasing pressure to convert to row crops. U.S. Census of Agriculture data for Clay County show that there has been a 60% drop in pasture acres between 1997 and 2007. (That 60% is equal to 54,383 acres.) It’s likely the 2012 Census will show a continued drop. That’s why farmers who continue to put an emphasis on maintaining pasture and forage production as BitterSweet Acres has done, increase their environmental value to the state’s natural resources every year.

Dean Gronemeyer, NRCS district conservationist for Clay and Palo Alto Counties, said “Land is under more pressure today to produce food and fiber, and I often see this trend is at the expense of the soil and water resources.” Gronemeyer noted that farmers like the Greg Wood family have shown that farming “can be done in a manner that protects the soil, water and plant resources.”



ISU Economists Have Cautious Message for Farmers

Iowa State University economists are cautioning farmers to be prepared for a potential downturn in the values of commodities and land.

John LawrenceJohn Lawrence, director of Agriculture and Natural Resources Extension and Outreach and associate dean for Extension Programs and Outreach, said four Iowa State economists give “an analysis of the current state of Iowa agriculture,” in a series of papers on the Ag Decision Maker website (http://www.extension.iastate.edu/agdm/, under the Ag Cycles heading).

“This analysis is not intended to be a forecast of annual prices in the coming months or years. Nor is it predicting gloom and doom for agriculture. Rather, it is intended to help put current economic conditions into a historic context, better understand the factors that will influence prices and margins in the future, and help farmers prepare for whatever direction the market turns,” Lawrence said.

The ISU economists offer ways crop and livestock producers can be ready for the possibility of economic upheaval after many years of increasing prices and land values.

Chad Hart, associate professor of economics and extension economist, points out the cyclical nature of commodity markets and advises farmers to create and follow a marketing plan based on production costs; buy inputs when making crop sales; move to fixed rate loans to protect against higher interest rates; and continue to use risk management programs, such as crop insurance.

Lee Schulz, assistant professor and extension livestock economist, presents the supply and demand situations for beef cattle and hogs. He highlighted the importance of managing costs and price risks in a successful operation.

Michael Duffy, professor of economics and extension economist, reviewed the history of Iowa farmland values and sees a likely decline as corn and soybean prices fall, but suggested the decline won’t be as steep as the Farm Crisis of the 1980s.

Dermot Hayes, professor of economics and Pioneer Chair in Agribusiness, uses an Iowa State-developed method to extrapolate futures prices for five years into the future. The worst-case scenario shows corn prices as low as $4.27 in 2013, $3.85 in 2014, $3.41 in 2015, $3.12 in 2016 and $2.89 in 2017; with soybean values for the corresponding years at $9.69, $8.89, $7.85, $7.09 and $6.55.



Study Reveals Top Traits of Different Sheep Breeds

Sheep producers in western states can get a better idea of which breeds are best suited for their operations, based on a comprehensive evaluation by U.S. Department of Agriculture (USDA) scientists of the animals used to produce market lambs.

The USDA scientists and their university colleagues examined critical performance traits of lambs sired by rams of Columbia, Suffolk, Texel and a composite breed developed at the Agricultural Research Service (ARS) Roman L. Hruska U.S. Meat Animal Research Center in Clay Center, Neb. ARS is USDA's chief intramural scientific research agency.

The team included ARS geneticists Tim Leeds, Michelle Mousel and David Kirschten, and professor emeritus David Notter at Virginia Polytechnic Institute and State University at Blacksburg, Va. In the study at ARS' U.S. Sheep Experiment Station near Dubois, Idaho, the group evaluated lamb survival, growth, body composition, efficiency and carcass merit and value.

Rams from each breed were mated to Rambouillet ewes, producing more than 1,800 lambs over a three-year period. Suffolk-sired lambs were larger at birth, grew faster and had a survival rate as good as or better than other crossbred lambs.

After weaning, lambs were fed a high-energy diet and weighed weekly. Suffolks had the most rapid gains, most desirable leanness and were equal or superior to other lambs in growth, fat depth and loin muscle area.

