Sioux Falls Morrell plant cited

John Morrell and Co. agreed Friday to pay $44,079 for dozens of violations of the Clean Water Act.

In a federal suit filed last week, the South Dakota Department of Environment and Natural Resources cited the Sioux Falls hog processing plant for 58 violations since May 2008 and said the plant was noncompliant with federal statutes in nine of the last 12 quarters. Morrell is accused of dumping toxic chemicals from its Sioux Falls plant into the Big Sioux River. According to a Sioux Falls Argus Leader story, at its peak, the plant is accused of discharging three times the permitted amount of ammonia into the river.

The settlement agreement calls for Morrell to review its wastewater treatment and to begin improvements in a year. The Sioux Falls Morrell plant processes 17,000 hogs a day.

A statement from Morrell says the company will cooperate with state and federal regulators to address problems at the plant. The Sioux Falls plant is Smithfield Foods’ largest U.S. hog processing facility.

Quiet, higher day for grains and oilseeds

Soybeans were higher on technical and fund buying, along with spillover from the outside markets. The dollar was lower while the Dow, gold, and crude oil were higher on easing concerns over European economic health. At this point, the trade’s pretty much just waiting for Wednesday’s USDA supply, demand, and production numbers. The trade sees increases for production and ending stocks with numbers out at 7:30 AM Central. Soybean meal and oil followed soybeans higher.

Corn was higher on fund and technical buying, in addition to the outside market direction. Farmer selling remains slow but corn has had a lot of trouble recently trying to keep upward momentum, evidenced by Monday’s trade. Traders are waiting for those USDA updates and see a slight decrease in crop size against an increase in ending stocks following the surprisingly bearish September 30 quarterly stocks update. Weekly progress and condition numbers are delayed until Tuesday by Columbus Day. Ethanol futures were higher.

The wheat complex was higher with Minneapolis leading the way up on slow farmer selling and the lower dollar. Chicago and Kansas City pretty much just followed the hard red spring market with no real fresh news of their own. Additionally, Chicago and Kansas City’s fundamentals remain bearish, and key areas of the hard red winter region received much needed rain over the weekend. On Wednesday, the trade expects a modest reduction to U.S. ending stocks. European wheat was higher on the brighter tone in the broader market. India’s Farm Secretary P.K. Basu, via Dow Jones Newswires, projects Indian wheat production at a record 86 million tons, compared to the 2010 total of 85.93 million tons. DTN reports the Philippines bought 30,000 tons of milling wheat from Australia.

Livestock and grains and the RFS

The biofuels debate keeps ratcheting up, especially where ethanol is concerned. Livestock groups laid out their frustrations when a bill was introduced in the House last week that aims to tie the Renewable Fuels Standard to U.S. corn supplies. Kevin Kester, President of the California Cattlemen’s Association, spoke on behalf of the National Cattlemen’s Beef Association. Kester owns a stocker and cow-calf operation and says they’ve overcome many challenges inherent to the business. The challenge of U.S. renewable fuels policy, he says, is too great.

“I want to be very clear,” says Kester, “The National Cattlemen’s Beef Association is not opposed to ethanol. We just want to have a fair shake to compete head-to-head for a bushel of corn.” Kester specifically points to the RFS, saying, “Cattlemen are price takers not price makers. So, therefore, these record high prices and near record tight corn supplies and reserves are partially due to the RFS mandate.”

R.C. Hunt, a North Carolina hog producer, on behalf of the National Pork Producers Council says they support corn’s role in helping the country become more energy efficient but something has to change.

“The current feed grains situation has pork producers very nervous. We have had tight supplies and USDA is estimating a fall harvest smaller than it was initially projected,” says Hunt.

Gary Marshall, head of the Missouri Corn Growers Association, tells Brownfield that agriculture “can’t exist on $2 corn” and the RFS Flexibility Act would be a giant step backward.

“I’m disappointed in these national livestock groups for continuing to push for these types of things.” Marshall says the cost of gasoline would skyrocket if not for ethanol and adds that he’s worked for the past 25 years to help corn growers get higher prices and to go backwards does not make sense.

