The workshop, led by U.S. Agriculture Secretary Tom Vilsack and U.S. Attorney General Eric Holder, featured panel discussions on a variety of topics, including competitive dynamics in the seed industry, trends in contracting, transparency and buyer power, and concluded with public testimony. 

“Today’s workshop provided the Department with an important opportunity to hear from a variety of perspectives and individuals about competition in the agriculture sector,” said Attorney General Eric Holder.  “We appreciate the importance of this industry to our economy and are committed to enforcing the antitrust laws effectively to ensure fair and open competition that protects both consumers and farmers.”

“In my travels across the country, I hear a consistent theme: producers are worried whether there is a future for them or their children in agriculture, and a viable market is an important factor in what that future looks like,” said Vilsack. “These issues are difficult and complex, which is why this workshop today is so important and long overdue.”

Friday’s meeting was the first in a series of workshops that will be held over the next several months. 

Holder, Varney serve notice to large agribusiness companies

The nation’s largest agribusiness firms received a stern warning from the Obama administration during Friday’s ag competition workshop in Ankeny, Iowa:  There’s a new sheriff in town and anti-competitive practices won’t be tolerated.

Attorney general Eric Holder set the tone for the session. “We know that a growing number of American farmers find it increasingly difficult to survive by doing what they have been doing for decades,” Holder said, “and we’ve learned that some them believe that the competitive environment may be, at least in part, to blame.”

Both Holder and Christine Varney, the assistant attorney general for antitrust, said that while big isn’t necessarily bad, it can be bad if the power that comes with being big is misused.  “With big comes an awful lot of responsibility,” said Varney.  “When you have a tremendous amount of market share, you have the responsibility to behave in ways that keep the competitive playing field open.  You cannot engage in acts that are designed to protect or extend your monopoly.”

Varney said her office will vigorously enforce antitrust law.  When pressed on what actions might be forthcoming, and when, Varney responded that it’s already happening.  She pointed to last year’s blockage of JBS SA’s attempt to purchase National Beef and a recent Justice Department lawsuit seeking to block milk processor Dean Foods’ acquisition of a competitor.   Her message was that future acquisitions and mergers will be getting much more scrutiny than they have in the past.

The following audio clips feature some of the opening comments made at the workshop.

AUDIO: Secretary of Agriculture Tom Vilsack (2 min MP3)

AUDIO: Attorney General Eric Holder (3 min MP3)

AUDIO: Christine Varney, head of DOJ Antitrust Division (3 min MP3)

AUDIO: Iowa Senator Chuck Grassley (3 min MP3)

Farmers have their say

The workshop agenda included a panel of six farmers conveying their thoughts on competition issues in agriculture.  Eric Nelson, a grain and cattle farmer from Moville, Iowa argued that the government needs to do a better job of enforcing the anti-competition and antitrust laws already in place.   Pam Johnson, a farmer from Floyd, Iowa, talked about the innovations that have made American agriculture the envy of the world.

AUDIO: Eric Nelson (7 min MP3)

AUDIO: Pam Johnson (6 min MP3)

Corn was lower on technical and fund selling, in addition to the lower beans and crude oil. Corn’s fundamentals remain negative with a large supply, some uptick in ethanol use and fairly slack export demand. South Korea bought 116,000 tons of 2009/10 corn which was considered routine. Losses were limited by continued concerns over early planting delays ahead of March 31’s USDA prospective plantings report. Additionally, most contracts have managed to hold above last month’s lows. Ethanol futures were lower. Malaysia bought 60,000 tons of South American corn at $225 per ton.

The wheat complex was higher on short covering, technical buying and the lower dollar. When the dollar goes down, it lowers the price of U.S. goods on the export market. However, U.S. wheat is more expensive than wheat from competing exporters and the available world supply is large. In any event, fundamentals may be negative, but traders continue to hold a very large net short position, potentially setting the stage for more sideways movement. Minneapolis had additional support from concerns over hard red spring planting delays. European wheat was mixed, mostly firm, in consolidation trade; May Paris was up .4% and May London was .8% higher.

