Monday January 22 Ag News

Preparing For Pre-Harvest Marketing In 2018
Amy Timmerman – NE Extension Educator

Selling corn under $4.00/bushel is not fun for anyone, but it will be a reality for Nebraska producers this year. Despite low prices, there will be opportunities for savvy marketers. The 2018 marketing year is shaping up to be similar to 2017 for corn. Here we will review some the challenges producers faced in 2017 and how we can avoid them in 2018.

In 2017, corn accumulated a record amount of global ending stock, placing downward pressure on corn prices. Without a major market jolt, we can expect 2018 corn prices to be shaped by this large quantity of corn. 

Challenges
1.    Basis: Because of the high volume of corn available, basis has been weak across the state. Grain buyers (elevators, ethanol facilities, feedyards) have access to plenty of grain and do not need to improve basis to attract farmers to sell. Remember basis values, especially for new crop, seldom change throughout the year. Furthermore, any changes that do occur are likely to be minimal (a few cents). Do not let a weak, unwavering basis keep you from selling grain when futures prices spike.
2.    Early futures price peak: Another symptom of high ending stocks, are that prices reach their peak much earlier in the year, February-April rather than April-June. Figure 1 compares a 20-year average percent price increase over January 1 to the average of years with “Very High” ending stocks. In 2017 many producers did not price corn early enough to capture seasonal highs.
3.    Unrealistic price targets: One barrier many farmers ran into in 2017, was that their pre-harvest price targets were too high. Producers had set target prices at and above $4.00/bushel cash in 2017. For most Nebraska farmers they had a small window, if any, to pre-price at this level.

Combating the Challenges
1.    Basis: There is little to nothing that individual farmers can do to improve the basis. However, this is a good time to consider which delivery locations are most profitable. Each grain buyer sets their own basis. Thus, shopping around your area for the best basis may help you gain a couple of cents. If you have the ability to haul grain to another area, you will want to calculate if the cost of hauling grain to receive the better cash price is worth the expense of hauling.
2.    Early futures price peak: Be prepared to sell grain early in 2018. Accept that you may be pricing a crop that you have yet to plant. Remember, in pre-harvest marketing plans it is not recommended that you forward contract or hedge 100% of expected production. The rule of thumb is to not pre-price more than insured production (Actual Production History (APH) times your percent of coverage). Most producers price 25%-50% of insured production.
3.    Unrealistic price targets: The market does not care if prices are below your cost of production until prices are so low that you decide not to produce anymore. Realistic target prices should be set based on grounded market expectations. The USDA releases the World Agriculture Supply and Demand Estimate monthly. In this report they predict farm prices for corn, soybeans and wheat, giving us a good gauge to set price targets. The December 12 USDA WASDE report estimates that national average cash price will be between $2.85 and $3.55/bushel.

This year will be a challenge for many grain producers. Having a written marketing plan that addresses the pitfalls outlined above will help keep you on track. For more grain marketing information check out the articles at cropwatch.unl.edu. 



 Farmland Values Stabilize in 2017 in Grain Belt States

Farmland values in the grain belt states served by Farm Credit Services of America (FCSAmerica) stabilized in 2017, a reflection of continued market demand for quality land.

Sales of higher quality farm ground contributed to an uptick in average sale prices in 2017. Where prices dropped at local or regional levels, sales generally involved lower quality land. Average sale prices rose slightly in Iowa, Nebraska and South Dakota. Wyoming had too few sales to identify a trend.

FCSAmerica compiles sales records and, twice a year, appraises 64 benchmark farms. The cooperative’s objective is to track real estate values without the influence of changes in land quality on sale prices. Iowa and Wyoming saw modest overall increases in real estate values in 2017, while Nebraska and South Dakota declined.

NEBRASKA
Five benchmarks farms increased in value, while two showed no change. The remaining 11 declined an average of 6.1 percent.  Total sales declined in 2017, with dry cropland dropping 15 percent and irrigated 25 percent compared to 2016. Public land auctions dropped 16 percent and auction “no sales” increased to 5.2 percent, up from 2.2 percent in 2016.

IOWA
Eleven benchmark farms saw an increase in value in the last six months of 2017, while 10 showed no change. Overall farmland sales activity was down 20 percent. However, public land auctions increased 2 percent compared to the previous year. The percent of auction “no sales” fell to 2.7 percent, down from 3.2 percent in 2016.

“Overall real estate values have stabilized in the past year, but continued low profit margins and potential for an increase in sales activity could put downward pressure on real estate values,” said Tim Koch, FCSAmerica’s chief risk officer.

