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DTN Closing Livestock Comment 01/19 16:54

DTN Closing Livestock Comment 01/19 16:54 Late-Week Profit-Taking Causes Upset in Livestock Futures to Close Mostly Lower The cattle complex settled generally lower with triple-digit losses evident in the feeder market. Although lean hog futures finished on a mixed basis, most trading interest seemed to be interested in pressuring nearby issues. By John Harrington DTN Livestock Analyst GENERAL COMMENTS Market watchers had to be patient this week, but the cash cattle trade finally developed late Friday afternoon with packers paying more for short-term slaughter needs. Live sales in the South are mostly marked at $123, $3 higher than last week. Most dressed sales in the North were marked at $195, $3 higher than last week's weighted average basis Nebraska. The National hog base closed off $0.35 compared with the Prior Day settlement ($62-$71.50, weighted average $69.36). From Friday to Friday, livestock futures scored the following changes: Feb LC up $4.53; Apr LC up $3.27; Jan FC up $3.60; Mar FC up $2.95; Feb LH up $0.50; Apr LH up $1.18. Corn futures closed generally a penny higher, modestly firming from the lows set last week. The stock market settled higher with the Dow off 53 and the Nasdaq better by 40.

DTN Feeder Pig Index


DTN Early Word Grains 01/19 05:55

DTN Early Word Grains 01/19 05:55 Green Light for Grains, Most Commodities March corn was up 1 1/2 cents, March soybeans were up 3 1/2 cents, and March Chicago (SRW) wheat was up 1 cent. By Todd Hultman DTN Analyst 6:00 a.m. CME Globex: March corn was up 1 1/2 cents, March soybeans were up 3 1/2 cents, and March Chicago (SRW) wheat was up 1 cent. CME Globex Recap: Except for modest losses in energies, the rest of the commodity board is mostly higher early Friday, including nearly every grain and soybean contract. Stocks around the globe are also trading higher, including a 98 point gain in Dow Jones futures. OUTSIDE MARKETS: On Thursday, the Dow Jones Industrial Average closed down 97.84 points (-0.4%) at 26,017.81, the NASDAQ Composite was down 2.23 points (-0.03%) to 7,296.05, and the S&P 500 was down 4.53 points (-0.2%) to 2,798.03. DJIA futures were 98 points higher early Friday morning. Asian markets were mostly higher early Friday with Japan's Nikkei 225 up 44.69 points (0.2%), Hong Kong's Hang Seng up 132.95 points (0.4%), and China's Shanghai Composite adding 13.11 points (0.4%). European markets were also trading higher with London's FTSE 100 up 19.25 points (0.2%), Germany's DAX up 121.32 points (0.9%), and France's CAC 40 gaining 25.52 points (0.5%). The euro gained 0.0245 to 1.2305 as the U.S. dollar index fell 0.15 to 90.33. March 30-year T-Bonds were 10/32 lower at 149'04 while February gold was up $7.50 to $1,334.70. Crude oil was $0.35 lower at $63.54 while Brent crude lost $0.40 to $68.91. China's Dalian soybean prices were mixed to lower and Malaysian palm oil futures were 1.25% lower overnight.

DTN Early Word Opening Livestock 01/19 06:06

DTN Early Word Opening Livestock 01/19 06:06 Livestock Futures Seem Staged for Mixed Opening The cattle complex is likely to open mixed as traders jockey ahead of last week's cash developments. Lean hog issues should also begin with uneven price action in slow volume. By John Harrington DTN Livestock Analyst Cattle: Steady-$2 HR Futures: Mixed Live Equiv $139.06 + .60* Hogs: Steady/Weak Futures: Mixed Lean Equiv $ 85.86 - .28** * based on formula estimating live cattle equivalent of gross packer revenue ** based on formula estimating lean hog equivalent of gross packer revenue GENERAL COMMENTS: What a difference a week makes in terms of market timing. Last week's cash business was essentially completed by Tuesday. This week we've reached Friday with virtually nothing booked. Whatever explains the contrast, some action will have to surface between now and sunset. Higher futures clearly anticipated that packers will blink before feedlot managers. Look for opening bids around $118 in the South and $190 in the North. Asking prices should remain firm at $122 to $123 in the South and $195 to $197 in the North. Live and feeder futures should open mixed, tied to follow-through buying and profit-taking.

DTN Midday Grain Comments 01/19 11:46

DTN Midday Grain Comments 01/19 11:46 Grains Mixed at Midday Soybeans are the midday leader, with corn flat, and wheat lower. By David Fiala DTN Contributing Analyst General Comments The U.S. stock market indices are mixed at midday with the Dow futures down 35 points. The interest rate products are higher. The dollar index is 10 higher. Energies are lower with crude down 0.70. Livestock trade is mostly lower. Precious metals are mixed with gold 6.50 higher. CORN Corn trade is flat to a penny higher at midday with trade pulling back from an early test of resistance. Ethanol margins are slightly tighter with firmer corn and softer energy values. Corn basis set back slightly on increased selling on the futures rally with carry steady. Warmer weather should help to throttle back livestock feeding coming forward. The weekly export sales were strong at 1.89 million metric tons, but at midday the market is acting as if this is old news. On the March chart support is the 50-day at $3.52 we are right around at midday, with the 20-day at $3.50 below that, and resistance at the 100-day at $3.58. SOYBEANS Soybean trade is 4 to 7 cents higher with trade closing in on the next round of resistance with light buying continuing and trade has pulled back from a test of the 50-day moving average. Meal is $3.50 to $4.50 higher and oil is narrowly mixed. South American weather looks to continue the recent pattern in the near term with the north and south dry, and the middle wet, with the most concerns in Argentina. Basis and carry remains mostly sideways. Weekly export sales were improved at 1.24 million metric tons of beans, 281,000 of meal, and 27,900 of oil. The export wire was quiet again this morning, with only new crop sales on the wire so far this week. On the March, support is the 10-day and 20-day $9.64 that we have tested this morning and resistance the 50-day at $9.84. WHEAT Wheat trade is flat to 4 cents lower with trade chopping lower going into the weekend. Warmer weather should be the rule in the near term, but moisture will likely remain short in the near term for much of the Plains. The dollar remains below 91 on the index with the trend still lower, with rallies being sold. The gap between U.S. and Russian origin has narrowed but remains more favorable to Russia with U.S. export sales remaining weak at 153,000 metric tons. On the March Kansas City contract, chart support is the lows at $4.10, with the weekly low of $4.21 becoming nearby support with the 20-day at $4.29 as the first level of resistance with the 50-day at $4.30 above that, which we tested this morning. David Fiala is a DTN contributing analyst and the President of FuturesOne and a registered Advisor. 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 01/19 11:53

