'07 Corn Crop Projected to be 18 % Larger, But Stocks Up Only 10 Million Bushels — According to the USDA crop production and supply/demand reports, ethanol usage will exceed exports and corn stocks will remain flat. "Ethanol and general global corn demand is the fuel here; this is a long-term demand scenario," said James Barnett of Man Global Research, "This break over the last 60 days should really be seen as a buying opportunity." USDA did raise old-crop ending stocks by 60 million bushels.

Yield Number is Surprising — USDA is forecasting an average yield of 150.3 bushels per acre. The trade was expecting a number in the 152 to 156 bushel per acre range. "This number reflects the fact that our planting progress has been behind this spring and we have areas in the country that are wetter than normal," said Kent Beadle of Country Hedging, "Particularly in parts of Iowa and Missouri."

Soybean Ending Stocks — USDA estimates US soybean production will decline 14 percent this year, and ending stocks will fall almost in half. USDA says the rapid expansion in the production of biodiesel will contribute to a projected six percent increase in domestic soybean oil disappearance. John Welsh, with Peregrine Financial Group, says soybean prices have held together. "They seem to be able to be able to maintain pricing, relative to the year's beginning price levels, better than the other two grain markets."

Combest Now on Other Side of the Farm Bill Process — Former House Agriculture Committee Chairman Larry Combest is now lobbying for several commodity organizations and likes what he's hearing about the '07 Farm Bill. "Getting all the pieces in the right place is going to be a challenge, but I really like what I'm hearing from Collin Peterson; I really like what I hear from Tom Harkin; right now, I would have to say I feel very optimistic that at the end of the day there's going to be something that is going to seem pleasing." Combest says it's crucial to maintain balance, in other words, not pay for new programs out of existing program budgets.

Specialty Crops Proposal — Agriculture Secretary Mike Johanns has announced the Administration's plan for specialty crops in the next Farm Bill. An additional $5 billion in funding is in the proposal. That includes money to purchase more fruits and vegetables for USDA nutrition programs. The Market Access Program will also have new mandatory funding to help balance the inequity between subsidized and non-subsidized crops.

Farm Bill Extension — Due to changes in trade agreements, Senate Agriculture Committee Ranking Member Saxby Chambliss says it is impossible to extend the current Farm Bill. Chambliss uses sugar as an example. "For import quotas under NAFA that come into play on January 1, 2008, the sugar program would have to be changed in order to meet the provisions that come into play under NAFTA," said Chambliss, "Sugar has always been a no-net cost program, it's a program that needs to stay that way if at all possible; pure extension is not possible."

House Passes $.3.5 Billion Ag Disaster Bill on a Vote of 302-120 — This followed another veto threat from the White House which claims the aid is not needed when there is already a safety net available to farmers. The disaster bill vote came shortly after the House passed an Iraq war supplemental spending bill that President Bush has also threatened to veto. The disaster bill is expected to be combined with the Iraq funding bill later.

FARM 21 — Wisconsin Congressman Ron Kind is the chief sponsor of a new Farm Bill proposal. The FARM 21 would gradually transition farmers away from counter-cyclical, LDP, income loss, and direct payments, to risk management accounts and revenue insurance tools. The FARM 21 Act would limit farm payments to farmers with an adjusted gross income of less than $200,000; replace LDP's with a recourse loan program; remove the fruit and vegetable planting restriction; eliminate the sugar program; and transition the Milk Income Loss Contract program to dairy risk management accounts. It also increases spending for conservation programs and renewable energy research, and promotes healthy food choices. House Agriculture Committee Chairman Collin Peterson is encouraging Kind to find someone on the agriculture committee to bring this concept forward and not try to advance it on the House floor. "I think people are somewhat misguided if they think the Farm bill is going to be written on the floor; that would be a recipe for chaos."

Herseth Sandlin Upset with House Leadership for Removing Ag Disaster Language From War Funding Bill — South Dakota Representative Stephanie Herseth Sandlin says that would not be her preference. "I've expressed to leadership that by pulling it out. it suggests there's an economic difference between a hurricane and a drought." At the same time, the South Dakota Democrat says "we think there will be enough Republicans voting for disaster assistance that we may very well have enough votes to override another presidential veto."

NGFA Studies the Impact Ethanol is Having on Rural America — National Association of Wheat Growers CEO Daren Coppock says the National Grain and Feed Association wants to determine the effect ethanol is, or will have on transportation, the ag economy and production decisions. "One of the interesting conclusions they came up with is if crude oil stays above $60 per barrel, wheat goes to 40 million acres in about 6 years." Wheat acreage now approaches 60 million acres "and it wasn't that long ago (that) we were at 80 million; wheat is on a trajectory to become a minor crop."

E85, Please — The number of E85 fueling locations in the United States has topped 1,200. Last year at this time, the number of E85 sites was less than 750 facilities.

Ethanol on Record Pace — US ethanol production in February reached a record 386,000 barrels per day. Demand also continued to creep higher, to 416,000 barrels a day. Production is up 28 percent from a year earlier, while demand is up 48 percent. According to the US International Trade Commission, the US imported 43 million gallons of ethanol in February. Currently, 117 US ethanol biorefineries have a capacity to produce nearly six billion gallons annually.

WRDA Goes to Senate Today — The Senate begins work on the Water Resources Development Act this afternoon. Before the week is done, WRDA is expected to pass. The modernization of the locks and dams system has been an ongoing priority for agriculture and shipping interests.

Animal Welfare Views Aired in House Hearing — The House Agriculture Livestock, Dairy and Poultry subcommittee held an emotional hearing on the treatment of animals Tuesday. Former Texas Congressman Charlie Stenholm, who now lobbies for the horse slaughter industry, set the tone for the hearing. Stenholm said if animal rights activist groups continue to get their way, abandonment of animals will increase and animal welfare will decline. Stenholm was referring to the recent Court of Appeals hearing that upheld a Texas state law banning the sale of horse meat for human consumption, and shut down two horse slaughter plants in Texas. Wayne Pacelle, CEO of the Humane Society of the United States, noted that companies such as Smithfield Foods and Maple Leaf Farms have announced they will phase out the use of gestation crates. Parcelle said many of the common animal agribusiness practices are completely out of step with the moral sensibilities of most Americans and corporate America is responding.

Beef Recall — A Windom, Minnesota beef processor is recalling nearly 117,500 pounds of beef. PM Beef Holdings says E.Coli was not found in their facility, but the massive voluntary withdrawal was done to remove all suspected product out of the food chain. The E. Coli problem was found at Lunds and Byerly's stores in the Twin City metro area.

Beef Trade Developments — Over the next two weeks, Japanese inspectors will tour 27 US beef plants. If no problems are found, Japan will implement a random testing process. Right now, Japan inspects every box of imported US beef. Meanwhile, South Korea may open its market to bone-in US beef, but wants to wait until the world animal health organization meets later this month. US and South Korean officials met late last week and agreed to discuss the bone-in issue.

Major BSE Development — Using mice, Japanese scientists have found BSE from cattle 23 months of age and younger is not transmissible to others. Phil Seng, President and CEO of the US Meat Export Federation, thinks this finding could change attitudes about food safety and influence Japanese conditions on US beef imports. "If this is not transmissible it could go a long ways to questioning the validity of the 21 and 23 months BSE cases (found in Japan); we think this is very significant." The Japan Ministry of Health, Labor and Welfare is preparing a report of the study to present to the Japan Food Safety Commission for consideration. A decision on the issue is not expected from the Japanese government until after their elections in July.




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