When examined for feed efficiency, Suffolks also scored better than other breeds. Columbia-sired lambs required more than 15 pounds of additional feed compared with other groups.

At comparable market weights, Texels had heavier carcass weights and larger loin muscle areas, but were also fatter than lambs sired by the other breeds.

While the Suffolk scored the highest in most performance traits, other breeds still have desirable qualities. The Texel can produce heavily muscled lambs ready for market at younger ages. The Columbia is valuable for wool production and might be used as both a maternal and sire breed. The composite, developed mainly as a genetic resource, may be useful in stressful production environments that favor a lamb with intermediate growth potential.

Scientists are developing new germplasm resources in an effort to capture each breed's positive traits and incorporate them into a higher-performance breed.

Read more about this research in the August 2013 issue of Agricultural Research magazine.



Iowa Soybean Association, Iowa Food & Family Project support meal-packaging effort

More than 255,000 soy-based meals were packaged Aug. 9 at the Iowa State Fair with the help of the Iowa Soybean Association (ISA) and the Iowa Food & Family Project.

The ISA and Iowa Food & Family Project, along with GROWMARK, the Iowa State Fair and state fair goers, provided financial support for the Meals from the Heartland event. More than 1,500 volunteers, including ISA employees and farmer members, worked throughout the day to fill and box food packages to be distributed to Haiti.

ISA board member Randy Van Kooten of Lynnville attended. He said it’s the responsible and right thing to do. “As a farmer, it’s part of what we do. We grow crops and feed people,” he said.

Each food packet – enough for six servings – contains 10 ounces of soy protein, rice, dried vegetables and vitamins and minerals. Archer Daniels Midland and Cargill donated the soy protein.

David Bradley, executive director of Meals from the Heartland, said the meals will help Haitians still struggling to recover after a devastating earthquake in 2010.

“These packets are accepted around the world and the soy protein is the secret sauce that makes them so nutritious because of their high protein content. A lot of food insecure nations are short on protein,” Bradley said. “The ISA is a huge partner.”

Meals from the Heartland, a nonprofit based in West Des Moines, was founded in 2008 and has shipped 32 million meals worldwide since its inception.

“ISA’s support of packaging soy-based meals is part of a larger effort to bolster soybean demand around the world,” said Grant Kimberley, ISA director of market development.



Be Proud of U.S. Soy’s Sustainability Performance

U.S. soy’s customers range from industrial product manufacturers to animal nutritionists to food companies. But all of U.S. soy’s customers want to buy soybeans grown in a sustainable manner. That’s why the soy checkoff decided to demonstrate why U.S. soy and the farmers who grow it should already be considered sustainable.

The checkoff and other farmer-led U.S. soy organizations recently adopted the “U.S. Soy Sustainability Assurance Protocol,” which outlines the regulations, processes and practices that define U.S. soy production as sustainable. A related guide introduces farmers to the protocol and the information it includes.

Because so many customers demand responsibly sourced materials, farmers can consider sustainability a way to ensure U.S. soy demand stays strong. The checkoff and its partners, such as the U.S. Soybean Export Council and American Soybean Association, continue to use sustainability information in marketing efforts, but farmers can help spread the word, too.

Did you know soil erosion per bushel of soybeans is down 66 percent since 1980? How about the fact that soybean yields have increased by 55 percent in the last 30 years, using fewer inputs and less water? Would you have guessed that 98 percent of all the farmers who are subject to review are in compliance with U.S. Department of Agriculture conservation standards?

These are great facts your customers should know. Learn about these nuggets and many more in the easy-to-read sustainability guide. Reference the information when you talk to other farmers about the importance of sustainability. Share them through your social media channels. And tell your non-farming friends about how U.S. soybean farmers are responsibly raising their crops.



Senate Names Farm Bill Conferees
(from NAWG)
Late last week Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) named conferees to reconcile differences in farm bill legislation. Democrats:  Senate Agriculture Chairwoman Debbie Stabenow (D-Mich.) and Senators Patrick Leahy (D-Vt.), Tom Harkin (D-Iowa), Max Baucus (D-Mont.), Sherrod Brown (D-Ohio), Amy Klobuchar (D-Minn.) and Michael Bennet (D-Colo.) Republicans:  Ranking Member Thad Cochran (R-Miss.) and Senators Pat Roberts (R-Kan.), Saxby Chambliss (R-Ga.), John Boozman (R-Ark.), and John Hoeven (R-N.D.).



