Grains

The nation’s corn and soybean crops continue to mature at a record pace, according to this week’s USDA Crop Progress Report. In the report, USDA officials noted 37% of the corn is silking, 47% of the soybeans are blooming and a surprising 11% of soybeans are setting pods. It’s no secret the nation’s corn crop is looking great, for the most part. While pockets of the Corn Belt have experienced some tribulations, overall the crop continues to grow at a record pace. This week, USDA says 37% of the corn crop is silking. Compared to the five-year average of 18%, that’s significant. According to Monday’s report, 75% of the crop is rated good to excellent, that’s down just one percentage point from the previous week. But, it’s 10% higher than the same week last year. However, in Texas, corn continues to struggle with 25% of the crop rated poor or very poor. In fact, one West Texas farmer said even the irrigated corn in his area is struggling to survive. Soybeans are doing well too. USDA says 47% of the crop is blooming and 11% of it is setting pods. This same week last year, only 32% of it was blooming and 6% was setting pods. Louisiana soybeans are winning the race with 75% of the crop setting pods. Mississippi and Arkansas are close behind with pods on 50% and 45% of soybeans respectively. Soybean conditions continue to excel with 71% of the crop rated good to excellent, exactly like the week prior. Still, Missouri soybeans continue to feel the pain of drought. There, 16% of the crop is rated poor or very poor. Some say the corn and soybean crops aren’t really as good as the weekly conditions report continues to indicate.

In their Monday Crop Progress report, USDA outlined both crop conditions and crop progress for this week. According to the agency, 40% of the corn in Illinois is silking compared to the five-year-average of 11%. In Missouri, 48% of the corn is silking compared to the five-year-average of 24%. Unfortunately, the nation’s corn crop of which 17% is silking is due to face warm temperatures during this sensitive time. Warm overnight temperatures are known to reduce yield, according to USDA meteorologist Brad Rippey. The forecasted hot nights and hail damage over the weekend could alter crop conditions before USDA’s report next week. This week USDA says 76% of the crop is rated good to excellent. Wisconsin is this week’s garden spot with 33% of the crop rated excellent. Corn farmers in Texas continue to struggle the most. There, 28% of the crop is rated very poor or poor.

In their Monday Crop Conditions report, USDA noted corn and soybean crops across the country still look like they could produce above trend-line yields. The agency rated 77% of the corn crop good to excellent and 73% of the soybean crop good to excellent. While the markets are acting like there is a “lack of threat in the forecast,” AgriTalk host Chip Flory says there are some areas where conditions are far from ideal. While the current rating bodes well for a bumper crop and is helping pressure prices lower, weather could temper those yields as corn enters the tasseling stage in much of the Corn Belt. “Dry conditions in the southern portions of the Corn Belt with the crop starting to shoot tassels is concerning,” Flory says. “The rains are expected to continue for the next two to three days? in some areas of the Belt with above-normal temperatures. Longer term, the latest update from the National Weather Service suggests a hot and drier pattern starting next week. If rains fall in the southern areas, the timing would be really good. If these areas miss the rains, that’s a bad deal and potentially really bad if the heat moves back in.” According to USDA’s Monday report, an average of 5% of the nation’s corn crop was silking, two percentage points more than the five-year-average. Similarly, USDA says 12% of the national soybean crop is blooming. USDA meteorologist Brad Rippey says all eyes are on the nighttime forecasts the next two weeks. He says warm nighttime temperatures have historically hurt yields. Remember 1995? While the amount of corn rated “excellent” in some areas is unusual, Flory reminds that current conditions indicate little about final yields. “It’s a good start, but the condition ratings have clearly convinced traders there are no reasons for corn or soybeans to carry ‘yield risk’ or a ‘weather premium,’” he says.

USDA Secretary Sonny Perdue set out to calm frayed farmer nerves in a USA Today op-ed on the escalating trade war with China. “President Donald Trump is standing up to China, which wrongly believes it can bully our farmers to get America to back away from defending our national interests,” Perdue wrote. “He (President Trump) will not allow U.S. Agriculture to bear the brunt of China’s retaliatory tactics.” Perdue’s column begins with a recounting of research seed theft by Chinese nationals from Iowa farm fields in 2011. The Secretary makes the case that intellectual theft strikes not only U.S. tech firms, but is also firmly taken root in the heart of agriculture. Perdue notes that the increasing tariff pressure is designed to stop Chinese intellectual property theft and open markets. “The Correct response from China would be to stop stealing from Americans and give American products a level playing field to compete in China, not to retaliate and reinforce its own position,” he wrote. Secretary Perdue hints that USDA has access to tools to provide support to U.S. farmers to offset damage done by the tariff battle, but he does not yet offer specifics on what the administration has planned. “We have not unveiled our strategy, as it is not good practice to open our playbook while the opposing team is watching,” he noted. “But farmers should know this:” Perdue said. “They have stood with President Trump and his policies, and we will make good on our promise to stand with them as well. If China does not soon mend its ways, we will quickly begin fulfilling our promise to support producers, who have become casualties of these disputes.”