DTN Midday Livestock Comments 01/19 11:53 Moderate to Strong Losses Develop Friday Morning Narrow pressure seen early in the market has limited trade activity through the complex. This may bring additional uncertainty to the entire trade. Triple-digit losses are holding in feeder cattle trade. By Rick Kment DTN Analyst GENERAL COMMENTS: Pressure is seen in all livestock markets with aggressive triple-digit losses in feeder cattle markets leading the complex lower. Although trade is still sluggish, the overall lack of follow-through buying activity may bring additional uncertainty to the market. Corn prices are higher in light trade. March corn futures are 1/4 cent higher Friday. Stock markets are mixed in light trade. The Dow Jones is 54 points lower while Nasdaq is up 24 points. LIVE CATTLE: Narrow to moderate losses have developed across the live cattle futures. There is likely to be some additional market shifts seen in the last couple hours of trade, although most traders may focus on increased trade volume over the next couple of weeks. The strong gains seen earlier in the week has also put more emphasis on the desire and need to spark some additional trade volume and square positions before the weekend. Cash cattle sales are still undeveloped Friday, although trade still needs to be done before either side can call it a week. This may add to the uncertainty in futures trade as packers are unwilling to aggressively increase bids at this point. Live bids are seen at $118 in the North and South, while dressed bids are holding at $192 to $194 per cwt. Asking prices are seen at $124 and higher live and $195 to $197 dressed basis. Boxed Beef cut-outs at midday are lower, $0.48 lower (select) and down $0.58 per cwt (choice) with light movement of 67 total loads reported (41 loads of choice cuts, 12 loads of select cuts, 9 loads of trimmings, 6 loads of ground beef). FEEDER CATTLE: Triple-digit losses have quickly developed across the complex late Friday morning. The inability to bring back the buyer support seen over the past two trading sessions has created underlying position taking with nearby contracts holding losses of $1 to $1.30 per cwt. The follow through weakness seen in live cattle markets through the morning may continue to add softness to the entire cattle trade, and push feeder cattle futures even lower. LEAN HOGS: Mixed trade is seen midday Friday with traders focusing on the overall lack of buyer support willing to move into the market. There is growing support for market stability in deferred contracts, while the weakness that has moved into the cattle trade is starting to erode overall market gains through the rest of the trading session. February futures are trading 75 cents per cwt lower with the rest of the market stuck in a narrow range. Cash prices are higher on the National Direct morning cash hog report. The weighted average price is up $0.13 at $69.84 per cwt with the range from $63.50 to $71.50 on 5,243 head reported sold. Cash prices are higher on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is up $0.02 at $69.90 per cwt with the range from $66.50 to $71.50 on 2,695 head reported sold. The National Pork Plant Report posted 146 loads selling with carcass values adding $0.19 per cwt. Lean hog index for 1/17 is at $73.55 up $0.56 with a projected two-day index of $73.67, up $0.12. Rick Kment can be reached at rick.kment@dtn.com (BE) Copyright 2018 DTN/The Progressive Farmer. All rights reserved.

DTN Closing Grain Comments 01/19 13:46

DTN Closing Grain Comments 01/19 13:46 Soybean Meal Posts Fifth Consecutive Gain March soybean meal closed up $3.20 Friday, its fifth consecutive gain in the aftermath of last week's USDA report and helped by ongoing concerns of dry weather in Argentina. Row crops ended with small gains while all three wheats finished a little lower.

DTN Chart Technical Points 01/19 16:30

DTN Chart Technical Points 01/19 16:30 DTN FUTURES 10 1/19/18 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 MAR 422.75 421.50 426.00 427.67 428.52 44.52 45.26 43.68 43 33 32 51 CBTWT MAY 435.50 434.56 439.19 440.65 441.14 44.01 44.94 43.39 42 32 34 54 KC WT MAR 427.50 426.50 431.69 431.11 428.88 45.79 47.29 45.59 33 24 39 60 KC WT MAY 441.25 440.06 445.25 444.58 441.98 46.21 47.64 45.72 32 23 41 61 MN WT MAR 608.50 610.56 619.36 619.13 623.01 33.64 38.46 41.80 8 9 8 43 MN WT MAY 617.50 619.75 626.69 626.36 630.18 34.75 39.25 42.37 9 10 9 44 CORN MAR 352.50 351.31 349.50 350.85 351.47 57.06 53.28 47.93 82 72 51 35 CORN MAY 360.75 359.50 357.72 359.08 359.72 57.45 53.43 47.92 83 74 53 35 CORN JUL 369.00 367.75 365.89 367.36 367.92 57.32 53.46 48.19 86 76 52 33 OATS MAR 258.00 255.50 252.44 248.10 254.49 69.96 61.72 51.90 76 68 76 68 OATS MAY 255.75 255.44 253.03 251.00 259.49 57.68 52.42 47.71 68 69 53 40 BEANS MAR 977.25 971.75 964.78 965.10 982.23 60.99 54.02 48.90 90 88 64 36 BEANS MAY 988.50 983.06 975.92 976.14 992.90 61.27 54.30 49.19 91 89 65 37 BEANS JUL 998.25 992.69 985.42 985.971002.17 61.50 54.52 49.39 91 89 64 36 S MEAL MAR 331.60 326.77 321.48 319.94 324.92 71.05 63.27 55.62 93 92 75 42 S MEAL MAY 335.10 330.33 324.82 323.16 327.71 72.67 64.57 56.38 94 93 78 44 B OIL MAR 32.28 32.45 32.98 33.19 33.62 27.74 33.20 39.79 6 8 13 33 B OIL MAY 32.48 32.65 33.15 33.36 33.79 28.07 33.36 39.78 6 8 13 32 CATTLE FEB 121.90 120.73 118.79 120.10 121.29 61.61 55.72 51.42 93 88 51 27 CATTLE APR 122.72 122.34 120.58 121.47 122.45 57.80 54.03 51.19 89 88 52 29 FEEDER JAN 147.95 147.65 146.12 146.24 148.17 56.56 52.76 49.26 85 80 60 46 FEEDER MAR 145.60 145.67 143.73 143.41 145.88 56.60 53.00 49.43 81 81 65 50 HOGS FEB 72.07 72.94 72.55 71.86 69.89 52.31 54.02 54.31 52 61 80 80 HOGS APR 75.50 75.77 75.62 75.54 73.92 52.41 53.54 54.09 66 61 69 68 COTTON MAR 83.42 82.40 81.12 79.70 75.53 75.81 73.52 69.38 63 58 75 80 COTTON MAY 83.79 82.71 81.43 79.93 75.99 76.47 74.23 70.06 71 64 79 83 RICE MAR 12.20 12.16 11.99 11.95 12.23 62.63 56.03 50.64 81 77 71 49 RICE MAY 12.45 12.42 12.26 12.22 12.50 61.53 55.27 50.60 80 79 71 50

