Featured Agriculture News

09/18/2018 - North Carolina Ag Hit Hard

While it's too early to make specific damage calculations, Hurricane Florence hit North Carolina with nearly all of the state's cotton and half of its tobacco in the fields. As of now, it's hard to navigate the state because of the volume of flooded roads and bridges.

09/18/2018 - USDA Crop Progress

In its first soybean harvest report of the season, USDA's National Ag Statistics Service estimated that 6% of the U.S. crop was harvested as of Sunday, Sept. 16, 3 percentage points ahead of the five-year average pace.

09/17/2018 - Todd's Take

Much like Charlie Brown trying to kick the football, we continue to rediscover that we're not very accurate at making early corn yield estimates.

09/17/2018 - Wettest Areas Will See Delays

Wet conditions threaten northern Midwest harvest progress along with crop quality over the next week.

09/17/2018 - Finding Pathways for Biofuels

As biofuel plants struggle under the Renewable Fuel Standard right now, a climate event in San Francisco looks at how low-carbon fuels standards have boosted ethanol use in California and could drive more biofuel demand if Midwest states embraced similar policies.

09/14/2018 - Three States Granted WOTUS Injunction

After a Texas court's ruling on Wednesday, the waters of the U.S. rule is now on hold in 27 states.

09/14/2018 - USDA Details Trade Aid Metrics

Several commodity groups representing dairy producers and grain farmers questioned USDA's methodology when the department released final numbers for its trade aid package. USDA emphasized the main focus was examining how much trade declined for a particular commodity following retaliatory tariffs.

09/14/2018 - USDA Reports Review

USDA not only disagreed with the private analysts fading their Aug. 1 crop estimates, they said, "We'll see you one and raise you one."

09/13/2018 - Cash Market Moves

On July 6, China imposed a 25% tariff on U.S. soybean imports in retaliation for President Donald Trump's 25% tariff on $34 billion of Chinese goods. Since then, the trade war continues to escalate, leaving soybean farmers in Western states without a Pacific Northwest market at harvest.
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09/18/2018 North Carolina Ag Hit Hard

By Chris Clayton
DTN Ag Policy Editor

OMAHA (DTN) -- With rainfall totals in parts of North Carolina reaching as much as 36 inches since Thursday due to Hurricane Florence, a big chunk of rural North Carolina was largely marooned Monday with more than 1,000 roads closed in the state.

Still, North Carolina Farm Bureau President Larry Wooten noted the sun was shining in Raleigh, North Carolina, on Monday afternoon and he expected recovery would begin soon.

"We're seeing some blue skies, and that makes everybody's spirits a little better and that old Flo (Florence) has gone on north somewhere," Wooten said. "We don't wish it on anybody, but we're just glad it's off the coast of North Carolina."

The North Carolina Farm Bureau is also a major insurer in the state, and people with personal property and business damages were trying to call offices to file claims. But phone lines were down and travel remains nearly impossible in parts of the state because of flooded roads and bridges.

"We got over 1,000 roads closed in this state," Wooten said. "We can't even get out with our insurance company and adjust claims in those hardest-hit areas because offices are marooned."

Reuters reported Monday there were more than 462,000 homes and businesses without power in North Carolina and South Carolina. Some cities, such as Wilmington, North Carolina, also were basically surrounded by rising flood waters, requiring authorities to look at providing aid supplies by air.

While it's too early to make specific damage calculations, the storm hit North Carolina with nearly all of the state's 420,000 acres of cotton and 100,000 acres of peanuts still in the field. The cotton damage is unknown, but peanuts may manage while still in the ground.

North Carolina also is the largest sweet-potato-producing state, and at least half the crop is still in the ground. Whether the crop suffers major damage depends on how long those sweet potatoes remain under standing water.

"If the water stands on them very long, they will probably sour and be no good," Wooten said.

Corn farmers worked pretty feverishly to get as much of the crop out as they could before the storm hit, Wooten said. But about half of the state's 163,000 acres of flue-cured tobacco was still in the fields, as well, he said.

"It's suffice to say the storm could not have hit North Carolina agriculture at a worse time, and North Carolina agriculture will take the brunt of the hit in terms of losses and expenses from this storm," Wooten said, adding that the best tobacco, for instance, was still in the fields. "It's undetermined as of yet what in the field will be salvageable, and we grow 50% of all of the tobacco in the United States."

Tobacco in the bulk-curing barns also likely suffered damages, especially for farmers who lost power and could not keep heated air moving through the flue boxes.

While the crops will take a hit, Wooten credited North Carolina poultry and livestock producers for preparing ahead of time for the hurricane. "I would say almost all of our hog and poultry operations have auxiliary generators to make sure they can keep feed going into those houses, water going in there, as well as keep air on those animals," Wooten said.

Wooten advised farmers to document their losses for crop insurance agents and the local Farm Service Agency when offices reopen. President Donald Trump had issued disaster declarations for both North and South Carolina that will open up some federal USDA programs for farmers and livestock producers.

One concern Wooten said is how farmers will now apply for trade aid assistance under the USDA Market Facilitation Program created last month. Under the program, farmers have to report their actual production from the 2018 crop to receive aid. But that will not help farmers who may have been weeks away from harvest who now have suffered significant yield losses because of the storms.

"So there's a question when you go into the FSA office whether the loss is from the tariff or from the hurricane, so for us, it's going to be a little different," Wooten said.

