The drought getting worse in the High Plains

While the overall drought conditions in the contiguous United States have not changed much in the last four weeks, the weekly Drought Monitor shows the dry conditions are intensifying in the High Plains. 95 percent of Nebraska is now in extreme drought, 84 percent of Kansas is in extreme drought while South Dakota has nearly 57 percent in extreme drought. To the south, 75 percent of Oklahoma is in extreme drought.

Overall, the High Plains have 84 percent in severe drought, 57 percent extreme drought and 27 percent exceptional drought. In the Midwest: 30 percent severe drought, 11 percent extreme and 0.28 percent in exceptional drought. Nationally, the continental United States has 59 percent in moderate drought, 38 percent severe drought, 19 percent extreme and 6 percent in exceptional drought.

Read the latest Drought Monitor here:

Congressional ag leadership pushes

Speculation continues as to whether the House will bring up the Farm Bill during the lame duck session. The pending fiscal cliff and military spending are going to be the top priorities for lawmakers. On Thursday ranking Ag Committee member Collin Peterson called on Republican leadership to bring the bill to the floor saying there was no reason for further delay. Peterson also stated he would not support any extension of the 2008 farm bill.

Meanwhile House Ag Committee chair, Frank Lucas is also urging his colleagues to take action but the chairman did leave the door open to a possible extension saying: “If we can’t get this done in December and there is a one year extension, be prepared to hit the ground running in the spring,” he said. “We’re not going to start all over in our hearing process. We’re going back to markup immediately if we can’t complete this in the present session of congress.”

Senate Ag Committee Chair Debbie Stabenow joined the chorus on Friday stating the farm bill would be a great place for Congress to start working together: “If Congress can work together to pass the Farm Bill, it will create the trust and momentum we need to overcome gridlock and solve the challenges our country faces. Passing a bipartisan Farm Bill that reduces the deficit by $23 billion is a significant first step in meeting the critical deficit reduction challenges our country must face head-on this year.”

Fraudulent fertilizer dealer gets 1 year

The former owner of a California fertilizer company will serve a year in federal prison for selling organic fertilizer that was not organic. Peter Townsley was also fined $125,000 and upon leaving prison will live in a halfway house for six months while doing 1,000 hours of community service.

Townsley pleaded guilty in February to defrauding organic farmers with his “Biolizer XN” fertilizer. The product was approved by the Organic Materials Review Institute in 1998 but Townsley changed the formulation in 2000 and in 2001, adding ingredients not approved for organic crops. He continued to label the product as organic.

The San Francisco Chronicle reports by the time Townsley was caught in 2005, he had sold $6.5 million of Biolizer which was $2.5 million more than he would have made had it been sold as nonorganic.

Townsley apologized before being sentenced

A down week for dairy

For the second time in the week, cash cheese declined on the Chicago Mercantile Exchange on Friday. Barrels down 7.5 cents to $1.835, blocks fell 7 cents to $1.92. Class III futures declined in response to the cheese market. Butter and nonfat dry milk held steady.

For the week, cash cheese barrels down 24.5 cents, blocks lost 19 cents, butter gained a quarter-cent and Grade A nonfat dry milk gained a half-cent. Class III futures November declined 22 cents, December is down 91 cents, January is 53 cents lower, February fell $1.34 while the May contract is 2 cents lower than a week ago.

So cash cheese dropping below $2.00 during the week, traders were not surprised by the drop however, buyers are a bit reluctant to jump in when prices are going down. No exact numbers yet but cheese and dairy product sales in the Northeast are certainly going to be hurt by the on-going transportation problems and lack of electricity from Hurricane Sandy and the Nor’easter.

Packaged fluid milk sales in the U.S. in September totaled 4.3 billion pounds, 5.2 percent less than total sales in September of 2011. Adjusting for the calendar composition sales were 1.5 percent lower than a year ago. Total conventional milk sales were down 5.2 percent while organic fluid milk sales decreased 4.5 percent from a year ago.

The monthly World Agricultural Supply and Demand Estimates from USDA on Friday nudged projected milk production for 2012 a little higher to 199.7 billion pounds citing a little more production per cow. The 2013 production estimate unchanged from last month at 199.7 billion.

