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U.S. – CANADIAN AG LEADERS AGREE ON PESTICIDE HARMONIZATION ISSUES
State and provincial agricultural officials from the United
States and Canada have agreed that rules and restrictions on farm chemicals and livestock drugs should be harmonized between the two countries. Read more at the Farm and Ranch Guide, http://www.farmandranchguide.com/display/inn_news/Regional%20News/
news06.txt
AUSTRALIA NON-GM GRAINS CASH IN WINNING TRADE HAND
Australia's big grains export industry has begun cashing in on worldwide
consumer fears about genetically modified (GM) food by selling canola to Europe with a non-GM price premium.
The sales involve about 150,000 tonnes of canola, for shipment early next year at a non-GM premium of about US$5 a tonne, well-placed industry sources told
Reuters.
This was a clear-cut example of how Australia, which has so far resisted following Canada and the U.S. into genetically modified food crops, was making hay
while the sun shines, analysts say.
A perceptual advantage which Australia was clearly beginning to enjoy over its North American GM-producing rivals was reinforced by United States farmers
virtually giving up on strict separation of genetically modified (GM) grains from conventionally produced grains, analysts and traders also said.
"Problems being experienced in the U.S. of separating GM grains could have short-term benefits for Australia," national wheat exporter AWB Ltd said in a statement issued to Reuters through its spokeswoman. "We have GM-free products and if they've experiencing problems in providing GM-free product, that gives us an obvious advantage in the short-term," she said.
Neither Australia nor the U.S. presently produce GM wheat, but U.S. problems with separating GM from non-GM corn and soybean crops was giving Australia a
perceptual advantage on export markets, the AWB spokeswoman said.
Non-GM canola scores first premiums
Australia's non-GM canola competes directly with Canadian GM canola on export markets, and here consumer
resistance, strengthened by the U.S. inability to separate all GM grains from non-GM grains, was boosting Australian sales, traders said. "We believe that we're starting to see the early stages of the
much-waited premium for non-GMO canola," one well-positioned grains trade source told Reuters, requesting anonymity.
New crop forward business had been done between Australia and Europe for the new crop canola, to large crushing companies. This was for shipment January
onwards at a time and price indicating a premium on current Canadian sales to China, he said.
It was hard to gauge the exact premium because currencies, freight rates and futures all came into play. But the premium appeared to be up to US$5 a tonne
on the current stable market of around the mid-US$190s fob, the source, with one of Australia's leading grains export boards, said.
Shipments were expected to involve around three Panamax loads of 50,000 tonnes each, he said.
An admission this week by the National Grain and Feed Association in the U.S. that less than 10 percent of the U.S. grains industry was segregating GM from
non-GM grains in the present record harvest year has also confirmed sneaking suspicions held by consumers and in Australia's non-GM farmers. "Less than 10 percent of the industry is engaged in segregation
and we don't anticipate a strong need for it this fall," Thomas O'Connor, National Grain and Feed Association director of technical services, told Reuters in Chicago.
Australia braces for GM dilemma
While the U.S. dilemma is advantageous to Australia at present, AWB's spokeswoman said on Thursday that
Australia could be facing similar issues in the longer-term. "We're GM-free now. We may not always be," she said. The Australian industry was taking a very serious look at the matter and
adopting a coordinated approach, she said. Australia so far produces no GM grains, with first production of its first modified grain crop, canola, at least two years away. Wheat is Australia's leading grain,
holding a share of almost 20 percent of the world market. "Who knows?" the AWB spokeswoman said when asked if Australia would be producing GM wheat in the future. "It's still a few years away."
FARM PROPOSAL WOULD SHIFT MORE PAYMENTS FOR FLOOD CONTROL
A farm policy shift toward more payments for flood control and other
conservation benefits is being proposed by Congress.
The Farmland Stewardship Initiative would include $25 million for demonstration projects across the country, including $5 million for pilot areas in North Dakota and Minnesota. Other proposed tryout locations are South Dakota, Vermont and California.
The proposal has support from Sens. Kent Conrad and Byron Dorgan, D-N.D., among others.
"Through the development of these pilot programs, we hope to build support for a broader shift in agriculture policy toward Farmland Stewardship in the
next farm bill," Dorgan and six colleagues wrote in requesting consideration of the bill. The "single compensation" concept would pay farmers for a range of management practices under existing
programs.
