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 DTN Market News


US Direct Feeder Pigs 07/03


DTN Midday Grain Comments 07/18 11:44

DTN Midday Grain Comments 07/18 11:44 Grains Mixed at Midday Mixed midday trade is seen with the market giving back some light early gains. By David Fiala DTN Contributing Analyst General Comments The U.S. stock market indices are mixed with the Dow futures up 85. The interest rate products are firmer. The dollar index is 5 points higher. Energies are mostly firmer with crude up $0.30. Livestock trade is mixed with cattle higher and hogs lower. Precious metals are slightly lower with gold down $1. CORN Corn trade is flat to a penny higher at midday after trading 3 cents higher early in the morning session. On the chart it appears the market is trying to move through nearby resistance, but is taking its time. Outside markets are neutral at midday, and weather is fairly benign. Cooler weather looks to hang around the next couple weeks with mixed moisture potential with a growing focus on early August weather with the advanced state of the crop. Ethanol board margins remain positive but have narrowed with firmer corn and weaker energy trade. Corn basis has been flat to firmer for the most part. On the September chart futures are around the 10-day at $3.47, with the 20-day at $3.53 chart resistance. Support is the fresh low of $3.37 1/4 scored last week which is also the level of the lower Bollinger Band. SOYBEANS Soybean trade is mixed at midday after some higher overnight and early-day session strength with soybeans continuing to try to work higher after reversing on Monday. Meal is mixed and bean oil is 20 to 30 points higher. Brazil remains at a stout premium to U.S. origin, which is compounded by the ongoing logistics issues with Brazil with premiums around $2.05, which almost equals the tariffs placed by China. Bean basis has remained steady with processors taking the lead with crush margins remaining exceptionally strong. The daily export wire has remained quiet. Weather should not be a major driver near term for soybeans due to limited stressful forecasts but with pod fill starting beans could be more active based upon any forecast changes. On the August chart the 10-day at $8.42 is again the first level of resistance which we were we are trading this morning with further support the lower Bollinger Band at 8.13 with the next level resistance the 20-day at 8.58. WHEAT Wheat trade is 1 lower to 4 cents higher at midday with trade working to consolidate the attempt at an uptrend we are seeing since the report last week. Harvest pressure should start to fade as it winds down for the winter wheat. Spring wheat should see good progress with Canada with drier weather showing up again for some. Russian harvest continues to move along as well with yields remaining below last year's levels as they get into spring wheat harvest. HRW basis has remains solid through harvest with the better protein with offered premiums declining. On the September KC is just above the 20-day at $4.90 and the 10-day at $4.93 overnight with the 200-day at 5.11 the next level of resistance. David Fiala is a DTN contributing analyst and the President of FuturesOne and a registered adviser. He can be reached at dfiala@futuresone.com Follow him on Twitter @davidfiala (BAS) Copyright 2018 DTN/The Progressive Farmer. All rights reserved.

DTN Midday Livestock Comments 07/18 12:04

DTN Midday Livestock Comments 07/18 12:04 Active Buying Moves Into Cattle Futures Sharp buyer support has quickly developed early Wednesday morning. This has helped to bring about even more buyer support through the entire cattle complex. Lean hog trade remains under light to moderate pressure, following the recent trend lower. By Rick Kment DTN Analyst GENERAL COMMENTS: Strong market support is seen across all cattle trade with nearby contracts holding $2 per cwt gains in live cattle futures and spot feeder cattle futures trading over $3 per cwt higher. The overall support in the complex is becoming well-rooted, with prices moving to summer highs. Corn prices are higher in light trade Tuesday. July corn futures are 3/4 cent higher. Stock markets are higher in light trade. The Dow Jones is 81 points higher while Nasdaq is up 2 points. LIVE CATTLE: Live cattle futures have aggressively moved back into the complex with August futures surging $2.20 per cwt higher and moving prices to $108.62 per cwt at midday. This has moved through short term resistance levels, with prices in the August contract trading at the highest levels since March. There is growing support that overall supply levels may continue to be tight through the fall and winter months, given the current and expected demand for beef projected by many market watchers. Cash cattle bids have started to develop through the morning, but bids are still well below asking prices. Given the support in futures trade, it is unlikely that feedlot managers will pull the trigger quickly without some movement from packers. Bids are seen at $107 to $108 live and $172 to $173 dressed. This is well below asking prices that are holding at $114 and higher live and $180 to $183 dressed. It may easily be Friday before active sales are reported. The Fed Cattle Exchange Auction today listed a total of 428 head all for Kansas, with 142 actually sold at $112.00, 109 head were marked as unsold, and 177 head marked as PO (Passed Offer of $111.00) All cattle listed were set for a 1-9 day delivery. Boxed Beef cut-outs at midday are higher, $0.28 Higher (select) and up $0.26 per cwt (choice) with light movement of 89 total loads reported (57 loads of choice cuts, 15 loads of select cuts, 4 loads of trimmings, 14 loads of ground beef). FEEDER CATTLE: Sharp triple-digit gains have flooded into feeder cattle trade. This is moving additional buyer support back into the complex, with traders looking for the ability to add increased market support to the entire complex. August futures are leading the complex higher with a $3.17 per cwt rally. The ability to move live cattle futures above $108 per cwt in front-month futures is helping to solidify buyer interest which just a week ago seemed to be uncertain about stepping back into the complex. LEAN HOGS: Limited pressure is seen in lean hog futures trade Wednesday. But the overall weaker tone in the market continues to hold with nearby contracts setting new contract lows and giving every indication that buyer support may be hard to find in the near future. August futures have eroded 30 cents per cwt, moving to $67.90 per cwt as traders focus on current supply levels and the uncertainty of demand growth for both short- and long-term market activity. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $1.39 at $70.59 per cwt with the range from $70.00 to $73.00 on 5,376 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is down $1.09 at $70.97 per cwt with the range from $70.00 to $73.00 on 2,639 head reported sold. The National Pork Plant Report posted 226 loads selling with carcass values falling $1.74 per cwt. Lean hog index for 7/16 is at $79.69 down 0.65 with a projected two-day index of $79.15, down 0.54. Rick Kment can be reached at rick.kment@dtn.com (SK) Copyright 2018 DTN/The Progressive Farmer. All rights reserved.

DTN Closing Grain Comments 07/18 13:49

DTN Closing Grain Comments 07/18 13:49 Grains Coast to Mixed Closes After two days of active trading, the grain sector took a break Wednesday and settled near Tuesday's closes on light volume. Corn and soybeans were a little higher while all three wheats ended lower. By Todd Hultman DTN Analyst