DTN Cattle Close/Trends 01/19 15:35

USDA MARKET NEWS--AFTERNOON CATTLE REPORT 01/19/18 VOLUME USDA TOTAL RANGE DTN PRACTICAL RANGE WT AVG KANSAS CONFIRMED CASH SALES - TODAY: 0 WEEK T0 DATE: 49 STEERS No reportable trade HEIFERS No reportable trade NEBRASKA CONFIRMED CASH SALES - TODAY: 0 WEEK TO DATE: 0 STEERS No reportable trade HEIFERS No reportable trade TEXAS CONFIRMED CASH SALES - TODAY: 0 WEEK TO DATE: 166 STEERS No reportable trade HEIFERS No reportable trade COLORADO CONFIRMED CASH SALES - TODAY: 0 WEEK TO DATE: 0 STEERS No reportable trade HEIFERS No reportable trade IOWA CONFIRMED CASH SALES - TODAY: 444 WEEK TO DATE: 844 STEERS 295 193.25-193.25 193.25-193.25 193.25 HEIFERS No reportable trade COMMENTS: At the time of this close only some light scattered trade had been Reported in parts of the North at $195, $3 Hr than last week's weighted average Basis NE. We will continue to track this week's cash cattle sales on the Daily Sales Reported to DTN Page. 5-AREA LV STR AVE PR&WT: $121.00(1475) HIDE&OFFAL: $10.66 -0.03 CARCASS EQV INDEX CHOICE (600-900#) SELECT (600-900#) #OF HD LIVE BASED 178.13 170.72 7,916 BOX BASED 192.86 188.16 45,867 AVE INDEX 185.49 -0.52 179.44 -0.45 53,783 BEEF CUTOUTS CHOICE (600-900#) SELECT (600-900#) 204.86 -0.83 200.16 -0.71 61.53 LDS CH CUTS / 18.04 LDS SEL CUTS / 10.85 LDS TRIM / 14.87 LDS GROUND BOXED BEEF TREND: Wk/lr on lt-mod dem & offers COMPREHENSIVE WEEKLY CUTOUT VALUE: Week ending 01/12 $207.25 +2.95 CUTTER 90% 350# UP C/O: $170.10 -0.01 NAT'L BONELESS BF TRIM: 14.33 lds / Modly/shrply lr on gd dem & mod offers 90% TRIM: 00 lds: Wtd Avg $No Test/ Mostly weak to lower FI KILL(WTD) FRI 117(588) WK AGO 116(588) YR AGO 114(525) MIX: THU SH94/CB24 SAT 27(615) WK AGO 23(611) YR AGO 47(571) WEEKLY CANADIAN CATTLE IMPORTS. FEEDERS SLAUGHTER S&H Week Ending: 01/06/18 285 4,217 Week Ending: 12/30/17 110 1,641 Change from prev week: +175 +2,576


 DTN Headline News


Preparing to Fight Flames

By Todd Neeley
DTN Staff Reporter

OMAHA (DTN) -- In the months that followed the March 2017 wildfires in the Texas Panhandle, volunteer fire departments and others began asking questions: What could have been done differently to combat the blaze, but also to prepare for it?

Farmers and ranchers continued to search for answers as to how they could have been better prepared for the wildfires that devastated parts of southwestern Kansas, the eastern Texas Panhandle and parts of the Oklahoma Panhandle.

A year later, the National Interagency Coordination Center has identified those areas -- and other areas in the Central and Southern Plains -- as being under significant wildland fire risk from now until April. (See https://www.dtnpf.com/…)

"We've had a few regular meetings and long conversations," said rancher Chaz Rutledge, of Canadian, Texas, several months after the fire last year. His homestead narrowly missed total disaster on March 6, 2017 in the eastern Panhandle. Rutledge is a volunteer firefighter for the tiny Locust Grove Volunteer Fire Department near Canadian.

"That fire itself was just an extreme situation no one today had seen before. We can't think of anything we could have done differently to change the outcome."

While the Texas Panhandle continues to recover from the blaze that killed ranchers, cattle and horses, and destroyed grasslands and property across 600 to 700 square miles, Rutledge said on the positive side rural fire departments such as his are beefing up their operations.

Thanks to monetary donations, the 10-member Locust Grove department focused on upgrading safety equipment and applied for grants to double the size of its fire facility. The moves will help improve safety for firefighters as well as stepped-up training.

Even then, the size of the fires and the rate of speed at which they ate up acres of grasslands was staggering.

"As far as things we could have done differently," Rutledge said, "if we would have had 10 more firefighters it wouldn't have made a difference. In our little department, we have more manpower than equipment."


Gene Hall, director of public relations at the Texas Farm Bureau, said the size and scope of the March fires last year proved to be too much for local volunteer fire departments to fully handle. The Texas Farm Bureau and others are working to provide more money to rural departments in the Panhandle.

"They use up resources every time they go out and fight a fire," he said.

The wear-and-tear on their equipment "is atrocious" and it needs to be maintained as a last line of defense, Hall said.

"I think they did a good job given the circumstances, but more volunteers would help. That's a special kind of person. There needs to be an awareness of how crucial their role is. If you live in that area and you're not contributing, you're letting someone else carry the load," said Hall.

On July 10, 2017 the Texas Farm Bureau announced it distributed about $361,000 to panhandle victims, through the TFB Panhandle Wildfire Relief Fund.

Rutledge said the countryside has responded in places such as Canadian where there is a waiting list to join the local fire department.

The March fires "was the third time since 2006 we've had fires," he said. "It will happen again. Attentiveness to that kind of event is cyclical."


Rutledge said he realized it's important to have safe areas to move cattle on his own ranch, perhaps where grass is short and use firebreaks. He added it's also a good idea to place more water tanks around the ranch and to keep grass mowed around the homestead.

When it came time to leave the ranch, it nearly was too late, Rutledge admitted. He suffered a significant amount of smoke inhalation that led to a severe sinus infection.

"There is no right answer," he said. "I sat down here and watched that smoke for too long."

Hall said there should be a "good common sense effort" by local authorities when conditions are perfect for wildfires: do whatever you can to send notices out to the public.

"Everybody ought to look at getting fire extinguishers. Make sure they are ready in case of equipment fires in or on barns," Hall advised. "People need to keep trees trimmed back. Any dead trees ought to be taken care of. Some guys are thinking about perimeter fire breaks."

Thousands of miles of fencing were lost in the blazes, leading many farmers and ranchers to favor the installation of steel corner posts. In addition, some ranchers are considering the merits of creating their own firefighting apparatus to compensate for when volunteer departments are overwhelmed.

That may include working with neighbors to buy firefighting equipment and coming up with unified plans. In other words, for some ranchers it's about taking increased responsibility to protect and defend their property.

"I think we all have to be more responsible ourselves for our own problems," said Canadian, Texas, rancher Steve Rader, who essentially was left to fight the fire on his own ranch. The March wildfires scorched his ranch in the Texas Panhandle, killing about 85 of his 520-head cattle operation, and wiped away about 60% of his pastures.

"Because if you can get it stopped early it's not a big deal. Once it gets big it's a big deal." For Rader, it became a big deal. Roughly 8,000 acres burned on his ranch.

While the March wildfires were a big deal to the people affected by them in the Southern Plains, they weren't the last of the wildfires making the news. Large, tragic, fast-moving fires have struck drought areas in the Northern Plains, Canadian Prairies and California since then.


Often when disasters such as wildfires hit, there's little time to react.

Back in Texas last year, as the fire approached Rutledge's place he rushed inside his home to see what he could take in seconds: he grabbed a computer and checkbook and rushed out the door.

Since the disaster, Rutledge said he is considering buying renter's insurance, and some families are considering cattle insurance in response to about 4,000 head of cattle lost in the Texas wildfires.

"There's been a few people after the fire who said they had it and it saved them," Rutledge said.

"We need to look into that for the future. Nobody thinks about flood insurance until they have a flood. I think the main thing is, you never know what's going to happen. May be better to have a backup plan. That fire, the only thing that would have stopped that would have been a wheat field or a plowed ground. If money were of no object -- and I had a wish list -- a bulldozer or maintainer, if I had a fire rig with a tanker on the back, I could have done a lot of good."

Several people were killed in the wildfires across the three states.

In Texas, two of those victims were 20-year-old Cody Crockett, and his 23-year-old girlfriend Sydney Wallace, who were killed heroically trying to move cattle away from the blaze.

