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DTN Midday Grain Comments 09/21 11:34

DTN Midday Grain Comments 09/21 11:34 Wheat Grain Trade Higher at Midday Trade is narrowly mixed midday with a typically slow session. By David Fiala DTN Contributing Analyst General Comments The U.S. stock market indices are lower; the Dow futures are down 35. The interest rate products are higher. The dollar index is 28 lower. Energies are mixed with crude up 0.10. Livestock trade is mostly lower. Precious metals are lower with gold down $21. CORN Corn trade is right around unchanged at midday with trade staying near the levels seen all week; the trading range has only been 2 1/2 cents. News will be light until next Friday when the quarterly grain stocks report will be released, so harvest results are what the market should be talking about the rest of the week and next week. Both better than expected and worse than expected have been in market discussions. Ethanol margins are near unchanged this morning with corn and ethanol both near unchanged. The weekly export sales were on the low end of the range of expectations at 527,900 metric tons with sales for new marketing year lagging behind the 2016 pace. On the December chart support is at the $3.44 1/4 August low with resistance at $3.53, where we find the 10-day and 20-day moving averages. SOYBEANS Soybean trade is flat to a penny higher at midday with trade staying firmly range bound. Meal is $1 to $2 higher and oil is 45 to 55 points lower. Trade is watching demand and harvest results closely as China secured another 132,000 metric tons. The weekly export sales were very strong at 2.34 million metric tons, 172,700 metric tons of old and new crop meal, and 8,500 of old and new crop oil. November futures keep avoiding sustained pressure following the negative USDA report last week, but we find selling interest in the $9.75-$9.80 area. Yield numbers as harvest progresses should give us some direction the rest of the week before rains slow things into next week. The export news is expected to remain a positive factor for futures. On the November chart support is at the 10-day at $9.64, then the 20-day at $9.57. Resistance is at the $9.79 200-day. WHEAT Wheat trade is flat to 5 cents higher at midday with spring wheat showing the mostly strength with trade testing the higher end of the recent range yet again. Australia continues to see some struggles as the crop emerges from dormancy, while the large Russian crop will continue to keep pressure on the ability of the US to compete on the world market. Egypt is starting to look around for cargos again with the advantage remaining with the Black Sea. The weekly export sales remained soft at 307,200 metric tons. On the December Kansas City contract 20-day at $4.39 is support the 50-day at 4.69 is resistance. 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 2017 DTN/The Progressive Farmer. All rights reserved.

DTN Midday Livestock Comments 09/21 12:20

DTN Midday Livestock Comments 09/21 12:20 Livestock Paper Marked Unevenly Lower as Traders Turn into Final Hour The cattle complex near midday is generally lower, pressured by profit taking and cash uncertainty in the wake of Wednesday's rally. Hog futures are also stuck in reverse with nearby issues particularly attracting sellers. By John Harrington DTN Analyst GENERAL COMMENTS: The fed cattle trade is at a standstill at midday with just a few bids noted in parts of the North (i.e., $104/$165-168). Generally speaking, asking prices are around $110 in the South and $172-174 plus in the North. It's beginning to look as if significant trade volume will not surface until after the on feed report Friday afternoon. According to the midday report, the national hog base is .66 lower ($48.00-51.50, weighted average $49.55). Corn futures are fractionally mixed near the top of the noon hour in lackluster trade volume. Equities at midday are lower with the Dow off 35 points and the Nasdaq negative by 17. LIVE CATTLE: Live prices are mixed as traders prepare to move into the final hour of the session with price changes ranging from 27 higher to 100 lower. Nearbys have been in the red for most of the session, pressured by profit taking in the wake of Wednesday's impressive pop. The premium of spot October may also be reined in a bit by uncertainty surrounding cash potential. Beef cut-outs are lower at midday, off .21 (select, $188.33) to 0.25 (choice, $191.79) with light to moderate box movement (50 loads of choice cuts, 12 loads of select cuts, 10 loads of trimmings, 10 loads of coarse grinds). FEEDER CATTLE: For the most part, feeder are moderately lower at midday (i.e., mostly down 10 to 92), checked by positioning relative to yesterday's surge forward and the September 1 on feed report set for release Friday (i.e., 2:00 CDT). Yet losses seem to be moderating from the toughest wave of selling seen earlier this morning. LEAN HOGS: Triple-digit losses blanket the first three lean issues at midday (i.e., off 112 to 190) as tough fundamentals continue to make it difficult for bulls to breathe. The rest of the complex is moderately lower. Most of the trade volume seems to consist of bear spreading and long liquidation. The carcass value is sharply lower at midday with all major primals quoted lower (especially the rib, picnic, and ham). Pork cut-out: $74.13, off $2.19. CME cash lean index for 09/19: 60.92, off 0.96 (DTN Projected lean index for 09/20: 60.12, off 0.80). John A. Harrington can be reached at john.harrington@dtn.com (BE) Copyright 2017 DTN/The Progressive Farmer. All rights reserved.

DTN Closing Grain Comments 09/21 13:49

DTN Closing Grain Comments 09/21 13:49 Grains Flounder, End a Little Higher Corn, soybeans, and wheat all struggled with low trading volume Thursday but were able to end a little higher. Compared to outside commodities, Thursday's grains were among the better performers of the day as December gold traded over $20 lower.