DTN Chart Technical Points 07/18 16:30

DTN Chart Technical Points 07/18 16:30 DTN FUTURES 10 7/18/18 SLOW STOCHASTIC PRICES ARE DECIMAL MOVING AVERAGES RSI'S 5 Day 20 Day CONTRACT CLOSE 4-Day 9-Day 18-Day 45-Day 9Day 14Day 30Day %K %D %K %D CBTWT SEP 494.50 494.44 494.36 493.17 514.41 48.91 47.66 47.71 64 57 42 28 CBTWT DEC 510.75 509.88 510.69 509.43 533.34 48.56 47.02 47.07 60 53 37 24 KC WT SEP 487.75 488.69 491.53 488.28 523.66 45.82 44.46 44.93 53 47 27 22 KC WT DEC 513.00 513.31 515.44 511.75 547.48 46.58 44.82 45.03 54 48 29 23 MN WT SEP 528.00 530.31 535.67 539.11 580.91 36.17 34.95 36.41 35 28 10 11 MN WT DEC 546.25 548.13 553.39 556.31 594.54 36.47 35.29 36.62 34 28 10 12 CORN SEP 347.25 344.13 347.14 352.13 376.65 42.56 39.40 38.90 56 39 19 13 CORN DEC 361.00 357.69 360.44 364.72 388.17 43.87 40.48 39.64 59 41 21 15 CORN MAR 372.75 369.56 371.97 375.46 397.77 44.80 41.27 40.18 61 43 23 15 OATS SEP 234.00 233.50 235.75 236.83 241.87 42.62 43.13 44.82 42 39 35 38 OATS DEC 240.25 238.88 239.92 240.13 245.57 49.56 47.73 46.47 49 47 40 39 BEANS AUG 842.25 832.50 842.86 854.60 932.76 40.74 36.06 34.59 60 38 17 12 BEANS SEP 848.00 838.19 848.33 860.14 937.49 40.91 36.24 34.73 60 37 17 12 BEANS NOV 857.75 848.25 858.72 870.54 945.99 40.75 36.37 35.07 60 38 17 12 S MEAL AUG 328.20 328.10 330.44 330.83 350.51 40.11 37.43 38.39 40 30 26 26 S MEAL SEP 327.00 327.20 330.01 330.60 350.50 38.50 36.40 37.82 37 28 16 17 B OIL AUG 28.07 27.85 28.33 28.67 29.92 36.18 34.42 35.39 22 18 14 20 B OIL SEP 28.17 27.96 28.43 28.78 30.05 35.60 33.91 35.12 23 19 13 18 CATTLE AUG 108.95 106.71 105.96 105.43 104.01 67.60 62.97 56.81 86 70 70 61 CATTLE OCT 110.65 108.79 108.34 108.34 106.95 64.38 60.17 55.12 85 66 57 52 FEEDER AUG 154.45 152.21 151.64 150.39 147.01 66.48 63.60 58.79 78 70 78 74 FEEDER SEP 154.65 152.47 151.82 150.64 147.39 68.58 65.12 59.58 82 74 77 72 HOGS AUG 67.20 68.61 70.18 72.72 75.27 25.46 30.52 37.17 8 15 8 8 HOGS OCT 51.92 53.36 54.21 57.26 60.90 27.73 29.62 33.83 24 33 13 11 COTTON OCT 88.83 88.95 87.78 86.34 87.87 58.16 55.45 54.77 78 82 71 50 COTTON DEC 88.08 88.01 86.82 85.34 86.82 59.69 56.66 55.86 74 77 69 50 RICE SEP 11.82 11.97 11.96 11.61 11.30 57.58 58.19 54.47 66 70 91 91 RICE NOV 11.67 11.80 11.82 11.50 11.33 55.77 56.22 52.93 63 68 91 92

DTN Closing Livestock Comment 07/18 17:32

DTN Closing Livestock Comment 07/18 17:32 Bullish Traders Slam Cattle Futures Triple Digits Higher Live and feeder contracts closed sharply higher thanks to aggressive short-covering, technical-buying and cash premiums. Lean hog issues settled on a mixed basis with nearbys generally losing ground to deferreds. By John Harrington DTN Livestock Analyst GENERAL COMMENTS Aside from a smattering of cash bids (i.e., $107-$108 in the South and $172-$173 in the North), the cash cattle trade remained at a standstill. According to the closing report, the national hog base is $1.36 lower compared with the Prior Day settlement ($67-$73, weighted average $70.62). Corn futures settled about a penny plus higher in slow market conditions. The stock market closed 79 points higher in the Dow and fractionally lower basis the Nasdaq.

DTN Early Word Grains 07/19 05:56

DTN Early Word Grains 07/19 05:56 Grains Mostly Lower, Gold Falls to New Lows December corn was down 1/4 cent, November soybeans were down 4 1/4 cents, and September Kansas City (HRW) wheat was unchanged. By Todd Hultman DTN Analyst 6:00 a.m. CME Globex: December corn was down 1/4 cent, November soybeans were down 4 1/4 cents, and September Kansas City (HRW) wheat was unchanged. CME Globex Recap: Global stock markets are mostly lower early Thursday with ongoing trade disputes still seen as a threat to world growth in 2018 and interest rates expected to go higher. Most commodities are also lower early Thursday with gold trading at new lows. OUTSIDE MARKETS: Previous closes on Wednesday showed the Dow Jones Industrial Average up 79.40 points at 25,199.29 and the S&P 500 up 6.07 points at 2,815.62 while the 10-year Treasury yield ended at 2.87%. Early Wednesday, DJIA futures were down 42 points. Asian markets are lower with Japan's Nikkei 225 down 29.51 (-0.1%) and China's Shanghai Composite down 14.71 (-0.5%). European markets are mostly lower with London's FTSE 100 up 15.95 points (0.2%), Germany's DAX down 33.07 points (-0.3%), and France's CAC 40 down 17.39 points (-0.3%). The euro was down .0049 and the U.S. dollar index was up 0.37 at 95.46. September 30-year T-Bonds were down 8/32nds while August gold was down $11.40 at $1,216.30 and August crude oil was down $0.82 at $67.94. Soybeans on China's Dalian Exchange were steady to lower and Malaysian palm oil futures were down 0.3%.

DTN Early Word Opening Livestock 07/19 06:57

DTN Early Word Opening Livestock 07/19 06:57 Thursday's Action Follows New Highs In August Cattle Expect lean hog contracts to begin in a mixed basis thanks to a residual of selling on one hand and short covering on the other. The cattle complex is likely to stay firm after the August futures broke to a new three-month high on Wednesday. By Todd Hultman DTN Analyst Cattle: Steady Futures Hogs: Steady-$1 Lower Futures * based on formula estimating live cattle equivalent of gross packer revenue ** based on formula estimating lean hog equivalent of gross packer revenue GENERAL COMMENTS: We may see cash cattle trade Thursday after getting a bullish nudge from the futures market Wednesday, but so far, bids and current asking prices are far apart with offers around 114.00-115.00 in the South, and 180.00-183.00 in the North. Wednesday's slaughter of 119,000 was up 2,000 from a year ago. This week, cattle are also looking at several days of stressful conditions in the southwestern Plains with daytime temperatures at triple digits and early morning temperatures still in the mid-80s.

DTN Cattle Prices/Trends 07/19 08:15

DTN CATTLE PRICES/TRENDS 07/19 08:15 HEAD SOLD LIVE STEERS DRESSED LIVE HEIFERS DRESSED KANSAS . . . . . NEBRASKA . *108.00(BID) *173.00(BID) *108.00(BID) *173.00(BID) TEXAS . *108.00(BID) . *108.00(BID) . COLORADO . . . . . IOWA . . . . . *PRIVATE SOURCES DTN COMMENTS: Just a few bids have been renewed this morning, but they continue to be far from current asking prices of around 114.00-115.00 in the South, and 180.00 plus in the North. Significant trade volume will likely be delayed until later this afternoon and/or Friday. Beef cutouts are expected to be higher, with light to moderate box movement. NOTE: Feedlots are encouraged to call DTN with any cattle sales, at 1-800-369-7675, 1-402-399-6402, or 1-402-462-8897. All sales will be listed anonymously and organized by state. All live sales are FOB and set for 1-9 day delivery. General trends and summaries from this data will also be posted on the Daily Sales Reported to DTN page.


 DTN Headline News


Trade Complicates Ag Economy

By Katie Dehlinger
DTN Farm Business Editor

KANSAS CITY, Mo. (DTN) -- Kansas City Federal Reserve president Esther George, a sixth-generation farmer, remembers the 1980s, and comparatively speaking, the economic situation doesn't look all that bad.

There's been a lot of farm consolidation, but banks have been minding their underwriting standards carefully.

"That said, I don't want to underestimate the stress that I think exists today or could come," she told an audience of farmers and bankers at the Federal Reserve Bank of Kansas City's annual agricultural symposium.

As a member of the Federal Open Markets Committee, George said she supports the Fed's shift from accommodative monetary policy to a more neutral stance through gradual increases in the Fed Funds Rate. While that will help keep the overall economy in check, she acknowledged it could cause pain in some parts of farm country.

