COMPILED BY THE RED RIVER FARM NETWORK
USDA Raises Annual Farm Income Forecast by Five Percent — Chief Economist Keith Collins says USDA is just reacting to the price rally. "We've seen an explosion in crop market prices this fall; as a result, we are seeing much stronger cash reciepts in the second half of 2006," said Collins, "We are estimating cash reciepts for all commodities will be at $242 billion and that would be an all-time record high." Net cash income is forecast to be 18 percent below last year. The farm production costs are record high, up five percent from 2005.
Dynamic Times for Agriculture — Renewable energy is creating excitement. Markets are also strong. "There has probably never a time where farmers have a better pricing opportunity for profitability; I've just never seen a time like this," said Paul DeBriyn, President/CEO, AgStar Financial Services. Interest rates are relatively stable. DeBriyn credits an inverted yield curve "which means that money is longer term is cheaper than shorter term and that is a somewhat unique phenonemon." DeBriyn encourages growers to lock in long term interest rates.
Higher Corn Prices Buying Acreage — When USDA predicted a season average corn price of $2.60, Allendale was projecting farmers would increase corn acreage by more than 5 million acres next year. Since that time, USDA raised its price forecast for corn by 40 cents. Now, Allendale's Joe Victor thinks an 8 million acre increase is likely. "If USDA is bold enough to throw it up to a $3.00 season average farm price, it implies 8.2 million acres more than 2006 levels." While the higher corn prices are being fueled by expanding ethanol production, those same prices are starting to squeeze profits for ethanol producers, as well as the livestock industry.
8 Mil Increase Not Likely — Estimates of next year's corn acreage seem to be increasing. Steve Freed, director of research for ADM Investor Services, say one estimate of an 8 million acre boost would be, by far, the biggest year-to-year increase in corn acres. "Basically, every farmer in the United States would have to increase ten percent to get to that acreage number and we are not hearing that in the East; I think that we probably have seen at least a 5 million acre switch."
More Corn — Seed companies are seeing some evidence of the increased interest in planting corn next year. Legend Seed Sales Manager Dennis Tweed says some 80-day corn varieties are in tight supply. "We've always told producers to book early; specific varieties are getting very short." Tweed says growers may be better off to keep wheat and soybeans in their rotations. Tweed is worried about the "guys who jump in with 2,000 acres of corn who never planted corn before; you just never know what Mother Nature will bring."
Seed Supplies May be Tight — Good yields, good prices and expanding demand for ethanol is driving the interest in planting corn next year. Dan Lund, distributor for NuTech Seeds in North Dakota and northern Minnesota, says some varieties are hard to find. "In North Dakota and the Northern Cornbelt, the 85 day and earlier corns are showing really a lot of pressure; I think a lot of companies, including ours will be sold out here before we get to the middle of December," said Lund, "The middle of Minnesota is showing a lot of pressure on triple stack supplies; overall, corn is going to be short this year."
Demand for '07 Seed Has Seed Companies Scrambling — While the buzz is with corn, other commodity prices are also strong. That has created anxiety for seed companies, but "acres and indecisions are always a part of our business." Golden Harvest Seed Marketing Services Head Lyn Ramsey says his industry must be ready to help the grower deal with possible changes in the acreage mix. Ethanol has brought excitement to the corn market and acreage will likely be up. "If I had a crystal ball, I'm not sure they'll be up as much as some are predicting, but there will be a shift."
Flory Offers Simple Marketing Advice for Corn — Pro Farmer Editor Chip Flory is telling farmers to divide their total per acre production cost by the fall delivery price at their favorite elevator. "That's going to tell you how many bushels you need to sell right now to cover 100 percent of your production costs; a lot of guys are going to be shocked when they find out they can maybe sell less than half of their crop and cover 100 percent of their production costs." Flory says farmers renting ground can still lock in substantial profits right now.
Agassiz Making Decisions — Agassiz Energy is revisiting construction costs for the proposedErskine, Minnesota ethanol project. Organizers have terminated a contract with one builder and are meeting with other construction firms. A decision is expected this week. Agassiz Energy will likely launch an equity drive in early 2007.
VeraSun Begins Construction at Two Sites — Brookings based, Verasun Energy has started construction on ethanol plants in Hartley, Iowa and Welcome, Minnesota. Each facility will produce 110 million gallons of ethanol annually and process more than 39 million bushels of corn.
