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Corn, Soybeans to Have Higher PLC Yield

By Todd Neeley
DTN Staff Reporter

OMAHA (DTN) — Changes to Price Loss Coverage, or PLC, in the 2018 farm bill could result in higher federal payouts on the crop insurance program, according to a new analysis from Farmdoc at the University of Illinois.

In particular, the new farm bill allows for a one-time option to update payment yields.

“Of 21 program commodities, only corn, soybeans, upland cotton, and, especially sorghum have a U.S. national PLC yield that is higher with the 2018 than the 2014 farm bill update formula,” the Farmdoc analysis said. (https://farmdocdaily.illinois.edu/…)

Not only did an update in the PLC formula account for the change, but Farmdoc said there were a number of “yield-affecting” events during the update periods of 2013 to 2017 and 2008 to 2012.

As a result, the analysis said at the U.S. market level, corn, soybeans, upland cotton and sorghum have higher 2018 than 2014 PLC update yields.

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Livestock & Poultry Outlook

By Emily Unglesbee
DTN Staff Reporter

ARLINGTON, Va. (DTN) — U.S. meat production continued to climb to record levels in 2018 and that trend will continue in 2019.

Total red meat and poultry production grew 2% to a record 102.4 billion pounds last year, and USDA expects these categories to increase by 2% again in 2019, to reach a new record of 104.7 billion pounds. These projections were released early Friday in USDA’s outlook for livestock and poultry, at the agency’s annual Agricultural Outlook Forum in Arlington, Virginia.

This steady rise in production kept cattle, hog and turkey prices lower last year, as well as broiler prices, which rose briefly in the first half of the year before dropping in the second half. USDA expects prices for cattle and turkey to rise in 2019, but hog and broiler prices are forecast to drop lower. Exports for 2019 are expected to increase for all the major commodities, but pork growth may be held back by ongoing trade disputes.

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Tariffs Slow Export Projections

By Jerry Hagstrom
DTN Political Correspondent

SAN DIEGO (DTN) — So many farmers are dependent on off-farm income in today’s economy that lenders say the worst threat to farmers is a general economic recession, the chief economist for the American Farm Bureau Federation said here Tuesday.

“Farm lenders say the reason why we can continue to do what we are doing is off-farm income,” Farm Bureau Chief Economist John Newton said during a panel discussion by agricultural economists at the Crop Insurance Industry Convention here.

“It is off-farm income that allows folks to continue to farm. Lenders are really concerned about a slowdown in the U.S. economy,” added Newton as he presented statistics on the decline in farm income since 2013.

The general U.S. economy is performing well, Newton said, but he is worried because consumer confidence and the CEO confidence index have both fallen.

Newton said USDA statistics show that in 2018, gross farm income was $435 billion and production expenses totaled $369 billion, resulting in net farm income of $66.3 billion, which was down $57 billion, or 47%, since 2013.

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Ag Outlook Comes Into Focus

By Chris Clayton
DTN Ag Policy Editor

ARLINGTON, Va. (DTN) — As USDA opens its annual Agricultural Outlook Forum, a mix of reports show steady land values holding up against lower farm income and a poor long-term outlook.

In a forecast released last week, USDA sees net cash income for agriculture remaining relatively flat over the next decade as expenses steadily rise and income for crops and livestock fails to keep pace. The Minneapolis Federal Reserve highlighted farmers’ economic stress in an update last week, suggesting more farm operations are at risk of “throwing in the towel.”

USDA Chief Economist Robert Johansson will detail the crop production and livestock outlook for 2019 on Thursday. Agriculture Secretary Sonny Perdue, along with the agriculture ministers of Canada and Mexico, will then hold a joint session to likely tout the prospects of the U.S.-Mexico-Canada Agreement.

The export opportunities for some crops look stunted at the moment.

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Best Young Farmers/Ranchers-5

By Dan Miller
Progressive Farmer Senior Editor

Bobby Morris heads out early on hot and humid Louisiana summer mornings to inspect his sugarcane fields. You can hear the cane growing, he says, more than an inch per day as its sword-shaped leaves rise toward 14 feet.

Morris Farms Partnership tends 3,200 acres of sugarcane in soils from heavy clays to sand, much of it within a baseball throw of Port Allen, one of Louisiana’s huge Mississippi River levees. Sugarcane is this state’s No. 1 crop and has been tended for more than 200 years. It grows today on 400,000 acres in 22 parishes and spins off $2 billion a year to cane growers and raw sugar factories.

ONE FARM, ONE CROP

If there is cushion gained from harvesting multiple crops, Morris Farms thrives or dies on decisions made about managing this single crop.

Morris’s farm’s acreage has doubled twice. “Each time we acquired more acreage, drainage, grass pressure and yields were all well below our standards,” he says.

