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News from the Minnesota Association of Wheat |
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AG TRADE LETTER SENT TO BUSH AND GORE With American agriculture continuing to face severe economic difficulties, the letter explained that trade opportunities must be expanded. The letterv outlined five priorities: 1) gaining Presidential Trade Negotiating Authority (TNA) from Congress; 2) completing China's accession into the World Trade Organization (WTO); 3) launching a comprehensive WTO negotiation with aggressive pursuit of trade liberalizing policies in agriculture; 4) exempting agricultural and food products from all trade sanctions and embargoes; and 5) eliminating barriers to trade in products made from biotechnology. The letter concluded by encouraging Gore and Bush to make agricultural trade an important issue in their upcoming agenda and pursue ways to strengthen American agriculture.
PROGRESS ON CHINA PNTR While final passage will be delayed, this week's action clearly moves the process forward. While this action is a positive step, it remains important that the Senate does not add amendments to the legislation passed in the House in order to avoid a conference committee and a second round of voting in the House. Senate leaders plan to undertake debate on the "China Nonproliferation Act" before PNTR comes to a vote. This legislation, introduced by Senators Fred Thompson (R-Tennessee) and Robert Torricelli (D-New Jersey), would force the President's hand in applying sanctions on China under certain circumstances. The wheat industry strongly opposes this legislation or adding any other amendment to the China PNTR bill.
RELDAN USE THREATENED Seeking input on Reldan's use, USDA conducted a nation-wide conference call in April where an agreement was reached to phase out the use of Reldan over the next six years. However, EPA officials reviewing the application have received very little comment on the use or importance of Reldan or producer opinion on the USDA brokered agreement. Accordingly, NAWG has learned that the entire Reldan application is in jeopardy. Without EPA approval, the product would be removed from the market without allowing time for the development of replacement products. Earlier this year, NAWG expressed to EPA earlier this year its support for keeping Reldan available and is currently preparing additional official comments. State associations, local elevators, and individual wheat producers who are familiar with the use of Reldan are also encouraged to submit comments. Written comments should reference EPA Docket Number OPP-34202B, and be sent no later than August 15, 2000 to: Public Information and Records Integrity Branch Information Resources and Services Division (7502C) Office of Pesticide Programs Environmental Protection Agency 1200 Pennsylvania Avenue, NW Washington, DC 20460 Comments can also be filed electronically by e-mailing them to: opp-docket@epa.gov NAWG will send each state association office a copy of its official comments and additional information next week.
UKRAINE GRAIN CROP ESTIMATED TO BE LOWER The main reason for the estimate was unusual weather that the Ukrainians had in July. Because of this weather, harvesting is expected to be difficult. Besides the bizarre series of cyclones that hit the area, Ukraine had unseasonal frosts in May and hurricane-force winds plus hail in June and July.
TRADE WITH VIETNAM Unlike China, Vietnam is not eligible to receive normal trade relations status. However, the United States Trade Representative (USTR), recently signed a bilateral agreement with Vietnam which is the first step towards the process of granting normal trade relations. This agreement could potentially lead to Vietnam's future accession to the World Trade Organization (WTO). Congress must approve the agreement, but due to tight time constraints on the remainder of the congressional calendar a vote is not expected until next year. The agreement negotiated by USTR would serve to normalize trade relations between the two countries. The deal would serve to open up Vietnam to U.S. goods and services while reducing U.S. tariffs on Vietnamese products.
