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Wednesday the Federal Reserve announced it would raise the target interest rate range for federal funds to 2.25% to 2.5%. This 25 basis point increase is the 9th highest interest rate increase since the financial crisis, according to Yahoo Finance. The new rate is effective Dec. 20, 2018. “The Board of Governors of the Federal Reserve System voted unanimously to raise the interest rate pain on required and excess reserve balances to 2.40%,” the statement explains. “Setting the interest rate pain on required and excess reserve balances 10 basis points below the top of the target range for federal funds rate is intended to foster trading in the federal funds market at rates well within the Federal Open Market Committee’s target range.” In related news the board approved a .25% point increase in the primary credit rate to 3.00%, also effective Dec. 20, 2018. The Federal Reserve noted the labor market and household spending remains strong. However, growth of business fixed investment has moderated from its earlier rapid growth. On a 12-month basis inflation overall and inflation for non-food or energy items remains near 2%. The Fed doesn’t expect longer-term inflation to change much. The rate increase came over the objections of President Donald Trump who, in a tweet, urged the Fed to “Feel the market, don’t just go by meaningless numbers.”

Cannabis Named A Commodity Crop In The 2018 Farm Bill While the full text of the 2018 farm bill hasn't been released yet, U.S. Rep. Collin Peterson, D-Minn., says the new bill will look a lot like the one that expired in September. What isn't the same in the expired bill? Cannabis, in the form of industrial hemp, receives crop status in the bill, opening a significant door for farmers growing it. Official release of the farm bill will be next week, due to memorials and the funeral of former President George H.W. Bush, says ProFarmer policy analyst Jim Wiesemeyer. Congressional leaders have still not determined when the House and Senate will vote on the measure. The farm bill is done, including most, if not all, estimates from the Congressional Budget Office, despite reports to the contrary, Wiesemeyer says. Getting the bill done was a challenge. "We've had problems trying to button this thing up," Peterson, the ranking Democrat on the House Agriculture Committee, told reporters at a news conference in Moorhead. "Frankly, it's a damn miracle we got it done." Peterson is encouraged by the progress industrial hemp will gain by inclusion in the bill. "I may grow some hemp on my farm. I'm looking at it," Peterson said. "There's a big market for this stuff that we've been ceding to Canada and other places." According to a story from The Hill, the hemp-specific provisions included in the farm bill were largely shepherded by Senate Majority Speaker Mitch McConnell (R-Ky.). The changes amend the federal Controlled Substances Act of 1970 so that industrial hemp plants containing less than 0.3% THC are no longer classified as a Schedule I prohibited substance. This language shifts regulatory responsibility from the federal level to the state level. Industrial hemp can be grown for its fiber and a health supplement called CBD oil.

Expectations are that the 2019 cotton crop is going to be big--just as big as the one in 2018 and maybe bigger. Farmers are likely to seed 14 million acres of the crop across the Cotton Belt areas of Texas, the South and Southeast, according to John Robinson, Professor and Extension Economist-Cotton Marketing with Texas A&M AgriLife. "We have a really good chance of having a 21-million-bale crop," Robinson predicts, adding that he anticipates having 4.3 million bales from 2018 to carry over into the new year. "That means we'll have at least a 25-million-bale supply, and I think that's low," he notes. "It'll probably be more like 26 million, and that would be a large, large supply." By comparison, the National Cotton Council estimates the 2018 U.S. crop will total 19.8 million bales. Mill use is forecast at 3.4 million bales, while exports are forecast to be 15 million bales. The estimated total offtake stands at 18.9 million bales. With beginning stocks of 4.3 million bales, this would result in U.S. ending stocks of 5.0 million bales on July 31, 2019, and a stocks-to-use ratio of 26.5 percent. Robinson says two key factors are likely to contribute to a big 2019 crop: poor prices for corn, soybeans and peanuts, which will drive farmers to plant more cotton, and abundant rainfall, thanks to the forecast of El Niño conditions by the NOAA (National Oceanic and Atmospheric Administration). The NOAA predicts a 70% chance of wetter-than-normal conditions this winter that could extend through next spring and up to early July. "The planting and establishment periods will have plenty of moisture, meaning everything will come up and get off to a great start," Robinson says. Strong early-season growth next spring means farmers will be less likely to abandon cotton acres. Between 12% and 15% abandonment is common in the South and Southeast, and 40% to 50% abandonment in Texas is not unusual, Robinson says. With more than adequate moisture predicted, he anticipates that total abandoned cotton acres next year will likely be in the neighborhood of only 10% The expectation for a big crop signals the likelihood of weaker prices in the year ahead, which could impact the futures market as early as April or May when WASDE numbers are confirmed by USDA. "I believe we'll have futures falling all the way into the 60s, if that happens," Robinson says. Future prices were in the mid-70s as Farm Journal went to print, and Robinson, concerned that prices will fall, was urging cotton growers to start locking in prices for a portion of their crop. "It has been a while since we've had futures below 70 cents, but I at least want to remind farmers of the possibility of downside price risk," he says. "My stump speech is do some pricing, some hedging early, like now." O.A. Cleveland professor emeritus, agricultural economics, Mississippi State University, takes an even stronger stance on marketing. "A December 2018 futures price at 80 cents and/or a December 2019 futures price above 80 cents both plead with you to begin or add to your price fixing. If one has not fixed any 2018 crop, then it is time to price at least 50 percent of expected production. Ditto the 2019 crop!"