Body: This week, President Trump has ordered U.S. Trade Representative Robert Lighthizer to find an additional $200 billion of Chinese goods on which to place tariffs of 10 percent. This would be in addition to the $50 billion tariff on Chinese goods on claims of intellectual property theft. “It is very unfortunate that instead of eliminating these unfair trading practices, China said it intends to impose unjustified tariffs targeting U.S. workers, farmers, ranchers, and businesses,” Lighthizer said in a statement. “At the president’s direction, USTR is preparing the proposed tariffs to offset China’s action.” The original $50 billion in U.S. tariffs are expected to go into effect July 6, but commodity markets are suffering from the news as it unfolds. On news of the Chinese tariffs on U.S. agriculture products, the Dow Jones Industrial Average erased all gains for the year, and so have commodities. During Tuesday’s trade, soybeans dropped 40 cents before recovering to near $9 levels before the close. “It’s really scary,” said Carl Wagner III, a farmer from Niles, Mich. “I wish I would have sold more [soybeans] earlier in the winter, but you just can’t predict some of these things.” If the U.S. publishes the additional tariff list, China’s commerce ministry said it plans on responding, saying threats of additional tariffs violate prior negotiations and consensus reached between the two countries.

President Donald Trump’s aides are looking at ways to use the Commodity Credit Corporation (CCC), a division of USDA created in 1933, to offer a financial backstop for farmers. Another option is “Section 32” funds. The possible aid would be a way to protect farmers if China and/or other countries officially implement tariffs on U.S. agricultural products. The following is analysis from Pro Farmer Washington Analyst Jim Wiesemeyer. For complete details on proposed plans to provide farmer support to offset losses from tariffs and daily updates on policy action, subscribe at ProFarmer.com. CCC can borrow up to $30 billion from the Treasury Department and extend that money to farm groups. If U.S. farmers see orders from China plummet because both countries create new layers of tariffs on imports, the White House previously said it wants to set up an assistance program for the U.S. ag sector, including the livestock industry, row crop producers and fruits and vegetable farmers impacted. The White House is considering several options. For example, USDA could direct the CCC to purchase soybeans to buoy farmers’ revenues. The CCC is able to assist through loans, purchases, payments and other operations. The CCC Act also authorizes the sale of agricultural commodities to other government agencies and to foreign governments and the donation of food to domestic, foreign, or international relief agencies. Another option: Section 32 funds. Congressional lawmakers in the fiscal year 2018 March omnibus budget removed earlier restrictions on the CCC’s activities. The change overturned years that had kept the CCC from supporting prices of agricultural goods. The last time Section 32 funds were used was right before 2010 elections, pushed by then Sen. Blanche Lincoln (D-Ark.). Lincoln at the time sought congressional support for $1.5 billion in disaster payments for her fellow Arkansas farmers and others around the country. But it wasn't passed by Congress after five attempts. President Barack Obama's Chief of Staff Rahm Emanuel then promised he would find a way. USDA was able to round up about half the funds to direct some extra assistance to Lincoln's state as well as a few select others. The USDA disaster aid, paid for out of USDA’s “Section 32” funds, included $550 million in relief for weather related crop losses in 2009, $60 million in payments to producers who lost poultry contracts in the 2008 bankruptcy of Pilgrim’s Pride, and $20 million for the aquaculture industry who suffered high feed costs in 2009. Eligible commodities at the time were limited to upland cotton, rice, soybeans and sweet potatoes. Also, eligible counties were those designated primary disaster counties due to high precipitation or moisture conditions in 2009. Producers who certified to at least a 5% loss in 2009 received a payment based on a pre-determined payment rate multiplied by the actual planted (or prevented planted) acres that they had on file with the Farm Service Agency. As for the current situation, President Trump “has directed the Secretary (of Agriculture) to use the authorities he has to protect farmers,” USDA said in a previous statement. “It wouldn’t be prudent to give away our playbook and let China know exactly how we would plan to mitigate what they have threatened. But we can say this: we will not allow our agricultural producers to bear the brunt of China’s retaliation, as we defend our own interests as a nation,” USDA Secretary Sonny Perdue said. The topic could find its way into the late days of a new farm bill. Senate Ag Chairman Pat Roberts (R-Kan.) in March said that he and Sen. Debbie Stabenow (D-Mich.), the panel's ranking member, agree that Congress will likely have to come up with some form of assistance for farmers who lose business because of Chinese retaliation. “If we continue down this road, we may have to consider some kind of payment on a case-by-case basis," Robert said. Roberts floated the idea of calling such aid “Trump Tariff Payments,” or TTP. As for the topic of direct payments, there is really nothing in the CCC Charter Act that authorizes direct payments for income support. The Charter Act is old enough that the tools it includes pre-date the 1996 reforms, so it is focused on price support, etc. But the USDA secretary can get creative, contacts advise, noting he could undertake a lot of activities that constitute “expansion of domestic markets” or “marketing facilities” for example. Thus, a lot will come down to how creative Perdue's lawyers get. Note that these limitations apply only to CCC. For Section 32, the method of support isn’t really constrained (just the funding available as noted previously). RESTRICTIONS Section 32 is a permanent appropriation that since 1935 has set aside the equivalent of 30% of annual customs receipts to support the farm sector through (1) encouraging the export of farm products through producer payments or other means; (2) encouraging the domestic consumption of farm products by diverting surpluses from normal channels or increasing their use by low-income groups; and (3) reestablishing farmers' purchasing power by making payments in connection with the normal production of any agricultural commodity for domestic consumption. Bottom line: After talking with government and other sources, conclusions drawn: Should aid be needed, USDA would have leeway in several areas. Asked why such aid may not include direct payments, one source responded: “Because that does not 'support the price.' It supports the income of the producer. It’s the pre-1996 vs post-1996 argument of price vs income support. That said, I would make a forceful argument that 'payments' opens the window to direct support because how do you support prices using payments? I’ve never received a good answer on that one…." But sources within government and the ag sector agree on one thing: It would be far better for President Trump to work out a deal with China and other countries relative to the current tariff battles.