"This does not help when you have marginal borrowers or borrowers that are struggling," she said. "It doesn't help with, perhaps, young farmers that incurred a lot of debt for the purchase of land or equipment. And so, there are pockets of stress as we look around. I don't think anything is at the point that we think is alarming at this stage, but the question is: How much longer will we experience this continuation of low commodity prices, low farm incomes?"

Agriculture's role in a global economy -- the symposium's theme -- is increasingly uncertain amid renegotiation of the North American Free Trade Agreement, the U.S.'s steel and aluminum tariffs based on controversial national security rationale and tit-for-tat tariffs with China over intellectual property concerns.

"You hear all the time that there are no winners in trade wars, only casualties, and I think it's also the case that trade wars aren't easy to win because of that," said Joe Glauber, a senior research fellow at the International Food Policy Research Institute and former chief economist for the USDA. "Every time you say, 'I'll punish them, I'll show them. I'm going to raise tariffs,' someone on your side is also being hurt by that. And I think that's particularly difficult when you launch a trade war on multiple fronts."

Several panelists at the symposium from Canada and Mexico said they expect a renegotiated NAFTA agreement will be finalized before U.S. elections, but there are still difficult issues to resolve, like automobiles, dispute settlement and a sunset clause.

Glauber said U.S.'s trade dispute with China could have concerning consequences in the long run. In 1973, the U.S. imposed an embargo on soybean sales that only lasted a few weeks, but it was enough to encourage Japan to begin buying soybeans from Brazil and the European Union to institute new supports for oilseeds, policies the U.S. later challenged at the WTO.

Brazilian soybean prices are $60 per metric ton higher than in the U.S., Glauber said. "If these differentials continue, Brazil producers will have strong incentives to plant more beans, and take most, if not all, market expansion expected over the next few years. I think this is the real serious thing."

U.S. producers could receive some price protection in the short term through revenue insurance since spring price guarantees were set before the trade disruptions caused significant declines in prices. However, if trade uncertainty continues into next year, all bets are off.

Since the trade battles began, President Donald Trump has said farmers would not be hurt. Agriculture Secretary Sonny Perdue has said an aid package for farmers could be proposed sometime early this fall, after prices for fall crops are better known. While there's talk of helping farmers through USDA's Section 32 programs to buy surplus commodities and the Commodity Credit Corporation, it's a concept Glauber struggles with.

"I think while some want to be sympathetic to farmers as pawns in a trade war, I fear this diminishes the cost of such actions and creates a moral hazard, if you will, for policy makers," Glauber said. "These are painful decisions, and it's one thing to start spreading a lot of money around, but where do you stop? Do you stop with farmers? Do you stop with consumers? Do you go with other producers? That list could get really long in a hurry."

He said such assistance would disguise the long-term costs of trade disruptions, even though farm incomes and profitability would still suffer. And there's a bigger risk: Farm profitability is one of the key factors underlying and supporting farmland values. After five years of falling farm incomes, Glauber said he's surprised farmland values have been so resilient.

"I would have thought with the softness in prices that you would see that come down. I think good farmland still captures really good prices," he said. The debt situation is much different than in the 1980s farm crisis, and interest rates, while on the rise, remain low from a historical perspective. "One of the bigger questions I've had is what happens when interest rates go up? Do you start to see softness in land?"

Many bankers at the symposium found the confluence of trade disputes and higher interest rates concerning.

"If this persists, it does worry me," Glauber said.

Katie Dehlinger can be reached at Katie.dehlinger@dtn.com

Follow Katie Dehlinger on Twitter @KatieD_DTN


USDA's Not So Equal Access

By Chris Clayton
DTN Ag Policy Editor

OMAHA (DTN) -- When USDA announced changes in its crop reports last week, Agriculture Secretary Sonny Perdue boasted that modern technology ensured everyone had equal access and a level playing field when it comes to tapping USDA's major market reports.

Yet, earlier this year, Perdue said poor internet access is one of the worst problems in rural America.

DTN has been asking more questions about what drove the decision to eliminate us and several other news agencies from early access to major crop reports such as the monthly World Agricultural Supply and Demand Estimates. DTN also has been questioning the market benefits by taking away early reporter access.

DTN is one of a handful of news services that have attended the lockup for more than a decade to provide thousands of market-driven customers the latest world supply and demand estimates in a swift, readable format once USDA allows news outlets to transmit that data.

Everybody, according to USDA's new plan, will just go to USDA's website at 12:00 p.m. Eastern Time and download key market reports such as the monthly World Agricultural Supply and Demand Estimates (WASDE).

"Everyone who has interest in the USDA reports should have the same access as anyone else," Perdue said about the change in crop report procedures. "Modern technology and current trading tactics have made microseconds a factor. This change addresses the 'head start' of a few microseconds that can amount to a market advantage. The new procedures will level the playing field and make the issuance of the reports fair to everyone involved."

Last January, USDA and Secretary Perdue released the results of a Trump administration study, the "Interagency Task Force on Agriculture and Rural Prosperity." Perdue said at the time the lack of rural broadband is the "one overarching challenge that we must overcome to ensure rural prosperity." The task force's first recommendation was to expand e-connectivity in rural and tribal areas.

The issue of bad internet access in rural America was effectively dismissed by USDA leaders who believe that everyone will have "equal access" to crop reports at 12:00 p.m. ET on report days.

According to a Federal Communications Commission report on broadband earlier this year, 30.75% of Americans in rural America and 35.4% in tribal lands lack access to broadband internet, defined as 25 Mbps. That compares to 2.1% of Americans in urban areas. Dozens of U.S. senators and some trade associations have argued the FCC is actually low-balling just how poor internet access is in rural America.

USDA made its change in report access for the Aug. 10 WASDE and Crop Production reports because of what USDA officials point to as a two-second volume of trade that happens right at noon Eastern when the crop report is released. That's become part-and-parcel of the high-frequency trading game, and USDA offered no explanation how exactly that would change by sending everyone to a USDA server at 12 p.m. Eastern to get the crop report.

Last week, the November soybean contract at 11:59 a.m. EDT had 222 contracts trades. At exactly noon EDT, the volume spiked to 3,140 contracts traded with a 10-cent price spread that ranged from $8.42 1/2 to $8.52 1/2. Over the next 20 minutes, the range of contracts moving fluctuated from a few hundred to nearly 2,000 contracts before prices settled. By 12:30 p.m. EDT, trading had settled down to a few hundred contracts and the price settled at $8.46.


USDA, questioned about the new report policy, told DTN, "Evidence suggests that clients of news agencies receive faster access to USDA data than the public." The inference is that without the headlines and keywords that early access by media creates, high-frequency trading and the profits made from it will end.

The Congressional Research Service says high-frequency traders employ a range of tactics that may have nothing to do with actual numbers in a crop report. In an April 2016 report on high-frequency trading, the non-partisan CRS highlighted aggressive trading strategies meant to generate profits on spreads and rapid trades. Those included "order anticipation" and "momentum ignition" strategies. The CRS report noted, "In fact, corn, the largest grain futures market, averaged more than five such events per year over the last five years," according to comments by former CFTC Chairman Timothy Massad. At the time, Massad noted these increased flash events would continue in commodities.

Joseph Janzen, a professor of agricultural economics at Montana State University, said it's unclear whether high-frequency traders are moving based on rapid headlines or if some simply start momentum strategies in the milliseconds following report release time to quickly move the market the way they want. There hasn't been enough study done on high-frequency traders to understand motivations at these firms, Janzen said.

He added that there are a growing number of firms focused on high-frequency trades. These companies are trying to make money on fractions of pennies instantaneously on the market.

"For anyone who has some sort of automated or algorithmic trading system where they are essentially letting a computer trade based on some instructions, how USDA puts out the report is meaningless," Janzen said. "It doesn't matter."