DTN Chart Technical Points 09/21 16:30

DTN Chart Technical Points 09/21 16:30 DTN FUTURES 10 9/21/17 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 DEC 452.50 447.19 444.53 440.29 461.39 62.05 52.91 45.95 76 72 85 71 CBTWT MAR 472.00 467.38 464.44 461.28 482.82 61.44 51.88 45.36 78 74 85 67 KC WT DEC 449.50 445.44 443.39 440.19 462.06 58.22 50.12 44.36 69 64 80 69 KC WT MAR 467.50 463.25 461.03 457.92 479.91 58.53 50.39 44.61 71 65 80 68 MN WT DEC 624.25 621.31 629.64 638.29 684.27 33.72 34.00 40.89 22 14 7 10 MN WT MAR 636.00 634.31 642.19 649.25 688.72 33.40 34.45 41.62 18 13 7 12 CORN DEC 350.25 350.00 352.17 353.29 367.19 39.86 39.66 41.34 31 38 33 34 CORN MAR 363.00 362.56 364.58 365.81 379.29 40.73 40.26 41.75 32 39 32 33 CORN MAY 371.25 371.00 372.92 373.72 385.96 41.39 41.04 42.31 31 40 39 39 OATS DEC 250.00 244.06 239.61 239.00 259.10 66.87 55.01 48.73 82 73 39 25 OATS MAR 257.00 250.69 246.75 246.01 262.62 68.65 57.22 50.60 85 75 47 30 BEANS NOV 970.75 968.50 965.53 959.25 963.91 59.37 56.01 51.93 60 65 79 77 BEANS JAN 981.00 978.88 975.78 969.17 973.03 59.92 56.49 52.27 61 66 80 79 BEANS MAR 990.25 988.06 984.53 978.08 980.51 60.97 57.34 52.94 66 70 83 80 S MEAL OCT 309.00 307.33 305.11 302.41 306.88 60.48 56.30 51.01 52 63 75 73 S MEAL DEC 312.90 311.08 308.64 305.62 309.70 61.70 57.33 51.71 54 64 77 76 B OIL OCT 34.10 34.37 34.61 34.76 34.31 38.90 44.49 50.08 39 33 32 50 B OIL DEC 34.34 34.61 34.86 35.01 34.54 38.84 44.49 50.13 39 32 32 51 CATTLE OCT 110.10 109.15 108.03 107.01 109.09 64.35 57.89 50.82 83 77 76 62 CATTLE DEC 116.20 114.70 113.41 111.79 112.01 73.62 65.74 56.21 90 83 90 84 FEEDER SEP 153.18 152.38 150.40 147.24 146.32 74.59 67.09 57.63 93 92 96 95 FEEDER OCT 155.88 154.48 151.81 148.22 146.38 76.11 69.80 60.12 92 94 96 95 HOGS OCT 57.33 59.03 59.63 60.76 64.31 28.86 31.95 36.82 23 43 19 16 HOGS DEC 57.80 58.88 58.11 58.20 60.16 44.67 44.59 44.63 77 85 58 36 COTTON OCT 69.04 69.87 70.42 71.86 70.57 33.82 40.21 45.23 32 33 19 27 COTTON DEC 68.25 69.07 69.42 71.03 69.70 33.36 40.08 45.24 37 34 19 25 RICE NOV 12.71 12.80 12.81 12.78 12.62 46.29 50.44 55.09 27 40 62 69 RICE JAN 12.97 13.05 13.05 13.02 12.85 47.25 51.35 55.94 25 40 61 68

DTN Closing Livestock Comment 09/21 15:59

DTN Closing Livestock Comment 09/21 15:59 Lean Hog Futures Resume Early Fall Meltdown Hog futures closed sharply lower in the first four contracts, hammered by bearish fundamentals and active bear-spreading. Cattle contracts settled mixed with nearbys losing ground to deferreds. By John Harrington DTN Livestock Analyst GENERAL COMMENTS Although a few Northern cattle buyers left some bids of the table (e.g., $104/$165-$168) here and there, for the most part, feedlot country remained as a closed library. Some asking prices were reported at $110 in the South and $172-$174 in the North. According to the closing report, the national hog base is $1.12 lower ($45-$51.50, weighted average $49.09). Corn futures closed fractionally higher at the conclusion of a boring and featureless session. The stock market closed lower with the Dow off 53 points and the Nasdaq down by 33.

DTN Early Word Grains 09/22 06:03

DTN Early Word Grains 09/22 06:03 Everything is Green Again December corn was 1 cent higher, November soybeans were 8 cents higher, and December Chicago (SRW) wheat was 1 cent higher. By Darin Newsom DTN Senior Analyst 6:00 a.m. CME Globex: December corn was 1 cent higher, November soybeans were 8 cents higher, and December Chicago (SRW) wheat was 1 cent higher. CME Globex Recap: The grain and oilseed complex was showing green across the board early Friday morning, supported in part by renewed weakness of the U.S. dollar. Energies were mixed, with natural gas stabilizing following Thursday's sharp sell-off, and metals were mostly higher led by a rejuvenated gold market. DJIA futures were lower, pressured by Asian equities after North Korea threatened a test of another hydrogen bomb over the Pacific Ocean. OUTSIDE MARKETS: The Dow Jones Industrial Average closed 53.36 points (0.2%) lower at 22,359.23, the NASDAQ Composite lost 33.35 points (0.5%) to 6,422.69, and the S&P 500 fell 7.64 points (0.3%) to 2,500.60 Thursday. DJIA futures were 25 points lower early Friday morning. Asian markets closed lower with Japan's Nikkei down 51.03 points (0.2%), Hong Kong's Hang Seng off 229.80 points (0.8%), and China's Shanghai Composite down 5.28 points (0.1%). European markets were trading mostly higher with London's FTSE 100 up 6.49 points (0.1%), Germany's DAX gaining 32.33 points (0.3%), and France's CAC 40 rallying 27.12 points (0.5%). The euro was 0.0043 higher at 1.1984 while the U.S. dollar index lost 0.23 to 91.95. December 30-year T-Bonds were 16/32 higher at 154'12 while December gold gained $5.00 to $1,299.80. Crude oil was $0.02 lower at $50.53 while Brent crude added $0.03 to $56.46. China's Dalian soybean futures were higher and Malaysian palm oil futures were lower overnight.

DTN Early Word Opening Livestock 09/22 07:21

DTN Early Word Opening Livestock 09/22 07:21 Cattle and Hog Futures Staged for Mixed, Late-Week Opening Look for the cattle complex to open on a mixed basis as traders position ahead of cash and on feed news. Lean hog contracts are also set to begin with uneven action in light volume. By John Harrington DTN Livestock Analyst Cattle: Steady-$2 HR Futures: mixed Live Equiv $130.40 - 0.24* Hogs: $1-2 LR Futures: mixed Lean Equiv $78.31 - $3.28** * based on formula estimating live cattle equivalent of gross packer revenue ** based on formula estimating lean hog equivalent of gross packer revenue GENERAL COMMENTS: Once again cattle buyers and sellers have reached the last business day of the week with not a hoof traded. Moderate trade volume will have to develop sometime today, perhaps not until the feedlot inventory hit the press. Packers bids are likely to begin this morning around $104-105 live and $165-168 dressed, still far below asking prices of $119 in the South and $172-174 in the North. The September on feed report is scheduled to be released this afternoon at 2:00 CDT. Average trade guesses look like thing: on feed, up 2-3 percent; placed in August, off 2-3 percent; marketed n August, up 6 percent. Live and feeder futures are staged to open on a mixed basis as traders position ahead of cash and on feed news.