Farmland values remain well below the market’s peak of three to four years ago. Overall, values are off about 20 percent.



NDA SEEKS PROPOSALS FOR SPECIALTY CROP GRANTS—DEADLINE FEB. 9

The Nebraska Department of Agriculture (NDA) is currently accepting grant proposals for its 2018 Specialty Crop Block Grant Program (SCBGP). NDA administers the program, which is funded through the U.S. Department of Agriculture. The deadline for submitting proposals is Feb. 9.

“Nebraska’s specialty crop industry is thriving with help from the Specialty Crop Block Grant Program,” said NDA Director Steve Wellman. “The program supports research, development and marketing of specialty crops and offers resources for innovative projects and ideas that help grow Nebraska’s ag industry.”

Specialty crops are fruits, vegetables, tree nuts, horticulture and nursery crops (including floriculture).

For the 2018 SCBGP, NDA anticipates approximately $600,000 will be available to fund new projects. Producers, organizations and associations, as well as state and local agencies, educational groups and other specialty crops stakeholders are eligible to apply.

Thirteen specialty crop projects were funded in Nebraska last fall through the program for a total of nearly $600,000.

This year’s proposals will be reviewed and scored using select criteria. Applicants who make it through the first round will be asked to submit additional information. NDA and USDA will announce the projects receiving funding in the fall.

Instructions for submitting a proposal, proposal applications, performance measures and program guidelines are available on NDA’s website at nda.nebraska.gov/promotion/scbgp/index.html. All proposals should be saved as a Microsoft Word .docx file and sent electronically to casey.foster@nebraska.gov by the Feb. 9 deadline. For additional information contact: Casey Foster at (402) 471-4876, or by the email listed above.

To view a comprehensive list of eligible specialty crops and examples of projects funded under the SCBGP, visit USDA’s website at ams.usda.gov/services/grants/scbgp.



NPPC Commends USDA for Maintaining Essential Livestock Market Programs

Two U.S. Department of Agriculture (USDA) programs critical to the continuity of livestock market operations will continue during the current federal government shutdown. The Livestock Mandatory Reporting (LMR) program, managed by USDA’s Agricultural Marketing Service, is the sole source of market information on sales to packers of cattle, swine and lambs and on the subsequent sale of meat products. Inspection services provided by USDA’s Food Safety and Inspection Services also will continue as an essential activity, ensuring a key element of America’s food supply -- safe, nutritious and affordable meat and poultry -- are available to consumers.

“NPPC appreciates the leadership provided by Agriculture Secretary Sonny Perdue, Undersecretary of Marketing and Regulatory Affairs Greg Ibach and Acting Deputy Undersecretary of Food Safety Carmen Rottenberg,” said NPPC President Ken Maschhoff, a pork producer from Carlyle, Illinois. “Inspection and market news reporting are essential to the proper functioning of responsible commerce in the U.S. pork industry during the uncertainty of a federal government shutdown.”

Maschhoff added, “The availability of LMR market data ensures that reliable and accurate information that influence critical business decisions are available to thousands of producers and other market participants, including those in the futures market.” 



Farm Bureau Statement on WOTUS Jurisdiction Decision
Ellen Steen, General Counsel of the American Farm Bureau Federation

“The U.S. Supreme Court ruled correctly today that federal district courts—not federal courts of appeals—have jurisdiction to review the 2015 Waters of the U.S. (WOTUS) rule. This Supreme Court decision brings greater clarity to an important issue that has bogged down the litigation over this and other Clean Water Act regulations for years. That is a positive result, but it also creates uncertainty and confusion in the short term, because the Sixth Circuit must soon lift its nationwide stay of the 2015 rule.

“At this time, the Environmental Protection Agency has not yet finalized its proposed rule to delay the application of the unlawful and dangerous 2015 WOTUS rule while the agency considers whether to permanently repeal that rule. AFBF is considering its options to avoid application of the 2015 rule while EPA moves forward with an appropriate long-term solution that provides clear rules and clean water without requiring a federal permit to plow a field.”  



Fort Worth Hosts National Biodiesel Conference & Expo

The National Biodiesel Conference & Expo opens today at the Fort Worth Convention Center and offers a vehicle showcase and ride-and-drive opportunity alongside demonstrations and presentations on the latest in the industry.

And this year’s conference takes on special significance as the title sponsor, the National Biodiesel Board, celebrates 25 years.