Janzen added, "I see sort of the motivation that one way to access the report is the most fair, but some traders will have a speed advantage. We know that and there are guys who will have made the investment to get a speed advantage. That will always be the case."


USDA maintains that it is improving its ability to provide the information to the public, handle the increase in load volume on its website, and keep the data secure. But USDA officials gave no details on what they've done to stress-test their system, nor when that work was completed.

While high-frequency traders will change their game, more than 4,000-plus local grain elevators and thousands more brokers, farmers and livestock producers are going to be searching for that WASDE data on USDA's website while often relying on internet service that Secretary Perdue says isn't good enough for the modern world.

Angie Setzer, known on Twitter as @GoddessofGrain, lives in Iowa but works for a Michigan grain company. Setzer typically gets her WASDE information directly off USDA's website after seeing early flash data come across Twitter just after the report is released. She then attempts to pull the actual report off USDA's website. Setzer has a problem downloading that data off USDA's website "just about every time I do it."

"I would say nine times out of 10 I'm not able to access the actual website info for a couple of minutes, at least," Setzer said. "It's almost a guarantee I'm not going to get it right away. Twitter is actually faster than using their website."

"You already see the market react prior to the report coming out. Now it will be even further because everyone will be trying to access it," she said.

Chris Clayton can be reached at Chris.Clayton@dtn.com


Will Regulate Lab Meat?

By Chris Clayton
DTN Ag Policy Editor

COLLEGE PARK, Md. (DTN) -- In the debate over which agency should take the lead in regulating cell-cultured proteins -- or meats -- the Food and Drug Administration on Thursday laid out its long history overseeing cell cultures for products ranging from pharmaceuticals to yogurt.

FDA and USDA share duties on food inspection with FDA overseeing as much as 80% of food products, but USDA's Food Safety and Inspection Service is taking charge of traditional meat products such as beef, pork and poultry. The advent of cell-cultured meat has created a regulatory turf battle as cell-cultured companies want FDA in charge while traditional livestock groups want USDA in charge.

Opening up Thursday's hearing, FDA Commissioner Scott Gottlieb alluded to the notion that agricultural technology has outpaced regulators' understanding of the science.

"Innovation in American agricultural production dwarfs the technology progress in almost any industry," Gottlieb said. He added that cell-cultured food will be making its way to retail shelves in the near future.

Gottlieb also noted that the risks of cell-cultured meat products differ from traditionally harvested meat products.

Susan Mayne, director of food safety and applied nutrition at FDA, said FDA already has been working with the cell-cultured meat industry for several years as these startup firms start prepping for regulatory approval and market access.

"These are still early days, but make no mistake, FDA has been preparing for this for quite some time," Mayne said. "This is not our first rodeo, so to speak. We have multiple authorities and programs that can support efforts to bring products with new ingredients in the market."

These start-up meat companies, working primarily right now on beef and chicken products, made it clear in the hearing that they see FDA as the appropriate agency for this work.

Meanwhile, traditional livestock groups have a different take. Just before Thursday's hearing, the National Pork Producers Council characterized the FDA's move as "regulatory land grab." NPPC called on USDA "to assert its proper oversight on two emerging issues critical to the future of animal agriculture: laboratory-produced cultured protein and gene editing in livestock production."

Livestock groups are concerned about the emerging cell-cultured industry, which is already receiving venture capital money from traditional meatpackers, taking market share away from livestock producers over time as the price of cell-cultured meat eventually comes down to a competitive price level with meats from animal-raised livestock.

While FDA hosted the daylong event offering various players in the meat industry as panelists or for public comment, USDA officials did not publicly participate.

DTN Political Correspondent Jerry Hagstrom also obtained a letter from House agriculture leaders to White House Director of Management and Budget Mick Mulvaney, complaining that FDA was moving forward with the meeting with no USDA involvement, even though the White House Domestic Policy Council held a meeting with the two agencies to discuss the regulation of cell-based foods.

A USDA spokesman replied to DTN, "As these new products begin to emerge in the marketplace, we look forward to working with the FDA and the public to tackle these issues." The USDA spokesman added, "We have nothing further to add."

At the hearing, Paul Mozdziak, a poultry science professor at North Carolina State University, pointed out that animal enzymes are already used to make vaccines, noting this is a "very routine cell culture." Still, Mozdziak said the issues with converting cells to marketable meat products come downstream after the actual lab meat is produced.

"Once you get cells down, how are they going to be able to treat downstream and how are they going to treat the final integrity of the product?" the professor said. "In the post-harvest, there is the opportunity to contaminate all the way through to packaging."

Eric Schulze, the vice president of product for Memphis Meats, said that his company had designed its production to conform with FDA's approach, including identifying and managing potential differences between its products and existing meat products. Memphis Meats uses the cells to grow meat in a lab without animals, yet at the moment, Memphis Meats has not begun to market its products.

Rhonda Miller, a Texas A&M meat scientist who is also a former president of the American Meat Scientist Association, stressed there are still many questions about food safety as the cell-based meat is harvested and becomes available for human consumption.

DTN was unable to remain for the entire hearing, but interviews this week with representatives from livestock groups highlighted the FDA-USDA turf battle.

"This is building up to be a turf battle between USDA and FDA over who has regulatory authority over cell-cultured meats," said Danielle Beck, director of government affairs at the National Cattlemen's Beef Association. "It is starting to be a little bit concerning, I think, from our perspective, or a lot bit concerning," Beck said.

NCBA supports USDA's Food Safety and Inspection Service (FSIS) taking the lead on regulating cell-cultured meats and sees USDA as having authority over such products based on law.

"At the end of the day, regardless of the production method, any product that is compositionally meat, or a meat food product or a meat byproduct as designed through the CFR (Code of Federal Regulations) under the Meat Inspection Act, all fall under the same jurisdiction which is USDA FSIS," Beck said.

NCBA's take, representing cattle producers, is that FDA is considering some of the right risk-based issues, "but, ultimately, they are putting the cart before the horse because the question that first needs to be addressed is jurisdiction," Beck said.

Lobbyists told DTN that FDA had gotten approval from the Department of Justice citing that FDA had oversight on the issue of cell-cultured meats.

However, Jennifer Corbett Dooren, a senior adviser in FDA's press office, said in an email, "Our response is that it is mischaracterization of what was discussed at a stakeholder meeting earlier this year." She did not respond to a request to relay what was said at the meeting.

FDA sees the broad definition of food giving them the authority to claim the primary position of regulation and moving forward on this.

"Legally, we don't believe your justification is there," Beck said. "We believe USDA FSIS is the best agency out there equipped to regulate these products from a safety perspective, but also from the labeling perspective because of the mandatory labeling pre-approval process. That is a powerful regulatory tool that FDA just doesn't have. At the end of the day there needs to be fair, accurate product labels for any product out there regardless of the enforcement method."

Beck said FDA has not responded to labeling demands, pointing to a push in the dairy industry going back 18 years to get FDA to enforce accurate labeling for imitation milk products, such as almond and soy products.

By and large, even the sellers of cell-cultured meat said they believe USDA is the best venue to regulate their products.

Still, lobbyists who had worked with USDA on the oversight of cell-cultured meats said USDA staff "were just as surprised as we were about the FDA hearing." There's a notion that FDA staff "literally stole" USDA's plans for a public comment period and guidance moving forward.

Then there is the prospect that farm bill conferees could also add a provision in the farm bill conference report to provide a clear statement on who should have oversight.

Lia Biondo, a spokesperson for the U.S. Cattlemen's Association, said USCA "is working the congressional angle pretty hard, but, yeah, there is definitely an opportunity in the farm bill to provide some clarification over who has jurisdiction."