DTN Cattle Prices/Trends 09/22 08:30

DTN CATTLE PRICES/TRENDS 09/22 08:30 HEAD SOLD LIVE STEERS DRESSED LIVE HEIFERS DRESSED KANSAS . . . . . NEBRASKA . . . . . TEXAS . . . . . COLORADO . . . . . IOWA . . . . . *=PRIVATE SOURCES DTN COMMENTS: The country is slow to start this morning, but we expect packer inquiry will start to improve over the next several hours. Having said that, it is very possible that significant trade volume could be delayed until after the on feed report is released later this afternoon. Asking prices are around 110.00 plus in the South, and 172.00-174.00 in the North. Beef cutouts are expected to be lower 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


Comparing UAVs, Planes, Satellites


By Jim Patrico
Progressive Farmer Senior Editor

A mysterious deep-green rectangle convinced Randy Jax that aerial imaging had the potential to improve his farm.

His family had grid-mapped its fields near Adams, Minnesota, for 15-plus years, and Jax thought he knew almost all there was to know about the farm's soils. But, he was surprised this spring when he stared at an aerial image of a field near his farm buildings. The NDVI (Normalized Difference Vegetation Index) image, which was taken by a UAV (aka drone, UAS), contained a large rectangular shape that was greener than the area surrounding it. That indicated the corn plants within the square were thriving better than those outside it.

After digging into his family memory banks, Jax realized the rectangle was the outline of a pasture his father had used for dairy cows, a pasture that had been converted to cropland almost 20 years ago.

His soil samples had detected high nutrient levels in that area but did not clearly "see" the rectangular shape.

But the drone saw it. "NDVI shows the good or bad in smaller areas, and gives you information going forward," Jax said.

A simple thing, perhaps, but Jax's discovery is indicative of what farmers are seeing with new eyes in the sky. Growers now can get overhead perspectives on their fields, which can help with variable-rate prescriptions for seed, chemical and fertilizer. Aerial imaging also can make replant decisions easier and more informed; they can shape the way a farm grows.


Keys to the boom in agricultural aerial imaging are technologies that can capture valuable forms of digital photos. For example, near-infrared (NIR) images plus software can create NDVI maps, which make crop-health evaluation possible. Thermal imaging can detect variations in heat from a subject, which has potential when working with livestock. And three-dimensional aerial imaging can help see elevations in fields that are useful in designing contour systems and drainage tile layouts.

UAVs have been collecting much of the imaging buzz lately. However, farmers and the consultants who serve them can choose from two other aerial photography platforms: airplane and satellite. Together, the three platforms are like trifocal glasses. Drones are for the closest work, airplanes give a medium view and satellites take the longest view possible. Farmers might use one, two or all three, depending on their circumstances and how fine they need imaging to be.


Herb Dowse flew the UAV that found the mystery rectangle at Randy Jax's place. Dowse is a precision agriculture specialist for Northern Country Co-op, which serves large swaths of northern Iowa and southern Minnesota. He flies both an AgEagle RX60 fixed-wing craft and a Phantom III rotorcraft. He also can reference satellite images "as a check" either before or after sending up a drone. He doesn't use airplanes, in part, because not many pilots do that work in his coverage area.

An AgEagle can cover 220 acres in less than 20 minutes, so Dowse uses it for broad acre work. That usually means evaluating in-season crops, but he also has used the AgEagle for mapping existing tile lines. If a customer isn't sure where tile lines lie, Dowse can fly after a rain event and spot them based on NDVI images. Tile lines show up as red or yellow because there's less vegetation immediately on top of them. If there is a break in a line, "They [his customers] don't have to tear up 20 rows. Instead, they might only have to tear up three rows because they know exactly where the problem is," Dowse said.

He uses the Phantom III to focus on problem areas where it can hover for close-up work. Last year, for instance, he used the Phantom III to assess crop damage for an insurance claim after cattle got loose in a field.

When used to evaluate the health of a crop, Dowse said, drone imaging is a first step. If he finds a problem, he always follows up with a personal inspection.

John McNamara, an agronomist for Wiles Bros. Inc., a farm-supply company and farm in Plattsmouth, Nebraska, agreed that UAV flights should lead to boots on the ground. "A drone might tell me, 'Hey, there is something different here.' But, I am a firm believer in ground-truthing, walking an area to see exactly what is going on."

McNamara also has satellite imaging available to him through the company's subscriptions to Climate FieldView and EncircaSM View. (Editor's note: Encirca and DTN/The Progressive Farmer have a business partnership.) But, McNamara said, "Drones are better than satellites for pointing out problem areas," because the resolution of the image is so much better.


Drones typically produce images with resolutions as fine a 2 inches per pixel [the building blocks of an image]. Images from airplanes range from 10 inches to 3 feet resolution. Satellite images are the coarsest, at about 9 to 15 feet per pixel.

UAVs can fly under the clouds, so weather is less of a factor than for airplanes or satellites. But, UAVs and winds don't get along well, and by law, they have to fly under 400 feet. Also, you must have a permit from the Federal Aviation Administration to fly a UAS for commercial purposes, including farming. You also must fly only in line of sight, and you must have a spotter.

Shadows from the sun early in the morning or late in the day can lessen the usefulness of UAV images. That limits flight times to mid-morning to mid-afternoon on sunny days. Some new imaging processing technologies can partially overcome this time/sunshine limit.


Two years ago, Tim Tyson, of Parker, Kansas, founded his company—TNT Solutions—based on images taken from airplanes. "As far as getting information to farmers so they can get things done, we think airplanes are the way to go," he said.

Tyson is a dealer for AgPixel, a remote-sensing and geospatial analytics company, based in Johnston, Iowa. His customers are agronomists and consultants. He contracts with a pilot, and AgPixel processes the raw aerial imaging to import directly into SST and SMS software for writing prescriptions. He guarantees to deliver processed images within 24 hours after a flight. Tyson charges about $2 per acre.

Tyson recently added access to satellite images to his business portfolio, and he will fly a UAV when asked. "If you have a small project [under 80 acres], or you want to get down below 1-inch resolution, we can do that with a UAS," Tyson said.

"But if you are looking at a lot of acres [for most work], you don't want a UAS, you want an airplane," Tyson said.

His pricing for drone work starts at $200. For satellites, he charges $.15 per acre per image with a minimum of 1,000 acres and 60 days subscription.


Peter Scharf has used all three imaging platforms in working with farmers. He is a University of Missouri plant sciences professor who, in 2015, started a business named NVision AG. Motto: "Turn Yellow Back to Green ... But Leave Green Enough Alone." The idea is to provide crop consultants and their grower customers rate-control files for variable-rate application of in-season nitrogen in corn.

