Thursday, August 26, 2010
Governor Butch Otter re-appointed Gordon Gallup of Ririe, to the Idaho Wheat Commission. Gordon represents the wheat producers of District Four, which includes Custer, Butte, Jefferson, Bingham, Bonneville, Madison, Teton, Fremont and Clark Counties. Gallup, who has been operating the family farm since 1975, grows wheat, barley, and alfalfa on a 3,000-acre farm.
Commissioner Gallup has been actively involved in the Idaho Grain Producers Association (IGPA), the National Association of Wheat Growers (NAWG), he currently serves on the Board of Directors of the Ririe Grain and Feed Co-Op.
Gallup has been instrumental in organizing and facilitating the IWC Direct Seed Workshops held for the past three years in Idaho Falls. He has been using direct seed tillage since 1985 with six years prior to that in minimum tillage.
“Our goal at the Commission,” says Gallup, “is to help growers maximize profitability. There are many ways to do that including direct seeding. I want to help interested growers expand direct seeding in both dryland and irrigated wheat.”
Mr. Gallup attended Idaho State University and Ricks College. He and his wife Carole have been married for 35 years and have seven sons and seven grandchildren. The Gallup’s enjoy boating, snowmobiling, four wheeling, and fishing.
Monday, August 23, 2010
Soil & Water Conservation Commission Offers Low Interest Loans
At a recent meeting, the Idaho Soil and Water Conservation Commission made a change to its revolving loan fund to provide farmers and ranchers with additional resources to implement conservation practices on their land. The revolving loan fund known as the Resource Conservation and Rangeland Development Program (RCRDP) will offer loan limits up to $200,000, an increase from $125,000.
The RCRDP loan program is authorized by Idaho law to provide low interest loans to farmers and ranchers for resource management projects and improvements. The interest rate for an individual loan varies from 3 – 5%, depending on the length of the loan. Interested applicants may now apply for a single loan of up to $200,000, but cannot exceed a total of $300,000 in total loans per individual.
“The Commission’s loan program is a tremendous avenue for farmers and ranchers to find the capital to meet their conservation goals,“ said Bill Flory, SWC Chair, from Winchester. “We’ve got over 200 current loans and hope to see additional applications as a result of the increased limits.”
The first step for interested applicants is to submit an application and conservation plan to their local conservation district. The local conservation district will review the conservation plan and forward a recommendation ranking that particular project to the SWC. The applicant will then provide financial and collateral information to the SWC office in Boise. SWC staff will then prepare the loan package for review by the Commission at the next scheduled meeting.
Completed applications received before September 3rd will be reviewed during an SWC conference call on September 28th. Completed applications received before October 15th will be reviewed by the Commission during a November 17th meeting in Burley.
The SWC works closely with local Idaho Soil and Water Conservation Districts in the wise use and enhancement of soil, water, and related resources. The SWC and local districts are committed to improving the environment, increasing public awareness of conservation issues, and supplying landowners and land users with the technical information needed to implement conservation measures and improve natural resource management.
For more information about the loan program or to find your local conservation district email email@example.com or call 208/332-1790. A RCRDP fact sheet and application form can also be found under the ‘Programs’ tab on the SWC website at www.swc.idaho.gov.
Friday, August 20, 2010
Copyright 2010 Associated Press
All Rights Reserved
Associated Press Financial Wire
The Associated Press reports that wheat prices resumed their rally this week as the prospect of another country limiting exports fed into supply concerns.
Wheat prices hit a two-year high earlier this month because a severe drought in Russia has destroyed about one-fifth of the grain exporter's harvest. Russia has suspended exports for the rest of the year because of damage from the weather.
Dryness in Ukraine and heavy rains in Canada has also hurt crops. Ukrainian officials on Wednesday delayed a decision on whether to limit grain exports from September to December because of dry weather hurting the harvest. A decision is expected Aug. 25, Barclays commodities analysts said.
The December contract gained 5 cents to settle at $6.8875 a bushel, its first advance after three days of losses. The September contract peaked earlier this month at $7.8575 a bushel, the highest price since August 2008, when Russia announced its intention to cut off exports. It has since drifted lower, but could approach the high if drought conditions prevent farmers from planting winter wheat.
