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News from the Minnesota Association of Wheat |
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CHINA WILL BUILD A LARGE FLOUR MILL DESIGNED TO MILL IMPORTED WHEAT
CARGILL ANNOUNCES PREMIUMS FOR HARD WHITE WHEAT
CHINA DAILY NEWSPAPER STATES CHINA GRAIN AND RICE HARVEST PROJECTIONS DOWN A lower summer grain harvest due to drought and a smaller early rice crop, which together account for 30 percent of grain output, meant it was virtually certain the overall grain harvest would fall this year, it quoted officials as saying. Both grains and rice forecasts were too be down this year. The People's Daily quoted the bureau as saying the forecasts were based on samplings and on-the-spot estimates in major producing areas. China produced 508 million tonnes of grain last year, according to official statistics.
WHEAT QUALITY COUNCIL REPORTS ABOVE AVERAGE WHEAT YIELDS FOR ND
A FOOD AND AGRICULTURAL POLICY FOR THE 21ST CENTURY The publication, entitled "A Food and Agricultural Policy for the 21st Century," results from a major effort by multidisciplinary experts on farm and food policy. The 17 participants included agricultural economists, rural sociologists, antitrust attorneys, agricultural historians, political scientists and nonprofit organizational leaders. "In this day of unprecedented prosperity, farm families got left behind and Rural America is in crisis," said Fred Stokes, president of OCM. "As the public and policy makers consider alternatives to address this crisis, I hope that this document is widely used to bring more balance and reason to this crucial debate," Stokes added. Edited by Michael C. Stumo, the document provides guidelines for a better farm and food system that focuses on four areas: antitrust policy, conventional farm programs, whole food system strategies and agricultural research policy. Additionally, many of the participants themselves contributed individual papers addressing cutting edge issues of public concern. For instance, Dr. Neil Harl explains why "the greatest economic threat to farmers as independent entrepreneurs is the deadly combination of concentration and vertical integration." Albert A. Foer, president of the American Antitrust Institute, shows in a piece entitled "Baked Lasagna" how the spiraling concentration of the retail and processing sectors requires that "the federal antitrust laws should be used expansively to preserve as much of the remaining competition as possible." Dr. Daryll Ray of the Agricultural Policy Analysis Center at the University of Tennessee explains why the experiment that is the 1996 Farm Bill has failed, and where we go from here. Beyond concentration issues, participants also considered the biotechnological age, a short history of agricultural institutions, whether farmers and agribusiness are partners or competitors, and the social justice impact of the food system. "A Food and Agriculture Policy for the 21st Century" can be downloaded for free online at www.competitivemarkets.com. Printed copies (113 pages) are available for $17.00 plus $3.00 shipping and handling by writing Organization for Competitive Markets, P.O. Box 6486, Lincoln, NE 68506. Online orderingshould be available as of the first week of August. The Organization for Competitive Markets is a multidisciplinary, nonprofit organization dedicated to restoring open and truly competitive markets to agriculture for the benefit of farmers, ranchers and rural communities. CONTACT:
IMPORT TENDERS AND BIDDING STRATEGIES IN WHEAT The tender data indicated there was a surprisingly wide range of bids. Variation of bids across firms submitted for individual HRS tenders had standard deviations that ranged from $5/mt or less in a number of tenders to as high as $22/mt. Tenders for HAD show similar variability. Tenders for HRW showed higher variability yet with standard deviations of bids between $30 and $40/mt. These results show much greater variability than is normally ascribed to competition among international grain sellers. The spread between participants' bids and cost indicators ranged widely across firms. Optimal bids and expected payoffs were derived for a prototypical bidder competing against the existing incumbents. Using this as a base case, we analyzed the impacts of the number of competitors, information, and cost differentials. In each case, we quantified the likely impact on optimal bids and expected payoffs. In addition, there were three particularly interesting extensions from conventional auction models that were examined. One was the impact of the option to the seller of supplying wheat from Canadian origins. Effects of Canadian offers in bid functions were not statistically different from U.S. origins. The effect however, was interpreted as an increase in the number of random bidders within a tender. The effect of this was to reduce optimal bids for HRS by $0.50/mt. This suggests that the effect of Canadian originas an option is minimal when the Canadian Wheat Board (CWB) sells through accredited exporters. The second interesting effect was that of correlated bids. Results indicated a high degree of correlation among bidders which had the effect of increasing the probability of winning, optimal bids, and expected profits. Finally, we explored the prospective impacts of the winner's curse on optimal bids. Results suggest that in light of the winner's curse, bidders should raise their bids; in the case of HRS, from a high of 1.9% to 7.7% to correct for bias in value estimation, to a low of0.2% to 3.1% when considering money left on the table. These results have a number of implications. The simulations improve our understanding of a very important mechanism of procurement and competition in international grain trading. For buyers, tendering is useful particularly if there is temporal variability in costs and they vary across supply firms, if the number of bidders is large, and if information about bidders is transparent and bidders' offers are less correlated. Finally, for sellers, auctions can result in intense competition among participants. Being low cost is essential to success in this form of competition. Sellers that are not low cost should avoid auctions to be successful, and bidders should make adjustments to their bids to account for the winner's curse. Authors: Here is the web site: http://agecon.lib.umn.edu/ndsu/aer441.html Carol Jensen
WHEAT TOUR FINDS LITTLE DISEASE IN S.E. NORTH DAKOTA More than 60 tour participants, including agronomists, grain industry representatives and others, inspected roughly 175 fields on Tuesday across the southeast quarter of the state, which includes the fertile Red River Valley along the eastern border. The tour projected average yields for spring wheat in the southeast region at 35.5 bushels per acre, compared with estimates of 28.6 for the same area in 1999 and 31.6 for the five-year average. Yields in some fields were projected as high as 55 bushels per acre. Crop quality appeared good, with little evidence in the Red River Valley of scab, a fungal disease that had been a threat because of heavy rains and flooding along the river in June. Scab can cut yields by shrivelling kernels. "I like what I see," said Larry Beard, chief statistician with the North Dakota Agricultural Statistics Service. "There's not much scab and low disease. That was a real concern." Although incidence of scab was reported as high as 50 percent in one field, its presence was limited to only about 2 percent or less in most areas in the valley. Beard said producers in the region were doing a better job of managing scab, mostly through crop rotation. Some tour participants reported worse scab damage towards the centre of the state. Others noted scattered evidence of diseases such as root rot, ergot and rust. But on the whole, fields in the area looked healthy. Wind and hail damage was minimal. Combining was under way in southern areas, while spring wheat fields further north, toward North Dakota's midsection, were about seven days from harvest. The state's weekly crop report, issued Monday, said the harvest was three percent complete as of Sunday. North Dakota is the top U.S. producer of both spring wheat and durum. An elevator operator in Gwinner in the state's southeast corner estimated initial new crop yields at 35 bushels per acre, with variations from 25 to 60. He said protein content ranged from 12.5 to 15 percent. Another elevator operator in Breckenridge, Minnesota, estimated area yields at 60 bushels per acre, with 13 percent protein. "Growers seemed pretty satisfied in that area," one tour participant said. A third elevator operator in Mott, in southwest North Dakota, told tour participants that test weights were better than average while protein levels were below normal. The tour members will walk fields in central, north and northwest North Dakota on Wednesday.
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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