Kernals for the New Year
Hello and Happy New Year to all!
I trust all had a Merry Christmas enjoying time with family and friends.
Each of our girls, with their families and/or significant others, were all home for an enjoyable time together. I got the wish for a white Christmas, which provided endless hours of outdoor enjoyment and laughter for the grandsons. Truth be known, I can honestly say the host was near max capacity...the older I get, the more important is my 'routine'. I remember a saying heard as a youngster from my grandfather in his native Ukrainian tongue, the translation provided me when asked was something along the lines of 'house guests, like fish, both smell after a few days...'. My grandfather loved Lutefisk and pickled herring, which coincidentally were plentiful in his home from Thanksgiving through New Years and perhaps contributing to the correlation of guests and the aromatic effervescence.
Canola oil - I was remiss last time not providing all relevant information regarding the recent study related to the usage of canola oil; specifically, the rebuttal to the said study and the validity of the data gathered. Please take time to read, the link is provide here.
Continuing Resolution - As expected and noted here last time, Congress 'kicked the can' down the road again with passage of temporary funding through January 19th. The CR contained a provision exempting the tax bill from the statutory Pay-As-You-Go rules that would have required farm program spending cuts in 2018. This allowed the President to sign the tax bill early rather than waiting until January, allowing the promise of tax reform by Christmas.
Disaster Bill - The House passed a $81 billion disaster bill that the Senate did not take up when considering the above CR. Included in the House bill is hurricane relief monies, but also farm subsidy monies for cottonseed and livestock producers. We've heard the outcry from both the cotton producers and dairy producers how they need/want a better farm bill; if passed, this will build a baseline for said provisions in the new farm bill debate. The current bill also includes language with linkage requirements that the last farm bill did not have: producers purchasing crop insurance would be eligible for a higher level of disaster assistance than those who did not, plus requiring insurance participation if any assistance is received.
Upon further review - Yes, I'm deviating from my traditional alphabetically sequenced topics, but this is noteworthy (humble opinion)...you will recall prior mention of RMA modifying Prevent Plant coverage options, specifically eliminating PT, which is/was an additional 10% coverage above the coverage provided in the basic MP policy; while not a significant item in our immediate area, the upper Midwest is a horse of a different color. The elimination did not go as far as OMB (Office of Management and Budget) wanted or as they had requested, as RMA preserved the 5% (FT) additional coverage option. The savings of $410 million dollars from this is widely speculated as a move to win concessions elsewhere, specifically cotton and dairy...if the USDA does not reprogram the money to other projects/programs, the 'savings' will disappear from RMA's projected spending and lost from the farm bill baseline. Stay tuned.
Disaster Declaration - Shoshone County Idaho has been designated by USDA as a primary natural disaster area due to this summer's drought. Additional Idaho counties qualifying for assistance include Benewah, Bonner, Clearwater, Kootenai and Latah. Also included are the contiguous counties of Mineral and Sanders in Montana. Farmers and ranchers in these counties qualify for natural disaster assistance. Contact your local FSA office for details.
Fertilizer - Appears that the recent declines in prices have waned for now, at least for NH3 which is up considerably since mid-November. Here's the scoop
Markets - The world is awash in virtually all grown commodities and with no significant news to the contrary, the markets are responding accordingly. US wheat exports have picked up considerably since my last update, current commitments are 5% behind last year and are nearing the USDA export projection average of 76% year to date. The continued weakening of the US dollar should bode well for continued export sales. US wheat price is very competitive in the world, but I'm not certain it explains why Spain would source US milling wheat. The open winter in the Black Sea region is a negative as it allows the FSU to continue exporting at a record setting pace.
All household oil prices have fallen - soybean oil, palm oil, coconut oil; only canola oil has not had the significant decline in price when compared to the other oils.
Livestock prices are maintaining price strength despite an increase in numbers and production. The latest cattle on feed report showed an 8% placement increase over last year, the largest in 6 years. Fed cattle marketings are up 3% from 2016, which helps keep the inventory current. 11% of US beef production is exported. Brazil says it's ready to resume fresh beef exports to the US, the US says "not so fast"...hog inventory is up 2% year over last year.
Oil prices stalled below $60 per barrel this past week on news of Libyan pipeline to open again. The Iranian protests will cause a stir and no doubt have an impact... Another tanker of fuel bound for North Korean was intercepted by South Korea today...sanctions, what sanctions? UK has a new North Sea oil field and is now online; largest offshore project for that country in a decade.
January 12th is the next report due from USDA. This report provides the acres of winter wheat planted, expected to be less than last year's 108 year low planting, and 2017 harvested acres and yields for corn and beans.
Tax Planning - We will facilitate an update on the changes in the new law sometime in February. When facilities and dates are secured I'll announce here. Paul Nieffer of Clifton Larson Allen, (who's already posted several blogs and has had his commentary regarding the new tax law featured by various ag media groups), has agreed to provide an update to help growers plan and prepare for 2018. I anticipate this to be hosted in Colfax and Walla Walla at this time.
(It's) The economy stupid - If the economy is not clicking, especially in the rural ag sector, our country isn't humming along economically. Continued consolidation in the financial industry is causing decline in small-town business across this country...George Bailey was on to something!
Weather - Being a typical farm kid, I had to check out the forecast back 'home'...today's high, -6°F after an overnight low of -28; windchills were -60 in the southwestern part of ND. I spoke with my niece on Christmas who lives in Bismarck, their overnight low that day was -26 and the high was -3, windchill a rattling -40! It's been a bitter cold spell for this region. Most of the Great Plains region is open (no snow cover); there's been minimal moisture received this fall with nothing predicted for the next week. I acknowledge the wheat seedling is much tougher than I am, yet the conditions it endures are incredible.
The latest drought map shows the severity now gripping nearly 2/3 of the US and contiguous from border to border through the plains. Then, a recent study by Cornell climate scientists on the possibility of a 'megadrought', (a drought lasting more than 30 years), in the western and southwestern US.
Until next time,
"If you are afraid of failure, you don't deserve to be successful" ~Charles Barkley
I wish all a Blessed New Year!
McGregor Risk Management Services, LLC
Cell - 509.540.2632
Fax - 509.843.2583