Shamrock, Texas rancher Trent Cadra knew Crockett. He said the tragedy offers a lesson area ranchers will remember for years to come.

"As far as us and those situations in the future, I think it's a good thing if you can go in there and move your cattle out, open some gates and stuff like that," Cadra said.

"But I think, if anything we took away from that, is take care of your cattle and your country but then also be willing and able to say 'I've done all I can do, I'm going to get out while I can.' I'm not saying anything bad about Cody Crockett, if anything he taught us sometimes maybe you try too hard and put yourself in a bad situation you didn't plan for. If anything, he might have taught us that."

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

Follow him on Twitter @toddneeleyDTN


Dicamba Cases May Be Centralized

By Todd Neeley
DTN Staff Reporter

OMAHA (DTN) -- Attorneys representing farmers from across the country who filed multiple lawsuits alleging off-target dicamba damage to their crops will try to convince a federal panel of judges next week that the cases should be heard in a single court.

The seven-judge U.S. Judicial Panel on Multidistrict Litigation is slated to hear oral arguments on Jan. 25 in Miami, Florida, on a motion by attorneys representing farmers in Arkansas, Illinois, Kansas and Missouri to move all the cases to one court.

The question at hand will be what venue would best serve the interests of all the litigants.

An attorney representing some of those farmers in Illinois told DTN in an interview that consolidating the cases in one court would best serve all farmers alleging crop damages.

Thousands of complaints have been made in at least 24 states by farmers alleging crop injury from dicamba-based products manufactured by Monsanto, BASF and DuPont. Lawsuits have sought the stoppage of sales of dicamba products under the names Xtend, Engenia, Fexapan and Xtendimax, and have also sought damages for crop losses.

Attorneys for the companies generally have opposed centralizing the cases, expressing in court filings their preferences of venue.

Attorney Rene F. Rocha with Morgan and Morgan based in New Orleans is representing more than 100 farmers in the lawsuits.

The federal multidistrict court is expected to consider moving the cases to one of four courts: the Southern District of Illinois, the Eastern District of Missouri, the Eastern District of Arkansas or the District of Kansas.

The seven judges on the multidistrict panel that holds hearings at venues across the country include Sarah S. Vance, U.S. District Court Eastern District of Louisiana; Marjorie O. Rendell, U.S. Court of Appeals Third Circuit; Charles R. Breyer, U.S. District Court, Northern District of California; Lewis A. Kaplan, U.S. District Court Southern District of New York; Ellen Segal Huvelle, U.S. District Court District of District of Columbia; R. David Proctor, U.S. District Court Northern District of Alabama; Catherine D. Perry, U.S. District Court Eastern District of Missouri.

"If the panel decides to centralize these cases, which I believe is more likely than not, it will be most likely in one of those courts," Rocha told DTN.

So far about a dozen cases have been filed, he said, involving more than 100 plaintiffs.

"They all allege a similar set of facts that have given rise to their damages; that being the defective nature of the dicamba herbicide that have been put out on the market by Monsanto, BASF and DuPont, and there's a variety of different kind of growers," Rocha said.

To this point, soybean growers have seen the majority of the damages, he said. However, farmers growing a wide variety of crops have alleged damages.

Among the cases in consideration by the federal multidistrict court is Bader Farms Inc. v. Monsanto, involving Campbell, Missouri-based peach producer Bill Bader. His case is unique in that his farm alleges damages from Monsanto's 2015 release of the seeds portion of the company's Xtend crop system before the associated herbicide labels for that crop system were approved by the U.S. Environmental Protection Agency. The farm alleged damage to nearly 40,000 trees from 2015 to 2016. That case was expanded to include BASF products and damage alleged in 2017.

"The Bader case is unique because it alleges damages from between the 2016 growing season and even before, and the issue with that is damages arising in those years will not have been caused by the new dicamba herbicide, but by people spraying older versions of the dicamba on the new resistant seeds," Rocha said.

He said moving the cases to one court would achieve efficiency in discovery, save time and cost, and would prevent inconsistent rulings of law.

"Going around in appeals courts, you have for instance a judge in St. Louis saying one thing and the judge in Illinois or in Arkansas saying another; it can just throw in a lot of curveballs into managing these cases through to resolution," Rocha said.

In addition, moving the cases to a single venue allows plaintiffs' counsel to combine resources to get through common issues in the litigation.

Rocha said centralization is something that occurs often in agriculture-related legal cases.

So far, the cases filed are related to product liability on behalf of the companies, he said.

"People understand that this is a products problem," Rocha said.

"Good relationships with the neighbors are important and people understand the neighbor is not the one that did them wrong. Liability insurers are taking the same position," Rocha said. "By and large, all the reports I'm hearing that liability coverers are not covering these damages, just because after conducting an investigation into the circumstances they're determining that it's not any negligence on the part of their insurer (that) is the cause of the damage, but is instead the result of the defective nature of the dicamba herbicides."

Rocha said that although many farmers have already filed lawsuits, there likely are more to come. For producers who may have suffered damages, he said it isn't too late to consider their options.

"These are complex cases and it's something that will take some time," Rocha said.

"It's too early in the process to say how long that will take, but it's just the nature of our civil justice system that you have to go through discovery and have expert testimony."


Editor's Note: DTN Crops Technology Editor Pamela Smith contributed to this story.

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

Follow him on Twitter @toddneeleyDTN


JBS Selling Five Rivers

By Chris Clayton
DTN Ag Policy Editor

OMAHA (DTN) -- JBS USA has announced the sale of the world's largest cattle-feeding operation, Five Rivers Cattle Feeding, to affiliates of Pinnacle Asset Management LP, in a sale valued at approximately $200 million.

JBS USA had been shopping around for a buyer for Five Rivers Cattle Feeding since last summer after JBS' Brazilian ownership got caught in a political and bribery scandal in Brazil. After turning JBS into a global meat empire, Wesley and Joesley Batista were tied to a bribery scandal that included the president of Brazil. The two brothers were arrested last September for an insider-trading scandal tied to the earlier bribery case. Federal authorities accused the brothers of trading on the fact that the bribery scandal would become public.

Five Rivers Cattle Feeding has feeding capacity for more than 900,000 cattle in 11 feedyards across Arizona, Colorado, Idaho, Kansas, Oklahoma and Texas. While Pinnacle will take over the feeding operations, a news release from the two companies states Five Rivers will continue delivering fed cattle to JBS USA packing plants. Further, the current leadership at Five Rivers, including president and CEO Mike Thoren, will remain in place, as will approximately 600 employees.

"The acquisition of the largest and most respected cattle-feeding operation in the world continues Pinnacle's strategic path of investment and development of our diversified, global, physical commodity platform, of which livestock is a critical sector," said Jason Kellman, managing partner and chief investment officer at Pinnacle Asset Management.

Pinnacle is a New York-based firm focused on providing institutional investors a way to invest in commodity markets. Pinnacle has approximately $2.3 billion under management.

Pinnacle is partnering with a pair of other asset-management companies to buy Five Rivers, including Arcadia Asset Management LLC, which already has other livestock marketing operations, according to the news release. The other asset-management firm involved with the purchase is Ospraie Management.

The sale comes 10 years after JBS bought Smithfield Beef Group, which included the Five Rivers Cattle Feeding operations, as well as Smithfield Food's beef processing facilities. JBS since expanded the feeding operations about 10% over the last decade before agreeing to sell to Pinnacle.