“For the visionaries who launched what would become the National Biodiesel Board in 1992, we want to say ‘thank you,’” said NBB CEO Donnell Rehagan. “We look forward to taking this opportunity to reflect on those first 25 years, but we are also excited to launch into the next era of growth for America’s Advanced Biofuel.”

Following a University of Missouri study that demonstrated biodiesel had potential as a diesel fuel replacement, the Missouri Soybean Merchandising Council created the National SoyDiesel Development Board in 1992. Sensing the opportunity to utilize the vast surplus of soybean oil collected each year, while also expanding energy security and environmental benefits, other state soybean associations quickly joined the effort. The new association changed its name to the National Biodiesel Board in 1994 to reflect the diversity of fats and oils that can be made into biodiesel.

In the early days, NBB spearheaded diesel engine research and emissions testing to demonstrate biodiesel’s environmental benefits, leading to official specifications for the fuel used in diesel cars and trucks today and earning the reputation as America’s first commercially produced advanced biofuel. The producers then were primarily a collection of small businesses serving their communities, distributing a few hundred million gallons of biodiesel by the turn of the century.

Today, with support from a bipartisan strategy to bring transportation fuel options into the mainstream through implementation of the federal Renewable Fuel Standard and a tax incentive to spur growth, the advanced biofuel has blossomed into a nearly 3 billion gallon per year industry. A renewable, clean-burning diesel replacement that can be used in existing diesel engines without modification, biodiesel is now produced in every corner of the country made from an increasingly diverse mix of resources such as recycled cooking oil, soybean oil and animal fats. As biodiesel has grown over the last 25 years, it has stayed true to its local roots. The more than 64,000 jobs the industry supports are often the highest paying in many rural areas. To be called biodiesel, the fuel must meet the strict quality specifications of ASTM D6751.

“Biodiesel is an American success story,” said Rehagen. “We have overcome countless challenges, and we will undoubtedly face many more as we continue to grow the industry. But for everyone who has pulled together for the past 25 years to make our success a reality, this conference is a great time to celebrate."

A celebration of the 25th anniversary will be front and center when conference organizers pull back the curtains on the main stage -- constructed in an even larger Expo Hall for the first time this year -- to open the festivities on Tuesday morning.

And the conference isn’t just for industry insiders. The public is invited Tuesday to join in the discussions focused on biodiesel technology, public policy and more. They will also have the opportunity to explore the event’s Expo Hall, where they can learn all about how biodiesel is made from an increasingly diverse mix of resources such as recycled cooking oil, soybean oil and animal fats. A Texas driver’s license is required for local residents to attend free of charge. Wednesday, the public is invited back to participate in a “ride-and-drive” with vehicles provided by area dealers and equipped with the latest diesel engines.

Other highlights for attendees include a session with the filmmakers who premiered “Hot Grease” at the prestigious DOC NYC film festival before its debut on the Discovery Channel last November. The feature length documentary tells the story of biodiesel’s rise and the industry fight for survival in the face of numerous public policy challenges. The producers spent countless hours documenting the experiences of biodiesel entrepreneurs in Texas, while advocates in Washington, D.C., come together to protect the industry from a barrage of attacks from opponents more interested in protecting the status quo.

The National Biodiesel Conference & Expo takes place January 22 - 25 at the Fort Worth Convention Center. To learn more about the conference, including a full schedule of events and information on how to register, visit www.biodieselconference.org.



US Government Report Strengthens Consensus on Biodiesel Benefits

A new study on biodiesel’s lifecycle energy and greenhouse gas (GHG) emission effects updates and reaffirms the long-understood benefits of using the renewable fuel. The study is the latest in the significant body of transparent, peer-reviewed, studies that conclusively quantify biodiesel’s widespread benefits. The report, recently published by a collaboration between Argonne National Laboratory, Purdue University, and the U.S. Department of Agriculture (USDA), represents the most up-to-date and comprehensive lifecycle analysis of biodiesel ever produced. Results confirm that biodiesel compared to petroleum diesel reduces GHG emissions by 72 percent and fossil fuel use by 80 percent.

“This is the highest GHG reduction of any heavy-duty transportation fuel and reflects biodiesel’s natural ability to store solar energy in a liquid form compatible with today’s engines and power generation technologies,” said Jim Duffield, who coauthored numerous lifecycle reports for USDA’s Office of the Chief Economist prior to his recent retirement.