Brazil’s Growing Pains
(from US Grains Council)

One of the United States' largest competitors in global grain sales, Brazil, has continuing storage limitations that reduce its flexibility in international marketing. This past year, Brazil exported an estimated 21 million metric tons (827 million bushels) of corn alone, benefiting from the U.S. drought that drove up cost of U.S. corn in the global market.

Brazil has a current storage capacity at an estimated 145 million tons with an expected harvest of 188 million tons of grains The Food and Agriculture Organization recommends an adequate storage capacity at 120 percent of production volume, which means Brazil is lacking 80 million tons of grain storage.

Even though Brazil has set aside $30 billion to build warehouses over the next six years, there will still be a shortage of space in the short run. According to the U.S. Grains Council, two additional factors aggravate Brazil's storage problems.

FIRST: There is a lack of transportation infrastructure which results in a saturation of the Ports in the Southeastern and Southern regions. From January to May 2013 these ports exported an estimated 93 percent of the total corn and 86.9 percent of total soybean exports. If the Ports of the Northeastern and Northern area exported more grain, the storage shortfall in producing areas would be at least partially relieved.

SECOND: 65 percent of the existing storage capacity is located on the coast, while most of the new production areas are in the center of Brazil. These new production areas are severely limited in the amount of storage they have available. Mato Grosso, in western Brazil, currently expects a 40 million ton harvest of corn and soybeans, and has only 30 million tons of storage space available.

"The United States possesses good infrastructure and adequate storage space for its grains," said Erick Erickson, USGC director of global strategies. "It is one thing to be able to grow the corn, but it is another to be able to handle the supply properly, which is where the United States holds a clear advantage."



Ready to Supply and Serve China with Wheat
Casey Chumrau, US Wheat Associates Market Analyst

One of the major emerging grain market stories at the start of the 2013/14 marketing year is China’s demand for wheat. As of July 25, China had purchased 3.58 million metric tons (MMT) of U.S. wheat. That number accounts for 28 percent of total U.S. commercial wheat sales so far this marketing year, to a country that, on average, accounts for 2 percent of total annual U.S. wheat sales. The ability to meet the unexpected high-volume demand at this time of year, before the new crop is available for shipment, highlights the U.S. system’s unique reliability.

China has been relatively self-sufficient since 1996/97 in producing the wheat its population consumes. Total Chinese annual imports have exceeded 3.0 MMT only three times in the last 17 years. In the last five years, U.S. sales to China have averaged 388,000 MT and have not exceeded 3.0 MMT since 1995/96, when sales reached 3.13 MMT. 

Chinese imports have been on the rise the past two marketing years. USDA’s initial forecast in May projected total 2013/14 imports to reach 3.5 MMT, following imports of 2.93 MMT in 2011/12 and 3.20 MMT in 2012/13. Growing demand for high quality wheat-based products accounts for much of this increase.

There was no clear indication that Chinese wheat imports would jump dramatically this year, yet a  combination of factors built up to the spike. First, frost damage and harvest time rains reportedly hurt Chinese domestic crop quality. At the same time, world wheat prices were arching significantly lower than last year, presenting an excellent buying opportunity. And China is certainly taking advantage.

Of the 3.58 MMT of U.S. wheat bought for delivery in 2013/14, 3.29 MMT is soft red winter (SRW). As of July 26, the SRW price for August delivery from the Gulf of Mexico was $268/MT, compared to $343/MT a year earlier. This sales pace prompted USDA to increase its forecast for total Chinese imports to 8.5 MMT, by far the highest since China bought 12.5 MMT in 1995/96.

Most, if not all, of the wheat shipped to China so far has been old crop supply. However, the new crop SRW harvest has just concluded in the last few weeks. Most other major exporters exhausted their old crop supplies and will not be able to sell wheat at competitive prices until their new crop is available.