"The sale of the Five Rivers Cattle Feeding assets and farms is a strategic move that will allow JBS USA to more efficiently deploy working capital and focus on the company's core food and value-added products businesses," said Andre Nogueira, CEO of JBS USA. "The transaction concludes the divestment program previously announced and unanimously approved by the JBS S.A. board of directors, and more favorably positions the company for future opportunities. The long-term partnership with Pinnacle will ensure JBS USA's continued ability to produce high-quality beef products, including natural, certified humane, raised without antibiotics, source-verified and traditional products, enjoyed by customers and consumers around the world."

JBS USA will continue operating its beef and pork facilities in the U.S. The company also is the largest shareholder for Pilgrim's Pride, the largest poultry company in North America, the company stated.

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

Follow him on Twitter @ChrisClaytonDTN


DTN Retail Fertilizer Trends

By Russ Quinn
DTN Staff Reporter

OMAHA (DTN) -- Average retail fertilizer prices continued to shift higher the second week of January 2018, according to retailers surveyed by DTN. The good news for farmers facing higher fertilizer prices is a majority of farmers appear to have already purchased at least some of their needs for the upcoming growing season, according to a recent DTN Twitter poll.

On Twitter earlier this week, I created a poll asking farmers this question: "With retail fertilizer prices on the rise, what best describes your fertilizer buying for the 2018 growing season."

The poll ran for 24 hours from the morning of Tuesday, Jan. 16, to the morning of Wednesday, Jan. 17. The final tally showed there were 356 total respondents.

Leading the way with 70% of the vote was "Already bought fertilizer." Second, with 20%, was "Wait and buy in the spring," followed by 6% with "Going to buy in January," and 4% with "Going to buy in February."

The results of the poll were not really that surprising on a couple fronts.

First, with prices historically low for much of 2017, a higher percentage of farmers apparently locked in at least some of their fertilizer needs. Also helping was mild fall weather in many Corn Belt locations, which allowed much fall application of nitrogen (N), phosphorus (P) and potash (K).

The second takeaway from the results of the poll is that those who didn't buy fertilizer already are not going to lock in prices anytime soon this winter. This makes sense with retail fertilizer prices on the upswing since November 2017.

It will be interesting to see what happens this spring with prices. Will prices continue to rise, or will they level off?

It could be a bad news/good news situation for farmers this spring. The bad news is prices could be higher than in recent years. The good news is quite a bit of N, P and K were applied last fall, so shortages in fertilizer supplies this spring should not occur, at least in some locations.

For the second week in a row, average retail prices for all eight major fertilizers were higher compared to a month earlier, according to DTN's survey of retailers. However, only one fertilizer was up a significant amount. As has been the case in recent weeks, anhydrous was up 10% compared to last month. The nitrogen fertilizer's average price is $479 per ton.

The remaining fertilizers were up by smaller amounts. DAP had an average price of $456/ton, MAP $491/ton, potash $346/ton, urea $352/ton, 10-34-0 $410/ton, UAN28 $220/ton and UAN32 $258/ton.

On a price per pound of nitrogen basis, the average urea price was at $0.38/lb.N, anhydrous $0.29/lb.N, UAN28 $0.39/lb.N and UAN32 $0.40/lb.N.

All but three fertilizers are now higher compared to last year with prices pushing higher in recent weeks. Anhydrous is 3% higher, urea is 4% more expensive, DAP is 5% higher, potash is 8% more expensive and MAP is now 12% higher.

Three fertilizers are still lower in price compared to a year prior. Both UAN28 and UAN32 are 1% lower, while 10-34-0 is 6% less expensive looking back a year.

DTN collects roughly 1,700 retail fertilizer bids from 310 retailer locations weekly. Not all fertilizer prices change each week. Prices are subject to change at any time.

DTN Pro Grains subscribers can find current retail fertilizer price in the DTN Fertilizer Index on the Fertilizer page under Farm Business.

Retail fertilizer charts dating back to 2010 are available in the DTN fertilizer segment. The charts included cost of N/lb., DAP, MAP, potash, urea, 10-34-0, anhydrous, UAN28 and UAN32.

DTN's average of retail fertilizer prices from a month earlier ($ per ton):

Jan 9-13 2017 432 441 320 338
Feb 6-10 2017 431 448 330 354
Mar 03-10 2017 436 460 336 361
Apr 3-7 2017 438 466 338 354
May 1-5 2017 436 466 339 351
May 29-Jun 2 2017 436 471 340 339
Jun 26-30 2017 437 470 340 333
Jul 24-28 2017 434 462 338 308
Aug 21-25 2017 434 458 338 304
Sep 18-22 2017 429 452 345 312
Oct 16-20 2017 432 452 348 340
Nov 13-17 2017 435 459 342 339
Dec 11-15 2017 439 479 343 340
Jan 8-12 2018 456 491 346 352
Date Range 10-34-0 ANHYD UAN28 UAN32
Jan 9-13 2017 437 467 222 258
Feb 6-10 2017 440 485 238 273
Mar 03-10 2017 441 503 246 279
Apr 3-7 2017 441 505 248 280
May 1-5 2017 436 508 247 280
May 29-Jun 2 2017 436 503 248 280
Jun 26-30 2017 435 484 238 268
Jul 24-28 2017 425 423 229 265
Aug 21-25 2017 419 417 216 248
Sep 18-22 2017 416 402 211 248
Oct 16-20 2017 413 397 205 262
Nov 13-17 2017 403 410 216 272
Dec 11-15 2017 403 434 218 256
Jan 8-12 2018 410 479 220 258

Russ Quinn can be reached at russ.quinn@dtn.com

Follow Russ Quinn on Twitter @RussQuinnDTN


New Ag Group Defends NAFTA

By Chris Clayton
DTN Ag Policy Editor

OMAHA (DTN) -- Fearful about the prospect of seeing NAFTA derailed, more than 30 ag-related business groups have come together to create Americans for Farmers & Families, a coalition focused on stressing the importance of the free-trade agreement to President Donald Trump, his administration and Congress.

The groups represent general farm organizations and a broad array of commodity groups and lobby organizations up and down the food supply chain, from bakers to distillers to the rail industry.

Americans for Farmers & Families highlights that the North American Free Trade Agreement is an economic engine in rural America -- "the very same communities that powered President Trump to victory in 2016."

The new coalition builds on similar groups that also have cropped up to defend NAFTA, such as Farmers for Free Trade, which made a major push to highlight the importance of NAFTA last week at the American Farm Bureau Federation annual meeting.

A round of NAFTA talks begin next week in Montreal, which will be the sixth round of official discussions between the U.S., Canada and Mexico.

Americans for Farmers & Families calls for preserving but modernizing NAFTA and cautions against any attempts by the Trump administration to withdraw from the 24-year-old trade pact. Since NAFTA began, the coalition points out, U.S. food and agricultural exports have more than quadrupled and account for 25% of American exports. Essentially, one in every 10 acres of American crops is exported to Canada or Mexico.

"Farm Belt voters supported President Trump by a three-to-one margin in the last election, and they are counting on President Trump to improve NAFTA in the modernization negotiations," said John Bode, president and CEO of the Corn Refiners Association and a member of the Americans for Farmers & Families leadership team. "It's not an exaggeration to say many farmers are still farming today because of NAFTA. We know that President Trump has a lot of experience negotiating good deals. We support him in updating and improving NAFTA."