USCA also filed a petition earlier this year seeking clear labeling that would require sellers of cell-cultured proteins not to use the words "meat" or "beef" on their products. The state of Missouri also has approved a law that makes similar requirements. Right now, USCA is waiting for USDA to respond to the petition.

"We have got to find a way to get out ahead of this and provide some clear rules for how they will management these products," Biondo said.

DTN Political Correspondent Jerry Hagstrom contributed to this report.

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN


Cash Market Moves

By Mary Kennedy
DTN Cash Grains Analyst

In late 2015, Congress extended the deadline for positive train control implementation by at least three years to Dec. 31, 2018, with a possible extension to Dec. 31, 2020, if a railroad completed certain statutory requirements necessary to obtain an extension, according to the Federal Railroad Administration (FRA). The legislation, the Positive Train Control Enforcement and Implementation Act of 2015, required all railroads to submit a revised PTC Implementation Plan (PTCIP) by Jan. 27, 2016, outlining when and how the railroad would have a system fully installed and activated.

The U.S. Department of Transportation (DOT) released a letter on Jan. 2, 2018, from Secretary of Transportation Elaine L. Chao to all the nation's Class I railroads, intercity passenger railroads and state and local transit authorities, stressing the urgency and importance of safely implementing positive train control (PTC) systems in the upcoming year to meet the Dec. 31, 2018, deadline, as mandated by Congress.

"Advancing the implementation of PTC is among the most important rail safety initiatives on the Department's agenda," Secretary Chao said in the letter. "FRA leadership has been directed to work with your organization's leadership to help create an increased level of urgency to underscore the imperative of meeting existing expectations for rolling out this critical rail-safety technology."

U.S. Sen. John Thune, R-S.D., chairman of the Senate Committee on Commerce, Science and Transportation, convened a hearing titled, "Implementation of Positive Train Control" on March 1, 2018. "Railroad passengers expect railroads to follow safety laws and implement the necessary technology to do so, including PTC," said Thune. "After troubling reports that some commuter railroads are falling behind on implementation, this hearing will examine what needs to get done and what railroads need to do to meet their obligations."

Here is a link to the testimonies at the hearing:


BNSF Railway Company (BNSF) announced in December 2017 that it had fully installed PTC and was operating under PTC on all mandated subdivisions well ahead of the year-end deadline. However, in mid-June, they submitted a request to the DOT for a two-year extension of the PTC deadline, due to the FRA current interpretation of the law that full implementation status cannot be achieved until all non-BNSF trains and/or equipment operating on its PTC-equipped lines are also PTC compliant, according to a BNSF press release.

"BNSF has succeeded in the adoption of this key safety technology. Even with this request for a deadline extension, BNSF's PTC network is installed and we are currently running, and will continue to run, more than a thousand trains daily with PTC as we continue to refine the system and resolve technological challenges," said Chris Matthews, BNSF assistant vice president, Network Control Systems.

However, to be considered fully implemented requires that all other railroads operating across any of BNSF's PTC-equipped lines must be capable of operating with BNSF's PTC system, noted the press release. "This interoperability of PTC systems between Class I, commuter and short-line rail carriers remains a challenge," said BNSF. "While the BNSF has successfully demonstrated interoperability with several railroads that operate on its network, including commuter railroads and Amtrak, not all railroads that operate on BNSF will have completed their PTC installation by the end of 2018."

Union Pacific (UP) has stated on their website that, at the end of 2018, PTC will be 100% installed on UP's required rail lines, and implemented on 75% of the required lines.

"When we filed our revised implementation plan in 2016, the goal was full PTC implementation on all required lines by the end of 2018. However, as we implemented this complex suite of technologies across our network, the largest one in the U.S., unanticipated operational issues developed," UP stated on their website.

"As permitted by Federal statute, UP intends to file with the FRA an alternative schedule for implementing PTC on the remaining segments as soon as practicable, but no later than the end of 2020. We will meet all criteria necessary for an alternative schedule, including full network installation and implementation on the majority of required lines, by the end of 2018.

"UP remains committed to PTC. The alternative schedule provides flexibility to problem solve issues that arise, so that this critical safety system is implemented correctly. PTC will be installed and implemented for all passenger use on UP's required lines by the end of 2018."

The Association of American Railroads (AAR) stated on their website that Class I railroads that meet the 2018 installation deadline can obtain an additional 24 months to test and ensure the system is fully interoperable.

"It is not enough to get PTC to operate across a single railroad's footprint; it must be interoperable. Interoperability means that the system works with any PTC-equipped locomotive running on any of the railroad tracks through the United States where PTC is required," noted AAR. "While some railroads will be fully implemented by the end of 2018, others will continue to test and will be fully interoperable no later than the 2020 deadline."

Here is a link to the background on Positive Train Control Enforcement and Implementation Act of 2015:


Here is a link to an article posted by Association of American Railroads on Complexities and Challenges of PTC


Here is a link to all U.S railroads quarterly reports on PTC implementation progress:


Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow her on Twitter @MaryCKenn


Back In the Fold

By Des Keller
Progressive Farmer Contributing Editor


-- Family returning to the farm need to have defined roles and goals.
-- New management must work toward building loyalty from employees.
-- Embrace technology, such as apps, to track fieldwork and maintenance.


Karen Makamson Edwards remembers clearly the fall day in 2013 when she turned down the drive to her parents' farm and knew her life was going to change forever.

A Mississippi girl turned hair stylist living in Pueblo, Colorado, Karen had never intended to return to the farm after college and styling school. She and husband, Stephen, an attorney, loved where they lived and had started a family.

But, for Karen, there were strong pangs of homesickness when she returned to Morgan City for a visit with 2-year-old McKenzie. Edwards wanted her daughter to get a sense of the farm at harvest, to generate for her the kind of wonderful memories she treasured. And, honestly, she missed those times herself.

"When we turned down the dirt road to home, I knew this time was different," Karen said. "There was a calling for me there. Things were changing, and I knew God wanted me to be a part of the change. The rest is history."

So began the latest phase of a family-farm transition that continues to this day. The Makamsons' experience demonstrates why succession planning can be so difficult -- and traumatic -- for many farm families. Even under the best circumstances, unforeseen events can quickly transform a carefully laid plan into chaos and uncertainty.


Karen's parents can attest to the fact the family business most people envision doesn't resemble the successful one emerging at Garry Makamson Farms.

"I didn't see Karen having a lot of interest in the farm," said Karen's father, Garry, 63. "I was reserved about her being interested because you don't just walk into this business and run it."

"We did not expect her to come back," said Connie Makamson, Karen's mother. "That was a shocker. But, when she said she wanted to, we were excited."

Certainly, it didn't immediately occur to Karen to move back to the farm. For more than two years, she had helped from Colorado. She built the farm's website and did public relations.

In 2011, the Makamson operation became part of FamilyFarms Group, a national financial and management consulting organization of nearly 90 farms. Karen attended the group's annual conferences with her father.

"I was blown away by the women involved in farming I met there -- in other than just a bookkeeping role," Karen said. "In the back of my mind, I thought, 'We'll see where this goes.' "

Then her brother, Steven Makamson, decided to leave the farm in 2013 to pursue his first love -- coaching basketball and teaching. He had been working on the farm since he was 8 years old but rented and farmed his first 150 acres while in college. At the same time, he worked setting up and maintaining the irrigation systems for his father.

Steven then worked on the farm for 2 1/2 years after college, took a break to continue his education and worked for another six years for his father, the last three years performing human resources (HR) duties on the farm. Karen's "calling" found her returning to take on management duties as the farm's director of human resources.

By December 2014, the Edwards family had moved back to Mississippi, but not to Morgan City. Instead, they settled in Jackson, the state's largest city, where Stephen -- son-in-law and attorney -- got a job.


No matter how a succession plan unfolds, it's crucial for everyone to communicate, said Megan Roberts, Extension educator, agricultural business management at the University of Minnesota.