In addition, hog producers pumped down lagoons in anticipation of high volumes of rain. The North Carolina Pork Council reported Monday that there had been at least one hog-lagoon breach on a small operation, but an inspection showed the solids remained in the lagoon. At least four other lagoons were overtaken by flood waters. With more than 3,000 active lagoons, the pork council was concerned about the impact of flooding.

Wooten said he had not heard of any hog producers' lagoons breaking, but there were also problems with city waste-water treatment facilities.

"But we have got municipal sewage that dumped millions of gallons of untreated sewage and nobody seems to say anything about that, but they want to jump on the hog industry in North Carolina," he said.

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

Follow him on Twitter @ChrisClaytonDTN

(AG)

09/18/2018 USDA Crop Progress

By Anthony Greder
DTN Managing Editor

OMAHA (DTN) -- In its first soybean harvest report of the season, USDA's National Ag Statistics Service estimated that 6% of the U.S. crop was harvested as of Sunday, Sept. 16, 3 percentage points ahead of the five-year average, according to the agency's weekly Crop Progress report released Monday.

This year's soybean harvest progress is also 2 percentage points ahead of 4% at the same time last year. Nationwide, the crop continued to mature ahead of normal with 53% of soybeans estimated to be dropping leaves, 17 percentage points ahead of the average pace of 36%. The crop's good-to-excellent rating dropped to 67% last week, down 1 percentage point from 68% the previous week.

The U.S. corn harvest also continued at an ahead-of-normal pace with an estimated 9% of the crop harvested as of Sunday, 2 percentage points ahead of last year and 3 percentage points ahead of the five-year average. The crop continued to mature ahead of normal with 54% of corn estimated as mature as of Sunday, 18 percentage points ahead of the five-year average of 36%.

Corn condition, at 68% good to excellent, was unchanged from the previous week.

Meanwhile, winter wheat planting progress was estimated at 13% as of Sunday, near last year's pace of 12% and also near the five-year average of 14%.

Spring wheat harvest had nearly wrapped up with 97% of the crop harvested as of Sunday, near last year's 98% but ahead of the five-year average of 92%.

Sorghum coloring was 88%, ahead of the five-year average of 83%. Sorghum mature was estimated at 41%, near 42% at the same time last year but behind the five-year average of 44%. Twenty-six percent of the sorghum crop was harvested as of Sunday, behind the average pace of 29%.

Barley was 96% harvested as of Sunday, behind 99% last year but near the average of 97%.

Forty-nine percent of rice was harvested as of Sunday, behind last year's 53% but ahead of the five-year average of 47%. Forty-nine percent of cotton had bolls opening, ahead of the average of 46%.

"Nothing in Monday's numbers are apt to have much price impact on Tuesday," said DTN Analyst Todd Hultman.

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

National Crop Progress Summary
This Last Last 5-Year
Week Week Year Avg.
Corn Dented 93 86 84 86
Corn Mature 54 35 32 36
Corn Harvested 9 5 7 6
Soybeans Dropping Leaves 53 31 38 36
Soybeans Harvested 6 NA 4 3
Winter Wheat Planted 13 5 12 14
Cotton Bolls Opening 49 39 43 46
Cotton Harvested 13 10 11 6
Sorghum Coloring 88 79 83 83
Sorghum Mature 41 34 42 44
Sorghum Harvested 26 24 28 29
Spring Wheat Harvested 97 93 98 92
Rice Harvested 49 40 53 47
Barley Harvested 96 92 99 97

**

National Crop Condition Summary
(VP=Very Poor; P=Poor; F=Fair; G=Good; E=Excellent)
This Week Last Week Last Year
VP P F G E VP P F G E VP P F G E
Corn 4 8 20 47 21 4 8 20 47 21 4 9 26 48 13
Soybeans 3 7 23 49 18 3 7 22 50 18 3 9 29 48 11
Sorghum 5 12 30 44 9 5 12 30 42 11 2 6 27 53 12
Cotton 8 24 29 30 9 13 21 28 29 9 6 8 25 44 17
Rice - 4 22 58 16 - 3 22 59 16 1 6 24 52 17

Anthony Greder can be reached at anthony.greder@dtn.com

Follow him on Twitter @AGrederDTN

(AG)

09/17/2018 Todd's Take

By Todd Hultman
DTN Analyst

Each fall, when Lucy convinces Charlie Brown that he is supporting the great Thanksgiving tradition of kicking the football, we plead with him not to do it. Of course, Lucy wins out and Chuck ends up on his back, betrayed again by Lucy's dirty trick of pulling the ball away. No matter how many times Charlie tries and fails, he genuinely believes the next time will be different. The naive faith is a bit endearing, but come on -- Chuck also needs to wake up.

You've probably guessed by now that we are Charlie Brown in this metaphor, surprised again after USDA just pulled the football away on Wednesday and posted a new record-high corn yield estimate of 181.3 bushels per acre (bpa). If the surprise of USDA's higher-than-expected estimate feels familiar, it was just 10 months ago I wrote about USDA posting a new record yield of 175.4 bpa in the November 2017 WASDE report in a column titled "Is This the Year of Super Corn?"

Read the column here: https://www.dtnpf.com/…

Last year's record estimate was actually more of a surprise, as drought conditions were more threatening in 2017. Other than Missouri and Kansas, most corn-producing states showed adequate soil moisture this year, and summer temperatures were largely moderate in July and August. Comments from private crop tours frequently included the word "variability" for a second consecutive year, but judging from USDA's latest report, the caution in those observations was unwarranted.