Scharf does this by analyzing aerial images to determine which areas of a field might benefit from an extra shot of N. The rate-control files he writes can save a poor crop or turn a good crop into a great crop. The more yellow an area of corn is, the more it responds to added nitrogen, he said. Scharf recommends the most nitrogen where the corn leaves are the most yellow: "I have not found corn yet that is so yellow it is not worth saving."


When examining aerial images, Scharf tries to estimate yield loss if the grower takes no action. That gives farmers and consultants a cost/benefit approach to nitrogen application.

When he started his business, airplanes were Scharf's preferred platform for imaging. "The thing about a plane is one guy with a Cessna can do 10,000 acres in a day, and one guy with a drone can only do 1,000," he said.

Airplanes do have drawbacks. For example, it isn't always possible to find a pilot who can fly on short notice or when the weather is right.

"A lot of times when we are pulling the trigger, we want answers right now. We don't want to schedule a plane to fly a few days from now," said Thad Becker, precision ag director for MFA Inc. The farm-supply and marketing cooperative has more than 45,000 farmer/owners in Missouri and adjacent states. "Variable-rate fertilizer is kind of our bread and butter," Becker said.

Variable rate is where Scharf fits in. MFA has been a customer for two years, and he understands the urgency of its business. If he catches a nitrogen deficiency early, he said, he can recommend an application with a tractor-mounted toolbar. But later in the season, a highboy sprayer or even an aerial application might be necessary. "With ag, you probably have only four key decision points in a year. You have this little window in which to work," he said.


Scharf switched much of his imaging work from airplane to satellite this year. He was able to do so because some satellite image suppliers, especially Planet, have launched more satellites to make their product timelier.

In the recent past, satellites only overflew most locations once or twice a month. If there was a cloud cover during the flyover, images were not useful. Now, Planet offers much more frequency because at least one of its satellites is overhead most days. Planet has a goal of photographing every part of Earth everyday.

When Scharf tried satellites this spring, "I was just blown away to find images [for a client's fields] from four days in a row," he said. "That tipped the balance for me" from airplanes to satellites.

Despite their lower resolution compared to images from airplanes or UAVs, satellite photos work well for writing the rate-control files that Scharf offers. "It's a pretty coarse image, but it's really quite adequate as long as the soil is covered [by vegetation]," he said. "The crop has to be hip to waist high to get a pretty good prescription out of it."

Satellite images are much less expensive than either airplane or drone images. A particular advantage is that, "Satellite images let you look backward in time," Scharf said. Because of extensive archives of images, he can compare today's views with those taken years earlier.


Mark Thomeczek, of Marshall, Missouri, is owner of JBM Agronomics, part of the MFA network and a client of Scharf. He appreciates the three aerial imaging platforms and said they are all useful, but he is not afraid they will put him out of work. He visits clients' fields nearly weekly in-season to make his own on-the-ground evaluations.

"I don't count on satellite or plane imaging to tell me there is a problem," Thomeczek said. "I know that before I ever call in a request [for aerial imaging]. But I can't georeference a problem from the ground. Peter's [analytics] program can give us a good estimate of yield loss and profitability. [Without that] sometimes, I can't do anything but a SWAG [scientific wild ass guess]."


Scharf uses his experience with all three imaging platforms to make comparisons.

-- "What drones can do that nothing else can is get very high-resolution images that potentially have some very important application," Scharf said. Example: Drones work well for replant decisions because images are higher resolution and even can see individual small plants.

-- "The promise with planes is to do it [collect imaging] earlier than with satellites. I have done it as early as knee-high corn," Scharf said. That means earlier diagnosis and application.

-- "Speed is so important, I would love to see satellite be my meat-and-potatoes source of imaging for most of my fields," Scharf said. Rather than set up a UAV or airplane, and hope for good weather, he can download a satellite image and immediately start analysis.


Here's a quick look at the advantages and disadvantages of the three aerial imaging platforms:

UAVs (aka drones, UASs):

-- easy to deploy on short notice

-- highest image resolution

-- shortest flight time and least amount of area covered per flight


-- ability to go when the customer needs it, depending on weather

-- images on an as-needed basis

-- resolution good enough to allow writing prescriptions


-- bigger picture about what is going on; general overview

-- cheaper in the long run

-- lowest resolution

-- frequency of imaging questionable

Jim Patrico can be reached at jim.patrico@dtn.com


Organic Imports Questioned

By Chris Clayton
DTN Ag Policy Editor

OMAHA (DTN) -- USDA's Office of Inspector General released an audit this week of the National Organic Program that found the program was lacking control and oversight of imports coming into the country that were declared "organic."

The audit highlighted that at least some imported food and feed products did not have the paper trail to prove they were actually raised under organic standards. Adding to that, USDA's Agricultural Marketing Service had no controls in place at ports of entry to ensure importers are meeting U.S. organic standards. USDA had not worked with the U.S. Customs and Border Protection to ensure U.S. organic requirements are met and there was an adequate paper trail from importers.

USDA's Agricultural Marketing Service, which oversees the National Organic Program, largely concurred with the Inspector General's audit and stated in response that USDA was taking several actions to tighten controls of imported organic products.

Imports of organics have soared in recent years, but there have been growing doubts over whether those products are actually organic. This is especially true for the spike in imports of commodity crops, including organic feed. Imports of organic corn have risen from 3.1 million bushels in 2014 to an estimated 20 mb this year. Organic soybean imports hit 40 mb last year.

The incentives for importing commodities and dubbing them "organic" can be significant. Cash prices for domestic organic corn currently run from $8 to $9 a bushel while cash bids for organic soybeans are $16.75 to $17.50 a bushel, according to USDA's latest National Organic Grains and Feedstuffs report. Those compare to standard commodity prices under the DTN National Corn Index at $3.04 a bushel and the DTN National Soybean Index of $8.96 a bushel.

The OIG also found that USDA's process for determining equivalency standards overseas lacks transparency. There are documents to resolve differences between U.S. and foreign organic standards, but there is no methodology to disclose how that works to industry. Along with that, USDA "was unable to provide reasonable assurance" that the proper paperwork was reviewed at U.S. ports to verify that products called organic actually came from certified organic farms overseas and businesses that grow and sell organic products.

Further, some of the fumigation actions taken at port to deal with pests effectively converted commodities from being organic. USDA's Agricultural Marketing Service has not established controls at ports to track whether products fumigated with non-organic chemicals are then not sold as organic.

