WEEKLY NEWS HIGHLIGHTS

NEWS BRIEFS COMPILED BY THE RED RIVER FARM NETWORK

Ending Stocks — USDA’s first estimate of new-crop ending stocks was bullish for corn and wheat, and bearish for soybeans. Corn ending stocks next year are about half of the current marketing year’s levels, due to an expected 34 percent increase in ethanol use and a six percent boost in exports. Wheat ending stocks next year are 100 million bushels below this year, while soybean stocks will increase 85 million bushels.

Feed to Fuel — With a 2006-2007 corn carryout figure of 1.14 billion bushels, USDA estimates the amount of corn used for ethanol will increase 34 percent in the year ahead. Broker/analyst Jerry Gidel with North American Risk Management Services says there has been a dramatic shift from feed to fuel. "With the numbers we saw put out by USDA last winter, everybody looked at that 500 million increase in demand for ethanol for this coming year, and they said could that really be a possiblity?" said Gidel, "What we’ve seen so far this year and the amount of ethanol plants that are already in construction and what is planned over the next couple years, it is going to be a big factor."

Ag Disaster DOA — House Speaker Dennis Hastert says the Senate’s $109 billion emergency supplemental spending bill is dead on arrival. According to Hastert, the House has no intention of joining in a spending spree. The bill’s $4 billion ag disaster aid will have the support of some farm-state conferees. South Dakota Senator Tim Johnson and North Dakota Senator Byron Dorgan vow to fight to maintain the disaster assistance in the conference committee process.

Johanns Releases First Farm Bill Discussion Paper — Agriculture Secretary Mike Johanns used a fruit and vegetable meeting to unveil the first in a series of Farm Bill discussion papers. During the Chicago speech, Johanns repeatedly said the current farm program excludes 60 percent of US farmers. "My heart is with the American farmer; I happened to grow up in a place where we grew a lot of program crops, but you know what?" asked Johanns, "Farmers are farmers, whether they are growing something in an orchard or in a row crop." The USDA analysis offered three alternatives for risk management. One would use the existing farm programs, but make them more consistent with WTO rules. The second option replaces marketing loans and countercyclical payments with a system that pays producers, based on revenue shortfalls. The third alternative puts more emphasis on farm savings accounts, expanded crop insurance, conservation and rural development monies.

Former USDA Leaders Endorse AFT Farm Bill Plan — Former Agriculture Secretary Clayton Yeutter, says the farm safety net needs to be maintained, but should be re-designed to effectively manage risk. "Today, we have a combination of direct payments, countercyclical payments, loan deficiency payments, crop insurance and disaster payments; we ought to be able to do better," said Yeutter. Yeutter says the American Farmland Trust is offering more options to manage risk, with less cost to the government. Former Agriculture Secretary Dan Glickman says the AFT plan presents a transformational approach. "We know that a safety net is needed, but its got to be a modern safety net, consistent with the realities of what the world is like."

Diesel Turmoil — According to one biodiesel manufacturer, the new low-sulfur diesel requirement, will likely cause even higher diesel prices."I hate to call it a train wreck, but we are anticipating the diesel fuel world will be in extreme turmoil this summer," said John Campbell with Ag Processing Inc. The new sulfur regulations begin next month.

House Dems Release Energy Plan — The Co-Chair of the Democratic Rural Working Group, South Dakota Congresswoman Stephanie Herseth, says the plan would make the US energy independent in ten years. "We have to be more aggressive in laying out an increasing percentage on the fuel sold in this country and establishing the renewable fuel standards based on that increasing percentage, to get to 20 percent of ethanol use in the country by 2015."

"Baloney" — Minnesota Congressman Collin Peterson is trying to clear up some misinformation about ethanol. "I want people to know that there are 24.4 days of ethanol supply which is more than enough to supply the industry," said Peterson, "It is actually more days of supply than we have of gasoline, which is about 22 days, so there is no shortage of ethanol." Peterson says ethanol has not caused the gas prices to go up." In his words, the idea the US needs to import ethanol from Brazil is "a bunch of baloney."

Tariff Reduction — House Majority Leader John Boehner will not attempt to enact a reduction in the tariff on ethanol imports. A spokesman says Boehner recognizes the majority of lawmakers do not support a temporary tariff reduction.

Johnson Blasts Bush Over Brazilian Ethanol Imports — South Dakota Senator Tim Johnson is upset with President George W. Bush for suggesting Congress should allow imports of Brazilian ethanol as a solution to high gasoline prices. Johnson says the domestic ethanol industry is meeting the market demand. Since the May 1st phase-out of MTBE, Johnson says ethanol producers have not missed a beat in transporting fuel throughout the country.

Ag Approps Heard in House — The House begins consideration of the fiscal year 2007 agriculture appropriations bill Wednesday. The bill provides more than $18 billion in total discretionary spending, a decline of $96 million from this fiscal year, but $564 million over the White House budget request.

LMA Lobbies Congress — The Livestock Marketing Association was on Capitol Hill last week. A voluntary animal ID system was their top priority. "The program should be voluntary until we get some of our questions answered," said LMA spokesman John McBride. McBride says cost and confidentiality must be addressed.