"When it comes to estate and family business succession planning, we immediately think about all the legal and tax aspects," she said. "Ultimately, however, it is the communication that leads to goal setting that is the foundation for any transition."

The communication has to involve determining the role of the newcomer in running the operation. Nobody should receive an owner-manager salary without doing the work, according to Galen Dody, of Dody Legacy Group, a Missouri-based business planning and accounting group.

"You want an adult child coming back to the farm to take on a management role in some area and watch their growth," he said. His firm isn't working with the Makamsons and isn't familiar with their particular situation.

"For children to come back to the farm, we want them to understand that it may require them taking some courses and showing a desire to grow the operation, and create more success for the future," Dody explained. "If that's not the desire, they are just a hired hand."


Karen has moved well beyond any hired-hand stage. Her new routine has her traveling 1 1/2 hours to Morgan City at least twice a week to work on the farm's human resources and the operation's paperwork, and to plot the future of the business.

"The hardest part about working from Jackson is balancing work life and home life," Karen said. "When I'm home, my full-time mommy job doesn't stop. Fortunately, most of what I do can be done via phone, email or scan. The Edwardses have two young children with a third due in August.


As for the official delegation of farm duties, Garry is the CEO and owner. On any given day, he could be doing anything from driving the combine to accounting to buying supplies to crop marketing.

"Dad makes the big decisions," Karen said. "He consults Mom and me to weigh out different opinions and options."

Garry's nephew, Curt Jolly, is the operations manager. He coordinates the daily activities of nine employees, and they answer to him about their immediate work.

"Dad and Curt have been working together for more than 25 years," Karen said. "He knows as much about the operation side as Dad does."


Karen conducts employee performance reviews and keeps employee records up-to-date. She addresses any complaints from or about employees, and created and enforces the farm's employee handbook. She is also the "face" of the farm and works with the Natural Resources Conservation Service, the Farm Service Agency and FamilyFarms Group.

"I learned a lot about HR skills and how to work with people by working with the public in fashion design and as a hairdresser," Karen said. "I also leaned on FamilyFarms Group [for the] technical part of creating an employee handbook, policies, disciplinary actions, etc."

As for the federal agencies, Karen said she's been fortunate to have had local employees "hold my hand and help me learn."

From day to day, how well is it working?

"Karen has helped me change the way we conduct business," Garry said. "We've implemented things that, in the long run, make us better." For example, she formalized how they work on the farm. Employee hours are closely assigned and tracked, so it's clear who is working on what and when.

Karen has also spent more time on the farm's human capital. She lunches -- on the farm's dime -- regularly with workers. Last fall, the Makamsons took employees to a Mississippi State University football game. The entire farm had a month off last winter.

"I give her a ton of credit for doing some things different on the farm," said David Walker, whose Memphis, Tennessee-based Local Seed Co. works with the farm. "Garry has asked me, 'Do you think we're headed in the right direction? Can Karen handle this?' My response has always been, 'Yes.' She's building loyalty from employees."


Walker said he's been impressed with the newsletter Karen produces. "Karen keeps the farm operation in the eye of their landlords, bankers and other professionals," he said. "And, if another landowner visits their accountant or banker in the area, and wants to find a good farm to rent their ground to, this newsletter, in this area, makes them stand out."

Still, Karen is a young woman manager in a business still dominated by men. And, she's doing it at a distance. As is, she's paid a salary and gas for her travel. Karen and her parents have been looking into providing health care as part of employment but "haven't found the right fit yet."

Farm employee Kevin Mueller believes her input to the business has been valuable. "She sees things here with fresh eyes," said Mueller, 28, who has worked on the farm for four years. "She's taking us to another level in terms of using technology. To me, it doesn't matter who the boss is as long as I can get the work done.

"Karen has started us using Trello [a project-planning application] that allows us to use our phones to make notes on something we see in a field -- and this information can be accessed by everyone else," he added. "I can also use it to go back and check when I've changed the oil on a particular tractor, for instance. This app is a real benefit as opposed to having everyone write everything down on paper and share in a group meeting that may be tough to arrange."

She has also used training exercises for HR purposes that can be accessed on employees' phones to watch, for example, a video on the use of a new forklift. "Otherwise, it would be tough to stop everyone on the farm to have a meeting," Mueller adds.

Planning for succession of the business is just getting started. Garry, admittedly, is glad he has Karen handling human resources. That part of the business was not one of his strengths. "If you can conquer HR, that's one of the hardest things on the farm."

The family has been meeting with bankers, lawyers and estate/succession planners on how to make the best transition of the business. Karen and her brother, Steven, who maintains a financial interest in the operation, will eventually split assets (land and equipment) fairly. Whether that will occur through gifting, buyouts, inheritance or a combination of those methods is as yet undetermined.

"My brother and I have always been in agreement that we want the farm to continue, but our ultimate goal is to stay close as a family," she said.

Upon their retirement, Karen will rent land from her parents. "I've been working to build relationships with current landowners that Dad rents from, so I can hopefully continue those leases in the future," she said.

Long term, the plan is for Karen to take over as CEO. "I will make the big decisions with a team under me to help with the day-in, day-out work."


A successful farm transition and succession plan transfer the human, business and financial capital to the next generation. Ideally, the plan would play out during the course of a decade.

"We use a decade as a benchmark," said Megan Roberts, Extension educator, agricultural business management, for the University of Minnesota. "The important thing is that the plans that take place over a reasonable period of time can be more successful."

The players in the process not only include the family members involved but possibly others outside the family. The transition planning should also comprise accountants, lawyers, consultants, extension educators and others.

Following are the main elements involved:

-- Retirement Plan. The needs of the generation retiring -- in terms of income -- often have to be met by the farm business. That income can't, however, endanger the future success of the farm business.

"Retirement income needs are not totally dependent on the farm business operating entity," Roberts said. Farmers may receive income from land rents separate from the operating entity as well as social security, prior savings or money from the sale of assets to the succeeding generation. Retirement planning should also include health-care planning as well as retirees' contribution of labor and where to live, Roberts explains.

-- Transition Plan. What strategies should you use to transfer ownership, management and control of the farm business? Transferring management is an often overlooked or inadequately considered aspect of the plan that leads to the failure of many transitions.

"A buy-sell agreement is needed to eliminate the biggest risks a company and its shareholders face: the unexpected loss of a managing shareholder," said Wes Hentges, of AgriLegacy, a business consulting and accounting firm based in Missouri. Such an agreement provides clear terms for transferring share upon triggering events such as the death, disability, retirement or other voluntary and involuntary departure of a shareholder, he added.

-- Estate Plan. This plan must specify how farm assets will be distributed among the heirs upon the death of the owners. The plan should treat heirs fairly while maximizing the opportunity for the farm business to succeed in the future. Fair treatment doesn't necessarily mean equal treatment. This plan should also minimize any tax burden on heirs.

-- Business Plan. What are the business goals of the farm and the strategies to achieve them? Owners and managers need to critically and honestly evaluate the farm business to determine what direction is best for the future. Many farmers don't take this opportunity to make substantive and needed changes to the farm business. The plan should involve the ability to dissolve components of the business if needed, explained Galen Dody, of Dody Legacy Group.

"Don't put your children in business together unless you give them a way to get out," Dody said. "You need good buy-sell agreements that set the terms of a sale between or by family members."

-- Land-Use Plan. Owners should evaluate current and potential future uses of their farmland. The plan might include a decision on whether to keep the land in agriculture or sell it for development.


USDA Crop Progress

By Anthony Greder
DTN Managing Editor

OMAHA (DTN) -- Good-to-excellent condition ratings for both corn and soybeans declined nationwide last week, according to the USDA National Ag Statistics Service's weekly Crop Progress report released Monday.

NASS estimated that 72% of the nation's corn was in good-to-excellent condition as of Sunday, July 15, down 3 percentage points from 75% the previous week.