Loomis, SD Opens Ethanol Plant — Broin Companies is opening a 60 million gallon per year ethanol plant near Loomis, South Dakota. The plant will grind some 21 million bushels of corn and also produce 178,000 tons of distillers grains. Broin currently manages 18 plants in five states with four more projects under construction. The Sioux Falls company also markets more than a billion gallons of ethanol per year.
Renewable Energy Bonds Issued — Mandan's Great River Energy has been approved to issue the first ever Clean Renewable Energy Bonds. Part of the 2005 Energy Bill, the bonds provide what amounts to free interest loans for co-ops and public power systems to finance renewable energy projects.
ADM Plans to Expand Seven Oilseed Crushing Plants — Archer Daniels Midland says the expansion will support its biodiesel ventures. The soybean facilities are located in Indiana, Missouri, Nebraska and Iowa. ADM also plans to increase the canola crushing capacity in Velva, North Dakota. This work should be done by mid-2008.
Oil World Predicts Biodiesel Capacity Will Reach 22 Million Tons By End of '07 — That is a 266 percent jump from the 6 million ton capacity last year ago. The German newsletter says the combination of biodiesel demand and growing per capita consumption will mean vegetable oil prices will exceed protein values next year.
Mandatory No More — Under the Bush Administration, the national animal ID system will remain a voluntary effort. Facing resistance from some livestock producers, Agriculture Secretary Mike Johanns has ruled out a mandatory program. Johanns said USDA can still meet its enrollment goals under a voluntary system.
The Political Winds Can Change — The Livestock Marketing Association is surveying its membership about the implementation costs of an electronic national animal ID program. LMA spokesman John McBride says the livestock markets can help identify the true costs of an ID program. While USDA is promoting a voluntary effort, McBride says political winds can change. "We don't know what may happen in the next couple of years, and the new Democratic head of the House (Agriculture Committee) Collin Peterson has said he favors the mandatory system; so whatever happens we need to have these facts on hand, so we can prepare our members and so that they can do a better job of serving the industry."
The Strong Have Survived — Even with today's feed price, pork producers can still lock in a small profit or break even. Mike Brumm of Brumm Swine Consultancy says the challenge comes when corn reaches $4.00 and other feed ingredients push higher. To adjust to these feedgrain prices, some analysts predict the swine industry will lose 15 percent of its producers over the next three years. "It's scary on who becomes the 15 percent that quits because we weeded very heavily in the 90's and people that are left are very good pig producers, very good businessmen, and willing to stand up in public in a zoning hearing; they come with a backbone that says I'm not going to be the first one to quit."
PIC Makes Investment in SD — One of the world's largest swine genetic firms is making a key investment in Campbell County, South Dakota. PIC International has selected the Pollock, South Dakota area for a swine genetic center. County Commissioner Leroy Sandmeier says PIC will invest $17 to 20 million in this project. The facility will employ 45 full-time and ten part-time workers and bring a $2 million per year payroll to Campbell County. PIC has begun the land acquisition and permitting process. "They are hoping that everything falls in place that they can start construction next spring." Due to biosecurity considerations, PIC selected an area with little swine production. Campbell County is in north-central South Dakota, on the North Dakota border.
Dupont Tate & Lyle BioProducts Announce First Commercial Shipment of BioPDO — Bio-PDO is a new product made from corn sugar. Pioneer Hi-Bred International. President Dean Oestreich says Bio-PDO can be used to make a variety of consumer products, now made from petroleum products. "We are using it in a new Dupont fiber, called Sarona; when made into a carpet, it has great stain protection, mildew resistance, durability; it can also be used in apparel." Oestreich says Bio-PDO demonstrate's Dupont and Pioneer's ability to develop new industrial markets for farmers and more renewable products for consumers.
Monsanto Seeing Unprecedented Early Order Activity for Triple Stack Corn Traits — Dekalb and Asgrow will sell more acres of triple-stacked corn hybrids than hybrids with just one trait. Triple-stack combines Roundup Ready herbicide tolerance, YieldGard corn borer protection and YieldGard rootworm protection. Monsanto thinks Roundup Ready corn could be planted on more than 40 million acres next year, a 25 percent jump from this year.
Honda Patents New Ethanol/Diesel Blended Fuel — The mix includes a diesel base material, from 5 to 30 percent ethanol, and ethyl nitrite or ethyl nitrate.