The Farmland Stewardship Initiative also would seek to include "disincentives to sprawl" in some urban areas through conservation easements. In other
areas, the government might pay based on the absorption of carbon dioxide and other greenhouse gases.
There would be "a broad menu of options for a given farm operation or multiple farm operations within a region or watershed," under the proposal.
CONSUMERS, FARMERS EXPRESS INTEREST IN ORGANICS
Jon Kvaalen says there's two reasons he raises organically certified crops and
livestock.
"It's vastly more fun, (and) more profitable than conventional grain farming," said Kvaalen who farms in east central Montana near Lambert.
Finish the story at the Farm and Ranch Guide, http://www.farmandranchguide.com/display/inn_news/Regional%20News/ news02.txt.
CLOSING OUT 1999 CCC CROP LOANS
Written By Kent Thiesse, University of Minnesota Extension Educator
A considerable amount of corn and soybeans that were raised in 1999 were placed under CCC loan at County Farm Service Agency (FSA) Offices. Many of
these nine month loans will be maturing at the end of August or September. Many producers were hoping that a Summer grain market price rally would allow some higher net prices on this stored grain. The price rally
has not happened, so now producers are in a "salvage mode", just wanting to empty their bins and avoid any more financial loss on the stored grain.
Producers that have grain stored under CCC Loan have three options at the end of the nine month loan period. They are :
Repay the CCC loan principle plus interest. - Release the grain at the "Posted County Price" (PCP).
- Forfeit and deliver the grain.
Repaying The CCC Loan Plus Interest
This option is a non-factor for 1999 corn and soybeans stored under CCC Loan. Current PCP's for
corn and soybeans are well below CCC loan rates and are likely to remain below those levels over the next couple of months. This option is only utilized when crop prices are higher than the CCC loan rates.
Release The Grain At The "Posted County Price" (PCP)
This will be the most
common method that will be used to release the current corn and soybeans that are under CCC Loan. Grain may be released at the PCP on a given day. For example corn that was placed under CCC Loan at $1.75 per bushel
in December, 1999, could be released at a PCP of $1.20 per bushel in August, 2000, and the Producer could then sell or feed the corn.
Following are some points to consider when using PCP's :
The PCP is changed daily at County FSA Offices. Most FSA offices have a call-in phone number to check the PCP each day.
Changes in the daily PCP represent changes in the daily close of market prices on the previous day. So, if the market closes strong on a
day, most likely the PCP will also go up on the following day. Vice-versa is true when the grain markets drop. Understanding this concept is a key to utilizing grain release with PCP's and marketing the grain.
Example : Producer puts corn under CCC Loan at $1.75 per bushel in December.Market goes up $.08 per bushel on a given day to $1.28
per bushel.Producer releases CCC Loan corn at $1.20 per bushel PCP on that day.Producer sells the corn at $1.28 per bushel for a net gain of $.08.
The final market price is $1.75 plus $.08 or $1.83 per
bushel. - If it is that easy, how can producers actually lose money when using the PCP to release grain that is under CCC Loan. There are two ways to lose value :
1)One way to lose value in the grain and to lose the protection of the PCP is to release the grain under loan at the PCP, and not
sell the grain or have it pre-sold. In the previous example, the Producer could have released the corn at $1.20 per bushel, but decided not to sell the corn immediately because he thought the cash corn price
was going up. If the corn price actually went down and he was forced to sell the corn at $1.10 per bushel, the Producer would lose $.10 per bushel and net out at $1.65 per bushel.
2) The other way to lose value on the grain under CCC Loan is to sell the grain and wait for the PCP to drop to capture more gain in
price differential. In the previous example, the Producer could be pessimistic about Fall price prospects and decide to sell the corn at $1.28 per bushel and then wait for the PCP to drop before the CCC Loan
matures. If the price does not drop and actually increase, the Producer could be forced to release the corn at $1.40 per bushel, with a locked-in cash sale at $1.28 per bushel, losing $.12 per bushel, and having
a net price of $1.63 per bushel.
BOTH EXAMPLES ARE SPECULATING IN THE GRAIN MARKET !