Based on the past 37 years of guessing yields, Wednesday's corn crop estimate has a 90% confidence interval of plus or minus 7.6%, so there is still ample wiggle room in Wednesday's number. However, the same track record also shows that USDA's September estimate has been too low two-thirds of the time. Admittedly, we have no real evidence at this point to argue USDA is drastically wrong, other than the same naive hope that entices Charlie Brown into whiffing each fall.

If we get back to our main task of trying to understand what corn prices should trade at, given what we currently know, Wednesday's report was more apt to be a good buying opportunity for end users than the start of a new bearish move.

I suspect Wednesday's 14 1/4-cent drop in December corn was largely an emotional response of noncommercial liquidation, which will not stand the test of time. USDA's report aside, shame on speculators for hanging on to the long side of the market in front of harvest after a summer of good crop conditions. Like Charlie, they largely got what they deserved.

Corn producers, however, should not be swayed by Wednesday's report. After six consecutive years of good growing weather, it should be no surprise that cash corn prices are low heading into harvest -- that's a common seasonal influence. What is not common is USDA estimating lower ending corn stocks in 2018-19 for both the U.S. and the world -- times are a changing.

The last time I wrote about USDA surprising us with a higher yield estimate for corn was on Nov. 14, 2017. As we now know, last year's yield of 175.4 bpa eventually went even higher, to a final 176.6 bpa in January. November's ending stocks estimate was high at 2.487 billion bushels (bb) and the DTN National Corn Index was low, at $2.99 a bushel. The mood for corn was bearish, noncommercials were net-short 125,113 contracts, and the demand outlook was not so good.

Six months later, the DTN National Corn Index was at $3.62, boosted by an unexpected drought in Argentina that was not part of the conversation in November. Once again, corn's bearish harvest mood proved temporary, and prices succumbed to their seasonal tendency.

In spite of the initial shock of Wednesday's 14.8 bb crop estimate, the outlook for corn prices after harvest looks more bullish than it did a year ago. Among the U.S.' top competitors for 2018-19 exports, Ukraine's crop is expected to be up 271 million bushels from a year ago, while the combined production of Brazil and Argentina was down 1 bb in early 2018. Until South America can ship more corn again in mid-2019, the U.S. is well-positioned to benefit from increased world demand.

As a guy who has studied market behavior for decades, I find it a little humorous that, much like Charlie Brown, we humans continue to get wrapped up in guessing games over yield, and then act surprised when we find out, once again, that we are not very good at it. But in the larger scheme of things, surprises like Wednesday's are small tweaks that need to be considered in the context of everything else going on.

Meanwhile, traders continue to ignore that 2018-19 is offering U.S. corn prices the best demand environment since the ethanol boom. Yes, there is plenty of uncertainty ahead, and this is not a justification for $5.00 corn. However, while we lay on our backs looking at an autumn sky and feeling the pain of the latest whiff, there is plenty of reason to believe that the current bearish mood will not last, and corn's seasonal influence will likely bring higher prices again in the second quarter of 2019.

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

Follow him on Twitter @ToddHultman

(BAS/AG)

09/17/2018 Wettest Areas Will See Delays

By Bryce Anderson
DTN Senior Ag Meteorologist

OMAHA (DTN) -- It's the northern Midwest's turn in the spotlight for potential harvest delays from heavy rainfall. Moderate to heavy rain is forecast during most of Monday through Saturday, September 17-22, with amounts exceeding 2 inches, and reaching to more than five inches.

The main area for this heavy rain encompasses portions of the Corn Belt that have seen many wet days during the 2018 growing season -- central and southern Minnesota; most of Wisconsin; northern Iowa; eastern South Dakota; and northeastern Nebraska.

According to DTN Senior Ag Meteorologist Mike Palmerino, atmospheric dynamics are setting up for a high likelihood of heavy rain over the northern Midwest.

"The pattern next week features: a trough over southwest Canada and the northwest U.S. and subtropical high pressure dominating the southern U.S. and the western Atlantic Ocean," Palmerino said. "This will be a more active rainfall pattern for the central U.S. due to a boundary zone over the Midwest separating colder weather to the north and west from milder weather to the south and east."

Palmerino noted that Gulf of Mexico moisture, which had been partially taken away by the formation of Hurricane Florence along with a tropical disturbance in southern Texas, will be more available over the next week. "We will see Gulf moisture getting pumped northward into parts of the central U.S.," Palmerino said.

Crop quality and harvest both stand to be adversely affected by a wetter pattern. Impediments to harvest include wet and muddy fields; difficult if not impossible machinery transit; field compaction issues; reduced quality of wet grain; waiting longer for in-field drying; more expense in running grain dryers; and sheer crop loss in the event of wet conditions bringing on soybean pod-shattering or thunderstorm winds breaking off ears of corn and dropping them to the ground.

Not all areas of the Midwest have this wetter pattern. Farther to the south and east of the stationary front, the eastern and southern Midwest, along with the central and Southern Plains, have a drier weather prospect and better harvest conditions. But, the way the forecast is shaping up, the northern Midwest is in line to be bookended by wet conditions at the start and finish to the 2018 crop year.