“It’s encouraging to see the commitment to data and quality analysis brought together in this study,” said Don Scott, sustainability director for the National Biodiesel Board. “It’s not news that biodiesel is good for the environment. Where credible results are needed for sound policies, it serves us well to look at transparent, reliable science.”

This study represents the first time Argonne National Laboratory has published a lifecycle assessment of biodiesel including indirect land use change (ILUC). The theory of ILUC suggests that economic benefits from renewable fuels impact farming patterns globally. ILUC modeling attempts to quantify the future impact of such predicted land use change. ILUC has been included in analyses by the U.S. Environmental Protection Agency (EPA) and the California Air Resources Board (CARB) that independently conclude biodiesel’s GHG advantage exceeds 50 percent reduction over diesel fuel.

“The improvements to ILUC modeling in this study were not possible just a few years ago, because we did not have as much data as we do today,” said Farzad Taheripour, one of the authors of this paper from Purdue University’s Department of Agricultural Economics. “Data available today shows that farmers all around the world are increasing productivity on existing farm land. Calibrating the model to these real-world trends improves the accuracy and reduces the predicted emissions of biofuel expansion.”

The more the models reflect real world data, biodiesel’s benefits become even clearer. The improved model reduces ILUC emissions by more than 30 percent relative to the score adopted by CARB in 2015.

“Biodiesel’s emission-reduction benefits are so great that you can overapply penalties aligned with the most conservative models and biodiesel is still the cleanest alternative for today’s diesel engines and the heavy-duty transportation of tomorrow,” said Scott.

For example, although CARB applies an ILUC penalty to soy biodiesel, biodiesel remains a key component to reducing greenhouse gas emissions under the Low Carbon Fuel Standard.

Using its flagship GREET® LCA model, Argonne computes the GHG advantage of biodiesel as reducing emissions by 76 compared to petroleum. GREET®—whose acronym stands for Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation—houses the best engineering data for allocating process emissions, but it does not make predictions of future economic changes. When predicted economic impacts are added, the GHG benefit lands in the range of 66 to 72 percent better than petroleum. The lower end of this range results from using CARB’s emission factor model developed specifically for the California market. The higher end of this range results from using the emission factor model developed by the national laboratory, which includes higher resolution for organic carbon where that data is available.

Roughly half of the biodiesel used in the US is made from soybean oil. The other half is produced from sources like used cooking oil, animal fats, and other fats and oils. The authors of this study began by collecting the latest data on the energy and emissions from farming soybeans. Soybeans are grown primarily to produce protein meal for livestock feed. So, the first processing step after soybeans leave the farm is to a soybean crush facility where 80 percent of every soybean is used to produce livestock feed. The volume of oil that remains after protein extraction exceeds demand for feed or food, (i.e. salad dressing, frying and baking, etc.), so a portion of that oil that we cannot eat or export is used to produce biodiesel.

“This study includes the largest ever survey of biodiesel production facilities to capture the energy used in the form of natural gas and electricity to convert fats, oils, and grease into biodiesel fuel,” said Jeongwoo Han, who maintains the GREET® model for Argonne National Lab.

All these emissions were also combined with the emissions of transporting raw ingredients and finished fuel to market. By including all the emissions in the entire fuel lifecycle, this report presents a comprehensive comparison with the emissions of producing and using diesel fuel. This study includes more data but yields consistent results with other studies published over the last two decades.



 Farmers Union Urges Increased Funding for Farm Safety Net, Releases Priorities for Farm Bill

Given the persistent and ongoing economic challenges in farming and rural economies, National Farmers Union (NFU) is calling on Congress to increase funding for farm programs in the farm bill and pass the legislation as soon as possible. The NFU Board of Directors recently passed a resolution to this effect, outlining requirements for a farm bill that family farmers and ranchers can support.

“American farmers are not only suffering from price pressure that has reduced net farm income by half over the last four years, but devastating wildfires, hurricanes, and other natural disasters continue to punish agricultural communities,” said the Board. “Trade policies continue to promote the sale of farm products at prices below the cost of production. Farm bill legislation in 2018 must strengthen the safety net so that farmers and ranchers can manage risk, stay in business and continue to feed our country.”

The Board laid out a series of 14 recommendations that Congress should follow to provide a sufficient farm safety net, support rural communities, protect natural resources, improve beginning farmers’ and ranchers’ opportunities for success, and ensure the nation’s most vulnerable people have enough to eat.