"We expect a trend of shifting import demand to U.S. wheat exports in the absence of Black Sea exports," Barclays said in a research note Tuesday, pointing to a recent shipment of U.S. wheat to Egypt. Egypt has typically gotten the bulk of its wheat from Russia.
Spring and summer wheat prices also rose as investors worried about whether Russian farmers would be able to plant winter wheat, said Jason Ward, an analyst with Northstar Commodity in Minneapolis. The planting season runs through the end of September, but if the drought doesn't lift, the ground will be too parched to plant.
Ward said there was a forecast for more than an inch of rain this weekend in major grains growing regions. Less rain than expected would likely leave the ground too dry to plant, he said.
Other grains prices were mixed. Soybeans for November delivery fell 11.25 cents to $10.3075 a bushel, while December corn gained 3.25 cents to settle at $4.3325 a bushel.
Prices for metals and energy mostly retreated Wednesday.
September palladium fell $6.90 to settle at $490.40 an ounce and October platinum dropped $10.10 to $1,536.50 an ounce. December silver slid 19.8 cents to settle at $18.452 an ounce.
Copper for December delivery rose 1.2 cents to settle at $3.3705 a pound, however, and December gold ticked up $3.10 to settle at $1,231.40 an ounce.
Benchmark crude for October delivery fell 38 cents to $75.78 a barrel on the New York Mercantile Exchange.
Other October energy contracts barely budged. Heating oil fell 0.3 cent to $2.0484 a gallon, while gasoline was flat at $1.9070 a gallon. Natural gas dropped 1.7 cents to settle at $4.266 per 1,000 cubic feet.
Thursday, August 19, 2010
PIERS, the standard in trade intelligence, reveals a steady increase in wheat exports this year, and expects the trend to continue.
With a U.S. trade deficit that has widened significantly, Russia's temporary ban on wheat exports is likely to bode well for the U.S.
According to PIERS, year-to-date January through June U.S. ocean exports of wheat and maslin grew 11 percent, following an 11.2 percent decrease of the same grain commodities during the 2009/2010 trade season (July 2009 – June 2010).
This news, on the heels of a century-in the making drought situation in Russia, is a positive signal for U.S. Grain exporters.
U.S. Ocean export of wheat and maslin came in at more than 21.8 million metric tons (MT) during the 2009/2010 trade season.
Top markets receiving U.S. wheat products include Japan, Nigeria, the Philippines, Mexico and South Korea, with Nigeria increasing 25.5 percent and Japan 18.7 percent over the previous trade season.
But a shift is likely to occur.
Two Middle East countries adversely effected by Russia's August 15th ban - Egypt and Yemen - may look to the U.S. to compensate.
PIERS data reveals that during the 2009/2010 trade year, the U.S. exported 308K MT to Egypt and 365K MT to Yemen.
This is a steep decline from the 2008 -2009 trade season.
Mario Moreno, PIERS Economist says, "It is interesting to note that Egypt was the second top importer of U.S. wheat during the 2007 – 2008 season but last year, the country barely made it to the top 20."
According to Moreno, "At a time when the U.S. trade deficit widened to an almost two year high last June, the drought in Russia feels like 'manna from heaven' for many U.S. exporters."
Friday, August 13, 2010
Based on conditions as of August 1, Idaho’s spring wheat yield is forecast at 82.0 bushels per acre, up 2 bushels per acre from the July 1 forecast and up 5 bushels per acre from 2009, according to the National Agricultural Statistics Service. If realized, this will be the highest spring wheat yield on record, 2 bushels per acre above the record. Production of 44.3 million bushels from 540,000 harvested acres is up 9 percent from last year. Idaho’s winter wheat yield of 89.0 bushels per acres is up 2 bushels per acre from last month and up 8 bushels per acre from last year. Producers expect to harvest 740,000 acres of winter wheat with a total production of 65.9 million bushels, up 16 percent from last year bringing Idaho’s total all wheat production to 110,140,000 million bushels.
Thursday, August 12, 2010
Bloomberg business reporter Jeff Wilson writes that World wheat stockpiles before next year’s Northern Hemisphere harvests will be 6.6 percent smaller than forecast a month ago after adverse weather decimated crops in Russia, Kazakhstan and Ukraine, according to the Department of Agriculture.