Bryce Anderson can be reached at bryce.anderson@dtn.com

Follow him on Twitter @BAndersonDTN

(SK/CZ)

09/17/2018 Finding Pathways for Biofuels

By Chris Clayton
DTN Ag Policy Editor

SAN FRANCISCO (DTN) -- Just a few blocks from the commotion and crowds at the Global Climate Action Summit, biofuel advocates gathered Thursday to champion more low-carbon fuel standards that could take the country's biofuels industry in new directions.

While the climate summit focused on all the various ways states, cities and businesses can commit to reducing greenhouse-gas emissions, the "Driving Decarbonization" event highlighted how biofuel demand can grow if more states adopt low-carbon fuel standards.

"The thought leadership is moving in that direction here, and we've been hearing from particular organizations and people involved with the Governors' Biofuels Coalition that there are active discussions going on," said Graham Noyes, executive director of the Low Carbon Fuels Coalition. "People are seeing how valuable California's LCFS (low-carbon fuels standard) is. Midwest producers are asking that same question, 'Why don't we have this here?,' and they are seeing the unfortunate instability in the RFS program and realizing that having a backup or supplemental program is a very good thing to have in times like now."

Talk about low-carbon fuels standards comes, though, as ethanol plants are struggling with large supplies, tight margins and not enough product demand. Just Friday, Ergon BioFuels LLC, a subsidiary of Ergon Inc., announced it will close its 56.5-million-gallon ethanol plant in Vicksburg, Mississippi, in December.

"Ergon management has made significant investments at Ergo Biofuels over the years and had planned additional improvements to increase ethanol and corn oil yields going forward," said Kris Patrick, Ergon COO. "Unfortunately, continued erosion in margins, coupled with underperforming production equipment and the economic challenges of being a destination plant, forced us to make this very difficult decision."

Trying to boost demand through federal policy, traditional ethanol groups launched a Twitter campaign Friday directed at President Donald Trump, EPA Acting Administrator Andrew Wheeler and Agriculture Secretary Sonny Perdue with hashtags, including #IWantMyE15 and #RFSWorks. Ethanol groups are continuing the push to get EPA to commit to year-round E15 sales. The annual summer restrictions on E15 end on Saturday.

Gerard Ostheimer, a senior adviser for the group below50, said one of the issues with the RFS is its "static nature." The RFS does not reward ethanol companies for reducing the carbon intensity of their production, which is why so many Midwest ethanol companies work to export their product to California.

"The carbon intensity of ethanol for a number of plants has been coming way down, but the way the RFS is currently structured, that never gets scored and they will never get a reward for that," Ostheimer said.

Local motivations drive policies such as low-carbon fuel standards. California's LCFS is focused on long-term reduction of greenhouse-gas emissions, but such policies would likely take different motivations in Midwest states that are the major source of most biofuels now.

"Certainly, the Midwest states have very strong ag policies and very strong economic policies and can see using this kind of policy structure that doesn't require an annual appropriation, rewards efficiency and essentially keeps money in the state by sending fuel money to the feedstocks and the producers and all the related industries, that supports itself on the job and the economic side," Noyes said. "To some degree, if the greenhouse-gas reduction is just an ancillary benefit, then great, it gets us there."

Noyes noted California has become a leader in selling products such as E85, which has seen volumes triple in the state. "What's happened is the economics work," Noyes said. "You've got RFS, plus the LCFS and E85 typically selling at an 80-cent-a-gallon discount. So it's the best place in the world to sell E85, and people are switching to it for economic reasons and we're seeing 25% to 30% year-on-year growth every year."

California service stations and convenience stores are adding 25 new flex-fuel stations every year, and the state can now consume roughly 1 billion gallons of E85. "The LCFS is driving that, and it can do the same for mid-level blends and E85 blends in the Midwest," Noyes said.

Low-carbon fuel standards also have the support of health groups such as the American Lung Association. The group in California calculates long-term health benefits of low-carbon fuel standards in the state at $8.3 billion in avoided health impacts by 2025. That translates into reducing asthma attacks by more than 38,000 and avoiding more than 74,000 lost workdays to health issues. The American Lung Association wants to see more states embrace such standards.

Yet, more California startups are also trying to stem the tide of Midwest ethanol to keep California fuel dollars in the state. Companies are working on converting solid waste to biofuels, and at least one company is in the development stage for a sugar-cane ethanol plant. That facility, though, would need farmers in California's Imperial Valley to convert at least 50,000 acres to sugar-cane production to sustain the operation.

"California exports about $2 billion annually to places like Iowa and Nebraska -- I know some of you guys are from there -- and our argument as a state is the only time those dollars come back into the economy is January and February when those guys are freezing and they want to see the Santa Monica Pier or the Golden Gate Bridge," said David Rubenstein, president and CEO of California Ethanol and Power. "So our argument is you keep some of these dollars in the state and the economic reverberation of that is pretty strong. It creates new taxes and job opportunities."

When biofuel companies develop new technologies in advanced biofuels or cellulosic products, a pricing mechanism helps drive demand. That was something companies expected to see from the Renewable Fuel Standard, but the fluctuation companies have seen in renewable identification numbers (RINs) has taken away some of the market.

"That's where individual state programs can come in and fill that gap with their own pricing mechanisms to provide the value for the fuel," said Shailesh Sahay, senior regulatory counsel for ethanol producer Poet.