"Hot and dry weather increased poor-to-very-poor ratings from Missouri to Texas," said DTN Analyst Todd Hultman. "Michigan is also experiencing dry weather with 20% of their corn crop rated poor or very poor."

Corn development continued to run well ahead of the average pace with NASS estimating that 63% of the crop was silking as of Sunday, 26 percentage points ahead of 37% for both last year and the five-year average.

Soybean condition also declined last week. The crop was rated 69% good to excellent on Sunday, down 2 percentage points from 71% the previous week. Poor-to-very-poor ratings increased in Missouri, Kansas and Michigan.

"Good-to-excellent ratings for both corn and soybeans are not as good as those seen in 2016, but are still significantly higher than a year ago," Hultman said.

Like corn, soybean development was also running well ahead of normal, with NASS estimating 65% of the crop blooming as of Sunday, 20 percentage points ahead of the five-year average of 45%. Twenty-six percent of soybeans were estimated to be setting pods, 15 percentage points ahead of the five-year average pace of 11%.

Meanwhile, NASS estimated that 74% of winter wheat was harvested as of Sunday, equal to last year's pace of 74%, but slightly ahead of the five-year average of 71%.

Spring wheat was 93% headed as of Sunday, ahead of the last year's 89% and also ahead of the five-year average of 85%. The condition of the crop held steady from the previous week at 80% good to excellent. That's still the highest good-to-excellent rating for spring wheat for this time of year since 2010, Hultman noted.

Sorghum was 31% headed, equal to last year and near the five-year average of 32%. Sorghum coloring was 19%, near 20% for both last year and the five-year average. Sorghum condition slipped again from 51% good to excellent the previous week to 47% last week.

Barley was 90% headed as of Sunday, ahead of 87% last year and also ahead of the average pace of 88%. Oats were 96% headed, equal to last year and near the average pace of 95%. Sixteen percent of oats were harvested as of Sunday, ahead of 13% last year and also ahead of the five-year average of 14%.

Rice was 32% headed as of Sunday, near 31% last year and slightly ahead of the average of 29%. Cotton was 72% squaring, ahead of the average of 70%. Thirty-one percent of cotton was setting bolls, also ahead of the average pace of 24%. Cotton condition held steady last week while rice's good-to-excellent rating dropped 3 percentage points.

To view weekly crop progress reports issued by National Ag Statistics Service offices in individual states, visit http://www.nass.usda.gov. Look for the U.S. map in the "Find Data and Reports by" section and choose the state you wish to view in the drop-down menu. Then look for that state's "Crop Progress & Condition" report.

National Crop Progress Summary
This Last Last 5-Year
Week Week Year Avg.
Corn Silking 63 37 37 37
Soybeans Blooming 65 47 49 45
Soybeans Setting Pods 26 11 15 11
Cotton Squaring 72 59 69 70
Cotton Setting Bolls 31 21 25 24
Sorghum Headed 31 25 31 32
Sorghum Coloring 19 17 20 20
Spring Wheat Headed 93 81 89 85
Winter Wheat Harvested 74 63 74 71
Rice Headed 32 21 31 29
Barley Headed 90 78 87 88
Oats Headed 96 91 96 95
Oats Harvested 16 10 13 14


National Crop Condition Summary
(VP=Very Poor; P=Poor; F=Fair; G=Good; E=Excellent)
This Week Last Week Last Year
Corn 3 6 19 51 21 2 5 18 54 21 3 8 25 51 13
Soybeans 2 6 23 53 16 2 5 22 55 16 3 8 28 51 10
Spring Wheat 1 3 16 67 13 1 3 16 66 14 21 20 25 28 6
Sorghum 5 12 36 43 4 4 11 34 46 5 2 6 29 56 7
Cotton 10 18 31 34 7 8 19 32 34 7 1 9 30 46 14
Rice 1 5 25 56 13 1 5 22 59 13 1 4 25 46 24
Oats 4 3 22 58 13 3 3 21 60 13 9 13 27 42 9
Barley 1 2 12 70 15 1 2 12 68 17 8 10 29 43 10

Please send comments to talk@dtn.com


Stamp Farms Co-Defendant Pleads Guilty

By Todd Neeley
DTN Staff Reporter

OMAHA (DTN) -- One 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, has reached a plea agreement, according to court documents filed in the U.S. District Court for the District of Western Michigan.

James Leonard Becraft Jr. agreed to plead guilty to conspiracy to make false statements to the Federal Crop Insurance Corp. A change of plea hearing is set for Aug. 3 in Grand Rapids, Michigan. Jury selection and the trial is set to begin on Jan. 23, 2019.

On Dec. 13, 2017, a grand jury handed down an indictment of Becraft, Michael Stamp and Douglas Edward Diekman in connection with the Stamp Farms Chapter 11 bankruptcy filed in November 2012. The bank found Stamp Farms in noncompliance on loan agreements, including working capital and other ratios. Michael Stamp is the former owner of the farm.

Stamp and Becraft originally pled not guilty in January, according to court records, after being arrested by Internal Revenue Service agents on Jan. 18. According to the indictment, the losses alleged in the fraud total about $60.5 million.

According to the plea agreement, Becraft could face five years in prison, three years of supervised release, and pay about $2.7 million in restitution as well as a $250,000 fine.

In addition, the agreement said Becraft agreed to cooperate with federal authorities on the investigation into Stamp Farms.

"The defendant's cooperation will consist of all steps needed to uncover and prosecute such crimes, including but not limited to, providing investigators with a full, complete and truthful statements concerning the defendant's knowledge of any and all criminal activity of which he is aware," the agreement said.

In return, the U.S. Attorney's office agrees not to oppose Becraft's request for a reduction in the charges. Also, Becraft will not be charged with bank fraud and conspiracy to commit bank fraud.


According to court documents in Stamp's individual bankruptcy case, Wells Fargo claimed it had made a $68 million loan in December 2011 based on representations that Stamp Farms and its affiliates farmed 46,000 acres. Audits later could uncover only about 27,000 acres, the bank claimed.

Stamp Farms' assets eventually were auctioned off to Dennis Boersen, the owner of Zeeland, Michigan-based Boersen Farms. Boersen Farms has also faced financial difficulties.

The indictment said Stamp rapidly increased the number of acres the company farmed by acquiring agricultural land leases from landowners in southwest Michigan, "often by paying above-market rates."

Over the years, Stamp relied on "large" operating loans and credit agreements. In addition, the indictment said Stamp used crop insurance payments to pay for some of his operation, including covering lease payments.

Starting in 2011, Stamp needed money to keep his farm going and to pay off an outstanding loan. Between March and December, Stamp provided false information to obtain about $68 million in credit from Wells Fargo by misrepresenting the amount of land he farmed and the value of his farming assets, the grand jury said.

According to the indictment, when the bank extended his credit, Stamp continued to provide false information about his operation. In addition, Stamp submitted false claims to the Federal Crop Insurance Corporation in order to get crop insurance payments.

Stamp conspired with Becraft and Diekman, in particular, to "defraud the Federal Crop Insurance Corporation and its reinsurers," the indictment said.


In June 2015, Stamp's wife, Melissa Stamp, was sentenced to 20 months in jail and 20 months of supervised release, and was also required to pay $184,500 in restitution and had to forfeit $151,915 as part of a plea agreement with federal authorities for her role in bankruptcy fraud.

According to a news release from the U.S. Department of Justice, at the time of her guilty plea, Melissa Stamp admitted to giving $75,000 to her brother and about $90,000 to her father to conceal the money from a bankruptcy case that was filed one month later by her husband. She also admitted to concealing $50,000 in a safe in her home, according to DOJ, but none of the money was disclosed to the bankruptcy court.