Beef Checkoff Review — The Beef Checkoff Review Group will meet May 22nd to discuss ways to improve the promotion and research program. According to the Agri-Pulse newsletter, the National Cattlemen’s Beef Association and American Farm Bureau Federation are coordinating this meeting. R-CALF USA, the Livestock Marketing Association, the National Farmers Union and representatives of the dairy and veal industries will also participate.

Japan Confirms its 26th BSE Case — As high level talks are scheduled to begin, the Japanese media is busy reporting on its latest internal case of BSE. USDA Undersecretary Chuck Lambert and Deputy Undersecretary Ellen Terpstra will meet Japanese leaders this week to discuss the trade dispute. There is hope beef trade will resume before President George W. Bush and his Japanese counterpart meet next month in Washington, but challenges remain. Japan’s chief cabinet secretary warns his government will not succumb to pressure from the United States.

Korea Worries About WTO Challenge — If South Korea doesn’t reopen its market to US beef, the United States may pursue legal action through the World Trade Organization. A spokesman for the Korean agriculture ministry said there is no justification for further bans on US beef, creating the possibility of a WTO challenge. The beef ban could end as soon as next month.

Brazil Protests — The Brazilian government is providing additional assistance to its farmers, but growers are unsatisfied and plan to continue their protests. The government will pay farmers between 70 cents and three bucks per bag of soybeans to ease the big losses in the marketplace. The protests are now entering their fourth week. Producers will march on the capital city of Brasilia tomorrow. Over the past three weeks, protesters have blocked highways.

Land Values — South Dakota land values have doubled in the last six years. "The fact that cash rents and returns to land keep increasing, it provides underlying support for some of the increase in land values," said South Dakota State University economics professor Larry Janssen, "However, in the last several years, it has also been declining interest rates and people are pulling money out of other equities and putting it into the land market." Janssen says cash rental rates are rising, but not as fast as land values.

Take a Hike — The Federal Reserve has increased interest rates by a quarter of a percent. The rate goes to five percent. Chairman Ben Bernanke says the hike in rates was to keep inflation risks down.

SD Ethanol Project — Aberdeen Energy, a subsidiary of Glacial Lakes Energy of Watertown, continues its plans to build a 100 million gallon ethanol plant in Brown County . Plans call for an equity offering in early summer, with ground breaking by September.

Iogen Celluosic Ethanol Plans — Iogen Corporation plans to build the first American cellulosic ethanol plant in Idaho. Straw will be used to make the fuel. "They currently signed pre-production contracts with over 200 growers in Idaho," said Mark Gaede, lobbyist with the National Association of Wheat Growers. Iogen is considering other sites, including locations in the Red River Valley.

Ethanol/Malting Combo — Cargill Malts, Spirtwood Energy and Great Rivers Energy have announced plans to expand the Cargill barley malting plant and build a 100 million gallon ethanol plant at Spiritwood, North Dakota. Noting the success of these value-added ventures, Governor John Hoeven encouraged state farmers to grow more corn and barley.

ADM Expansion — Archer Daniels Midland has selected Cedar Rapids, Iowa as the second location for its ethanol capacity expansion. ADM will build a dry corn milling plant with an initial annual capacity of 275 million gallon. The Iowa facility is adjacent to an existing ADM corn processing plant. This news follows a recent announcement of a 275 million gallon expansion in Columbus, Nebraska. Construction on the Cedar Rapids expansion is expected to be complete in the second half of 2008.

Vera Sun Iowa — VeraSun Energy has broken ground on its third ethanol bio-refinery. The Charles City, Iowa plant will produce 110 million gallons of ethanol annually, from 39 million bushels of corn. VeraSun is headquartered in Brookings and has existing ethanol plants in Aurora, South Dakota and Fort Dodge, Iowa.

Another US BioEnergy Plant — US BioEnergy has plans to build a 100 million gallon-per-year ethanol plant near Grinnell, Iowa. The Brookings, South Dakota firm has a joint venture agreement with Big River Resources, which owns and operates an ethanol plant at West Burlington, Iowa. US BioEnergy has a variety of ethanol projects underway, including development deals in Hankinson, North Dakota and Janesville, Minnesota.

Agraria Will Open Doors Soon — The Agraria Restaurant will open later this month in Washington, DC, with a grand opening planned for June 7th.

SD Hall of Fame Class of 2006 — Two ranchers are included in the list of 15 inductees into the South Dakota Hall of Fame. Reliance rancher Pat Blum is a past president of the South Dakota Beef Industry Council. The late Richard Kjerstad of Wall was president of the South Dakota Farm Bureau from 1995 until his death in 2004. Induction ceremonies will be held September 15-16 in Watertown.

Exec Hired for Ethanol Company — Otter Tail Ag Enterprises LLC has named its new chief executive officer. Kelly Longtin previously served as the general manager at New Horizons Ag Services. Otter Tail Ag Enterprises is building a 55 million gallon ethanol facility at Fergus Falls, Minnesota. The plant should be operational by late 2007.

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