Sahay later pointed out state policy needs to be steady with its incentives, noting RIN prices under the RFS have moved from $1 to 20 cents a gallon just within this year. "That just doesn't provide the right incentives for commercialization," he said.

The "Driving Decarbonization" event was co-sponsored by the Biotechnology Innovation Organization (Bio), a major backer of the group below50, which came out of the Paris Accords as a global campaign to promote fuels that have emissions 50% below petroleum fuels. Next July, Bio will bring its World Congress on Biotechnology to Des Moines and below50 will hold an affiliated forum again promoting advanced biofuels and low-carbon fuel standards, said Stephanie Batchelor, a director for Bio.

"I think the Midwest is uniquely situated to have a regional LCFS, which is something we have not been able to have before," said Batchelor.

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

Follow him on Twitter @ChrisClaytonDTN

(AG/CZ)

09/14/2018 Three States Granted WOTUS Injunction

By Todd Neeley
DTN Staff Reporter

OMAHA (DTN) -- A Texas court has issued an injunction against the 2015 waters of the United States, or WOTUS, rule after the Texas attorney general's office told the court it was ready to appeal to a higher court.

As a result of a South Carolina court's recent ruling, the rule was in effect in 26 states and on hold in 24 states. The South Carolina court on Aug. 16 ruled that the EPA did not follow the Administrative Procedures Act in finalizing its rule to delay the 2015 WOTUS for two years.

On Wednesday, the U.S. District Court for the Southern District of Texas in Galveston granted a request for a temporary injunction of the rule in Texas, Mississippi and Louisiana.

As a result of this latest ruling, WOTUS is now on hold in 27 states: Texas, Mississippi, Louisiana, Georgia, Alabama, Florida, Indiana, Kansas, North Carolina, South Carolina, Utah, West Virginia, Wisconsin, Kentucky, South Dakota, Missouri, Alaska, North Dakota, New Mexico, Idaho, Arizona, Nebraska, Montana, Arkansas, Nevada, Colorado and Wyoming.

The 2015 rule now is in effect in 23 states: Iowa, Illinois, California, Washington, Oregon, Tennessee, Vermont, Virginia, New Hampshire, New Jersey, New York, Ohio, Oklahoma, Pennsylvania, Rhode Island, Minnesota, Michigan, Massachusetts, Maryland, Maine, Hawaii, Delaware and Connecticut.

The Texas court's ruling came after the Texas attorney general's office wrote a letter to the court, requesting a decision or the three states would appeal to a higher court.

In the ruling on Wednesday, the court said it issued the ruling primarily because it was in the public interest.

"At this early stage in the proceedings, the strength of the states' case should not be overstated," the order said. "While the court does believe that each of the above listed factors for a preliminary injunction have been met, it is the fourth factor pertaining to the public's interest in this matter that tipped the balance in favor of granting an injunction -- and did so to an overwhelming degree."

Attorneys general in Texas, Louisiana and Mississippi have been pressing the Texas court for an injunction since 2015, but the court had not issued a ruling until now.

In a letter to the court dated Sept. 6, those states asked the court to issue a ruling or they would appeal to a higher court.

On Aug. 16, WOTUS took effect in 26 states after a federal judge issued a nationwide injunction on the EPA rule that delayed the implementation of the Obama-era regulation. The rule redefined which wetlands and small waterways are covered by the Clean Water Act. Many farmers and ranchers feared the change would lead to increased government regulation of their land.

In a letter to District Judge George C. Hanks Jr., the Texas attorney general's office expressed frustration at the court's lack of action despite repeated requests prior to Thursday's ruling.

"The need for injunctive relief, already strong, is now urgent," the letter said. "Having met the elements for injunctive relief, the plaintiff states are entitled to a preliminary injunction. They are certainly entitled to a ruling, which they have been diligently pursuing. Unfortunately, their diligence has not been rewarded with any action from the court."

States led by Texas requested preliminary injunctive relief in September 2015 after the WOTUS rule took effect, and again in February 2016.

In the letter to the court, the states said they were prepared to appeal to a higher court to force the Texas court to consider their case.

"Therefore, the plaintiff states write to notify the court that on Sept. 13, 2018, absent a ruling on their long-outstanding preliminary injunction request, they will be compelled to seek a writ of mandamus from the Fifth Circuit (New Orleans) directing this court to rule on the pending motion for preliminary injunction."

On Aug. 24, Texas, Louisiana and Mississippi asked the Texas court to expedite its consideration for a nationwide injunction of the rule after a court in South Carolina issued a ruling that allows the rule to take effect in 26 states.

Agriculture groups led by the American Farm Bureau Federation, filed an appeal with the U.S. Court of Appeals for the Fourth Circuit in Richmond, Virginia. They are attempting to overturn a U.S. District Court for the South Carolina District ruling that threw out the EPA's rule to delay the implementation of the 2015 WOTUS rule by two years until 2020.

In the motion filed on Aug. 20, the farm groups asked for a stay pending that appeal. So far, the court has not ruled on the request.

The suspension rule would have given the agency until 2020 to complete a rewrite of WOTUS. Following the South Carolina court's decision, it reverted back to the U.S. Supreme Court ruling that found appeals courts do not have jurisdiction on the WOTUS issue. Instead, that jurisdiction lies with the district courts, the Supreme Court ruled.