The farm and its related businesses at the time of the bankruptcy claimed assets valued at $131 million and a net worth of $39 million. An audit found those assets dwindled to about $93 million in a matter of months.

The case left southwestern Michigan landowners and creditors jolted by what legal experts believe was, at the time, the largest grain farm bankruptcy in U.S. history. Top Producer magazine had featured the farm and Michael Stamp on the November 2012 cover as one of the publication's top producers of the year -- the same month Stamp filed for bankruptcy.

Stamp owned a number of related businesses that were part of the farm bankruptcy case. They include a custom farming operation, a trucking business, an excavating operation and a grain elevator, Northstar Grain LLC, which has a reported 4.2 million bushels of grain capacity.

While southwest Michigan was hit hard by drought in 2012, it is unclear what actually led to Stamp Farms' downfall in what was an era of booming commodity prices.

According to USDA, corn yields slipped statewide in 2012, falling from an average yield of 153 bushels an acre (bpa) in 2011 to about 118 bpa last year. Ironically, one of Stamp's affiliated farms placed third in the Michigan Corn Growers Association yield contest with a dryland yield of 259.9 bushels.

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @toddneeleyDTN


Family Business Matters

By Lance Woodbury
DTN Farm Business Adviser

Many of these columns have focused on big, strategic moves family businesses should make to enhance their success with estate plans, management succession, family employment, compensation, governance and conflict management. A degree of certainty on these important issues helps family members make better decisions and maintain relationships.

Challenging as the big issues may be, many family businesses are derailed by the little things. Seemingly minor events, an unintentional sleight, unequal time spent with different family members or an offhand remark becomes the spark that ignites a forest fire in the family firm. Consider whether some of the following concerns place your family business at risk for a blowup.


When working together in business, our human inclination is to notice how coworkers use their time. Even though family members have different responsibilities or roles, our tendency is to want to see everyone working the same number of hours. But, this often isn't the best strategy for a successful business. Some work inside and some outside, some are with people, some with equipment and some with technology. Some put in long hours at certain times, while some are steadier year-round. Some family members are more efficient with their time.

The overall result of these differences is some family members often feel they are working harder than others, which may be the case. Feelings of resentment can arise about perceptions of time spent working. These problems often start small but, over time, develop into a real relationship problem in the business.


When the comparison shifts to money and the expenses paid by the business, conflict can heat up in a hurry. What if one family member eats lunch out most days and pays with a company credit card, while another brings his or her lunch to work? Or, what if one occasionally fills up his or her personal vehicle's gas tank at the farm? What about paying for a spouse's expenses on a business trip?

One meal or tank of gas by a family member may not be a firing offense. However, over months and years, frustration and resentment about what the business covers and whether people are taking advantage of the business and each other can create a serious wedge between family members.


If a grandparent takes one grandchild on trips more frequently than others, it doesn't mean the other grandkids are loved any less. But, it probably doesn't feel like that to the others. How people are included in business discussions, whether they go on trips together, even the number of meals eaten together can create friction when compared with other family members. Again, it isn't one meal or one trip, but, instead, the accumulation of time spent that increases friction.


It is ideal, but naive, to expect people not to compare how they spend their time, the money of the business or the attention they receive from others. Consider two strategies to address these issues. First, commit to checking in with other family members. More often than not, the offending family member isn't aware of, or being held accountable for, their work habits, use of company funds or time spent with others. Simple awareness can go a long way. Second, when it comes to time and expenses, consider crafting a policy that spells out what hours are expected and what expenses are covered. Good policies can prevent problems and are often routine in non-family enterprises.

There are always challenges in working with family members. A commitment to communication and a few key policies can help clarify expectations and prevent these small issues from becoming large headaches for your family business.


Editor's Note: Write Lance Woodbury at Family Business Matters, 2204 Lakeshore Dr., Suite 415, Birmingham, AL 35209, or email lance@agprogress.com.


Todd's Take

By Todd Hultman
DTN Analyst

If we look at Thursday's World Agricultural Supply and Demand Estimates (WASDE) report from USDA, especially the world estimates for corn, it is easy to get a bullish feeling for corn prices. USDA lowered its estimate of world ending corn stocks to 151.96 million metric tons (mmt) (5.98 billion bushels) for 2018-19, a 21% drop the previous season's 191.73 mmt (7.55 bb). Not only are world corn stocks expected to be lower in 2018-19 relative to use, corn is expected to have the lowest stocks-to-use ratio since 1995-96, one of the more bullish years in corn price history.

When we look at corn prices themselves, however, we see a chart in a deep slump. December corn is trading at $3.56 early Friday, down a painful 17% from the high it reached just seven weeks ago. Moving to a long-term chart of December corn prices, current levels are not too far from last year's harvest low of $3.35 1/2, or the eight-year low at $3.18.

So what gives? Why are corn prices in the dumps when USDA's world estimates look so bullish? That's a fair question and I have a few thoughts to help try to understand corn's dilemma.

First, if we never saw USDA's world estimates, there wouldn't be much argument about December corn trading as low as it currently is. Back in early May, when December corn prices were pushing near what would eventually become their seasonal highs, noncommercials put on their largest net-long position since 2011.

Dry weather for Brazil's second corn crop -- coming after Argentina's drought -- surely inspired some of the bullishness, but the exuberant noncommercial response was revealed to be unsustainable when early planting went well in the U.S., and early crop conditions looked good.

Lots of bullish noncommercial positions have been losing money as USDA has repeatedly reported high crop ratings each Monday, which was a certain recipe for even lower prices. And that's what happened to corn. Add to the mix generally bearish concerns in grains over the lack of a NAFTA agreement and a trade war with China, and a bullish argument for corn prices becomes difficult to make.

It is in this heavily bearish environment that we are asking traders to have faith in USDA's more bullish projections for 2018-19. Keep in mind that the first field-based corn yield estimate in the U.S. will not be released until USDA's next WASDE report on Aug. 10 and last year's corn yield hit a record high 176.6 bushels an acre (bpa) on much less than ideal conditions. Can anyone yet say that a 15.0-bb crop with an average yield of roughly 183 bushels is out of the question?

Here in the U.S., USDA expects the current season to end on Aug. 31 with 2.03 bb of surplus corn. However, the 5.3 bb of corn stocks USDA reported for June 1 shows that demand is running 77 mb less than a year ago, but USDA is predicting 261 mb of increased corn demand in 2017-18. The final ending stocks for corn this season could easily be 2.2 bb.

When we take a closer look at USDA's world estimates, we see that world corn production is expected to be up 20.6 mmt (809 mb) in the new season, while world demand is expected to be up 24.4 mmt (961 mb). As mentioned earlier, the U.S. crop is still young, and new crops in Brazil and Argentina have yet to be planted. We are also talking about demand estimates that extend to Aug. 31, 2019.

Looking at world corn demand, it is difficult to tell in the WASDE report where the surge is coming from, but we do see that 7% of the 24.4 mmt increase is coming from China. Keep in mind that China reportedly has plenty of old-crop corn on hand and is only expected to import 1 mmt more than it did a year ago. So we have to note a significant part of the demand surge USDA is recording will not translate as increased exports for the U.S.

It has been said that all politics is local and that may also be a good bit of wisdom when trying to understand this year's corn prices. On the practical side, ending U.S. corn stocks in excess of 2 bb, a slower demand pace in the current season, uncertainty over the future of NAFTA, and relationships with other trading partners, are all bearish factors close to home. So is the corn growing in U.S. fields, most of which is off to a good start in 2018.

At this point, USDA's world estimates are still more theoretical than practical, and plenty of changes are still possible as we journey on. It takes more than just estimates to move markets -- it takes real people actually buying corn and that's what we're not seeing yet. Stay tuned to DTN for what promises to be an interesting season for corn.

Todd Hultman can be reached at Todd.Hultman@dtn.com

Follow him on Twitter @ToddHultman


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