Projected cheese prices unchanged from last month for both this year and next but butter prices were reduced 1 to 1.5 cents reflecting the lower cash prices.

Class III milk price estimate for 2012 unchanged from last month, $17.55 to $17.65. the 2013 estimate a dime higher at $17.85 to $18.75. Class IV for 2012 reduced a nickel at $15.95 to $16.15 while the 2013 price estimate was increased 15 cents at $16.90 to $17.90. The all milk price estimate for 2012 unchanged from last month $18.50 to $18.60 while the 2013 estimate was raised a dime $19.10 to $19.20 per hundredweight.

Read the full WASDE report here:

Cattle trade at steady to lower prices

Chicago Mercantile Exchange live cattle futures were mostly higher on tighter supply projections. Feeders were mostly weak on a lack of new buying interest. Direct cash cattle trade was mostly steady to $1 lower than last week’s trade with live business at $125 in Kansas and $126 in Texas, and on the dressed trade at $195 to $196 in Nebraska. The estimated cattle slaughter of 116,000 was 12,000 less than a week ago but 22,000 more than a year ago.

Hogs were higher on the recent solid trade in the cutout value and tighter cash supply estimates. The National Direct market closed $.07 lower with the weighted average of $78.65, the Eastern Cornbelt was up $2.56 for an average of $70.08, the Western Cornbelt was down $2.32 at $77.78, and Iowa/Southern Minnesota was $1.74 lower at $78.20. Butcher hogs at the terminals were steady at $50 to $58. Missouri Direct was steady at $73 to $76 on light to moderate supply and demand. Missouri Direct sows were unchanged at $42 to $48. Illinois Direct sows were steady at $49 to $62 on moderate demand and light offerings. The estimated slaughter of 427,000 head was down 1,000 on the week but up 39,000 on the year. The pork carcass cutout value was down $.33 at $86.63.

Beans drop on USDA numbers

Soybeans were sharply lower on fund and commercial selling. USDA raised the production estimate more than 100 million bushels to 2.971 billion, pegging the average yield at 39.3 bushels per acre. Ending stocks were also up on the month. Soybean meal and oil were lower on the losses in beans. Informa Economics projects 2013 U.S. soybean planted area at 80.1 million acres.

Corn was lower on technical selling and spillover from soybeans. USDA did raise the production and yield estimates slightly but the numbers are all still down sharply on the year. Ending stocks were also up but should stay well below last year’s levels. Dow Jones Newswires, citing trade executives, states Japan bought 500,000 tons of U.S. feed grade corn because of shipping delays on 900,000 tons of previously purchased Brazilian corn. China’s grain output should hit 580 million tons this year, a new record, up 9 million from 2011. According to Informa Economics, 2013 U.S. corn planting could hit 97.7 million acres.

The wheat complex was lower on technical and commercial selling. The Ag Department made a larger than expected increase to ending stocks, up 50 million bushels to 704 million, decreasing the U.S. export projection. Still, USDA did lower the world production estimate, decreasing expectations for Australia. Informa Economics sees 2013 U.S. wheat acreage at 57.1 million tons.

2013 Indiana State Fair: Year of Popcorn

One of America’s favorite snacks will be featured at the 2013 Indiana State Fair. Indiana State Fair executive director Cindy Hoye says Indiana is known for its tremendous corn-producing capabilities, but few know about the state’s popcorn production. “This is the year we make sure all Hoosiers realize that their main movie-watching snack was likely grown and manufactured in Indiana,” she says.

Hoye says the 2013 Indiana State Fair will have “fun at every turn” and much of it will be popcorn related. The 2013 Indiana State Fair runs August 2-18, 2013.

Friday midday cash livestock markets

There’s been light trade reported at $126 on the live basis in Texas, down around $1 on the week, with around 5,000 head traded. There’s even lighter activity in the Northern dressed markets at $195 in Nebraska and $198 in Iowa. Asking prices are $128 to $129 in the South and $198+ in the North with bids at $124 to $125 on the live basis and $193 for dressed. Boxed beef cutout values at midday were lower with Choice down $1.54 at $191.70 and Select $1.38 lower at $174.57.