U.S. Ag Secretary Tom Vilsack said last week he does not support the House bill. There is no companion bill to the RFS Flexibility Act in the Senate. The House version is sponsored by Represenatative Bob Goodlatte, a Republican from Virginia, and Representative Jim Costa, a Democrat from California.

Also last week, the National Research Center released a study questioning the environmental and economic benefits of the RFS and biofuels production. Renewable fuels groups say the data that was used is questionable.

A rather slow day in the futures market

Formula totals for the cattle last week were sharply lower in Texas, but more were marketed in Kansas and Nebraska. The total trade volume was generally smaller than the previous week especially in Texas. The new show lists collected on Monday shows the weeks offering to be generally steady with last week. Asking prices are around 123.00 to 124.00 on a live basis and 193.00 to 195.00 dressed. Monday’s cattle kill totaled 129,000 head, the same as last week and last year.

Boxed beef cutout values were steady on moderate demand and offerings. Choice boxed beef was up .49 at 184.90, and select was down .11 at 169.47.

Live cattle contracts settled mixed on the Chicago Mercantile Exchange on Monday. The October through April 2012 contracts all ended in the red with the balance of the deferred issues in the black. The lack of direction in the market came from the light volume. Live cattle traders appeared to be less willing to jump on “the all is good” bandwagon coming from the European debt crisis resolution touted over the weekend, according to DTN. October finished the session 1.95 lower at 120.02, and December was down 1.50 at 120.35.

Feeder cattle were mostly higher with the exception of spot October. The lack of active trade volume and a surge in grain markets while livestock futures remained under pressure created directionless movement for much of the session. October ended .62 lower at 139.00, but November was .77 higher at 143.12.

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Closing Grain and Livestock Futures: October 10, 2011

Dec. corn closed at $6.05, up 5 cents
Nov. soybeans closed at $11.77 and 1/2, up 19 and 1/4 cents
Oct. soybean meal closed at $304.70, up $4.60
Oct. soybean oil closed at 49.86, up 79 points
Dec. wheat closed at $6.11 and 1/2, up 4 cents
Oct. live cattle closed at $120.02, down $1.95
Oct. lean hogs closed at $93.02, down $1.67
Nov. crude oil closed at $85.41, up $2.43
Dec. cotton closed at 103.34, up 136 points
Oct. Class III milk closed at $17.92, down 11 cents
Dow Jones Industrial Average: 11,433.18, up 330.06 points

Clark’s catches help fund essay contest

Indiana High School seniors have the opportunity to win cash prizes to help fund their college education.  The Indiana Corn Marketing Council and the Indiana Soybean Alliance, in conjunction with the Indianapolis Colts have created the Hoosier Horsepower Essay Contest.   Indianapolis Colts tight end Dallas Clark says he realizes college education is important, but it isn’t cheap.  For that reason, the Indianapolis Colts will donate $100 on behalf of Indiana corn and soybean farmers to the program for every catch Clark makes this season. 

Four Indiana high school seniors will be selected to receive $2,000 to defer college education related expenses.  Jane Ade Stevens, executive director for ICMC and ISA says this essay contest allows Indiana high school seniors to think about the important role Indiana farmers play in their everyday lives.   

Essays must be postmarked no later than Friday, February 17, 2012.  Winners will be announced prior to the end of the 2011-12 academic year.  More information is available at www.colts.com/hoosierhorsepower.

ASA urges growers to contact Congress

With the U.S. the House and Senate expected to vote on U.S. Free Trade Agreements with Columbia, Panama and South Korea on Wednesday, October 12, the American Soybean Association (ASA) is urging members to contact members of Congress ASAP, urging support.

In the ASA Action Alert, the organization provides growers with key talking points.

• The three trade agreements combined represent nearly $3 billion of additional agricultural exports.

• Nearly five years of inaction on these FTAs resulted in loss of U.S. market share and forfeiture of economic growth.