The USDA audit came after the Washington Post tracked a shipment of 650,000 bushels of soybeans earlier this year from the Ukraine and shipped through Turkey that ended up being labeled as "organic" once the shipment arrived in the U.S. The Post found several thousand bushels of corn and soybeans that were being declared as organic once they were shipped, even though there was no evidence they were grown under organic standards. USDA ended up pulling the organic certification of a Turkish company following its own investigation into the situation.

Part of the challenge facing the National Organic Program is that it has a $9.1 million funding level to oversee a U.S. organic industry that pulled in roughly $47 billion in sales and is growing at roughly $3.5 billion in sales annually.

The Organic Trade Association released a statement saying the OIG report supports the group's position that more trade oversight and monitoring are needed to protect the integrity of the program. The group stated that it is pursuing legislative changes in the next farm bill to give the National Organic Program more tools to deal with fraud, such as electronic tracking of shipments.

The entire audit had nine different recommendations for USDA to improve the organic program, which included the need to strengthen control over imports and verify documents at U.S. ports of entry. Along with that, USDA needs to ensure more transparency regarding how USDA and foreign countries determine final equivalency in organic standards. USDA also is now working with Customs and Border Protection on a memorandum of understanding to review National Organic Program certificates at ports. That memorandum of understanding will be in place sometime in the first half of 2018, USDA stated. Along with that, USDA also needs to ensure more controls are implemented at ports to ensure that products needing fumigation at ports are not sold as organic products. The Inspector General's office did acknowledge that USDA organic officials are improving the process to prevent such sales.

The audit was released just after Miles McEvoy, deputy administrator of USDA's National Organic Program, announced last week he would leave his position at the end of September. McEvoy joined the National Organic Program in 2009 after overseeing a similar program in Washington State.

The full audit can be viewed at https://www.usda.gov/…

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

Follow him on Twitter @ChrisClaytonDTN


Group Wants Meeting with Perdue


By Todd Neeley
DTN Staff Reporter

OMAHA (DTN) -- A group challenging the administration of checkoff programs in agriculture has asked U.S. Secretary of Agriculture Sonny Perdue for a meeting to make its case for transparency and more federal control of those programs.

In a letter to Perdue on Wednesday, Mike Weaver, president of the Organization for Competitive Markets, said the group has uncovered a number of issues with the programs.

OCM filed a lawsuit in 2014 demanding the release of some 9,300 pages of documents related to the USDA's Office of the Inspector General investigation into the beef checkoff program. The documents stem from two OIG audits of the beef checkoff and its contractors, including the National Cattlemen's Beef Association.

For years, questions have been raised by groups such as OCM about whether millions in checkoff dollars are used properly by industry representatives.

The audits found producer investments in the checkoff are protected by a firewall that prevents beef checkoff dollars from being used for policy activities. Two audits by the OIG and several random audits by USDA found contractors to be in compliance with the laws that protect checkoff funds.

The OCM has said it doesn't buy that, filing the initial lawsuit in October 2014.

In the letter to Perdue, Weaver said his group has found additional problems with another checkoff program.

"OCM, working with other organizations, has uncovered the most recent issue within the dairy checkoff program," the letter said.

"According to federal law (7 US CODE §4514), the program is required to submit an annual report to Congress outlining the expenditures, activities and effectiveness of the program. This report has not been drafted nor filed for five years, keeping dairy producers in the dark about how their hundreds of millions of tax dollars have been spent over this time period. This is just one example of the lack of transparency and accountability of the checkoff programs."

Weaver said checkoff programs collect nearly $750 million in taxes from farmers and ranchers and "yet the government - their government - fails to provide the basic safeguards for these tax dollars as it does for other taxes collected."

OCM has requested the release of USDA documents related to a 2012 audit of the beef checkoff.

"Unfortunately, USDA refused to do so, leaving OCM with no other option but to bring a FOIA (Freedom of Information Act) complaint in an effort to force transparency," Weaver said.

"It is important to note that these mandatory checkoff fees are collected by agencies of the USDA and are the responsibility of the Agricultural Marketing Service (AMS) to oversee as clearly outlined on AMS's own website: 'AMS provides oversight, ensuring fiscal responsibility, program efficiency and fair treatment of participating stakeholders.'"

Weaver said in the letter that checkoff funds are not producer funds, "but are government funds derived from farmers and ranchers paying a mandatory fee to the government," meaning USDA "has the responsibility to ensure the checkoff programs are accountable, transparent and without conflicts of interest.

"Yet, the previous administration failed to do so," the letter said.

"Mr. Secretary, OCM and the family farmers and ranchers who pay into these government programs respectfully request a meeting with you. We believe you have a unique opportunity. It was the previous administration that failed the farmers and you now have a chance to make these programs work for those who are paying these taxes."

The group has requested the meeting prior to USDA turning over administration of the Grain Inspection, Packers and Stockyards Administration, or GIPSA, to the AMS.

"Further, we request you delay your final decision to move the administration of GIPSA to AMS until the conclusion of this meeting," Weaver said in the letter.

"This will allow America's family farmers, ranchers and dairy producers a chance to be heard."

The USDA initially conducted an audit of the beef checkoff program in 2013. The OCM filed a FOIA request and the OIG withdrew the audit and re-released it in 2014.

The initial audit included a statement saying The National Cattlemen's Beef Association was in full compliance. When the audit was re-released in 2014, the statement was removed.

NCBA has questioned OCM's motives because it receives funding from the Humane Society of the United States.

Read the OCM letter here: http://bit.ly/…

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

Follow him on Twitter @toddneeleyDTN


States Grapple with Dicamba


By Emily Unglesbee
DTN Staff Reporter

ARLINGTON, Va. (DTN) -- State pesticide regulators and departments of agriculture are struggling to manage the workload of hundreds of 2017 dicamba injury investigations as well as looming decisions on how to restrict and manage dicamba use in 2018.

"I represent state lead agencies with pesticide control officials, and my charge is to try to look after them, and this can't happen again," said Tony Cofer, president of the Association of American Pesticide Control Officials (AAPCO) and a pesticide director with the Alabama Department of Agriculture and Industries. "We cannot survive it, and I am not overstating that. If you have a staff of two and you have 150 dicamba complaints, that's not manageable."

Cofer's comments came during a routine meeting of the State FIFRA Issues Research and Evaluation Group (SFIREG). The group, convened under AAPCO, is charged with researching and advising both state and federal regulators on pesticide management and safety. The dicamba injury crisis of 2017 dominated the group's two-day meeting in Arlington, Virginia, on Sept. 18 to 19.

