Wednesday February 12 Ag News

NC Introduces Stepped-Up Basis at NCBA Convention

Nebraska Cattlemen introduced the following Stepped-Up Basis resolution during the Tax and Credit Committee at the 2020 Cattle Industry Convention on Thursday, February 5th. The resolution was voted on and passed by the committee at that time.

WHEREAS, NCBA’s agricultural producers have been working for generations with the hope that their heirs or other designated beneficiaries will carry on their agricultural operations, and

WHEREAS, stepped-up basis is a critical tool to meet producers’ unique needs for protecting assets for future generations, and

WHEREAS, discontinuing this practice has the potential to create undue tax liability for the heirs or other designated beneficiaries,

THEREFORE BE IT RESOLVED, NCBA supports preservation of stepped-up basis for assets in any future tax relief legislation.

“Carrying on the legacy of our predecessors and those that come after us is an important aspect of our industry. It is hard enough to get started or take over the operation from another generation, undue tax liabilities should not be a deciding factor for our heirs.” – Ken Herz, NC President.

Friday afternoon the National Cattlemen’s Beef Association (NCBA) board of directors approved this resolution into policy for the organization. NCBA uses these policies and resolutions as a guide to fight for cattlemen and women’s rights in Washington D.C.



Deadline to Apply for Natural Resources Conservation Funds Approaching

Farmers and ranchers interested in preventing erosion, improving soil health, conserving water and wildlife, or making any other natural resource conservation improvements to their property are encouraged to apply now for funding available from the USDA Natural Resources Conservation Service. Those interested in receiving funding should sign up before March. 13, 2020.

According to Craig Derickson, state conservationist for NRCS in Nebraska, there are several options available to producers.

“NRCS has a whole suite of conservation programs available to farmers and ranchers looking for assistance in improving and protecting the natural resources on their ag land. These programs provide funding on cropland and rangeland, as well as for animal feeding operations and establishing or enhancing wildlife habitat and wetlands. NRCS staff can help landowners and operators identify their options,” Derickson said.

One of the most widely applied conservation programs in Nebraska is the Environmental Quality Incentives Program. The goal of EQIP is to provide a financial incentive to encourage landowners to install conservation practices that protect natural resources, resulting in cleaner air and water, healthy soil and more wildlife habitat.

Individuals interested in entering into an EQIP agreement may apply at any time, but the ranking of applications on hand to be considered for funding in 2020 will begin March. 13, 2020. The first step is to visit your local NRCS field office and complete an application.

For more information about the Environmental Quality Incentives Program and other conservation programs, visit your local NRCS field office.



GOVERNOR’S AG CONFERENCE ADDS SPEAKERS TO MARCH 9-10 PROGRAM

Today, Nebraska Department of Agriculture (NDA) Director Steve Wellman announced the addition of speakers to an already outstanding program at the Governor’s Ag Conference, March 9-10, in Kearney. These new speakers have knowledge and experience in emerging markets and international trade. In addition to these topics, the Governor’s Ag Conference gives producers and agri-business leaders in Nebraska an opportunity to discuss how to drive economic growth in the state’s number one industry.

New speakers at the Governor’s Ag Conference include:
- Gregg Doud, Chief Agricultural Negotiator for the Office of the US Trade Representative. Ambassador Doud will provide an update on international trade efforts during the March 10th luncheon.
- Ted Carter, President, University of Nebraska will be the featured speaker at the “Celebrate Nebraska Agriculture” reception on Monday, March 9.
- Annette Wiles, a Nebraska hop and hemp producer will join a panel of speakers discussing new and emerging markets in Nebraska.

“With all of these experts in agriculture discussing a variety of topics, the Governor’s Ag Conference will have something for everyone,” said NDA Director Wellman. “These additional speakers join an already impressive lineup for a conference that’s bound to bring people together for the future of agriculture.”

The Governor's Ag Conference is coordinated by the Nebraska Department of Agriculture and is co-sponsored by Farm Credit Services of America.