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

Follow him on Twitter @toddneeleyDTN

(AG/SK)

09/14/2018 USDA Details Trade Aid Metrics

By Chris Clayton
DTN Ag Policy Editor

SAN FRANCISCO (DTN) -- Following some criticism of its numbers for trade aid, USDA on Thursday released a six-page paper detailing how economists came up with the calculations for trade damages when creating the Market Facilitation Program and a food purchasing and distribution program for commodities.

Several commodity groups representing dairy producers and grain farmers questioned USDA's methodology when the department released final numbers for its trade aid package.

USDA emphasized the main focus was examining how much trade declined for a particular commodity following retaliatory tariffs. USDA noted in the paper, as Agriculture Secretary Sonny Perdue repeatedly reiterated, that the department used an approach often taken at the World Trade Organization when the WTO adjudicates trade dispute cases.

USDA calculated damages following retaliatory tariffs by Canada, China, the European Union, Mexico and Turkey. Each country placed various tariffs on U.S. agricultural commodities after the Trump administration implemented tariffs on steel and aluminum imports. In the case of China, other tariffs have been placed on Chinese imports because of a push by President Donald Trump to penalize China for theft of intellectual property.

USDA looked at the value of trade with those countries in 2017 for particular crops and compared that to the trade value with countries after tariffs were implemented. The difference is the calculation of "trade damage" due to tariffs, USDA stated.

USDA officials and the chief agricultural negotiator at the U.S. Trade Representative's office on Thursday testified on trade to the Senate Agriculture Committee. Senators warned that farmers need quick resolution to some of these trade disputes because negotiating new trade deals takes too long.

"On top of already low prices, the agriculture sector has seen immediate negative impacts as a result of retaliatory trade actions," said Sen. Pat Roberts, R-Kan., chairman of the Senate Agriculture Committee. "As time goes on without resolution, the concern of losing long-term market access only grows."

Under USDA's formula, soybeans receive payments of $1.65 a bushel, divided by 50%, but corn producers qualified for only 1-penny-per-bushel payments. USDA highlights in an example that this is because China and the European Union combined imported $309 million in corn from the U.S. in 2017. With 25% tariffs added, USDA estimated combined exports would fall to $117 million. That equates to damages of $192 million. That $192 million is then divided by U.S. corn production of 14.6 billion, which equals only a 1-cent payment per bushel.

Those aid figures were again divided by 50% of a farmer's production.

USDA's numbers vary widely from an analysis by the National Corn Growers Association. The group submitted numbers to USDA calculating losses due to trade disputes at $6.3 billion, or 44 cents a bushel for the 2018 crop.

In an op-ed late last month for The Hill, Kevin Skunes, president of NCGA, noted that when USDA's trade aid came out, "It became strikingly clear that corn farmers would receive virtually no relief."

In calling for the White House to rescind its tariffs, Skunes added, "As history has shown, once you lose a market, it is very difficult to get it back. Our global competitors are aggressively pursuing every opportunity we miss and our margin for error is shrinking. Corn farmers direly need a win."

To read Skunes' full op-ed, see http://thehill.com/…

Payments under the Market Facilitation Program will total $4.7 billion and will be based on 50% of a farmer's production this year for the commodity. That 50% figure is then multiplied by the payment rates below:

-- Soybeans: $1.65 a bushel; total payments expected, $3.7 billion

-- Sorghum: 86 cents a bushel; total payments expected, $156 million

-- Wheat: 14 cents a bushel; total payments expected, $119 million

-- Corn: 1 cent a bushel; total payments expected, $96 million

-- Cotton: 6 cents a pound; total payments expected, $277 million

USDA opened enrollment for the program at the beginning of September. A producer needs to provide actual production for fall-harvested crops such as soybeans, corn, sorghum and cotton before they can sign up for the aid checks.

FARMERS FOR FREE TRADE EXPANDS

The USDA report comes after the group Farmers for Free Trade announced Wednesday it would expand as trade associations in other fields formed Americans For Free Trade.

Farmers for Free Trade is a bipartisan pro-trade coalition co-chaired by former Sens. Max Baucus, D-Mont., and Richard Lugar, R-Ind.

The new coalition will immediately join Farmers for Free Trade in the multimillion-dollar national campaign called Tariffs Hurt the Heartland, which focuses on telling the stories of the American businesses, farmers, workers and families harmed by tariffs. The stories will be told through town-hall-style events, grassroots outreach to Congress and the administration, social media, rapid response and digital advertising.

The campaign includes a geographically searchable map (http://tariffshurt.com/…) that allows users to find stories of job losses, deferred investments, higher prices and other negative consequences for farmers and businesses in communities across the country impacted by tariffs.

"This campaign will show how tariffs are squeezing the average American family and community from every direction," Farmers for Free Trade Executive Director Brian Kuehl said.

"If you are in Des Moines, Iowa, or Harrisburg, Pennsylvania, it's not just that tariffs are dropping the value of corn, soy or pork," Kuehl said. "Increasingly, it's that the price of buying a dishwasher has gone up, or that a local business has put off expansion because of the price of steel or aluminum.

"By joining with leading retailers, manufacturers and services organizations, Farmers for Free Trade will play a big role in showing the comprehensive damage the trade war is having on American communities."

USDA's paper detailing its trade aid models can be found at https://www.usda.gov/…

Editor's Note: DTN Political Correspondent Jerry Hagstrom contributed to this report.