“The farm bill, rightly so, touches all aspects of our food system,” said NFU President Roger Johnson. “As such, Congress must write and pass a farm bill this year that adequately supports each part of the food system—from the family farmers who grow our food, to the land they do it on, to the rural communities they support, and all the way to the consumers who rely on safe, affordable food. Providing adequate support begins with a recognition of the dire economic conditions of the farm economy, the impacts of food production on the land, and the moral imperative of our country to ensure its most vulnerable citizens have access to food.”

Among the NFU Board’s recommendations were a set of changes to the Farm Bill’s commodity title, Title 1, which has not provided adequate relief for farmers amidst the recent, dramatic slide in net farm income. It called for “increased and robust reference prices under the Price Loss Coverage program,” technical corrections to the Agricultural Risk Coverage program, and an “incentives-based inventory management program to manage milk supplies based on market demand.” The Board also called for mechanisms to address oversupply of grain and dairy, and for meaningful assistance to cotton producers.

Recognizing the role family farmers play as stewards of our natural resources, NFU recommended a strong conservation title that provides “additional acreage under the Conservation Reserve Program,” maintains “funding for working lands conservation programs that promote active stewardship and locally led conservation activities,” and funds “climate mitigation research and technical assistance at national and local levels.”

Central also to the family farm organization’s concerns are the farm bill’s impacts on rural communities. The NFU Board urged Congress to include “robust funding for programs that promote economic, infrastructure and clean energy development in rural communities,” and to prioritize development of local cooperatives.

To ensure the success of beginning and future farmers and ranchers, NFU called for implementation of programs within the farm bill that improve beginning, veteran, and socially disadvantaged farmers’ and ranchers’ access to land, capital, efficiency and markets.

Finally, and of equal importance, Farmers Union called for strong nutrition programs in order to provide a safety net against hunger.

“The family farm is the keystone of a free, progressive, and democratic national society as well as a strong America, and is the basis of a safe, secure, and stable food system,” wrote the NFU Board. “It provides opportunities for individual enterprise to all families in our society to achieve economic and social stability, as well as soil, water, and environmental stewardship of our natural resources and unparalleled production efficiency. “

“National Farmers Union’s Board of Directors, in its continued efforts to protect family farms, calls on Congress in 2018 to provide strong support and increased funding in the best interests of family farms, rural communities and consumers.”



CWT Assists with 2.7 million Pounds of Cheese and Butter Export Sales

Cooperatives Working Together (CWT) has accepted 17 requests for export assistance from Dairy Farmers of America, Land O’Lakes, Northwest Dairy Association (Darigold) and Tillamook County Creamery Association. These cooperatives have contracts to sell 2.692 million pounds (1,221 metric tons) of Cheddar and Monterey Jack cheese and 39,683 pounds (18 metric tons) of butter to customers in Asia, the Middle East, North Africa and Oceania. The product has been contracted for delivery in the period from January through April 2018.

CWT-assisted member cooperative 2018 export sales total 5.334 million pounds of American-type cheeses and 729,730 pounds of butter (82% milkfat) to 10 countries on three continents. These sales are the equivalent of 65.744 million pounds of milk on a milkfat basis.

Assisting CWT members through the Export Assistance program in the long term helps member cooperatives gain and maintain market share, thus expanding the demand for U.S. dairy products and the U.S. farm milk that produces them. This, in turn, positively affects all U.S. dairy farmers by strengthening and maintaining the value of dairy products that directly impact their milk price.



China Pork Output Edged Up in 2017

Chinese farmers are just starting to recover after pork output dropped to its lowest level in five years in 2016. According to Reuters, China's 2017 pork output rose 0.8 percent from the year before to 53.4 million tonnes, the National Statistics Bureau said on Thursday, increasing supply in the world's top consumer of the meat.

Pork output had dropped to its lowest level in five years in 2016, after farmers shrank their herds following financial losses in previous years. But even as herds began to recover during 2017, growing 0.4 percent to 433 million head, Thursday’s data showed, a crackdown on farm pollution across the country forced many small farms to close, pushing up slaughter rates.

Some analysts said they had expected the pork output number to be higher, given prices fell by around 20 percent during the year and imports also dropped.

Beef production in 2017 reached its highest level in records going back 20 years. It came in at 7.26 million tonnes, up 1.3 percent on the year. Output has risen in recent years as low milk prices prompted farmers to slaughter more dairy cattle and as the country’s growing middle class developed a taste for steak and hamburgers.

Poultry output climbed 0.5 percent to 18.97 million tonnes in 2017, while lamb production was up 1.8 percent at 4.68 million tonnes, the data showed.