BASE GRAIN MARKETING PLAN ON HISTORIC PRICE PATTERNS It pays to forward contract corn and soybeans rather than selling them at harvest time. However, storing the crop from harvest until the following July or later rarely pays. Those are two conclusions of Erlin Weness, farm management educator with the University of Minnesota Extension Service. He bases his conclusions on marketing data from the past 25 years. "The best time historically to forward price is April, May, and June," says Weness. "My data show that an average farm would have made $21 more per acre by forward pricing corn the first week in April, May and June rather than selling at harvest. Forward pricing soybeans would have resulted in $8 more per acre than selling at harvest. This is based on data from 1983-1999 at Worthington, Minn." On the other hand, Weness cites data that show waiting until July or later to sell is not profitable. From 1974 to 1999, the average increase in the price of corn from harvest until July was 19 cents per bushel. However, the storage cost was an estimated 32 cents per bushel. Weness says corn prices went up 60 percent of the time by 47 cents per bushel for a storage return of about 15 cents per bushel or $22.50 per acre. However, prices went down 40 percent of the time by an average of 36 cents per bushel. Adding this to the storage cost of 32 cents per bushel resulted in a total loss of 68 cents per bushel or about $102 per acre. Soybeans show a similar pattern, notes Weness. With eight- month storage costs of 48 cents per bushel, losses were over $48 per acre in years when prices fell. This was not enough to offset the years when prices increased. "We have to sell sooner in the marketing year," says Weness. "Storage returns on corn are very hard to capture. Anytime you can get a price that's more than four cents per month per bushel you'd better be emptying bins." It's a little easier to capture storage returns on soybeans, says Weness. The best months to sell are January through May 15; holding into July usually doesn't pay. The best marketing plans, says Weness, are based on historic probabilities of price occurrence, seasonality of prices, and normal price ranges. "Each year, many producers try to outguess the market and fail," he points out. "Playing the long-term odds will make you right 60-75 percent of the time, which is far better than seat-of-the-pants guessing. Put a plan in place for the 2000 and 2001 crop now if you haven't already done so." Source: Erlin Weness, (507) 372-8210
ETHANOL INDUSTRY IS FIGHTING TO KEEP THE 2 PERCENT OXYGEN REQUIREMENT New MTBE Bill: No Windfall For Ethanol A key senator has introduced a bill in Congress to ban the controversial gasoline additive MTBE, and he offered a separate amendment to encourage "clean alternative fuels," Reuters reports. At the same time, Environment committee chairman Bob Smith wants to weaken the 2 percent oxygen requirement -- a move that will upset the ethanol industry. Embattled by competing interest groups, lawmakers have been struggling to come up with a plan to eliminate MTBE. Smith's plan is not going to please everyone, but may carry more weight since he is chairman of the Senate Environmental Committee. "This is a tough, tough issue," Smith said. "It's hard to get agreement and everybody's not going to get what they want." As part of his plan to phase out MTBE over four years, states would be allowed to waive the 2 percent oxygen requirement for clean-air fuel (called RFG, or reformulated gasoline). It is the 2 percent oxygen requirement (the oxygen makes cleaner fuel) that has put MTBE in about 87 percent of the nation's RFG. (RFG itself makes up about one-third of the nation's gasoline supply, in the nation's smoggiest cities.) Ethanol makes up about 12 percent of the nation's RFG, and the ethanol industry wants to gain MTBE's 87 percent share as Methyl Tertiary Butyl Ether is phased out. The ethanol industry will only gain that share if the 2 percent oxygen content rule is kept in place. But the gasoline industry argues that the 2 percent requirement is not needed -- that clean-burning fuel can be made without MTBE or ethanol. And Smith apparently agrees, as his bill allows states to waive the 2 percent oxygen rule, Reuters reports.
MARKETING LOAN LIMITS INFORMATION Reprinted with permission from Agrimark Many producers will have a problem with the $75K marketing loan limit unless Uncle Sam changes the rules. However, there is a way to skirt the limit. First, address how much LDP you could be working with. The current sunflower LDP is $3.70, so a 1600 pound/acre crop would be $59.20 per acre. Canola is $3.30, so you are looking at similar numbers. Corn is currently at $.52, so 125 BPA nets $65 per acre, so it won'take long for max out a limit. The $75K limit applies to the combination of all marketing loan gains, including all LDP and for loans taken and paid off with cash. Now, the architects of F2F likely never expected average sized farms would hit such a limit, rather it was designed for the large corporate farms, esp. in the cotton and rice country. Now, how to skirt the limit (nothing illegal, you simply need to request a different method of computation). You can request the FSA office to pay off an existing loan with PIK certificates rather than using cash. You will still be able to pay off the loan at the PCP rate. The difference between the PCP and loan will not be counted against your limit if you use certs. The county FSA can issue on the spot certs to use. These certs are not traded, nor do they leave the FSA office. Two points to be aware of: the grain must be under loan to LQ with certs so if you have to move grain to commercial storage at harvest, be sure the location can issue a warehouse receipt for a few days/weeks. Next you can not use certs to LQ a loan while it is under the 60-day lock, but you can once the lock expires. For more on this article call AgriMark at 1-800-373-8123. |
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