The committee soon will make a formal recommendation to EPA regarding dicamba use in 2018. EPA had several members in attendance. They stressed the agency is taking the problem seriously.

"[EPA] is very concerned with what has occurred and transpired in 2017, and we're committed to taking appropriate action for the 2018 growing season with an eye towards ensuring that [dicamba] technology is available...for growers, but that it is used responsibly," said Reuben Baris, who works in the herbicide division of EPA's Office of Pesticide Program's registration division.

Baris also promised that a decision from EPA on dicamba use is coming in time for growers to make the appropriate seed and herbicide decisions for 2018.

"We're working as fast as we possibly can to bring negotiations [with the dicamba registrants] to closure so that everyone has the same information for the 2018 growing season," he said.


Over the course of four hours on Tuesday, the working committee fleshed out a number of potential regulatory changes state agencies may need to regulate dicamba successfully next year. They included restricted use pesticide classifications, mandatory applicator training, labeling revisions for the herbicides, a chemical marker to distinguish the use of new and old dicamba formulations and data to differentiate between the different ways dicamba can move off-target.

However, much of the discussion centered on evaluating just how significant the dicamba injury reports have been for states this year.

Dicamba injury complaints have now topped 2,610 in 24 states, according to the latest information gathered by Virginia pesticide control officials.

"We are in unprecedented, uncharted territory," said Andrew Thostenson, a pesticide program specialist with North Dakota State University Extension. "We've never observed anything on this scale in this country since we've been using pesticides in the modern era."

In states where the dicamba injury claims have soared above 100, state regulators are overwhelmed.

"It's almost impossible to respond adequately to that number of complaints given current staffing levels that the [state] departments of agriculture have," Cofer said.

Some regulators expect next year to bring even more problems, said Paul Bailey, director of the plant industries division of the Missouri Department of Agriculture. In 2018, dicamba-tolerant soybean acres are expected to more than double to 40 million to 50 million acres. Dow AgroSciences' 2,4-D-tolerant crop and herbicide system known as Enlist will also be in corn and cotton fields, and possibly soybean fields, pending import approvals.

Nor are soybeans the only crop at risk for dicamba damage. Missouri regulators are conducting injury investigations for peach orchards, vineyards, peanuts, watermelon and black-eyed peas, Bailey said.

Bailey and others noted that the current count of formal dicamba injury complaints from states does not represent the total damage from dicamba injury this year.

"We are kind of getting the idea that one out of 10 farmers affected are actually filing complaints with our office," noted Carrie Leach, quality assurance director for the Office of Indiana State Chemist, which is working on 126 dicamba investigations.

If all the farmers with dicamba injury had filed their complaints in Missouri, the state's 311 complaints would likely have rivaled Arkansas, which has seen 966 complaints, added Bailey.


On top of investigating the thousands of dicamba injury reports across the country, state regulatory agencies are trying to craft dicamba use rules and restrictions for 2018 in time for growers to make timely seed and herbicide decisions.

It's a tough task, noted David Scott, pesticide program administrator for the Office of Indiana State Chemist.

State investigators do not have enough information to differentiate between the multiple types of dicamba injury, from physical drift to volatility, tank contamination or off-label use of older dicamba formulations, Scott said.

Volatility -- the evaporation of a chemical, which can then move off target -- is of special concern, because it is beyond applicator control, Scott noted. The new dicamba herbicides are designed to be significantly less volatile than older formulations, but independent research from a number of universities has shown that the new compounds do still volatilize.

Trying to determine off-label use in a damaged field is also complicated by the dicamba herbicide labels, which Scott called "convoluted and actually contrary to themselves in certain areas."

Investigators aren't likely to have all the answers in hand before the states must adopt official dicamba rules for 2018, Cofer added.

"I know that the science hasn't necessarily caught up to where we are in the process," he said. "Regulatory decisions are probably needing to be made sooner than later that will affect next year's growing season...So the agencies concerned are going to have to make decisions probably before all the information is gathered."

The working committee also quizzed state pesticide officials on the types of education they required of applicators before the season, to determine if a certain protocol had been more successful and should be required for next year.

Like most issues with dicamba, connections between education and damage were not clear, however. Derrick Lastinger, a program director for the Georgia Department of Agriculture, attributed the state's zero dicamba complaints to its rigorous education and training instituted for 3,000 applicators in the state.

Dwight Seal, a district manager with the pesticides division of the North Carolina Department of Agriculture and Consumer Services, said some farmers opted not to spray dicamba after going through the state's online training course, a phenomenon echoed by Georgia's Lastinger.

"I think the training really did reinforce the requirements and did perhaps scare some folks away from using this technology," Lastinger told the committee.

Ples Spradley, a pesticide assessment specialist with the University of Arkansas, noted that Arkansas had rigorous training efforts as well, including spray clinics, an online training module and mandatory test, but it is still facing nearly 1,000 dicamba injury investigations. That state appears to have been a significant user of post-emergence dicamba in 2017.

You can see the full SFIREG working committee's meeting minutes at the AAPCO website here: http://bit.ly/….

Emily Unglesbee can be reached at Emily.unglesbee@dtn.com

Follow Emily Unglesbee on Twitter @Emily_Unglesbee


Todd's Take

By Todd Hultman
DTN Analyst

After USDA disappointed many again with a corn yield estimate of 169.9 bushels per acre, my first thought went directly to commercials, wondering if they would be buying corn as December prices dipped near their August lows. After all, securing cheap corn supplies that can be moved profitably is the primary interest of commercial grain firms, and we are near that time of year when seasonal lows typically occur.

I was somewhat satisfied to see Friday's Commitments of Traders report say that commercials turned net long in corn for the first time since late June. Corn had 4,831 net long positions, which is small, but it's a start and supports the notion that corn prices are nearing support after the demoralizing month of August, when December corn dropped 27 cents a bushel from prices that were already low.

That does not mean that corn cannot trade lower, and we have yet to see what harvest will hold. However, knowing that spot prices are below the cost of production for producers that have land expenses, and seeing the companies that know the grain market best take long positions on the board, we can reasonably expect that corn's lows should be near.

Corn was the most recent crop of interest for commercials, but not the only one where commercials are finding attractive values in the grain market. After a brief absence this summer, commercials returned to the long side of Chicago wheat on Aug. 8, and as of Sept. 12, were holding 33,995 net longs.

In the case of Chicago wheat, it is not unusual for commercials to be net long when prices are cheap, but it is a sign of support nonetheless. In 2016, the DTN SRW Wheat National Index fell to its lowest level in seven years. Technically, noncommercial longs as a percent of total holdings hit a bearish 36% last year, low enough to make 2016 a candidate for a possible multi-year low. But there is still no bullish argument on the horizon, while USDA is estimating 933 million bushels of U.S. ending wheat stocks for 2017-18.