• The Colombia FTA will benefit soybean farmers by immediately eliminating tariffs ranging from 5-20 percent on soybeans, soybean meal and soybean flour, and phase-out the 24 percent tariffs for crude soybean oil and refined soybean oil over 5 years. Most exports from Colombia already enter the United States duty-free, and this FTA will correct the current tariff imbalance in agricultural trade between our countries.

• The Korea FTA will increase exports of the major grain, oilseed, fiber, fruit and vegetable, and livestock products by $1.8 billion annually. The agreement offers immediate duty-free access to U.S. soybeans for crushing and to U.S. soybean meal. It also opens up South Korea’s food-grade soybean imports to the private sector.

• The Panama FTA will benefit soybean farmers by removing immediately the tariffs on U.S. soybeans, soybean meal, and crude vegetable oils.

Monday midday cash livestock markets

It is pretty much the normal Monday routine in cattle country with buyers and sellers’ busy taking inventory for this week’s show lists. Bids and asking prices have yet to be determined but best early guesses are the new offerings will be priced around 123.00 to 124.00 live and 193.00 plus on the dressed. Margin stressed packers will probably hold off as long as they can before showing their hand. Boxed beef prices and demand will have to improve before price agreement is reached.

 Choice boxed beef in the morning report is up .58 at 184.99, and the select is down .28 at 169.30.

Feeder cattle receipts at the Joplin Regional Stockyards in Missouri totaled 4,000 head on Monday. Compared to last week, steer and heifer calves opened 1.00 to 2.00 higher. Yearling steers sold 1.00 to 3.00 higher and yearling heifers traded steady. Demand was moderate to good and supply was moderate. Feeder steers medium and large 1 weighing 500 to 600 lbs traded at 134.00 to 140.50. 5 to 6 weight heifers brought 124.00 to 130.00.

Barrows and gilts in the Iowa/Minnesota direct trade is down .58 at 92.66 on a carcass basis, the west is .33 lower at 92.18, and the East is down 1.18 at 92.36. Missouri direct base carcass meat price is steady to 1.00 higher from 86.00 to 87.00. Terminal hogs are steady to 1.00 higher from 61.00 to 64.00.

The weakness in both the cash hog price and pork cutouts Friday is not lost in the active outside market support over the weekend. Traders are looking for packers to try to aggressively cut costs, with short-term softness possible in pork values early in the week.

Trade sees increase in corn, soybean ending stocks

Ahead of Wednesday’s USDA supply and demand update, analysts see bigger supplies of corn and soybeans against a tighter balance sheet for wheat.

The average guess for corn ending stocks is 795 million bushels, compared to 672 million last month, following the recent much larger than expected quarterly stocks estimate. Expectations run from 646 million to 989 million bushels.

Soybean ending stocks are pegged at 181 million bushels, compared to 165 million a month ago, due to a larger quarterly figure and a potential increase in the crop estimate. The range of estimates is 153 million to 255 million bushels.

Wheat ending stocks are seen at 747 million bushels, compared to 761 million in September’s update, with projections ranging from 674 million to 810 million bushels.

The numbers are out Wednesday at 7:30 AM Central.

NFU: Currency manipulation bill and FTAs

The National Farmers Union does not support the three free trade agreements now being considered by Congress but does support the Senate bill that addresses currency manipulation by other countries when free trade agreements are put in place.

NFU’s Chandler Goule says the USTR, which negotiates U.S. free trade agreements, does not have the jurisdiction to formally charge countries for currency manipulation. Goule says the U.S. has been burned before, when Korea manipulated its currency in 1988/’89 and says Mexico is another example.

“You can also look at the NAFTA agreement,” says Goule, “You know, right after we signed it the Mexicans immediately devalued their peso and so we lost all of our gains that we made in our trade agreement.”

Goule says the Senate bill would provide the US Treasury department the mechanisms it needs to not only formally charge those countries but also take actions with our trade agreements with them. Goule says that currency manipulation bill is “going down the right road” and Congress should pass it ahead of the FTAs.