Throughout the Corn Belt it’s easy to see corn and soybean crops are thriving. USDA took note, reporting 78% of the nation’s corn is in good to excellent condition in their June 18 Crop Conditions report. Similarly, USDA says 73% of U.S. soybeans are in good to excellent condition. Several states are growing beautiful corn crops, but none quite like Wisconsin. Ninety percent of the corn there is rated good to excellent, with an impressive 30% rated excellent by USDA. Not far behind Wisconsin, 88% of Minnesota’s corn is rated good to excellent. In Illinois, 29% of the corn is rated excellent. Unfortunately, the same can’t be said for Texas, North Carolina and Missouri. All three states continue to experience drought conditions and the crops are showing it. In Texas, 23% of the corn is rated poor or very poor, 11% of it rated very poor. Corn in North Carolina and Missouri is hanging on by a thread. In both states 13% of the corn is rated poor with very poor ratings at 4% and 2% respectively. Soybeans are responding well to rain and warm temperatures too. Wisconsin and Kentucky lead the pack for the best-looking soybeans with 87% and 86% respectively rated good to excellent. USDA estimates soybean planting is virtually over with 97% of the crop planted and 90% of it emerged.

The Canadian Food Inspection Agency (CFIA) has confirmed the discovery of unapproved genetically modified wheat plants containing a trait developed by Monsanto in southern Alberta. The isolated patch of wheat plants were found growing on an access road to an oil platform last summer, the agency said in a briefing on Thursday. The plants were reported by a custom applicator after they survived an application of glyphosate. Seven plants were taken for testing and the rest of the patch was destroyed. The Alberta government informed the CFIA about the suspicious plants in late January. Testing conducted since then shows the wheat contains a GM trait or “event” that was field tested by Monsanto (MON71200), but the plants do not match any Canadian registered wheat variety. The nearest trials for the trait, which Monsanto says it tested from 1998 to 2000, were located hundreds of miles from where it was found, said the agency. “The GM wheat has a genetic background that does not match any currently registered wheat in Canada. It has a fingerprint that is distinct from any registered wheat. CFIA is continuing our work to identify the specific class of this wheat, but this work is ongoing,” said a CFIA scientist during the briefing. The agency said it is confident it is an isolated case, and that none of the GM wheat entered the grain handling system or the seed system. The CFIA also emphasized that there is no food or animal health risk. The CFIA has begun monitoring the location, and will continue to do so for the next three years, verifying that all GM wheat that may germinate is destroyed. Officials in the briefing refused to speculate on where the GM plants originated, saying “there are too many variables and possibilities.” It’s not yet known whether the discovery will impact market access. As of late Thursday, there had not been any indications of concerns from international customers, said Cam Dahl, president of Cereals Canada. “We first became aware of this issue early this afternoon, and so we haven’t had that opportunity to reach out to customers. That is something we will be doing in the coming days, to provide that reassurance that customers can have confidence in the Canadian regulatory system,” he says in the interview below. The CFIA also said it is willing to share a validated test for the trait with trading partners, should they request it. According to the agency, there were 43 approved field trials in Saskatchewan and 11 trials in Manitoba involving wheat with novel traits in 2017, but none in Alberta. (Herbicide tolerance was the objective for 39 of these trials, with 32 focused on yield increases and six on fungal resistance.) Monsanto conducted field tests with glyphosate-tolerant Roundup Ready wheat from the late 1990s into the mid-2000s, but no genetically-modified wheat has ever been commercialized in Canada or the U.S. Monsanto withdrew its application for regulatory approval in 2004. At the time, the Canadian Wheat Board was opposed to the introduction of Roundup Ready wheat due to international customers’ concerns. Several escapes of Roundup Ready wheat have been found in the U.S., including in Oregon in 2013, Montana in 2014, and Washington in 2016. Several buyers, including South Korea and Japan, temporarily halted purchases of U.S. wheat after the discovery in Oregon. The incidents in the U.S. involved GM wheat lines that are genetically different from the GM wheat found in Alberta, said the CFIA, noting there is no evidence linking the Alberta case to previous United States cases.