Being first to market is an advantage but without the crop quality information and trade service provided by U.S. wheat farmers and the U.S. government through USW, occasional large buyers could not turn quickly to U.S. supplies. Production volume and consistency combined with an efficient, transparent marketing system backed by experienced trade service allows all wheat buyers to rely heavily on the U.S. market to meet their ever-changing needs.

Most recently in early 2013, Egypt turned to the United States after Black Sea suppliers were unable to meet its large import demand. Without warning or preparation, the United States was able to solely supply 1.68 MMT to the world’s largest importer.  In April, Brazil turned to the United States because its Mercosur partner, Argentina, did not have sufficient supply to meet Brazilian import demand. Since temporarily lifting a 10 percent import duty in April, Brazil has purchased nearly 2.0 MMT of U.S. wheat – mostly HRW.

Trade Team Travels to United States as Chinese Wheat Purchases Soar
It is clear that China is turning to the United States this year to help supply its increasing needs for wheat. To help Chinese millers take advantage of competitive pricing and high quality U.S. wheat supplies, a team of milling executives and purchasing managers sponsored by USW is now visiting the United States.

In addition to an increasing preference for Western-style wheat foods and high protein wheat, China needs to replace stocks released from their national grain reserve and the domestic winter wheat crop likely had significant quality problems after persistent rains at harvest time. At the same time, U.S. wheat prices have become increasingly competitive.

The six team members will tour grain facilities, meet with wheat researchers and talk directly with farmers on their farms in Oregon, Idaho, Montana and North Dakota. Discussions will help these managers build knowledge about the U.S. wheat marketing system and about the benefits of U.S. wheat for specific Chinese end-products. The trade team is sponsored in part by the North Dakota Wheat Commission with additional collaboration from the Oregon Wheat Commission, Montana Wheat & Barley Committee and Idaho Wheat Commission.

“These team members are in charge of final purchasing decisions for their mills and are looking for information on crop quality and grain standards,” said USW Regional Vice President Matt Weimar, based in Hong Kong, who will accompany the team. “China is looking to the United States to help bolster wheat supplies, and this team will learn how to use the U.S. grain marketing system to further increase the value of purchases of the high quality wheat needed to meet their consumers’ demands.”



Romania Wheat Harvest Hits 8-Year High

Romania this year reaped its biggest wheat and rye crop since 2005 and the second-largest in more than four decades, Agriculture Minister Daniel Constantin said Friday.  The wheat and rye harvest rose 37% year-on-year to 7.3 million tons in 2013, he added. Yield levels rose to 3,472 kilograms per hectare, from 2,650 kilograms per hectare in 2012. 

Record production was also registered for barley, oat and rape, the minister said.  Barley output rose to 1.5 million tons in 2013, the highest level in the last 23 years, while rape production reached roughly 648,000 tons, a six-fold increase compared with a year earlier.



Novozymes reports 6% organic sales growth in first half 2013

Novozymes, the world’s largest producer of industrial enzymes, today reported a first half of 2013 in line with expectations. Organic sales growth was 6% (5% DKK, 6% LCY) compared with the first half of 2012. The gross margin improved by 0.7 percentage point. EBIT grew by 7%, and the EBIT margin increased by 0.4 percentage point to 24.6% compared with 1H 2012.

The full-year 2013 outlook is adjusted for the unfavorable development in exchange rates since previous guidance and a positive effect from a lower effective tax rate. Sales growth in DKK is now expected at 5-7%, EBIT growth at 4-6% and net profit growth at 7-9%. Furthermore, net investments excl. acquisitions are expected to be lower at DKK 900-1,000 million and free cash flow before acquisitions is adjusted upwards to around DKK 1,700 million.

“The first six months developed as expected,” says CEO Peder Holk Nielsen. “Sales and earnings picked up during the period, and we're on track to meet our full-year organic sales growth and margin guidance. We're working hard on our priorities of driving innovation in the business and building our growth platforms, and I'm pleased with the progress. In the first half of 2013 we’ve launched new and exciting technology to Bioenergy and Household Care customers, we’ve made a bolt-on acquisition within BioAg and, within biomass conversion, Beta Renewables’ – and the world's – first commercial-scale biomass conversion plant started shipping commercial volumes of ethanol."