This year the conference is at the Holiday Inn and Conference Center in Kearney. A $125 early registration fee covers activities and food for the entire conference. After Feb. 24, the conference registration fee increases from $125 to $145. Registration and additional information is available online at nda.nebraska.gov/gov_ag/, or by calling NDA toll-free at 800-831-0550.



Lindsay Announces Release Of New Zimmatic® Poly Pipe For Its Center Pivot Irrigation Systems

Lindsay Corporation (NYSE: LNN), a leading global manufacturer and distributor of irrigation and infrastructure equipment and technology, today announced the global release of new Zimmatic poly pipe for its center pivot irrigation systems designed for growers who irrigate in corrosive water environments.

Corrosive water, caused by a number of factors ranging from high or low pH to variable mineral content to waste water applications, can weaken and deteriorate standard galvanized pipe, leading to premature failure.

Polyethylene-lined pipe, or "poly pipe," is the leading solution for growers who irrigate in corrosive water environments. Driven by customer-first innovation, Lindsay engineered its new Zimmatic poly pipe to consistently deliver the highest level of performance and structural integrity in the most extreme conditions.

"Customers drive everything we do at Lindsay – and water quality issues continue to be an increasingly prevalent challenge for growers around the world.  While several different options to handle corrosive water have existed in the market for years, growers told us there was a real need to have a better solution," said Wade Sikkink, director of global product management at Lindsay. "So, we looked at this old problem with a fresh approach and reengineered an entirely new solution about which we are extremely excited and, even more importantly, that our customers are telling us is an absolute gamechanger for them."

Other poly pipe offerings in the market rely on poly flanges for structural integrity, but poly flanges create a gap between the steel flanges at the joint and can compress over time, resulting in leaks. The new Zimmatic poly pipe features a recessed poly flange that allows for positive steel flange contact and eliminates the gap between flanges at joints, resulting in improved strength and span consistency. It is the same span joint design used for existing Zimmatic galvanized pipe, but with the added protection of the poly liner through the span pipe to provide an unmatched level of quality and rigidity.

To address the poly expansion and contraction challenges that cause the poly liner to move within the pipe, potentially leading to cracks and leaks, Lindsay introduced two additional new design innovations.  First, the liner is forced through the steel flange openings during formation for positive flange retention.  Further, a proprietary new pressure reversion manufacturing process greatly increases the friction between the poly liner and the steel pipeline to further reduce any lateral movement caused by temperature fluctuations inside the pipe. This unique process also reduces the lateral stress on the pipe outlets, which can cause leaking.

To produce this new solution, Lindsay is investing in a new facility at the company's primary pivot manufacturing plant in Lindsay, Neb. This new facility will house the highly automated, proprietary production tooling necessary to deliver exceptional quality and consistency.

"The advantages of the new Zimmatic poly pipe come from several manufacturing and design characteristics," said Rick Provaznik, vice president of engineering at Lindsay. "This product is the result of a significant, ongoing investment by Lindsay in meeting customer needs. We've refined our product, we've refined our manufacturing process, and we're producing the most reliable, highest‑quality poly pipe on the market."

The new poly pipe is available worldwide, and Zimmatic dealers are now accepting orders.



Southwest Iowa Renewable Energy Honored with RFA’s 2020 Industry Award
   
The Renewable Fuels Association presented Southwest Iowa Renewable Energy (SIRE) with the 2020 Industry Award today at the 25th annual National Ethanol Conference.

RFA’s Industry Award is presented annually to a member company that has provided a unique contribution to the industry’s success through technological, marketplace, or advocacy excellence.

SIRE is being recognized this year for their critical role in hosting the President of the United States along with multiple cabinet officials, federal, state and local officials and national news media for a tour of their facilities and a celebration of new regulations permitting summertime sales of E15. The event convened industry leaders and policymakers, providing an opportunity for the Trump Administration to hear first-hand accounts of the positive impact that expanding the use of E15 would have, as well as accounts of the damage being done to the renewable fuels industry by the unprecedented number of small refiner exemptions to the Renewable Fuel Standard.