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Stamp Farms Co-Defendants Sentenced

By Todd Neeley
DTN Staff Reporter

OMAHA (DTN) — Two of three men indicted on 14 counts of conspiracy to commit bank fraud and making false statements to attain loans and crop insurance for Decatur, Michigan-based Stamp Farms LLC, have been sentenced to prison time. They have been ordered to pay hundreds of thousands of dollars in restitution as a result of reaching plea agreements.

According to court documents filed in the U.S. District Court for the District of Western Michigan, James Leonard Becraft, Jr. pleaded guilty to conspiracy to make false statements on crop insurance forms. On Feb. 12, he was sentenced to a year in prison, a two-year supervised release and ordered to pay $648,188 in restitution to the Risk Management Agency in Kansas City, Missouri.

Douglas Edward Diekman pleaded guilty to conspiracy to make false statements on crop insurance forms. On Dec. 20, 2018, Diekman was sentenced to 13 months in prison, a two-year supervised release and ordered to pay $488,432 in restitution — $409,403 to RMA and $79,029 to the Farm Service Agency in Kansas City.

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Sulfur Fertilizers: One Vital Nutrient

By Russ Quinn
DTN Staff Reporter

OMAHA (DTN) — It’s well known that crops need the proper amounts of nitrogen (N), phosphorus (P) and potassium (K) to produce healthy plants and top yields.

Less known, but nearly as important, is sulfur (S). Plants not only need sulfur but also require it in the right form for plant availability. Research has also shown that season-long availability is vital for most crops.

The Sulphur Institute (TSI) (https://www.sulphurinstitute.org/…) refers to S as the fourth major plant nutrient. It has some key functions, including the formation of chlorophyll, which permits photosynthesis, the production of protein and the synthesis of oils.

Any crop can have a positive response to S, but corn, wheat, soybeans, alfalfa and cotton are the most common recipients. Canola is another crop that has higher S requirements, according to TSI.

Atmospheric deposition, the organic matter of the soil and previous applications are the most common sources of S, according to Ross Bender, senior agronomist for The Mosaic Company.

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Crop Insurance Update

By Jerry Hagstrom
DTN Political Correspondent

SAN DIEGO (DTN) — Martin Barbre, the administrator of the Agriculture Department’s Risk Management Agency, told the crop insurance industry on Monday that agents can discuss crop insurance for hemp with farmers who are growing it, but must tell them there is no coverage at the present time.

“If someone is growing industrial hemp, the agent can talk to them, but at present, there is no coverage for hemp. We are working on it. It takes time; there is an entire process we have got to go through,” Barbre said at the meeting of crop insurance companies, reinsurers and agents.

At the urging of Senate Majority Leader Mitch McConnell, R-Ky., the 2018 farm bill removed hemp from the list of controlled drugs and said the Agriculture Department could help growers in a variety of ways, including developing crop insurance for the product.

Industrial hemp is in the same cannabis family as marijuana, but has a concentration of no more than 0.3% tetrahydrocannabinol (THC), and people cannot get high from it.

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Best Young Farmers/Ranchers-4

By Dan Miller
Progressive Farmer Senior Editor

The legend of American agriculture has been one of farmers turning west for new ground — always west. Mark Lange looked east.

His land, near O’Neill, Nebraska, lay at the edge of the state’s Sandhills region. His crops were irrigated by an aquifer in decline. The state already had imposed water restrictions in other counties. Lange was convinced water regulation was coming his way. When that day came, there was no doubt his land value would take a hit. It was time to pick up his stakes and move. He did. Lange found better soils in Iowa.

He was able to sell his 1,500 acres and buy a similar number in west-central Iowa. After the 2012 harvest, the Langes packed up their entire operation and moved to Bagley, Iowa. “For the future of our farm, we thought we should move to a state where we weren’t so reliant on irrigation,” says Joel Lange, Mark’s oldest son.

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Taking in the Scope of Mato Grosso

By Chris Clayton
DTN Ag Policy Editor

OMAHA (DTN) — Tom Schwieterman, who grows 750 acres of corn and soybeans near Burkettsville, Ohio, said he had heard about the size of Brazilian soybean farms for years, but didn’t understand it.

“You can look in any direction and see wide-open land and planted crops,” Schwieterman said. “At home, every place you look you see a house, a barn, a silo. Out there, you just saw wide-open spaces. It’s just baffling to see something that huge. It’s actually bigger than I thought it would be.”

DTN joined a tour of U.S. farmers through parts of Amazonia, Mato Grosso and Parana states in Brazil during the first two weeks in February. Farmers touring Mato Grosso and Parana repeatedly noted their soybean yields were lower than expected, but they had shifted to their second crop, which was either cotton or corn.