AgriBank Reports Second-Quarter 2013 and Six Month Financial Results
Net Income Increases Seven Percent to $281.3 million for the First Half of the Year

Bill York, AgriBank’s CEO, commented on the financial results, “AgriBank is continuing to see strong performance as loan volume continues to grow and the Bank continued to position its balance sheet to take advantage of a favorable interest rate environment. Despite some initial planting delays due to inclement weather, farmers in most areas have been able to plant their crops and USDA is predicting large corn and soybean crops for this year.”

Year-to-Date 2013 Results of Operations
Net income rose seven percent to $281.3 million for the first half of 2013, up from $263.7 million in the same period of 2012.

Net interest income represents $31.5 million of that increase, rising to $258.4 million compared with $226.9 million in the same period in 2012. Net interest income remains strong and reflects the positive impact of our funding actions as well as the increased volume of fixed rate loans. Also positively impacting net interest income was an increase in retail loans, including significant growth in loan participations purchased from the AgDirect equipment financing program.

Loan loss provisions decreased due to loan loss reversals of $1.5 million for the period, primarily due to the reversal of a specific reserve on a participated credit.

Non-interest income was down 17 percent to $75.6 million from $91.2 million in 2012. The decrease was primarily due to $15.0 million of non-recurring refunds received during 2012 from the Farm Credit Insurance Corporation.

Second Quarter 2013 Results of Operations
Second quarter 2013 net income was strong at $141.3 million compared to $149.0 million in the same period in 2012. The decrease was primarily due to the 2012 non-recurring refund noted above and partially offset by the increase in 2013 net interest income.

Loan Portfolio
Total loans increased 0.3 percent from year end to $69.9 billion at the end of the quarter, reflecting seasonal increases in operating lines funded by wholesale loans to Associations. AgriBank’s loan portfolio credit quality remains strong with 99.8 percent non-adverse loans at the end of the quarter, compared with 99.7 percent at the end of last year. Nonaccrual loans declined to $46.8 million from $51.4 million at the end of last year while the allowance for loan losses was $10.4 million at June 30, 2013 compared with $13.3 million at the end of last year.

The 2013 crop production growing season started with a colder spring than normal and excess precipitation in much of the geographical area of the AgriBank District. These conditions caused some delay in spring planting. However, crops were generally planted within an acceptable range of time to allow for an adequate growing season and normal crop production. Most of the AgriBank District has an adequate moisture situation but there continues to be a portion of the Western Corn Belt that continues with drought conditions.

USDA projects a large 2013 corn and soybean crop such that commodity prices are anticipated to be lower this fall than the high levels experienced in recent years. Lower commodity prices will generally have a positive impact on livestock, poultry, ethanol and dairy producers who purchase these inputs while reducing profitability from crop production.

USDA’s most recent forecast (2/11/13) is for 2013 net farm income to increase by $15.4 billion to a record $128.2 billion. Crop production levels are forecast higher but are partially offset by the lower projected commodity prices. For this same period, net cash income is projected to decline by $12.1 billion to $123.5 billion. The contrast in directional change in net farm income and net cash income is primarily due to expectations of substantial increases in the value of corn inventories during the year.  Value of inventory change is included in net farm income but only affects net cash income when inventories are sold. Corn inventory value is expected to rise based on projections of average corn yields and historic corn-acreage levels.

Liquidity and Capital Resources
Cash and investments (substantially all of which are held for liquidity purposes) totaled $12.6 billion at the end of the quarter compared with $12.1 billion at the end of last year. The Bank’s end of the period liquidity position represented 158 days coverage of maturing debt obligations, well above the 90 day minimum established by the Farm Credit Administration, the Bank’s independent regulator.

Total capital increased $213.1 million during the period to $4.5 billion, driven primarily by earnings of $281.3 million and a reduction in other comprehensive loss of $53.9 million, partially offset by $138.7 million in patronage to Associations.