Government health agencies in the U.S. and Canada warned consumers, retailers and restaurants to avoid romaine lettuce Tuesday in yet another E. coli outbreak with cases in 11 states and Canada. The Centers for Disease Control and Prevention urged all romaine lettuce be discarded after reporting that 32 people in the U.S. and 11 in Canada have been infected with E. coli 0157:H7. The strain has the same DNA fingerprint as the strain identified in a 2017 outbreak linked to romaine in Canada and to leafy greens in the U.S. A group of produce industry associations say they are relying on producers and retail/restaurant customers to support the government health agency advisories and is urging an industry-wide voluntary withdrawal of all romaine currently in marketing channels and held in inventory. Additionally, food safety experts from the produce industry are preparing to closely examine information that may help in pinpointing the specific source of the outbreak utilizing the extensive traceback information maintained by leafy greens producers. “Food safety is our top priority,” The United Fresh Produce Association said in a statement released Nov. 20. “We must take swift action to protect consumers by stopping shipment of romaine lettuce and withdrawing any product that has been shipped to retail stores or restaurants.” The produce industry is working to achieve standardized, electronic (computerized) traceability across the supply chain through the Produce Traceability Initiative (PTI). The initiative is a voluntary, industry-wide effort designed to help maximize the effectiveness of current track and trace procedures, while developing a standardized industry approach to enhance the speed and efficiency of traceability systems for the future. During an August meeting, the PTI Leadership Council emphasized the importance of ongoing industry collaboration on traceability, and being able to track produce’s “last mile.” PTI Leadership Council Co-Chair Doug Grant of The Oppenheimer Group said, “The U.S. Food and Drug Administration’s (FDA) romaine outbreak investigation, combined with an increasing number of fresh produce recalls, highlight the need to be able to trace our products through to the retail level. And having more buyers step up and implement PTI at distribution center and store level will also send a strong vote of confidence to our supply chain about the need for and value of traceability.” The value of traceability to control food safety issues is increasingly important to all segments of the food industry, and technology makes isolating contamination sources ever more possible.

In midterm elections, the political party in office usually hits some headwinds while its opposition gains some ground. But whether the Republican party retains control or the Democrats can take it away — in either the Senate or the House — will play out on Tuesday as Americans head to their local polling stations and vote. Early predictions by analysts are that a lot of races will be tight, particularly in the U.S. House of Representatives, according to David Wasserman, house editor for the Cook Political Report. “Republicans have a lot of exposure in the House, and we see Democrats taking control,” Wasserman told Agri-Talk Host, Chip Flory, on Monday. But Wasserman says a Wall Street Journal survey shows that the Republicans have done a good job in the past month, slowing the momentum that Democrats had built. “It seems like some of the Democrats’ momentum has faded, and that the Kavanaugh appointment and the migrant caravan have done more to galvanize the Trump base than the tariffs and taxes, even,” Wasserman says. Democrats, who have been the House minority party since 2010, would need to flip 23 Republican seats while keeping the 194 seats they currently hold to take control of the House. Wasserman says three things could help them do that: “The primary factor that will decide House control is middle-income suburbia where Trump won by single digits in 2016,” he says. “Places like Payne County, Ill., parts of Des Moines, Iowa, and the suburbs of Kansas City will be important.” The second factor is what he describes as low-hanging fruit for the Democrats. “They must win the upscale, ‘Whole Foods’ suburban districts. This is an elite electorate that questions their identity with Trump,” he says. “Democrats could pick up a dozen seats there—more than half of what they need to have a majority.” Then there’s what Wasserman describes as Trump’s “third zones,” pockets of geography where he performed well in 2016. These areas could be vulnerable and include parts of the iron range of Minnesota, downstate Illinois, northern Maine and parts of upstate New York. However, Wasserman says the Republicans have done a good job of staying on their feet in these areas during the past month and they will play a lesser role in the election outcome tomorrow. If Republicans have any hopes of holding onto their control of the House, Wasserman says they have to pick up several democratic seats—like those in southern Minnesota and Nevada—and they also need the vast majority of close races to break their way. “It’s not impossible but it’ll be very difficult,” Wasserman says.

