News from the Minnesota Association of Wheat
Growers for Tuesday, August 8, 2000

USDA RELEASES CROP PROGRESS REPORT 08/07/00

^{Click here to view the 08/07/00 USDA Weekly Crop progress report}

POMERORY, MINGE AND PUSH FOR FARM SAFETY NET

N.D. congressman says net needs to address weather catastrophes, market fluctuations

Congressman Earl Pomeroy, D-N.D., is more convinced than ever that the nation's farmers need a double-layered safety net to weather agricultural financial crises -- one layer that offers protection from wild commodity market price swings and one that provides affordable crop insurance. To read more see the Grand Forks Herald

EU BECOMES NET WHEAT IMPORTER
PARIS, Aug 4 (Reuters) - According to Reuters, the European Union, normally a leading wheat exporter, is in the unusual position of being a net importer during the new crop year and North America is reaping the benefit.

EU soft wheat export commitments during the 2000/2001 crop marketing season, which began on July 1, stood at 183,000 tonnes on July 27. That was dramatically below the 576,000 tonnes at the same point a year earlier, according to EU Commission data.

By comparison, EU 2000/2001 soft wheat import commitments as of the same date totalled 292,000 tonnes. Analysts and traders said EU wheat imports are outpacing exports because of fears Europe will not produce enough milling-quality wheat to meet domestic demand, let alone sell to traditional clients in North Africa and the Middle East. As a result, EU millers are turning to other world suppliers to secure high-quality wheat.

"Given the the way the market stands at the moment, it's difficult to say whether the EU is going to produce enough milling wheat this year to have an exportable surplus," said James Dunsterville, grains analyst at agricultural commodities website agrinews-online.com.

FRENCH WEATHER WOES
Dunsterville's firm said annual domestic EU demand for non-feed wheat stood at around 40 million tonnes. But there are strong questions over whether the EU can produce that much, given the problems in France -- the EU's largest wheat producer.

France's farm ministry last month pegged the country's soft wheat crop at 36.1 million tonnes, up slightly from 1999.   However, that estimate was made on July 1 -- on the eve of four weeks of torrential rains and cold weather that turned what had been a promising French wheat crop into a largely feed-grade one, traders and analysts have said.

Accordingly, EU feed wheat prices have dropped to historic lows on ideas that supplies will be more than adequate, while extra premiums have been placed on high-quality milling wheat.

Wheat quality concerns have also dashed European Union grain exporters' hopes of selling hundreds of thousands of tonnes of wheat in the opening weeks of the new export campaign. EU wheat exporters, whose livelihood depends on the amount of wheat they ship to places like Algeria, Morocco and Tunisia, have seen sales dry up.

Traders look back at the just-ended 1999/2000 crop year, when the EU exported more than 16.4 million tonnes of soft wheat, including flour and food aid.

"You're lucky if you can find a tonne of wheat available for export," a French trader said gloomily as more heavy rains fell in northern France, heightening fears about poor quality.

U.S., CANADA MEET DEMAND
End-users in the 15-member trade bloc are turning to two of the EU's fiercest competitors -- the United States and Canada -- to meet their milling wheat needs.

According to USDA export sales figures released this week, U.S. exporters committed to sell 484,800 tonnes of soft and durum wheat to the EU between June 1 and July 27.  That was up almost 22 percent from 398,300 tonnes of export commitments to the EU at the same point a year earlier.

Sales of dark northern spring wheat, a high-protein wheat grown in northern U.S. Plains states such as North Dakota and Minnesota, accounted for more than 65 percent of total U.S. wheat export commitments to the European Union since June 1.

Sales of durum wheat, used in the production of pasta, made up about 20 percent.

USE OF COMMODITY CERTIFICATES FOR THE REDEMPTION OF LOAN-ELIGIBLE CROPS
Contact: Paul Thomas, Marketing Specialist, Northern Canola Growers Association (701) 323-5051

(Bismarck) Depressed prices and good yields have many North Dakota farmers worried about payment limitations.  The 1996 Fair Act set minimum price levels that a grower would receive in times of depressed prices.  These prices, referred to as the loan rate, were put in place as a trigger mechanism for the government to assist in direct payments to farmers in times of low prices.

The amount of payments a farmer receives from the government increases as commodity prices decrease.  However, because of a payment limitation enacted in 1985, many farmers will only be able to receive these payments on a portion of their production if a law is left unchanged. A bill has been introduced by Representative Emerson to increase the payment limitation from $75,000 to $150,000 per producer.

According to Paul Thomas, marketing specialist with the Northern Canola Growers Association, the payments are a necessity.  "In canola, as well as other crops, cash prices received at the elevator are insufficient to even pay for variable expenses incurred in producing the crop.  Farmers count on receiving the minimum price levels established in the 1996 farm program on all of their acres," stated Thomas. 

 One option for growers to explore if they exceed the $75,000 limit is the use of commodity certificates for redemption of loan eligible crops. On February 8, 2000 the Commodity Credit Corporation (CCC) announced that it would allow the use of commodity certificates by producers to redeem loan eligible certificates in the exact dollar value needed to redeem the producer's loan and would function as an immediate exchange.  In other words, there will be no actual issuance of a certificate, or generic certificate, that could be used at a later date. 

 Certificates allow crops that have been placed under CCC loans to be redeemed at the loan repayment rate without counting towards a producer's marketing loan payment limit. Some confusion as to the process of how this system will work has surfaced. The following list of questions and answers seeks to help clarify what growers need to do.

1. Where do I begin?
     You must first have your commodity in farm storage or at a CCC approved warehouse.  Most elevators in North Dakota are CCC approved.  Once you know the amount and quality of produce you have, you need to visit your county FSA office.

2. When I go to the FSA office what do I need to have with me?
     You need to bring information that gives the location of your stored grain, the quantity of stored grain and quality of the stored grain. The FSA office will then issue a CCC loan on the commodity.  A direct deposit will be made into your account for the value of the grain you placed under loan.

3. How long does this process take?
     Depending on the time of application and your county office, the loan process can take from a few days to a month.

4. Do I need to have my bins measured and grain federally inspected?
     In most cases it is not necessary to have a federal grade or bin measurement. However, some county committees do require grades and measurements for a number of reasons.  It is best to first check with your local office if you are concerned about this requirement.

5. After I have placed the grain under loan can I market the grain?       The same rules apply as under a regular CCC loan. The grain may not be sold without prior notification and repayment of the loan at your FSA office.

6. How do I repay my loan?
     When you want to repay your loan, contact your county FSA office.  They will determine your loan repayment figure for that day.  You can then repay the loan for the lesser amount of what you placed it under. 

7. After I repay my loan, am I free to market my grain?
     After repayment of the loan, you are free to handle the grain as you see best fit.

8. Can I rent a bin and place the grain under loan?
     Yes.  There is no restriction on location of stored grain.

"Every grower will have different marketing needs that need to be met. The best advice for one grower may not be the best for his or her neighbor," stated Thomas.  Growers with additional questions should contact their local FSA office.