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

Follow him on Twitter @ChrisClaytonDTN

(AG)

09/14/2018 USDA Reports Review

By Alan Brugler
DTN Contributing Analyst

USDA threw some bearish numbers at the corn market Wednesday, but pulled their punches a bit on the ending stocks side of the equation.

As you may have heard by now, USDA not only disagreed with the private analysts fading their Aug. 1 crop estimates, they said, "We'll see you one and raise you one." Because the market had been expecting a smaller number and not a larger one, prices dropped by double digits following the report, and December corn futures came within 1/2 cent of the life-of-contract low set back in July.

The national average yield estimate was increased to an all-time-record high of 181.3 bushels per acre (bpa). Let's look at the numbers in a little more detail, to better determine whether the number is likely to still be that high in January. The yield estimate was based on 9,820 farmer surveys and 4,952 objective yield plots measured by USDA personnel. USDA analysts also look at satellite sensing (crop-mapped NDVI and other techniques) to fill in holes in the data. The Terra MODIS yield model shows some impressive clusters of 250-to-300-bpa yields in Nebraska and Illinois. You can also pick out the flood-stressed areas in Minnesota and Iowa and the drought areas in Kansas and Missouri.

The objective yield is essentially ears per acre times grain weight per ear. Ears per acre as of Sept. 1 (they can go either up or down in subsequent reports based on second-ear survivability and weather-related losses) were record large in six of the 10 states where they are counted. Those six states included big acreage heavyweights like Nebraska, Iowa, Illinois and Indiana.

While the National Agricultural Statistics Service (NASS) does have some dried-down samples from the Southern harvest, they don't have much in the way of actual grain weight per ear for the September report in the Corn Belt. Thus, they compute an estimated yield from the farmer surveys and the satellite data, and divide that by the ear count. This results in an implied ear weight, which they determined to be record high for 2018.

Was the September jump to 181.3 bpa unusually large? No, not really. Since 1974, the average August-to-September yield increase -- in years where it was raised -- is 1.66%. This year's hike was 1.62%! They only raised September yields in 22 of the previous 43 years, just slightly over 51% of the time, but this is a typical hike for those years. Several trade axioms come to mind, such as "rain makes grain" and "big crops get bigger."

It is also important to note that raising yield 7 bpa in Illinois from last month increased U.S. production by 75.95 million bushels. That one change moved the national average yield from 180 bpa to 181.3 bpa. Yields were also increased 2 bpa in Nebraska, 4 bpa in Iowa, 6 bpa in Indiana and 8 bpa in Ohio.

What does this tell us about final yield? In the 22 years since 1974, where the September yield was larger than the August yield, the January final yield was 0.499% higher. That would imply a final yield of 182.20 bpa, very close to the polynomial trend yield since 1900 of 182.9 bpa.

We can also see what USDA thinks by digging down to page 42 of the Crop Production report. Their reliability table shows that the September estimate has been below the final numbers in 12 of the past 20 years. The biggest miss (or shift in reality) has been 845 million bushels, with the smallest 14 million. Their root mean square error is 3% over those 20 years, or 5.3% for a 90% confidence interval.

Our bottom line from this exercise is that the final corn yield is highly likely to be within 5% of Wednesday's number, with a bias that the final number in January is another bushel per acre larger based on other years where the September yield was above the August estimate.

Things like Hurricane Florence or an early freeze could still put a dent in the crop. There is immature corn in pockets that were too wet this spring, but much of the crop is ahead of normal maturity and thus less vulnerable. At least half of the North Carolina corn crop had been picked ahead of the storm (43% through Sunday and aggressive efforts this week), but the other part is still in harm's way.

The good news is that the world corn stocks-to-use ratio is very tight, and the tightest since 1973 for coarse grains. That means a strong export environment to soak up these extra bushels. USDA boosted projected exports another 50 million bushels Wednesday. This report (and particularly the selloff after it came out) is also a warning shot to producers considering making wholesale shifts of acreage from soybean into corn for 2019.

Alan Brugler may be reached at alanb@bruglermktg.com

(BE/SK)

09/13/2018 Cash Market Moves

By Mary Kennedy
DTN Cash Grains Analyst

The trade war between the U.S. and China has now gone on for over two months, and while recent reports say there are expectations for another meeting "soon," between the two countries, no meeting has been officially announced. Now, with President Donald Trump planning to impose new tariffs on about $200 billion of Chinese imports this week, that meeting may not happen. Still, there are many who believe that China will have to come back for U.S. soybeans regardless of any resolutions.

But not so fast.

Red River Farm Network reported on July 12 that a key China National Cereals, Oils and Foodstuffs Corporation (COFCO) official said in an interview with China's state-run newspaper, that China will be able to replace U.S. soybean exports with alternative sources. That includes an increase in business with Brazil and Argentina. The senior COFCO official also said China can buy more soybean meal, sunflowers and sunflower meal, canola and canola meal and fish meal to fill its needs. COFCO is one of China's state-owned food-processing holding companies.

It's clear that Pacific Northwest (PNW) exporters have no expectations for China business. Since mid-June, as the trade war talks heated up, PNW export bids disappeared -- not just for harvest time, but also for the first quarter of 2019. An exporter recently told me that any pre-contracted soybean sales had been shifted to other destinations.

Frayne Olson, a crops economist/marketing specialist at North Dakota State University, said, "We have missed our peak sale season for new-crop soybeans, as PNW exporters will book October, November, December shipments in July, August and September."