Cooper noted the importance of SIRE’s leadership in getting the ethanol industry’s message to political leadership in a year that presented the ethanol industry with a challenging and politically charged environment.

“SIRE did not just provide a tour of the facility and tell them how ethanol is made,” said Cooper. “They engaged these officials in a frank and honest dialogue about the devastating impact of small refiner waivers, the need to restore the integrity of the RFS, and the potential benefits of moving toward a high-octane low carbon future. The hard work that the men and women of SIRE put into this unforeseen leadership role is paying off—and we salute them for their strong effort.”

In addition to the E15 celebration and facility tour, SIRE hosted an April news conference on refinery waivers with Iowa Agriculture Secretary Mike Naig and others, and a bipartisan press conference in August with Congresswoman Cindy Axne to call for a federal investigation into the EPA’s Renewable Fuel Standard waiver process. The press conference featured speakers including SIRE CEO Mike Jerke, Iowa State Senator Tom Shipley, Iowa Soybean Association Board Member Jeff Jorgenson, and the CEO of Quad County Corn Processors Delayne D. Johnson. SIRE also hosted a roundtable discussion on issues facing rural America with U.S. Senator and Democratic presidential candidate Amy Klobuchar and Rep. Axne in October.

SIRE is a state of the art dry-mill grain processing facility that produces over 130 million gallons of fuel grade ethanol per year along with over 365,000 tons of dried distillers grains annually and approximately 90,000 pounds per day of corn oil. The facility consumes more than 44.6 million bushels of corn feedstock annually, grain that originates from a large portion of southwest Iowa and several counties in southeast Nebraska.



U.S. Pork Exports Set Both Value and Volume Records in 2019

U.S. pork exports finished 2019 on a high note, setting new records for both value and volume, according to statistics released by the U.S. Department of Agriculture (USDA) and compiled by the U.S. Meat Export Federation (USMEF). For the year, 5.89 billion pounds of U.S. pork and pork variety meats valued at $6.952 billion were exported to countries around the world, up 10% and 9% respectively from 2018.

Pork exports accounted for 26.9% of total 2019 U.S. pork production. Export value per head averaged $53.51, up 4% from 2018.

“China was the main driver for the record-breaking pace of U.S. pork exports in 2019,” said David Newman, a pig farmer representing Arkansas and president of the National Pork Board. “We are poised to help fill China’s protein gap caused by the country’s African swine fever (ASF) outbreak. But we’re also focused on recapturing lost market share with key customers and investing in research to develop emerging markets.” 

While exports to China were higher in 2019, key U.S. pork customers, including Japan (No. 1 in value) and Mexico (No. 1 in volume), saw significant declines as the United States worked to negotiate new trade deals with each country. 

Japan has historically been the leading market for U.S. pork in terms of value, as well as the leading destination for U.S. chilled (never frozen) pork loins. In 2019, the U.S. held 46% of Japan’s market for chilled pork, down from 70% in 2017, according to Norman Bessac, vice president of international marketing.

“With Japan as the most important U.S. market, the Pork Checkoff has brought key stakeholders and thought leaders together on a task force to lead marketing efforts there,” Bessac said. “The Checkoff investment in the task force and subsequent programs, promotions and educational events will help build Japan’s confidence in U.S. pork and allow exporters to recapture lost market share.”

Mexico remains the top market for U.S. pork by volume, with over 1.56 billion pounds of pork and pork variety meat exported in 2019.

“The majority of pork and pork variety meat exported to Mexico is bone-in hams,” said Bessac. “This is a great market, but there’s an opportunity to expand the product mix and to add value for U.S. pig farmers.”

Recently, the Pork Checkoff secured grant funds through the Foreign Ag Service Quality Samples Program and the Emerging Markets Program to help customers in Mexico develop new uses for pork loins. A new task force will provide insight to the Checkoff and USMEF as they use the grant and other programs to diversify U.S. pork exports to Mexico.