For four consecutive years, Nebraska farmland prices have declined. For 2018, the state’s farmland prices average $2,270, which is a 4% drop from a year ago, according to the final results of the 2018 Nebraska Farm Real Estate Market survey. Overall, Nebraska farmland prices have dropped 18%, or $595 per acre, since reaching a high of $3,315 in 2014. In the North district of the state, farmland values posted a 7% year-over-year drop—the largest of any district. The Central district’s values declined by 6%, followed by the Northwest and Southwest, where values each dropped by 5%. 2018 Nebraska Farmland Prices All of the seven land classes dropped in value, compared to last year. Non-tillable grassland values declined by 7%--the largest drop, followed by tillable grassland and hayland, which each declined by 6%. Gravity irrigated cropland dropped by 5%, and center pivot irrigated cropland decreased by 3%. Dryland cropland with irrigation potential declined by 3%, while dryland cropland without irrigation potential posted a 1% drop. Nebraska Farmland versus Price of Corn Survey participants pointed to low commodity and livestock prices, farm input costs and current property tax levels as the main drivers for declining farm real estate values, says Jim Jansen, agricultural systems economics, University of Nebraska. On the flip side, survey participants say the 1031 tax exchanges and non-farmer investor interest in land purchases are the most positive impacts on regional land values. The amount of land offerings for sale and purchase for farm expansion reported a positive, but negligible impact. Looking forward, land values will be strongly influenced by the tight profit margins for farmers and rising long-term interest rates. These factors will likely apply negative pressure to the farmland market. This annual survey, conducted by the University of Nebraska-Lincoln, polls appraisers, farm and ranch managers and agricultural bankers.

The House cleared its version of the farm bill Thursday on its second try with a vote of 213-211. Members of the House approved the bill which includes work requirements for some food stamp recipients under the Supplemental Nutrition Assistance Program (SNAP). It’s something democrats oppose. “It provides a work requirement for those on food stamps [who] are work capable,” said Rodney Davis, (R-IL). “We are going to be paid for people to be trained, get off government benefits and get out of the cycle of poverty.” The House will now wait for the Senate to vote on its version. Davis says he hopes the House can move the bill to committee with the Senate very quickly once its version has a vote. “That gives me a chance and many a chance to dive into the specifics of what the Senate proposes versus what [the House] propose," said Davis. "There are a lot of issues in the farm bill that came out of the house that didn’t get addressed that I would like to see more investment in ag research, for example. [I’d like to see that] we can work with our democrat and republican counterparts in the Senate. This is how we passed the farm bill in 2014 and it should be how we pass the farm bill in 2018.” Senate is expected to vote on its version of the farm bill next week.

As expected, the leaders of the Senate Agriculture Committee relapsed their draft 2018 Farm Bill on Friday afternoon. According to Committee Chair Sen. Pat Roberts and Ranking member Sen. Debbie Stabenow, the bipartisan draft will provide a new level of certainty and predictably to support farmers and ranchers across the country. The Livestock Subtitle of the bill creates a National Animal Vaccine and Veterinary Countermeasures bank. The draft directs the Secretary of Agriculture to make the maintenance Foot and Mouth Disease (FMD) vaccine stockpile a priority. However, no funds were earmarked for the new vaccine bank. The House of Representatives draft bill included a one-year funding amount of $150 million, The full committee will consider the Agriculture Improvement Act of 2018 on June 13. It is anticipated that Senate Majority leader Mitch McConnell will place the bill on the Senate calendar prior to the 4th of July break A date has yet to be set by House of Representative leaders to reconsider the farm bill that was defeated in May. House Speaker Paul Ryan earlier set a July 22, 2018 deadline for the passage of the House bill.

Contrasted alongside anemic crop commodity prices, cotton was once viewed as merely the best pig in the pen. No more. Significant profitability and growing demand are pushing white fiber across increasing acres. Since cotton acres scraped low in 2015, the Cotton Belt's white blanket has expanded by 4 million acres, and 2018 appears to continue the march. Growers are expected to increase cotton ground by 7% in 2018 to approximately 13.5 million acres the highest total since 2011. USDA's final 2017 estimate pegged yield at an unprecedented 905 lb. per acre. "USDA's initial projections for the 2017 crop suggested that the farm-level upland cotton marketing year average price could fall between $0.54-$0.74 per pound, and the USDA's current expectations suggest it is likely to be at the upper end of that range," according to The Feed, Farmer Mac's quarterly report on agriculture. Cotton producers were also bolstered by the Bipartisan Budget Act of 2018 (BBA), which dropped the Stacked Income Protection Plan (STAX) program and re-established cottonseed access to ARC and PLC payments (beginning in 2018). "Producers with generic base acres will be able to reassign acreage to seed cotton, and will be eligible for PLC payments if their effective seed cotton price falls below the program's $0.367 reference price," Farmer Mac details. Across 2018-2027, the change may result in $3.2 billion in available program payments. Increasing demand may fuel the cotton industry's 2018-2019 marketing year. Global cotton consumption consistently runs parallel with global GDP growth, which looks to be gaining steam. Despite the positive world outlook, several challenges could hinder cotton prices. China's stocks-to-use ratio is still high, and cotton's grip in the fiber market has been weakened by synthetics and artificial fiber.

