WEEKLY NEWS HIGHLIGHTS

Payment Cap Resurfaces — South Dakota Senator Tim Johnson supports the Administration’s attempt to implement a new cap on farm payments. "I’ve long supported common sense payment limitations that would save serious money and reduce program abuse; I’m pleased to see that the Bush Administration has recommended these payment limitations." Johnson, who is a member of the Senate budget and appropriations committees, is opposed to the across-the-board cuts proposed by the White House in the FY 2007 budget.

Qualified Support — South Dakota Senator John Thune supports much of the President’s budget, but says funding for agriculture needs another look. Thune promises he’ll work with the state delegation, congressional colleagues and the Administration to ensure that family farmers are not hurt by these funding levels. Thune does support cutting the farm program payment limit. Like Thune, Minnesota Senator Norm Coleman says the President’s budget is only a proposal. "The budget is the beginning of a conversation and the President has a laudable goal of cutting the deficit in half within 5 years and that’s good." On the other hand, Coleman said there are provisions in the budget that don’t make sense. "I’ve been a champion of not changing the Farm Bill, folks have contracts and commitments, at times, you have to live up to the commitments you made."

Tumbleson Comments — National Corn Growers Association President Gerald Tumbleson says the benefits of the nation’s investment in agriculture far outweigh its cost. "Agriculture’s share of the budget is half of one percent; it is very small and look what we do for the economy of the United States."

Budget Plan Discussed at NAWG Meeting — President Bush’s Fiscal Year 2007 budget proposal got a negative reaction at the North American Grain Congress. Informa Economics Vice President Jim Wiesemeyer said the most significant thing about the budget proposal was what was not in it. "It doesn’t include what they had last year; they had a limitation on the amount of grain that could be put under the marketing loan program and that was a major fundamental shift for farm programs." National Association of Wheat Growers Past President Sherman Reese hopes the proposal will be dead on arrival on Capital Hill. "Certainly, it is draconian, to say the least, if you’re a producer; I don’t think any of us can look at a $20,000 direct payment versus a $40,000 direct payment." Reese is also concerned about the way the budget ties direct payments to crop insurance. RRFN’s updates from the North American Grain Congress were sponsored by Dupont Crop Protection.

Record Soybean Crop — USDA’s February Supply/Demand Report bumped the ending stocks estimate for soybeans by 50 million bushels to a record 555 million bushels. Ethanol usage is up and corn ending stocks fell 25 million bushels. USDA made no change in projected global wheat imports, domestic use, exports or ending stocks. Relative to the metal and energy sector, Rich Feltes of Man Financial feels grain commodities are viewed as underpriced. "The market continues to levitate at levels higher than the fundamentals would suggest; it’s partly the concern about the wheat in the Southern Plains, it’s about the recent uptick in U.S. corn export sales, it is the escalating publicity surrounding carbohydrates as a source of energy and the La Nina."

Brazil to Surpass U.S. — According to the USDA, Brazil will replace the United States as the world’s largest soybean exporter this year. Large crops will allow Brazil to ship more than 26 million tons of soybeans in the current marketing year. The U.S. is projected to ship 24.7 million tons.

Brazil #’s Questioned — USDA made no changes in its Brazilian and Argentine soybean crop estimates. Brazil is still at 58.5 million metric tons and Argentina is at 40.5 million metric tons. Minnesota native Kory Melby continues to doubt the Brazilian numbers. "I’m sticking to my guns; 90days ago, I was saying producers reported acreage was going to be down, fertilizer usage was going to be down, there’s fungicide application problems and you combine that with drought issues in a few states," said Melby, "Where are these big numbers coming from?" Melby lives in Brazil, where he helps Americans find business opportunities.

Trade Gap — The U.S. trade deficit was a record-large $726 billion last year, 17 percent above the previous year. The December deficit was up 1.5 percent from November. Both imports and exports set records in December. Imports rose 1.9 percent, and exports went up 2.1 percent. The U.S. imported a record $176 billion worth of crude oil last year, at an average price of nearly $47 a barrel. December soybean exports were 41 percent below November, and 47 percent below a year ago. Wheat exports were up 19 percent for the month, and 11 percent above a year ago. Corn exports went up four percent in December, but were nine percent less than last year.