Americans for Farmers & Families intends to launch "a robust educational campaign to highlight the positive impact NAFTA achieves for hard-working Americans" and focus on updating the trade deal.

"We look forward to being active participants in this discussion as we ensure the growers, producers, processors, transporters retailers and consumers we represent have their voices heard," added Chris Novak, CEO of the National Corn Growers Association and another member of the Americans for Farmers & Families leadership committee. "This issue is simply too important for us to sit on the sidelines."

Zippy Duvall, president of the American Farm Bureau Federation, and Neil Dierks, CEO of the National Pork Council, were also quoted in the news release announcing the formation of Americans for Farmers & Families. "Canada and Mexico represent the second and third largest markets for U.S. agriculture," Dierks said. "A modernized NAFTA is critical to the prosperity of rural America."

Last week, the American Farm Bureau highlighted some of the largest commodity exports to NAFTA countries and the percentage of those exports for each state in the continental 48 states. (https://goo.gl/…)

The formation of the new group comes just after the global firm Oxford Economics released a study stating that scrapping NAFTA would create a short-term dip in the U.S. economy by lowering gross domestic product in 2019, increase inflation on consumers and cost the U.S. as many as 300,000 jobs.

Farmers and lawmakers have been increasingly concerned President Trump will invoke a NAFTA clause seeking to withdraw from the trade deal within six months even though Congress would need to officially take action to withdraw from the trade deal to make it an official action by the U.S. Still, some analysts see a withdrawal announcement as a way to gain some leverage to get a deal done quickly.

Politics are also quickly encroaching on the NAFTA talks. The Mexican presidential election will be held in July, followed by U.S. congressional mid-term elections next fall. Trump told the Wall Street Journal last week he would be flexible about any withdraw plans because of the Mexican election.

"I understand that a lot of things are hard to negotiate prior to an election," the president told the Wall Street Journal.

More information can be found at https://americansforfarmersandfamilies.com/…

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

Follow him on Twitter @ChrisClaytonDTN


Kub's Den

By Elaine Kub
DTN Contributing Analyst

You go to the grocery store. At the top of your shopping list, you have written: "ground beef," for which you expect to pay about $3 per pound. But when you get to the meat counter, it's actually $7 per pound! "Skip it," you say. "We'll just have to feed the kids chicken nuggets instead of tacos. Or maybe a nice vegetarian lentil stew."

The difference between $7 ground beef and $3 ground beef is pretty stark and many American shoppers would make a clear choice there. But where is the cutoff? Consider hamburger at $3.50 per pound? Or $5? Or $6? Rather than skip the product entirely, a family may just consume somewhat less at those higher price points.

More interestingly, what happens as prices get cheaper? Consumers can afford to buy more of their favorite stuff. Live cattle futures are running about 13% cheaper than they were two years ago at this time. Wheat is similarly 13% cheaper than it was at the start of 2016. Corn and soybean futures have slowly crawled 3% and 5% lower, respectively, during the past year. There must be some good to come from this low-price environment. Economic theory, at least, suggests that consumers should consume more as prices decline.

A previous Kub's Den column illustrated the annual per capita consumption of various agricultural commodities -- 174 pounds of flour per American, more than a ton of corn (in all its various uses), 54.4 pounds of boneless beef, 47 pounds of boneless pork. These numbers struck a chord with several readers, who felt optimistic that this is an ideal time to be showing off the ag industry's affordably priced products to new end-users all across the globe.

But price elasticity of demand -- the concept that a change up or down in price leads to a change down or up in the quantity purchased -- is more than just a concept. It's a number that can be calculated for any product. If economists have done this math for our grains and meat products, then perhaps we could make a good guess for how much extra demand -- in terms of bushels and tons -- we can expect in the current low-price environment.

Of course, it's never quite that easy. Decades' worth of studies published in economics journals have tried to calculate numbers for the price elasticity of demand for various food commodities, with varying results. Data from the USDA, data from national household surveys and data from retail grocery store scanners can show how shoppers' choices change when prices change, but these results assume only the price changes and all other things remain equal (a difficult assumption to make in the reality of household budgeting and food trends and human susceptibility to advertising).

The numbers can't really predict what will happen in more complex scenarios. During broad economic shocks, when consumers' overall incomes fall, their demand for food overall may change, to say nothing of any single category of food or beverage. And what about cross-price elasticities, which reflect changes in demand for one commodity when other commodities' prices change? And what about foreign end-users of food commodities -- do they behave like the U.S. shoppers described in these data sets?

Developing East Asia, especially, has become the biggest destination for U.S. agricultural exports after North America, accounting for 23% of the total value of our exports (2011-2015 average). Fifteen years ago, this region accounted for only 8% of U.S. agricultural exports. I wish I could have found the price elasticity of demand for wheat flour and flour-based products in East Asia in the late 2010s.

But alas, the only available, reliable estimates of price elasticity of demand describe consumer behavior in the United States, which we will just have to assume that Asian, South American and Middle Eastern consumers will gradually continue to mimic, with ever more fast-food restaurants popping up on street corners. Still, there are interesting lessons in the domestic data. Food shoppers are more sensitive to price changes in some kinds of food than in others.

The food category with the most inelastic demand was eggs. For every 10% increase in the price of eggs, the quantity purchased is expected to decrease only 2.7%. (Tatiana Andreyeva, Michael W. Long, Kelly D. Brownell, "The Impact of Food Prices on Consumption: A Systematic Review of Research on the Price Elasticity of Demand for Food", American Journal of Public Health 100, no. 2, Feb. 1, 2010: pp. 216-222.)

The food category with the least inelastic demand was "food away from home," including restaurant meals and fast food. For every 10% increase in those prices, consumption is expected to decrease 8.1%.

That fits with the conventional understanding of consumer behavior. People will tend to always buy a few staple groceries, pretty much no matter what. But life's little luxuries, like a meal in a restaurant, are much more likely to be cut from a family's budget if they're seen as unaffordable.

Now where do the grains and meats fit on that staples-to-luxuries spectrum? Mostly in the middle.

Cereals and milk had price elasticity estimates anywhere from 0.4-to-0.79, averaging about 0.6% change in purchased quantity for each 1% change in price (in the opposite direction). Poultry (price elasticity 0.68) was closer to these staples than fruit, pork, beef or soft drinks were. Pork's price elasticity in most studies has been pegged around a 0.72% change in purchased quantity for each 1% change in price (in the opposite direction). Beef was the most "luxurious" of all studied food categories other than soft drinks or juice. For each 1% change in the price of beef, the purchased quantity of beef is expected to change (in the opposite direction) by 0.75%, with one study's estimated price elasticity of demand as high as 0.83%.

This is good news, frankly, for the livestock sector. Beef and pork producers can expect to see the retail and wholesale markets respond quickly, and reliably, to changes in price, modulating any trends we may notice on the futures charts. So April live cattle prices are $10 per hundredweight lower than they were a few months ago? Well, at least the lower prices are likely to be met with robust demand from beef consumers, eventually sparking a chart reversal toward the upside.

It's not such good news for the grains. Major consumers of feed grains -- the dairy and egg industries -- themselves can't expect to see a major boost in grocery consumption just because U.S. shoppers may be feeling economically hopeful in 2018. People's consumption of these staple goods is relatively unchanging, regardless of price. So, too, is the direct human consumption of grain in cereal or flour products.