Taller equipment and emerging technology requires flexibility With every part of an operation set on go, the farm shop is a critical switchboard of activity. To make everything work in lockstep, you need a central command center that has the flexibility to work around you as opposed to the other way around. This is becoming more important since farm machinery has gotten taller, wider and more computer savvy. “One of the shop trends I see is to make everything more mobile,” says Bob Schultheis, University of Missouri agricultural engineer. “Putting [normally stationary] equipment on wheels enables farmers to get better use out of floor space.” In several meetings this winter, Schultheis has talked with farmers about how to design the best shop for their needs now and in the future. If the shop space is smaller than it needs to be, he adds, making tools moveable can help farmers create more flexible work spaces during busy seasons. “This is a different mindset than folks used to have—rather than hanging things on the wall and having to walk to them, you bring the tools to you. These moveable items could be tool caddies or parts bins—just use heavy-duty caster wheels under these items,” Schultheis says. “When you don’t need them, just roll them out of the way. It gives you a lot of flexibility on how you can work with the shop you already have.” Larger and taller doesn’t just describe late-model equipment—it’s also descriptive of new shops and machinery storage buildings. “Height is the most limiting factor for many farm shops,” says Dale Koehl, project sales consultant for FBi Buildings in central Illinois. “Equipment is getting taller as it gets larger, and farmers like to be able to drive equipment into the shop. They want the higher clearance.” Twenty-five years ago, most buildings Koehl sold were 14' high. While 16' is probably the most popular today, there’s growing demand for 18' or taller buildings. “I built 20' high for my family farm shop,” he says. With bigger shops comes more variety in door options. Sliding doors are giving way to larger, more efficient options. “Hydraulic lift doors basically open up the whole wall for equipment to drive in and out,” Schultheis says. While hydraulic doors are more expensive, they are easier to insulate, says Brian Haraf, marketing manager for Morton Buildings. “When you use traditional overhead doors, you have tracks that will eat up some overhead clearance—you build a shop 18' tall but you can only pull in equipment that is 16' tall. With hydraulic doors, you don’t loose any headroom at all. All the equipment is to the side.” If you’re planning a new shop, be forward thinking. “In large, multi-purpose buildings, there are all kinds of technology to include, such as heating and cooling, lighting, ventilation and interior functionality. Use a trusted contractor to make sure it’s done right,” Haraf says. Consider what technology, such as communication or power lines, might be needed in the next five to 10 years. “If you’re going to have a concrete floor and think you might add some wiring in the future, lay some pipe in there so you could exchange or pull in new wires without having to tear up the floor,” Schultheis suggests. Consider electric loads of power tools and pressure of pneumatic supply lines, too. One trend that hasn’t changed is in-floor heating. “It’s the most costly to install but probably the cheapest to run after it’s there,” Koehl says. “I can’t say enough good things about heat in the floor. The floor is always dry and your feet are warm while you’re working.” Zoning floor heat lets parts of the shop be heated, while other storage areas might remain unheated. Equip your building for safer use. “A good idea I saw in a shop in central Missouri, was using perforated tin on the top half of the shop’s 18' wall,” Schultheis says. The lower half of the wall was solid tin and offered a very durable surface. “The advantage of the perforated tin, which the farmer said didn’t cost anymore than regular tin, was the perforation knocked out all of the acoustical echo in the building,” he says. “You could be hammering an anvil or using a metal grinder and that sound didn’t reverberate through the building.” Because many farmers don’t remember to use safety protection in the shop, reducing excess noise cuts down the risk of hearing damage. Farmers should also use the proper gloves for the activity, eye protection and dust masks or respirator protection when sanding or painting. Be mindful about seed and chemical storage areas. With farmers prepurchasing more inputs, Schultheis says some store pesticides and other chemicals in the shop. Farmers like the idea because the area is less likely to freeze, but he cautions farmers to choose storage areas wisely. Consider: Are pesticides kept in a lockable unit, where children or unauthorized personnel can’t access them? Does the area have good ventilation, remain dry and offer temperature control? Is there protection from nearby running equipment and welding tools? Ventilation is key for welding and grinding tasks. Schultheis suggests installing a wall-mounted exhaust fan with 100 CFM airflow per vehicle in the shop or 1,000 to 2,000 CFM airflow per welder. Inside the walls of the farm shop, productivity has to remain top of mind. Preparing for new trends in agriculture will ensure farmers are ready to tackle every opportunity.