WTO Timeline — Members of the World Trade Organization have established an April 30th deadline to resolve agriculture trade issues. The chief U.S. agriculture negotiator Richard Crowder said the Administration is committed to that timeline. "We are focusing on how to get there and if we’re going to get there, so I think that coming out of the ministerial that was held in Davos and coming out of the talks that we are going to have in Geneva coming up in the next several weeks and months we’ve got to keep that as a target to deliver." Crowder said the Doha Round of the WTO must be completed by the end of this calendar year and before the expiration of Trade Promotion Authority in 2007.

WTO Rules on Biotech Issue — A World Trade Organization dispute panel has ruled the European Union ban on biotechnology violates global trade rules. The United States, Canada, and Argentina challenged the EU moratorium. The American Soybean Association welcomed the WTO report and called on the Bush Administration to challenge Europe’s traceability and labeling laws. National Corn Growers Association Past President Leon Corzine said the WTO ruling sends a message to the rest of the world.

Anti-biotech Crowd Responds — Friends of the Earth is criticizing the United States for challenging the European moratorium on biotech foods. FOE President Brent Blackwelder said the WTO is unfit to decide what we can eat or grow. The Institute for Agriculture and Trade Policy said the WTO ruling is a major step backward for democratic rights of national and local governments to establish their own health and environmental standards. The European Union is expected to appeal the WTO ruling.

FMD in Argentina — More markets are banning imports of beef from Argentina, due to this week’s outbreak of foot and mouth disease. Uruguay has sent troops to the Argentine border to disinfect vehicles and boost customs controls. Israel and South Africa are the latest countries to impose restrictions on Argy beef. Brazil, Colombia, and Chile took similar steps.

BSE Problem Could be Greater Than Originally Thought — Media reports out of Tokyo warn Japan may now be dealing with more than 40 new cases of BSE. One farm is suspected of having 45 BSE-positive cows. Meanwhile, Japanese officials are pressing the United States for more answers before U.S. beef imports will resume.

EPA Deadline Extended — The Environmental Protection Agency has extended the deadline for compliance with water discharge regulations affecting consolidated animal feeding operations or CAFO’s to July 31, 2007. The National Cattlemen’s Beef Association says more time is needed and the new deadline is "wholly inadequate."

SD Wheat Ground Needs Moisture — The South Dakota winter wheat crop was planted into dry soil. Rick Vallery, Executive Director of South Dakota Wheat Inc. says much of the western South Dakota needs moisture."Most of the snowcover is in the northeast portion of the state, and there is almost no snowcover in the west or central; we are definitely on the dry side."

Quality Factors — According to the National Sunflower Association, the 2005 crop averaged 42.7 percent oil content nationwide. That’s up from the 2004 level of 41 percent. Minnesota had the highest average in 2005, at nearly 45 percent. North Dakota sunflowers averaged 43.6 percent. South Dakota was at 41.7 percent.

FCS of America Closing 4 Regional Offices — As of July 1st, offices in Sioux Falls, Cedar Falls, Casper and Lincoln will close. Farm Credit Services of America serves farmers and ranchers in South Dakota, Iowa, Wyoming, and Nebraska.

Pepsi Milk Shake Available Soon — Pepsi and Ben & Jerry’s are partnering to launch a new line of dairy drinks. This is the first licensing agreement for the premium ice cream maker. The milk shakes will be sold in supermarkets and convenience stores, beginning this summer.

ADM News — Speaking to reporters at Agricore United’s annual meeting, Archer Daniels Midland Chairman and CEO Allen Andreas said ADM will soon build a polypropylene glycol plant in the United States. Due to the number of new biodiesel plants, Andreas said they are accumulating a lot of glycerin, which will be used to make polypropylene. ADM has announced plans to produce biodiesel in a joint venture with a cooperative in Mexico, Missouri, and at the ADM crush plant at Velva, North Dakota. Later in the week, ADM announced it selected Columbus, Nebraska as the first location for ethanol capacity expansion.

SD FSA Farm Loan Chief Named — Arnie Claeys has been selected as the South Dakota Farm Service Agency’s new farm loan chief. Claeys replaces Thomas Bowar, who retired in November. Claeys has been in the South Dakota FSA state office since 1987.

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