Chicago Mercantile Exchange live cattle contracts closed 20 to 127 points higher on the stronger cash cattle market. Additional support to the front months came from spreading into April and June out of the back months. April settled 1.27 higher at 95.10, and June was up .85 at 92.80.

Feeder cattle ended the session 70 to 155 points higher on the support from the strong action in the live pit. Additional support came from the lack of direction in the corn futures market. March settled 1.07 higher at 103.00, and April was up .87 at 105.97.

Feeder cattle receipts at Missouri auctions this week totaled 41,441 head. Compared to last week feeder steers and heifers found the majority of the sales steady, with trends at some auctions showing certain weights and cattle of classes several dollars higher to several dollars lower. Demand was good on a moderate supply. Feeder steers medium and large 1; 1385 head averaging 621 pounds traded at 111.95 per hundredweight, 1207 heifers weighing 623 lbs averaged 100.28.

Barrows and gilts in the Iowa/Minnesota direct trade closed 1.23 lower at 70.34 on a carcass basis, the West was down 1.20 at 70.45, and the East was 1.04 higher at 70.74. The Missouri direct base carcass meat price closed steady from 64.00 to 67.00 on the barrows and gilts. The weekly hog slaughter is estimated at 2,132,000 head, 31,000 less than last week and 20,000 less than last year. Saturday kill plans had been forecast to be around 30,000 head, but came in much higher than that at 84,000. Russia made it official on Thursday by relisting eleven U.S. pork plants for exports.

Lean hogs settled 5 to 77 points higher. Fund buying was noted as after April and June moved through ten day moving average resistance levels.  April settled at 72.65 up .77, The June contract hit a high of 81.50 before settling at 60 higher at 80.80. Pork trading was moderate with light to moderate demand and offerings. Pork carcass cutout value was .28 lower at 73.83.

Most pork belly months were unquoted and May ended .45 lower at 92.05.

USDA Mandatory reports cattle trading is moderate on moderate demand in Nebraska on Friday. Compared to last week early dressed sales have trended 2.00 to 3.00 higher at 147.00, but several continue to pass on bids. Trading in Kansas is light with dressed sales 4.00 higher than last week at 148.00. Trading remains inactive in all other areas. Reported negotiated sales volume at 11:00 was 6800 head. Boxed beef cutout values lower, with choice beef down .04 at 149.03, and select down .17 at 148.20.

Feeder cattle receipts at Missouri auctions this week totaled 41,441 head. Compared to last week feeder steers and heifers found the majority of the sales steady, with trends at some auctions showing certain weights and cattle of classes several dollars higher to several dollars lower. Demand was good on a moderate supply. Feeder steers medium and large 1; 1385 head averaging 621 pounds traded at 111.95 per hundredweight, 1207 heifers weighing 623 lbs averaged 100.28.

Agricultural competition is one of those “hot button” topics, one that evokes some very strong emotions.  Corning, Iowa farmer Ray Gaesser, vice-president of the American Soybean Association will be part of a workshop panel discussing seed competition issues.  He says there’s fine line between too much and too little regulation.

“We think there is a need to review what’s going on in our industry—but at the same time, we have concerns that we go too far and stifle innovation,” Gaesser says, “so it’s really a fine line that we must walk on to make sure that we have competition, but at the same time that we don’t over-control and stifle competition.”

How great is the interest in this subject?  DTN reports that, prior to the workshops, Justice and USDA asked for public comments and received more than 15-thousand responses—so many that DOJ has been unable to post all of them.

AUDIO: Ray Gaesser (2 min MP3)

Corn was very narrowly mixed on consolidation and late short covering. Contracts were lower early, continuing to absorb Wednesday’s USDA supply, demand and production numbers along with smaller than expected weekly export sales. Late support came from that short covering and continued concerns over wet weather delaying planting in some areas of the Cornbelt. Also, May managed to hold on above February’s low and additional support came from traders correcting corn and soybean spreads, buying corn and selling beans. In any event, fundamentals remain negative. Ethanol futures were lower. The Buenos Aires Grain Exchange left its Argentine corn production estimate unchanged at 20.2 million tons with 11.5% of the crop harvested.