After a week touring around the state of Mato Grosso, Brazil, Schwieterman and other Midwest farmers said their eyes were opened to the scale of production, state of technology and the value of U.S.

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Barn to Roam

By Joel Reichenberger
Progressive Farmer Senior Editor

There’s so much more now than there was — more people, more traffic, more buildings — but Glenn Arnold, 84 years old, stands on a ridge above his family’s old homestead in Steamboat Springs, Colorado, and can only focus on what is gone.

“On the corner, that’s where our house was,” he said on a cool afternoon in autumn, pointing to the edge of a nearly empty parking lot. “There was a small stone building that was a milk house and a couple of cowsheds.”

There was a granary, a corral, two chicken coops, and a barn, a towering wooden structure with a green-painted tin roof. It was his family’s pride when it was completed in 1928, built by his father, Walter Arnold.

Now, there’s a ski resort less than a mile from where the Arnolds’ old front door opened, and the spot is surrounded by condos, vacation homes and skier parking.

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WOTUS 60-Day Public Comment Begins

By Todd Neeley
DTN Staff Reporter

OMAHA (DTN) — The 60-day public comment period for the newly proposed waters of the United States, or WOTUS, rule launched Thursday with the EPA and U.S. Army Corps of Engineers publishing the rule in the Federal Register.

The new rule moves forward while the 2015 rule under the Obama administration remains in legal limbo and essentially in effect in 22 states.

EPA and the Army Corps are on track to finalize the new rule by September, which is likely to trigger a new round of legal challenges.

The publication of the new rule already has drawn praise and outrage from a number of interest groups. The public comment period closes April 15.

In a statement to DTN, American Farm Bureau Federation President Zippy Duvall said the group supports the proposal.

“Today’s release of a new draft Clean Water Rule is a major step toward fair and understandable water regulation on America’s farms and ranches and other working lands,” Duvall said.

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The Market’s Fine Print

By John Harrington
DTN Livestock Analyst

Beauty is in the eye of the beholder.

This ancient proverb may not exactly be the key to wealth and fame, but who among us has not found it to be the perfect ticket in avoiding unnecessary controversy and tension. To all but the most stubborn defenders of absolutes, it’s an invaluable tool of cooperation and peaceful disagreement.

Nothing like it shrinks the distance between, say, Van Gogh’s “Starry Night” and a paint-by-number portrait of an angry clown on black velvet. Or, for that matter, helps to mitigate conflicting preferences between royal wedding protocol on one hand and a free pasta buffet at the Elvis Chapel on the other.

As strange as it may sound, I owe these thoughts on the relative nature of “beauty” to the harsh winter reality of the polar vortex and a rather foolish drive through Nebraska’s Platte Valley in late January.

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USDA to EPA: What About Plan B on E15?

By Todd Neeley
DTN Staff Reporter

ORLANDO (DTN) — As the EPA races the clock to complete a rule allowing year-round E15 sales ahead of the summer driving season, if the rule isn’t done by June 1, the agency may have to resort to a plan B, USDA’s second in command told reporters on Wednesday.

Following a speech to the ethanol industry at the National Ethanol Conference in Orlando, Florida, USDA Deputy Secretary Stephen Censky said his agency had approached EPA and suggested that, if the rule isn’t completed in time, EPA could use discretion in restricting E15 use come June 1.

“We really do need — and again EPA is still working hard and is very committed to getting a final rule in place and having that announced so that can be in place for the summer driving season to allow year-round sales of E15 — but in the event that they aren’t, I know that’s one of the things of using enforcement discretion or announcing that the EPA is not going to be forcing folks [to stop selling E15 in several states, and] that the retailers are not in danger of having enforcement actions taken against them,” Censky said.

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Kub’s Den

By Elaine Kub
DTN Contributing Analyst

“There are only 8 cents of carry out to the May futures contract; how am I supposed to go to my banker and justify putting up new grain bins just to get another 8 cents per bushel? That math doesn’t work out!”

This question came up at a recent market outlook meeting, and the economic instincts behind the questioner’s details were spot on. He was considering funding a project with borrowed money based on the returns offered to him in the current market environment. He was looking at the actual carry in the futures spreads, which can be locked in as real income, instead of looking at some unreliable expectation that grain prices “might” tend to be higher in the spring than they were at harvest when the grain went in a bin.

However, I would encourage anyone considering the construction of new grain storage facilities in 2019 (and I imagine there are many such people, after the scramble to store both corn and soybeans in late 2018) to base their decisions on longer-term expectations.

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Analyst: Worst is Behind Ethanol

By Todd Neeley
DTN Staff Reporter

ORLANDO (DTN) — Ethanol margins continue to be depressed at the start of 2019, as evidenced by the losses DTN’s hypothetical ethanol plant continues to experience.