Building on the success of the Pork Checkoff report, Pork 2040: China Market Assessment, a new research and market study focusing on the ASEAN region, specifically Vietnam and the Philippines, will be conducted and released this year.

“The Pork Checkoff is committed to adding value for pork producers,” Newman said. “Aggressive marketing strategies in both developed and emerging markets will position U.S. pork to do just that.”



Weekly Ethanol Production for 2/7/2020

According to EIA data analyzed by the Renewable Fuels Association for the week ending Feb. 7, ethanol production dropped 4.4%, or 48,000 barrels per day (b/d), to 1.033 million b/d—equivalent to 43.39 million gallons daily. The four-week average ethanol production rate declined 1.4% to 1.048 million b/d, equivalent to an annualized rate of 16.07 billion gallons.

Ethanol stocks expanded by 3.8% to 24.4 million barrels, the highest since July. Inventories shifted higher across all PADDs.

There were zero imports of ethanol recorded for the fourth consecutive week. (Weekly export data for ethanol is not reported simultaneously; the latest export data is as of December 2019.)

The volume of gasoline supplied to the U.S. market scaled back by 2.4% to 8.722 million b/d (366.32 million gallons per day, or 133.71 bg annualized). Refiner/blender net inputs of ethanol followed, settling 1.7% to 873,000 b/d—equivalent to 13.38 bg annualized.

Expressed as a percentage of daily gasoline demand, daily ethanol production decreased to 11.84%.



Most Fertilizer Prices Continue to Move Lower

The majority of retail fertilizer prices continued their months-long trend of moving lower the first week of February 2020. However, for the first in quite some time, three fertilizers were slightly higher compared to the previous month, according to sellers surveyed by DTN.

Only one fertilizer had a significant price decline from last month: DAP was 5% lower and had an average price of $413 per ton.

Four other fertilizers had a slight price decline from the previous month. MAP had an average price of $435/ton, potash $373/ton, 10-34-0 $464/ton and UAN28 $235/ton.

The remaining three fertilizers had minor price increases compared to last month. Urea had an average price of $361/ton, anhydrous $490/ton and UAN32 $277/ton.

On a price per pound of nitrogen basis, the average urea price was at $0.39/lb.N, anhydrous $0.30/lb.N, UAN28 $0.42/lb.N and UAN32 $0.43/lb.N.

Retail fertilizers are now all lower in price from a year ago. MAP and DAP are both now 19% lower, anhydrous is 18% less expensive, both UAN28 and UAN32 are 13% lower, urea is 12% less expensive, potash is 3% lower and 10-34-0 is 1% less expensive from last year at this time.



Cattle Cycle
Brenda Boetel, Professor, Dept of Ag Econ, University of Wisconsin-River Falls

The semi-annual Cattle report was release on January 31, 2020. The report showed what many analysts had already been saying; the total number of cattle and calves in the USA was at 94.4 million head, slightly down from January 2019's number of 94.8 million head. This number indicates that the industry has entered into the liquidation phase of the cattle cycle. But what does that mean for cattle markets?

Cattle cycles have different phases: a liquidation phases, where cattle numbers decrease, and an expansion phase, where cattle numbers increase. This most recent cattle cycle began expansion in 2015, following 7 years of contraction. The previous cycle had 8 years of contraction.

Beef production cycles lag the cattle numbers because in order to contract the herd, more cattle must be harvested and to the grow the herd, cattle must be kept back as replacements. Price cycles typically work opposite cattle cycles, in that when cattle numbers are increasing, cattle prices are decreasing.

Given that we are in the liquidation phase of the cycle, we could expect an increasing trend in cattle prices, over the next few years. The liquidation phase begins after beef supply increased enough such that the decrease in beef price triggers a decrease in the cattle numbers. Given the high slaughter numbers at the start of the liquidation phase we typically see a further dip in prices. At the beginning of the liquidation phase, packers typically hold the greatest amount of leverage. As the cycle progresses through liquidation different segments will hold greater amounts of leverage until we get to the expansion phase. At the start of the expansion phase, the cow/calf producer typically holds the greatest leverage.