The latest Quarterly Grain Stocks report was a good reminder not to get too excited about lower prices boosting grain demand. If overall corn and wheat consumption played along with the economic theory, and showed price elasticities of demand similar to grocery-store cereal, then we might calculate that the year-over-year 13% price decrease in wheat should lead to an 8% increase in demand.

It hasn't.

Instead, it turns out that the most recent quarterly wheat disappearance was actually down 16% from the same period (September to November) a year ago.

Same for corn. From theoretical elasticity numbers, maybe we would guess a 3% year-over-year price decline would imply a 1.8% increase in the purchased quantity of corn. Nope. The quarterly grain stocks report showed that corn disappearance was down 2.6% from the same period a year ago.

The theory is good; and it may ultimately pay off with some slow growth in overall demand for feed grains and the industries that rely on feed grains (dairy, poultry, meat, ethanol, etc.). But unfortunately, it's too complex, too convoluted, with too many variables interrelated between too many data sets to ever give us a simple answer. Price elasticity considerations do imply that slightly cheaper grain could spark greater grain demand, but there's a lot of wiggle room in the calculations.

Elaine Kub is the author of "Mastering the Grain Markets: How Profits Are Really Made" and can be reached at elaine@masteringthegrainmarkets.com or on Twitter @elainekub.


Growing Biomass

By Todd Neeley
DTN Staff Reporter

OMAHA (DTN) -- A study published this week contributes more details than previous reports on biomass crops most suited to bioenergy feedstock use and what long-term factors may affect their growth.

A new long-term analysis conducted by 26 researchers across the country and published in "GCB Bioenergy," examined the potential of growing switchgrass, Miscanthus, sorghum, energy cane and prairie grass mixtures. The study attempts to provide farmers with general guidelines on how energy crops best fit in given regions. The project research spanned from 2008-2013 and was sponsored by the U.S. Department of Energy and the Sun Grant Initiative.

In addition to the specific biomass crops, the researchers examined how those crops might fit on Conservation Reserve Program, or CRP, lands.


The promise of converting biomass to bioenergy on a grand scale was the topic of the so-called "Billion Ton Study" by the U.S. Department of Energy in 2005 -- at around the time biofuels production was exploding on the scene as a result of the first Renewable Fuel Standard.

The report essentially laid out a best-case scenario as to the availability of all biomass materials in North America.

For farmers, it set the stage for what could be a future of growing biomass for biofuels production.

What the study lacked, however, was the finer details of the types of biomass crops best suited for a given region. The study lacked details on how farmers could best use land to take advantage of the potential bioenergy boom ahead. The new study published in GCB Bioenergy addresses that issue.

"Our long-term field study during 2008-2013 indicates that the annual biomass yield was 2.82 tons per hectare (2.47 acres) for warm-season mixture CRP land and 5.1 tons per hectare for cool-season mixture CRP land under best management practices (Anderson et al., 2016)," the researchers write.

The scientists said nitrogen fertilizer was the key management factor determining biomass yield on CRP land.

"By far, the greatest impacts on seasonal biomass production and changes in vegetation composition were due to location-specific precipitation," the scientists found.

In most CRP sites evaluated in the study, they said precipitation was the main factor in turning out higher yields. The researchers also examined how changes in the composition of plant species on CRP land could affect the long-term sustainability of those lands.

"The results demonstrate that CRP land will shift vegetative composition over time based on harvest and fertilization management for biomass feedstocks," the study said.

"Any shift by mismanagement over time to less-desirable or less-productive species will hinder the ability of CRP land to adequately provide a sustainable or reliable resource for bioenergy feedstock production."

While there continues to be tens of millions of acres in CRP contracts, the study said higher price signals in grain markets have led to diminishing CRP acres. So finding the best way for producers to make profits on CRP could have multiple benefits, the study found.

Profitable CRP land can "feed an emerging cellulosic biofuel industry, but also protect environmentally sensitive land and improve soil and water quality," the study said.

"Accordingly, in order for CRP lands to be a reliable source of sustainable biofuel feedstock, management considerations must be taken into account that can produce sustainable stands of desirable species and provide ongoing conservation services," the authors concluded.

Non-irrigated trials showed CRP in the eastern half of the United States and isolated locations to the west of that area are "capable of producing significant biomass for a national bioeconomy."

In 2011, an update to the Billion Ton study was completed. That update found up to 24.7 million acres of CRP land could be used to produce 50 million tons of dry bioenergy feedstock annually.


More than a decade ago, switchgrass was considered to be the most promising feedstock for producing large volumes of biomass for cellulosic ethanol production, because it is grown in all regions of the country.

Researchers found large yield variations depending on where switchgrass is grown. In addition, they found switchgrass response to nitrogen was "highly variable, but greatest in South Dakota and Virginia.

In states like Alabama where some of the highest switchgrass yields were recorded, nitrogen response was just 13%. In trials in Oklahoma and New York, the study said, "there was no benefit of added N across years, and in some production seasons, the effects of N on switchgrass in New York were significantly negative.

Researchers also found some difficulty in establishing switchgrass.

"The subpar establishment rates that arose at several sites in this study would negatively influence economic outcomes in a real-world setting and point to challenges for deploying biomass systems on marginal sites with difficult edaphic conditions, seed banks laden with weed seeds, or both," the study said.

"Although manageable, these issues present additional costs in terms of lower yield with the slow establishment or the cost of weed control. Of course, the value of a ton of switchgrass will remain the key driver for feasibility for marginal land use and fertilization inputs."


The study also examined the use of sorghum as a biomass crop. Researchers found annual rainfall to be the single most important variable for sorghum's success.

"In general, the southeastern United States had the highest and most stable yields, indicating that this is the most stable region for sorghum biomass production," the study said.

When it came to sorghum grown on CRP land, the study said yield was "significantly impacted by N rate, harvest timing, and year. Biomass yield increased as N fertilization rate increased."

In addition, harvest timing that resulted in the highest biomass yield depended on the mixture of plant species, the number of harvests, and the amount of precipitation received during the growing season.

"The effect of year on biomass yield was mainly attributed to the amount of precipitation received during the most critical period of the growing season, with most locations experiencing moderate to severe drought conditions for at least one season," researchers said.

"This effect of year, and precipitation in particular, highlighted the importance of conducting long-term field studies to more accurately predict expected biomass yields from CRP lands."

Read the study here: http://bit.ly/…

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

Follow him on Twitter @toddneeleyDTN


Developing Climate-Smart Ag

By Chris Clayton
DTN Ag Policy Editor

OMAHA (DTN) -- Farm organizations are beginning to talk about the evolution of climate-smart agriculture and the need to ensure the U.S. remains at the table as the United Nations begins developing an agricultural framework for climate change.

Representatives from more than 30 organizations were scheduled to meet in Washington, D.C., on Tuesday for the steering committee for the North America Climate Smart Agriculture Alliance. The meeting was hosted by the American Farm Bureau Federation and sponsored by the group Business for Social Responsibility. Beyond the U.S., farm leaders from Canada and Mexico also were scheduled to talk about climate-smart agriculture strategies in their countries as well.

The meeting marks a slight change in at least some farm organizations, which have largely avoided the specific topic of climate change since the former Obama administration championed a national cap-and-trade strategy more than eight years ago.