Readers of this column will not be surprised to hear that soybeans continue to have the most active demand interest of the three crops. Friday's CFTC data showed commercials net long 32,292 soybean contracts on Sept. 12, the same day that USDA predicted a record high 4.43 billion bushel soybean crop. That is not an especially large position, but it is unusual to see with a record harvest supposedly on the way, and the DTN National Soybean Index is already trading above its estimated cost of production.

Brazil's new planting season is starting out dry, but it is still early, and they have overcome dry starts before. Thursday's DTN article from Senior Ag Meteorologist Bryce Anderson, "NOAA Issues La Nina Watch," explained that cooler ocean temperatures are possibly setting Brazil up for drier weather in early 2018. You can be certain DTN will be monitoring that situation in the months ahead.

For producers wanting better prices in 2017, the August sell-offs in corn and wheat were disappointing, but at least here in mid-September, the sector of the market that knows the value of grains the best is giving us clues that support should be near. For corn and wheat, commercials' price sensitive buying is not exactly bullish, but for now, they are the best market clues grains have to show.

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

Follow Todd Hultman on Twitter @ToddHultman1


View From the Cab

By Richard Oswald
DTN Special Correspondent

LANGDON, Mo. (DTN) -- Fall is the time of year when luxuriant, green fields are painted earth-toned yellow, orange and brown. But for farmers like DTN View From the Cab farmer Zack Rendel of Miami, Oklahoma, fall harvest numbers paint the prettiest picture of all.

Zack and his family have finished the best corn harvest their farm has ever seen. This year's 132-bushel-per-acre crop topped last year's 123 bpa by a wide margin. Now milo numbers are in, and they look good, too!

"We finished milo harvest Tuesday (Sept. 12). All we had left Monday was our National Sorghum Producers yield contest plot. I narrowed my plot down to 2 acres. One and a half is the minimum. Our field average this year was 114 bushels per acre. On Tuesday when we harvested it, my plot blew me away. It was good -- 161.2 bpa. This is our farm record. The best Brent (Zack's uncle) has had is 154. For northeast Oklahoma, that is phenomenal," Zack told DTN late Sunday.

One negative number in this year's milo crop came from flocks of migrating birds. Zack told DTN that their feeding begins at the tips of heads, and then they work their way down. Ten-inch heads were pecked down to eight. "It would have been better if the blackbirds left us alone. I probably lost 20%. That's what really pulled the yields down," he said. Adding to feeding pressure was a scarcity of supply. "Ours was the only milo within 75 to 100 miles."

This year's sorghum seeding was lower than usual for the Rendels. Three- to six-hundred acres is closer to normal than this year's 25 acres. But heavy sustained rainfall for two weeks stopped Zack's planting progress dead in its tracks. Once planting resumed, it was all about soybeans.

Last week, Zack put in field time with a scraper, smoothing and leveling. Hired helper Terry continued discing, and Zack's dad, Greg, sprayed trash trees in fence rows, and Johnson grass wherever it was found. Brent manned the office, tending to bills and yield data of this year's corn crop.

Autumn in Oklahoma is both harvest and planting time. With milo and corn in the bin, it's time to go full-bore into canola planting on this year's corn ground. About half the total planned acreage had been prepared for seeding as of Sunday. But soil moisture profiles were declining in fields worked with a disc harrow to cut up stalks and prepare a seed bed. Then a welcome rain fell. "It started this morning (Sunday). Thankfully, we got 2 inches. One probably soaked in and the rest helped fill ponds," Zack said.

Since canola seed is small, if young plants are to emerge, shallow planting of about one-half to three-quarters of an inch deep is a must. Rain on worked ground creates a crust that preserves topsoil moisture for near-ideal planting conditions.

Soybeans with a maturity range of 4.8 to 5.3 are maturing. Some fields are turning yellow while others remain green. That's partly because of this year's wide planting window lasting from April to July. Harvest will likely start before the traditional first frost date in mid-October and possibly beyond.

Over the weekend, Zack saw his son Nathan's elementary school football team score another big win. Brent and his family traveled to Kansas City to enjoy one prominent Midwestern fall color: Kansas City Chiefs red. They had a good day with a 27-to-20 win over the Eagles.

"Uncle Brent enjoyed Sunday afternoon. That sort of sets the tone for the way things go around the farm all week," Zack said.

Meanwhile, outside Cedar Falls, Iowa, where View From the Cab farmers Brent and Lisa Judisch live and work, a little thing like corn harvest can turn into a spectator sport almost as popular as a football game.

"We started picking. My phone has been blowing up with people who saw me, asking 'What's the moisture?'" Brent told DTN late Sunday.

The week started out quiet enough with the Judisches clearing out the last of the 2016 corn crop and attending last-minute fall grower meetings. At one such seed meeting on Monday, about 30 farmers in attendance compared notes on rainfall. The conclusion was that no one has had rain since Aug. 21, with spotty-at-best rains prior to that. Some felt that soybeans might still benefit from a good shower, but it would have little effect on the corn. Wednesday was another meeting day, this time about fungicide options for the coming year. And, on Thursday, Brent and Lisa and their partners, Harold and Charlene Burington, attended an ag supplier customer appreciation dinner.

There was more harvest equipment prep work on Friday. On Saturday, Brent and Lisa tailgated with family before the Hawkeyes game in Iowa City, where their youngest daughter, Ellie, performed at half-time with other high school dance team members.

By Sunday, after checking a soybean head, identifying issues with the drive, and confronting a code-throwing variable-displacement turbo (code throwing means computer fault codes on the operator's display) on one grain cart tractor where an actuator switch was to blame, it was time to wake up the neighbors.

"I got a corn head on and opened up 5 acres behind the house here and another 5 acres down the road. I'll knock the stalks down so we can drive out there (for machinery parking during harvest)," Brent said. Moisture of 111-day corn was 24% with some green color left to the plants. One-hundred-five-day corn was totally brown and tested drier at 18.5%. Brent told DTN that his corn is "standing perfect." Corn cob quality is "very solid. Not spongy at all." That allows clean shelling and a high-quality sample and indicates good plant health.

Harvest work on farms south of Highway 20 where rainfall has been lighter started earlier in the week. Silage harvest in the area is just finishing up.

With no soybeans close to harvest and corn testing on the wet side, Brent will take this week to finish up final touches to harvest and tillage equipment before the big push nest week. Once harvest starts in earnest, a total of three combines will be deployed.