The wheat complex was lower on technical and fund selling, along with spillover from beans. Fundamentals are extremely negative with a large world supply and poor demand for U.S. wheat, pushing wheat to new five month and contract lows. However, the dollar was down and contracts are technically oversold, which kept wheat from dropping too hard too fast. European wheat was modestly lower on follow through selling and the negative fundamentals; May Paris was down .8% and May London was 1% lower. The United Kingdom’s Department of Environment, Food and Rural Affairs expects U.K. planted wheat area to be up 11.4% from 2009 and Kazakhstan’s Ag Ministry is projecting a 3% increase in planted area for grains. Japan bought 85,000 tons of U.S. wheat, 42,000 tons from Australia and 25,000 tons from Canada, and Tunisia picked up 25,000 tons of soft milling wheat and 25,000 tons of durum from an unnamed seller.

Chicago Mercantile Exchange live cattle contracts settled 32 points higher to 30 lower.  Front months were supported by longs rolling into June and August out of April. There were some spreaders that bought August and sold June. Uncertainty over the direction of this week’s feedlot trade weighed on the market. April settled .05 lower at 93.82, and June was .22 higher at 91.95.

Feeder cattle contracts ended the session, mostly 7 to 62 points higher with only spot March lower. Spreading out of the deferred months into March was the main feature. DTN’s Rick Kment says, traders remain unimpressed with the up and down nature of the market over the last couple of days and for the most part remained on the sidelines until late in the session.  March was down .07 at 101.92, and April was up .07 at 105.10.

Feeder cattle receipts at the Bassett, NE Livestock Auction totaled 2650 head on Wednesday. Compared with two weeks ago steers and heifers trended steady. Demand was good and trading was active. Feeder steers medium and large 1; 454 head averaging 568 lbs traded at 125.31 per hundredweight. 126 heifers weighing 583 lbs brought 107.49.

Barrows in the Iowa/Minnesota direct trade closed 2.81 lower on a carcass basis, the West was down 2.42 at 71.66, and the East was down .26 at 69.70. Missouri direct base carcass meat price closed steady to 1.00 lower from 64.00 to 67.00.Thursday’s hog kill was estimated at 414,000 head, 11,000 less than last week, and down 1,000 from last year. Saturday’s slaughter is only expected to be around 30,000 head, but Tyson’s plans were still undecided. Iowa barrows and gilts last week averaged 269.3 pounds, .1 pound lighter than the previous week, and .8 pounds larger than 2009, and 1.3 pounds heavier than the three year average.

Lean hogs settled 15 to 80 points lower on Negative fundamentals. Cash hog prices were sharply lower at midday in the direct trade. There was rolling by longs out of April into June. April settled .67 lower at 71.87, and June was down .45 at 80.20. The pork trade was slow, with light to moderate demand and offerings. The pork carcass cutout value was up .16 at 74.11.

 May pork bellies closed lower on the decline in the lean pit. Most contracts were not traded.  May finished the session .50 points lower at 92.50.

Feeder cattle receipts at the Bassett, NE Livestock Auction totaled 2650 head on Wednesday. Compared with two weeks ago steers and heifers trended steady. Demand was good and trading was active. Feeder steers medium and large 1; 454 head averaging 568 lbs traded at 125.31 per hundredweight. 126 heifers weighing 583 lbs brought 107.49.

Barrows and gilts in the Iowa/Minnesota direct trade opened 3.54 lower at 70.78 on a carcass basis, the West is down 2.94 at 71.14, and the East is .60 lower at 69.36. Missouri direct base carcass meat price is steady to 1.00 lower from 64.00 to 67.00. Iowa barrows and gilts last week averaged 269.3 pounds, .1 pound lighter than the previous week, and .8 pounds larger than 2009, and 1.3 pounds heavier than the three year average. While the week to week change is minimal, the fact that weights continue to hang above 2009 and the three year average represents some evidence for those that think finishing floors could be more current.