While the Trump administration has sought to peel back Obama-era policies on climate change, some agricultural leaders see the need for the U.S. to remain involved on global climate strategies.

"The world is growing," said Ernie Shea, president of the group Solutions from the Land and an organizer of Tuesday's meeting.

"There are going to be 10 billion people and they have to eat. Agriculture has to grow, but it also has to be sustainable."

Shea visited with DTN last week in Washington about the meeting and the reasons U.S. agriculture needs to re-engage on the issue of climate change.

Changing climatic conditions are a problem. That was reflected in 2017's natural disasters, which ranged from a succession of hurricanes to wildfires in the Plains to California and drought in the Northern Plains. Damage to U.S. property last year from natural disasters reached $306 billion, according to the National Oceanic Atmospheric Administration.

"These are all the things that science said was going to happen," Shea said. "The U.S. is a big breadbasket, but we're not immune to the impacts of climate. Climate change is a threat multiplier not just to producers in the U.S., but everybody."

The initial focus for commodity organizations and USDA is coalescing around the idea of accelerated adoptive management practices to help build resiliency in the farming system. This involves the various actions farmers and the overall supply chain have taken to reduce costs and help mitigate risks to extreme weather events.

"That has been a pretty comfortable platform to get the aggies back to the table," Shea said.

The North American Climate Smart Agriculture Alliance has three main goals: 1) sustainably increase agricultural productivity and farmers' livelihoods; 2) enhance adaptive capacity and improve resiliency; and 3) deliver ecosystem services, such as sequestering carbon and reducing or avoiding greenhouse-gas emissions.

Outside of adaptation and mitigation, there is the potential to develop a market component by helping link farmers using climate-smart practices with buyers looking to promote more sustainable agriculture. Such practices would include no-till farming, planting cover crops and other farm practices that help sequester carbon and build resiliency. A missing component in all of this is a set of metrics and validation for farmers to help develop these kinds of markets.

"Our vision is this reward mechanism for farmers could be pretty powerful," Shea said.

Back in November, the United Nations Framework Convention on Climate Change met in Germany and reached a decision to advance more work in the area of agriculture. The group, called the Koronivia Joint Work on Agriculture, now has two years to work on the challenges and "bold actions" needed in agriculture before the U.N. climate meeting in November 2020 when more specific actions toward agriculture and climate will be detailed for the U.N. to take up. (https://goo.gl/…)

The U.N.'s long-term agricultural climate project also came after Rabobank and the U.N. agreed to help support $1 billion in financing for sustainable agricultural development in parts of the world such as Brazil and Indonesia.

This new joint U.N. agricultural framework is one reason U.S. farm groups are starting to revisit the topic of climate change. There's a risk that if the U.S. is not at the table on such topics, it could get shut out of the decision-making process. Other export-driven countries could put the U.S. at a competitive disadvantage.

"Clearly, I think the Europeans are going to try to use it as a competitive advantage in trade," Shea said.

Some areas being examined are enabling policies that help encourage farmers such as using crop insurance or conservation programs for climate solutions. Iowa, for instance, initiated a program this year to reduce crop-insurance premiums as much as $5 an acre for farmers to plant cover crops. Other policies that could be perceived as lowering overall emissions would include things such as investment in water infrastructure to move more grain, oilseed and inputs through barges rather than trucks or rail.

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

Follow him on Twitter @ChrisClaytonDTN


Todd's Take

By Todd Hultman
DTN Analyst

As we head into 2018, one of the news stories gaining momentum is the approach of an impending trade war with China. The threat has been long anticipated as President Donald Trump made it clear during his campaign that he would get tough with China on trade policies, at one time vowing to name China a currency manipulator.

As president, Trump backed down from the manipulation charge, but according to CNBC.com, "The U.S. Department of Commerce (is) on the cusp of deciding whether to place tariffs on steel and aluminum imports" ("Cramer: The US-China 'trade war' could explode in 2018" by Elizabeth Gurdus, Jan. 4, 2018 at: http://cnb.cx/….)

In August, the U.S. began an investigation to determine if China is violating intellectual property rights. In response, AP News reported last week that "China warned Washington on Thursday it will 'resolutely safeguard' its interests ahead of a possible decision in an investigation into whether Beijing improperly pressures foreign companies to hand over technology." ("China warns Trump ahead of possible trade decision" by Joe MacDonald, AP Business Writer, Jan. 11, 2017.)

While the looming trade war has not yet been officially declared, there is good reason to believe China has already started taking hostile steps against U.S. soybean growers. On Dec. 20, 2017, Bloomberg news reported that USDA agreed with a request from China to impose stricter standards on U.S. soybean shipments to China. The article also explained that the requirements are not applied to soybeans from Brazil. ("U.S. to Tighten Standard for Soy Shipped to China, USDA Says" with assistance by Alan Bjerga, Shuping Niu, and Jeff Wilson, Dec. 20, 2017 at: https://bloom.bg/….)

Shortly after Bloomberg's article, USDA's Animal and Plant Health Inspections published its own statement with the title "Ensuring Continued U.S. Soybean Exports to China" (http://bit.ly/…). USDA's posting explained that participants across the U.S. grain supply chain will bear the responsibility (and cost) of reducing the level of weed seeds or other foreign material in U.S. soybean shipments to China to less than 1%, starting in 2018. USDA's Federal Grain Inspection Service will inspect and certify whether shipments are below or above the 1% allowable limit.

U.S. shipments certified below 1% foreign material are supposed to be expedited by China's inspection service (AQSIQ), while shipments over 1% are likely to require further cleaning. According to USDA, China will not hold or unnecessarily delay U.S. shipments based solely on foreign material.

Clearly, there will be a cost to complying with these new requirements, and it is not clear why USDA would agree to comply when Brazil is not required to do the same. There is also no reason to believe that agreeing to China's request has earned U.S. soybean growers any favors.

While USDA's popular WASDE and Grain Stocks reports were being examined on Friday, the less-noticed Oilseeds: World Markets and Trade report was also released with the heading: "China is Key to Slow Pace of U.S. Soybean Exports." An accompanying graphic showed how China increased soybean purchases from Brazil by 7.19 million metric tons (264 million bushels) in the first quarter of 2017-18 from a year ago, while purchases from the U.S. dropped 5.37 mmt (197 mb) from a year ago.

At the same time, U.S. soybean purchases from other sources were running slightly higher than a year ago. One other interesting number from Table 22 showed USDA expects Brazil to have just 77 million bushels of ending soybean supplies when the current marketing year ends on Jan. 31.

In other words, China has bought nearly every soybean in Brazil to avoid the U.S. before Brazil's next harvest starts shipping out, typically in February. Some will point out that the 2017 U.S. soybean harvest had a lower protein content than Brazil and that may explain some of China's preference. However, for the past several months, China has also paid a higher FOB price for Brazil's soybeans. Given the building trade tensions, China's shunning of U.S. soybeans looks a lot like political retribution.

Had Brazil's weather been hot and dry this season, China would have been forced to take on more U.S. soybeans. However, crop conditions have been good, and both USDA and Brazil's government are estimating Brazil's next soybean crop slightly above 4.0 billion bushels (110 mmt). With trade tensions running high and weather giving Brazil its sixth-consecutive large soybean crop, U.S. soybean growers are already facing bearish headwinds in 2018.

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

Follow him on Twitter @ToddHultman1


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