Rainfall on the Judisch farm has turned around with a half-inch overnight Saturday into Sunday. "It was pretty much gone by morning. It'll help the green soybeans," Brent noted. Another two-tenths inch fell on Sunday night, and more than soybeans benefitted.

"Lisa actually mowed the yard today," Brent said.

Richard Oswald can be reached at Talk@dtn.com

Follow Richard Oswald on Twitter @RRoswald


Bayer Requests Extension

By Pam Smith
DTN Progressive Farmer Crops Technology Editor

MONHEIM, Germany (DTN) -- Liam Condon, Bayer's president of the Crop Science Division, said the company is making progress on the planned acquisition of Monsanto. But he told journalists attending a global conference that the company now expects to close the deal in early 2018 rather than late 2017.

Bayer filed an application Sept. 18 to extend the European Commission's review deadline by 10 working days until Jan. 22, 2018. He said the aim of the request was to facilitate "an appropriate evaluation given the size of the transaction."

It's been slightly more than one year since Bayer announced it had signed a definitive agreement to acquire Monsanto for $66 billion. In response to a DTN question, Condon explained that Bayer has also pledged to divest overlapping business assets representing up to $1.6 billion in annual sales if necessary to answer antitrust concerns. In a separate agreement, Bayer has guaranteed Monsanto a $2 billion termination fee if the sale fails to go through, Condon said.

On Aug. 22, the EC initiated an in-depth investigation of the takeover, saying it was concerned about competition in various pesticide and seed markets. Earlier this year, Bayer indicated it would be willing to spin off its LibertyLink herbicide and seeds and traits portfolio. But Condon told DTN during an interview session with American journalists that regulators have yet to rule and that divesting LibertyLink is "not a done deal."

Condon also noted that the company had been in discussion with multiple parties about potential spinoffs. However, he noted that regulators will also be taking a hard look at any sales transaction to makes sure the purchasing company is strong and can provide adequate competition in the marketplace.

Condon refused to divulge what the name of the new combined entity might be. However, he did say that an announcement of the name would be among the first things revealed when the transaction is complete. "I can confirm that we are very proud of the Bayer name," he said.

The Bayer Crop Science Division will face volatile global markets for the rest of the year, Condon predicted. He blamed insecticide and fungicide sales in Brazil over the past two years as the reason for declines in profits.

The conference continues Wednesday. The event, Future of Farming Dialogue, brings together thought leaders and stakeholders from across the agricultural industry to focus on making the world's food system more sustainable.

Pamela Smith can be reached at Pamela.smith@dtn.com

Follow her on Twitter @PamSmithDTN


Grain Export Inspections Mixed

By Darin Newsom
DTN Senior Analyst

OMAHA (DTN) -- Corn export inspections were neutral to bearish, soybean export inspections were neutral to bullish, and wheat inspection numbers were bullish.

Corn weekly export inspections were 26.6 mb (week ending Thursday, September 14) putting the marketing year total at 53.3 mb. The weekly number was below last year's (for the same week) 51.0 mb. The marketing year total is running 54% behind last year's total of 115.4 mb. Both the weekly number and overall pace could be considered neutral to bearish given how early it is in the 2017-2018 marketing year, Newsom said.

Soybean weekly export inspections were 34.1 mb (week ending Thursday, September 14) putting the marketing year total at 74.8 mb. The weekly number was above last year's (for the same week) 28 mb. The marketing year total is running 6% ahead of last year's 70.3 mb. Both the weekly number and overall pace could be considered neutral to bullish given how early it is in the 2017-2018 marketing year, Newsom said.

Wheat weekly export inspections were 17.1 mb (week ending Thursday, September 14) putting the marketing year total at 320.5 mb. The weekly number was below last year's (for the same week) 21.1 mb. The marketing year total is running 2% ahead of last year's 315.2 mb. The weekly number could be considered bearish and the total inspection number bullish, Newsom said.

Darin Newsom can be reached at darin.newsom@dtn.com

Follow Darin Newsom on Twitter @DarinNewsom


Taxlink by Andy Biebl

By Andy Biebl
DTN Tax Columnist

It's becoming routine to see court cases backing the IRS against taxpayers who trip over the rules when donating assets to charity. Checks are difficult enough. Any single contribution of $250 or more requires a written receipt from the charity at year's end, or the deduction becomes zero. Property has additional hurdles.


The most favorable asset to donate to charity is generally property held over 12 months taxed as capital gain. Assets such as stocks, mutual funds and real estate are deductible at their market value. The taxpayer's historical cost is irrelevant. If the property is a publicly traded security, such as a mutual fund or listed stock, the current value on the date of transfer is readily determined and noncontroversial. But any other property, such as a parcel of farmland, must be appraised if the value exceeds $5,000. The charity might sell the asset a week after the donation, but the appraisal valuation determines the charitable deduction.

The IRS has learned to closely scrutinize these appraisal situations because of the many detailed requirements that can disallow the deduction. For example, there are strict dates regarding the completion of the appraisal (no more than 60 days prior to the donation and not later than the filing of the tax return). The appraiser must be properly qualified, and the appraisal must state that it was completed for income tax purposes. Further, there is a disclosure form within the donor's income tax return, IRS Form 8283, that requires the appraiser's sign-off, various details regarding the property donated and an acknowledgment of receipt by the charity. Donors may cringe at all these requirements, but when the tax law allows a deduction for the inflationary gain on property, this rigor should not be a surprise.


The rules get much trickier when non-real estate property is donated. To claim a fair market deduction, tangible personal property must be retained by the charity for use in its exempt function. For example, a taxpayer who donates artwork to a museum for its collection may secure an appraisal and claim a market value deduction. But donate that same piece to a hospital for its annual auction, and the deduction is limited to historical cost.


Farmers have a unique opportunity with respect to their raised grain. An appraisal isn't required because there's no tax deduction for the contribution (technically, the deduction is limited to tax cost, but that is zero to a cash method producer who expensed all growing costs). The tax advantage is legal avoidance of the income and social security taxes for the self-employed that would otherwise trigger from the sale of the commodity. The key point is transferring title of the grain in unsold form and allowing the charity to execute the sale so there is no taxation to the donor. If the sale has been locked in on a deferred payment contract, it's too late for the contribution.

Tax Columnist Andy Biebl is a CPA and tax partner with the accounting firm of CliftonLarsonAllen, in New Ulm and Minneapolis, Minn.

Andy Biebl can be reached at askandy@dtn.com


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