As we move through the increased slaughter numbers the overall decrease in cattle numbers will bring cyclically higher prices, but that won't occur until 2021 at the earliest. The lower calf crop will likely bring higher calf prices relative to 2019 in fall 2020.



Tyson: Pork to China Up 600%

Tyson Foods Inc. says it's just starting to see the benefits of the African swine fever outbreak in China, which includes a 600% year-over-year increase in pork orders to China in the fiscal first quarter.

The meat producer says it is moving toward a ractopamine-free hog supply, which should open additional markets for its pork products. Ractopamine is a feed additive that is banned in many countries.

"In fact, global demand for all proteins is increasing as African swine fever continues to reduce pork supplies in Asia," said Noel White, chief executive officer, on the company's earnings call last week.

Tyson also anticipates double the demand for chicken in China.



USGC International Staff Members Talk Global Grain Demand Drivers At Tampa Member Meeting

Global markets for U.S. grains are interconnected and affected by diverse drivers of demand including relationships with major grain users, ever-changing weather and trade policy.

U.S. Grains Council (USGC) members are meeting in Tampa, Fla., this week at the organization’s 17th International Marketing Conference and 60th Annual Membership Meeting to better understand how the Council’s network of global staff anticipate and respond to these factors in more than 50 countries around the world.

After a grueling year that included an ongoing trade war with China, unprecedented weather challenges and a flurry of trade deals with key customers, more than 350 attendees heard the latest developments and predictions from three experts on those topics to anticipate and plan for this year’s season: Ambassador Craig Allen, president of the U.S.-China Business Council; Eric Snodgrass, principal atmospheric scientist at Nutrien Ag Solutions; and Ken Levinson, executive director of the Washington International Trade Association.

“We want stable, long-term buyers in China,” said Ambassador Allen in his opening remarks about the ongoing and developing relationship with one of the United States’ biggest trading partners. “Nothing else is acceptable and we will work to that end.”

Snodgrass spoke to the power of Mother Nature’s long-term weather and climate issues, saying the Corn Belt is getting consistently wetter and farmers will need better tools to manage increased precipitation.

Levinson spoke to the dynamics driving agreements with major partners – China, Mexico, Canada and Japan – and the potential for new measures to gain new market access.

The morning culminated with selected USGC staff members from overseas offices reacting to how these drivers are interconnected and have impacts on trade in the markets in which they work.

Ryan LeGrand, USGC president and CEO, moderated the session of international directors including Alejandra Danielson-Castillo, director in South Asia; Tommy Hamamoto, director in Japan; Marri Tejada, director for the Western Hemisphere; and Manuel Sanchez, director for Southeast Asia.

From a tariff rate quota in Brazil to a new free trade agreement partner – Japan – and potential free trade agreement partner, Vietnam, each director spoke about positive developments in their own countries and regions in addition to how China, weather in the U.S. and trade agreement movements are impacting how they develop markets for U.S. grains, enable trade and improve lives in these places.

“Our expert country and regional directors and their staff members around the world tackle these very challenges every day to expand markets for U.S. grains,” said LeGrand. “They allow us to be successful for the corn, sorghum and barley sector producers who make up our membership.”

“It’s important for our members to hear from these experts as they will move into their Advisory Team meetings to formulate recommendations for moving trade forward in 2020,” said USGC Chairman Darren Armstrong, a farmer from North Carolina. “We appreciate the feedback and input, as well as the strategies provided by our directors scattered around the world working in our markets every day. They send back critical information to us on specific developments so the Council may remain nimble in addressing them.”

Loaded with information from both the morning’s expert speakers and the knowledge provided by the Council’s overseas directors, attendees headed into the first of three in-depth Advisory Team (A-Team) meetings, during which Council members help identify opportunities, set priorities and chart the course for the organization in the coming year.

In the next few days, attendees will continue A-Team meetings reviewing the Council’s Unified Export Strategy (UES) and will recognize members and USGC staff for their years of service before ending the week with a Board of Delegates meeting.