Olson said that, even if the China tariffs "went away" in the near future, "It would take at least three months, if everything works perfectly, to get soybeans efficiently moving in to the PNW export channel." Olson said he has told the farmers he has spoken to at various meetings that they need to "prepare to store this year's soybean crop until at least mid-summer 2019."

I reached out to a few elevators in North Dakota and was told that some exporters on the PNW have been asking elevators to roll September-October shuttle sales to December-January, while others just want to buy the contracts back. I was also told that country elevator bids will continue to vary widely based on what positions the elevator is in. One elevator manager said he was unaware of anyone at "no bid" except possibly some non-shuttle elevators.

Without the PNW market, the market for North Dakota right now is mainly at the Gulf. However, Gulf- and St. Louis-delivered shuttle markets are at a negative basis, record lows for October, reflecting farm bids in North Dakota in the negative $1.80s. A shipper told me that it feels like the wide country October basis levels could easily push forward into November-December, and maybe further, without China. Friday's cost, insurance and freight (CIF) Gulf basis was at a seasonal low of -8X (November futures), and the rail bid delivered to St. Louis was -68X.

Just recently, BNSF Railway extended the temporary rates out of North Dakota to St. Louis through March. Nevertheless, as the Northern Plains soybeans flow to those destinations, traffic will likely become congested, probably causing those markets to go to no bid or even cheaper bids if they fill up.

Olson told me that, if soybeans make a mad dash for the Gulf, it could turn into a "no room at the inn" scenario. "We can only push so many soybeans into the pipeline at a time," he said.

Keith Brandt, general manager of Plains Grain and Agronomy LLC in Enderlin, North Dakota, said, "We have been telling our growers for a long time that our space for soybeans this fall was going to be limited. We will take the contracted soybeans, but beyond that, there is no guarantee. We will have some space now for price later, but it won't get us through harvest. Once that price-later space is filled, it's cash or basis fixed. However, farmers have done a good job of making space at home for those extra beans."

Brandt said that a good carry in the market is a big help. "Local processors have a better basis, but there is a long wait in lines, and $7.00 beans isn't friendly to the farmer."

"It will be just another chapter in the book for another harvest," added Brandt.

Cory Tryan, manager of the grain department and logistics at Alton Grain Terminal LLC in Hillsboro, North Dakota, said: "Bean harvest has started, but at a slow pace for deliveries against contracts, some are binning the early dry stuff (9-11% moistures) on farm in case we get wet. Most of the beans are too green yet, but we could see harvest pick up around the 20th (of September). The first beans coming off are lower 40s (bushels per acre), on average, or around 5 bushels per acre better than projected after the heat and lack of rain late July and first half August. So far, this is a couple of bushels over an average year's crop."

Tryan said that pre-contracted beans will still come to town; however, most of the overrun will have to be stored on farm. The options to do this include older bins, buildings, newly added bins and more bags. The last choice would be to pile beans on the ground.

Piling soybeans is a big risk and could degrade the oil in their seeds, which is a crucial part of their value. Also, because of that oil, piled soybeans could rot faster.

Ken Hellevang, an NDSU Extension grain management specialist, told the Bismarck Tribune in August that farmers shouldn't store soybeans in exposed piles. "A 1-inch rain can spoil the top 2 to 3 feet on a pile, which is 'devastating' in most farm operations," Hellevang told the Bismarck Tribune. "Storing grain in silo bags on the ground is preferable to exposed piles, but the beans first should be dried to 11% moisture. Drying beans will reduce pounds for sale by roughly 2% and can cause breakage. The bags aren't aerated and moisture can collect and move in them."

One shuttle loader told me that soybeans are in "new territory" for everyone involved on both ends of the supply chain. Each has different positions and space to manage their risks, which are much higher this year at every stop along the chain for the harvest window.

CAN CORN SAVE THE DAY?

Olson said that, for now, corn would replace the normal harvest flow of soybeans to the PNW from North Dakota and other Northern states that typically ship harvest beans west.

The PNW supplies corn buyers in Japan on a regular schedule and also supplies South Korea and the Philippines. Still, posted corn basis bids for delivery to the PNW have been slipping lower ahead of harvest, with expectations that more corn will move there due to the lack of soybean bids. Friday's basis for BNSF shuttles delivered to the PNW was at +65Z/+70Z for October. Similar to the Gulf and St. Louis for soybeans, if the PNW market gets flooded with corn, that basis could drop as well or limit delivery time.

Other shuttle loaders in North and South Dakota agree that corn will be the main commodity shipped at harvest in order to keep space open for beans on the farm and at the elevator.

"Our farmers will lean on us for dumping their corn, and we will pile corn," said Brandt. "The basis isn't too bad for corn, and freight should be available so that we can ship corn at harvest and not get too upside down."

As of Friday, BNSF secondary shuttle freight bids for September and October were at no bid and offers were at -$100 per car under tariff, prices unheard of as harvest nears but good for shippers who need freight.

Nevertheless, do not forget the one red light that is suddenly flashing: USDA recently forecast a record U.S. corn yield of 181.3 bpa, with production totaling 14.8 billion bushels. If that forecast comes true, we will have more corn than homes available for it at harvest and well in to next year.

Stay tuned. This story is far from over.

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

Follow her on Twitter @MaryCKenn

(AG/BE)