The ethanol industry as a whole is looking and waiting for any kind of good market news.

Pavel Molchanov, senior vice president and equity research analyst for Raymond James and Associates, said during the National Ethanol Conference in Orlando on Tuesday that not only is the worst behind the industry, but there is reason for optimism.

“The good news is that, all over the world, there is more and more implementation of renewable fuel standards,” he said. “Let’s not lose sight of the fact that there are well over 30 jurisdictions that have a fuel standard. They’re not going to be able to get there without ethanol from you. There’s not enough ethanol that could possibly be produced in China.”

In addition, Molchanov said there are new emerging export markets in Mexico and Ukraine, coming off a record 1.6-billion-gallon export year by the ethanol industry in the United States.

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Mato Grosso’s Bumpy Ride

By Chris Clayton
DTN Ag Policy Editor

TANGARA, Brazil (DTN) — A tour bus full of Americans bounces like a carnival ride traveling downhill, coming off a plateau on a narrow clay, unsurfaced and seemingly unmaintained road in the middle of a steady downpour while maneuvering around semi-trucks likely loaded with soybeans going the opposite direction.

It’s just another afternoon during harvest in Mato Grosso in Brazil.

Mato Grosso has some farming advantages, such as its vast acreage — the state is the size of Illinois, Indiana, Iowa, Minnesota, Nebraska and Ohio combined (with room to squeeze in Delaware and Rhode Island). Also, Mato Grosso farmers can grow soybeans in the rainy season, then plant a summer crop like corn, cotton or sunflowers.

Agriculture, after all, makes up 75% of the economy of Mato Grosso.

Nevertheless, the Achilles heel in Mato Grosso is infrastructure for all those crops and livestock. And, for all its size, Mato Grosso lacks people and overall tax base with a population of just 3.4 million, of which more than 600,000 live in and around the city of Cuiaba.

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Todd’s Take

By Todd Hultman
DTN Lead Analyst

Much of last week in DTN’s newsroom was spent preparing for USDA’s reports on Friday. Ever since USDA closed the lockup room in Washington, D.C., last year, World Agricultural Supply and Demand Estimates (WASDE) report day has taken on an extra layer of anxiety as a whole village of staff plans and works behind the scenes to make sure we all hum in unison to get USDA’s new estimates out as quickly and accurately as possible.

We’ve all seen hectic portrayals of newsrooms in the movies with people yelling and reporters running through the office to make deadlines. WASDE report day at DTN is actually much different. There is an eerie quiet when the clock strikes 11:00 a.m. Every second waiting for data to show up feels like a minute, and when the numbers do appear, a nervous chatter of cross-checking begins.

Coming off of a five-week government shutdown, Friday had plenty of new estimates to examine, ranging from U.S.

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Mato Grosso Cotton Planting Up

By Chris Clayton
DTN Ag Policy Editor

CUIABA, Brazil (DTN) — While corn remains the major safrinha crop for Brazilian farmers, more cotton acreage is being planted in Mato Grosso this spring, as well.

Over the past two years, cotton planting has increased by nearly one-third for the safrinha (second crop) in Mato Grosso. The Institute for Mato Grosso Economics of Agriculture (IMEA) forecasts Mato Grosso farmers will plant 1.1 million hectares (2.71 million acres) of cotton this spring. The Brazilian Association of Cotton Producers (Abrapa) forecast cotton acreage to grow to 1.4 million hectares (3.46 million acres). Mato Grosso accounts for about 88% of Brazil’s cotton production.

China is the top market for Brazilian cotton, and a 25% tariff on U.S. cotton creates expectation that continued trade disruption between the U.S. and China will be to Brazil’s advantage.

Still, corn acreage in Mato Grosso is projected to remain steady at 4.7 million hectares (11.6 million acres).

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Worrying About Weeds

By Emily Unglesbee
DTN Staff Reporter

NEW ORLEANS (DTN) — “We have to do better.”

That was the challenge issued from Scott Senseman, a weed scientist and the 2018 president of the Weed Science Society of America (WSSA), to the hundreds of weed scientists and members of the ag industry gathered in New Orleans this week for the group’s annual meeting.

For the past two days, rain and wind has occasionally battered the windows of the hotel where the scientists are meeting, a fitting backdrop for the stormy issues they are tackling, from an epidemic of herbicide-resistant weeds to the public’s growing concerns about chemical use.

But Senseman is optimistic. Out of the 500 people at the meeting, more than 100 are graduate students.

“We need you to come up with new technologies,” Senseman told these rising young scientists. “We need your youth and your creativity and your energy to get these things done.”

Many are already delivering.

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