The National Direct hogs opened $.01 higher with a weighted average of $78.73, the Eastern Cornbelt is up $2.58 at $79.10, the Western Belt is down $5.49 at $74.61, and Iowa/Southern Minnesota is $5.33 lower at $74.61. Butcher hogs at the terminals are steady with tops at $50 to $58. The Missouri Direct base carcass meat price is steady at $73 to $76 with supply and demand both called light to moderate. Missouri Direct sows are steady at $42 to $48. Illinois Direct sows are steady with moderate demand for light offerings, ranging from $49 to $62. Pork trade at midday was slow with mostly light demand and light to moderate offerings.

Obama must pay to play…

It’s sunrise at 30,000 feet as I wing my way from Boise to Minneapolis en route to my East Coast hearth and home. It was good to get out of DC post-election; it was even better to spend time with the Idaho Dairymen, but that’s a blog for another time.

Being on an airplane at 5:30 a.m. gives you time to think about a lot of what if’s. In my post-election mood, the list of what if’s is just too darn long, so I’m going to focus on how the boys and girls in Washington can overcome their collective image as less-than-smart and less-than-in tune with their constituents. This is includes our newly reelected president.

I was surprised at how short the media memory this week when House Speaker John Boehner (R, OH) told a DC press conference the parameters under which he’s more than willing to work with the President and Senate Majority Leader Harry Reid (D, NV) to find a solution to the looming “fiscal cliff.” Go back to Boehner’s public statements and offers of cooperation during the debate leading up to the enactment of the Budget Act of 2011. Everything he said this week, he’s said before.

There was nothing “conciliatory” or particularly surprising in Boehner’s statements. His party has always said now, during a less-than-robust economic “recovery”, is not the time to raise anyone’s taxes, and if Dems will agree to getting a handle on entitlement programs is on the table — including Social Security, Medicare/Medicaid and food stamps — then he’s willing to talk about closing special interest tax loopholes and other revenue measures. This is the same offer made by the GOP in 2010 and 2011.

I’ve quietly believed Reid, given he’s bred as the same political animal as Boehner, knows that what Boehner is offering is how the ultimate dilemma of the fiscal cliff, tax reform, immigration and a host of other issues will be resolved. I don’t think President Obama gets it.

Obama has to realize he and his politicos took themselves out of the budget/deficit reduction game in 2010 as the zeal increased in pursuing what eventually led to the Budget Control Act. The President sidelined himself again when he forced Boehner to walk away from the so-called “grand bargain” on deficit reduction in 2011 by trying to up the ante at the 11th hour. I’m not sure the White House regretted these decisions as it allowed them to keep their hands clean and gave them splendid pre-election deniability.

However the fiscal cliff challenge is solved, however immigration and energy policy are addressed, the President must disabuse himself of the notion that he will set the debate and he will decide the outcome. In the grand scheme of things, he’s just another player in the game, just like Boehner and Reid, and his record doesn’t even approach those of the two congressional leaders. It’s clear if he offers nothing progressive, substantial or productive, then he will likely spend a lot of time waiting for the end game.

The White House spent the last four years saying all the right things. Now’s the time to demonstrate once and for all it can do the right thing as well.

The lesson learned this week was simple: The American voter gave no one a mandate; what Obama, Boehner and Reid got from the public was a second chance.

USDA raises domestic ending stocks

USDA’s increased its domestic ending stocks estimates for corn, soybeans, and wheat.

The Ag Department raised U.S. wheat ending stocks 50 million bushels to 704 million, cutting exports because of the recent slow pace of sales and shipments. The average farm price is seen at $7.75 to $8.45 per bushel, compared to $7.65 to $8.55 in October.

Corn ending stocks are pegged at 647 million bushels, 28 million more than last month, thanks to a bigger crop estimate and high feed use projection. The average farm price is estimated at $6.95 to $8.25 per bushel, compared to the month ago range of $7.10 to $8.50.

Soybean ending stocks came out at 140 million bushels, compared to 130 million a month ago, raising production while increasing the crush and export use categories. The average farm price is estimated at $13.90 to $15.90 per bushel, compared to October’s range of $14.25 to $16.25.