Producers can use FSA Form CCC-697, "Request To Lock-In A Marketing Loan Repayment Rate" at County FSA Offices to lock-in a PCP for 60 days
. Form CCC-697 expires 14 days before the CCC loan matures, so a Producer has a two week window to exercise a daily PCP to release grain under
loan. - Example : PCP on corn was "locked-in" at $1.45 per
bushel on July 1st. CCC Loan matures on August 31st and PCP is below $1.45. After August 17th, corn may be released at the daily PCP. If the PCP is close to the
"lock-in" price, a Producer should find out from the County FSA Office what day the CCC-697 expires, so they can gain the most benefit.
- If a Producer has an opportunity to price grain at a market price that offers a gain above the PCP, the Producer could use the CCC-697 to lock-in that
gain, and then decide by the "lock-in" expiration date whether to exercise the "lock-in" or to release the grain at the daily PCP after the expiration date. This is not a speculative
strategy. To release the grain with a PCP and not sell the grain is
There are no "overrun" bushels when releasing grain at the PCP. Only the original CCC Loan bushels are eligible to be
released at the PCP.
Forfeit And Deliver The Grain
With the advent of "Marketing Loans" and PCP's , forfeiture of grain under a nine
month CCC Loan is not often considered as an option. Usually, there is a financial advantage with grain market prices to either pay back the loan plus interest or release the grain at the PCP. However, our
current situation with 1999 grain that is under CCC Loans that are maturing in the next couple of months may be different.
Following are some considerations for forfeiture of grain under CCC Loan :
- Producers wishing to forfeit grain must notify the County FSA Office by the date the loan matures and deliver the grain to an approved CCC warehouse by the
designated delivery deadline. Settlements are based on the quantity and quality of grain delivered.
A Producer that is forfeiting grain may deliver up to 110 percent of the bushels listed as the CCC Loan quantity. Payment for the 10
percent extra bushels will be at the County Loan Rate. There is NO extra compensation for "overrun" bushels if CCC Loans are repaid using the PCP method. Generally, there is an advantage to forfeiting the grain under CCC Loan plus the 10 percent extra bushels on any given day, if the
difference between the market price for grain and the PCP is less than 10 percent of the difference between the CCC Loan Rate and the PCP. Example : Producer has 10,000 bushels of corn under Loan at $1.75 per bushel. PCP is at $1.20 per bushel and corn market price is $1.22 per bushel.
The 10 percent extra bushels for forfeiture would be 1,000 bushels. Using the PCP, the Producer would gain $.02/ Bu. on 10,000 bushels. Using forfeiture, the Producer would gain $.55/ Bu. on 1,000 bushels.
- Remember, a Producer must have enough "free-stock" grain that is not under CCC Loan or has not received a "Loan Deficiency Payment" (LDP) to use for the 10 percent extra bushels for forfeiture. Also, Producers that decide to forfeit grain must complete FSA Form CCC-681-1, "Marketing
Authorization Form", when hauling grain. This is necessary when delivering any grain to a warehouse that was under a CCC Marketing Loan.
"CALL BEFORE YOU HAUL !"
Producers should contact their County FSA Office well in advance of the CCC loan maturity dates to explore alternatives for forfeiting grain, as well as to
gain a better understanding of "Posted County Prices". FSA officials can help Producers determine the most profitable alternatives for their grain that is still under a 1999 CCC Loan. FSA Offices can also answer questions about CCC Loans and LDP's for grain that will be harvested in the Fall of 2000.
Generally, with either utilizing a PCP to release grain or forfeiting the grain, there are only a few cents per bushel to be gained.
Don't get too greedy !
Take advantage of minimal market opportunities that are available and avoid getting into "speculative" positions on grain that is stored
under CCC Loan.
Kent Thiesse
Extension Educator
Blue Earth County
Government Center
410 South 5th Street
PO Box 8608
Mankato, MN 56002-8608
Phone (507) 389-8141
Fax (507) 389-8355
email kthiesse@extension.umn.edu
LDP FORMS ON THE WEB
Need an LDP form but can't make it to your FSA office?
Go to this web site and print one out yourself. You will need Adobe Acrobat to run the form.
Go to http://www.adobe.com/products/acrobat/readstep.html to download the free Adobe Acrobat reader.
Then go to this web site to print out your form. www.fsa.usda.gov/dafp/psd/Forms/CCC666ldp.pdf
USDA RELEASES EXPORT SALES REPORT 08/17/00
http://www.fas.usda.gov/export-sales/esrd1.html
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