World output will total 645.7 million metric tons in the year that began June 1, down from 661.1 million forecast in July and 680.3 million in the previous year, the USDA said today in a report. Global inventories on May 31 will fall to 174.8 million tons from 187.1 million estimated last month and 194 million this year. The average estimate of 17 analysts surveyed by Bloomberg News was for 178.8 million.
“The drop in wheat production will help to boost sales of U.S. wheat and corn,” said Roy Huckabay, the executive vice president of the Linn Group in Chicago. “It’s going to be a very active shipping season” from October to March, he said.
Wheat prices have surged 70 percent since reaching a three-year-low on June 9 amid dry conditions in Russia, Kazakhstan and the European Union and flooding in Canada. Russia, the world’s third-biggest producer, last week banned exports of grain through the year’s end to conserve supplies for domestic food production and animal feed.
The USDA slashed its production estimate for Russia by 15 percent, to 45 million metric tons from 53 million in July. Its Ukraine forecast was cut 15 percent to 17 million tons. Kazakhstan’s estimated production is 11.5 million tons, down 18 percent from last month. The European Union, also affected by drought in some areas and heavy rains in others, will produce 137.5 million metric tons this year, down 3 percent from the July prediction, the USDA said.
December futures in Chicago jumped to a 23-month high of $8.68 a bushel on Aug. 6. Since then, they have plunged 16 percent to close at $7.25 yesterday, as investors slowed bets on further price gains.
Unsold supplies of U.S. wheat on hand on May 31 will total 952 million bushels (25.9 million tons), down from 1.093 billion forecast last month and down from 973 million on May 31, 2009, the USDA said. Twenty-four analysts and traders surveyed by Bloomberg News expected 965 million bushels, on average.
Total U.S. production in the marketing year that started June 1 is forecast at 2.265 billion bushels, compared with 2.216 billion estimated in July and 2.216 billion bushels in the previous year.
Wednesday, August 11, 2010
Reuters Peter Apps reports rising grain prices from Russia's drought and fires will pressure populations already hit by the financial crisis and could stoke unrest -- particularly in the Middle East, North Africa and parts of Europe.
Wheat prices have risen by nearly 70 percent since June after Russia suffered its worst drought in 130 years and are at their highest since 2008, when the last major food price rally sparked protests and riots in a string of emerging nations.
Analysts warn that if prices stay high then the threat of street violence will increase -- at least up to a point.
"We could see some street riots but I wouldn't expect any governments to fall," said Jonathan Wood, global issues analyst for consultancy Control Risks.
"On one level, we have much less of a problem than in 2008 because we have better food stocks. On the other hand, because of the financial crisis many countries are not in such a good position financially to deal with it."
Particularly in emerging markets where food makes up a higher proportion of household purchases, the price rise could filter through in inflation, rate hikes and wider deficits.
The Middle East and North Africa, particularly Egypt, are regarded as particularly vulnerable, as are emerging and southern European countries where discontent has already been fuelled by harsh cuts in public spending, benefits and pay .
"Grain imports are particularly sensitive in the Middle East and North Africa -- bread is such a crucial staple of the diet," said Metsa Rahimi, analyst at security consultant Janusian. "Eastern Europe is also an obvious area of risk."
Europe has seen less social unrest than many expected from the financial crisis -- although riots in Greece in May unsettled global markets -- but risks are expected to rise in the autumn as unions call strikes and spending cuts bite.
Central and Eastern Europe have pushed through tough measures to qualify for IMF and European Union aid, but analysts see patience running thin, particularly in Romania. Spain, Italy, France and the Baltic states are also being closely watched.
Much will depend on how long the price increase lasts and to what extent it filters through other commodities and foodstuffs.
That could swiftly bring angry mobs on the streets particularly in relatively poor authoritarian countries where maintaining food supply is seen as key to government legitimacy, they analysts said.
Russian Prime Minister Vladimir Putin was swift to impose an export ban, with the Kremlin likely to be keen to keep its silos full especially in the event of more damage to its winter crop.
"Adequate grain supplies have long been associated with social stability in Russia," wrote security consultancy Stratfor. "
Stratfor believes Russia may use the crisis to pull together nearby producers Belarus, Kazakhstan and Ukraine to form a regional grain cartel.
"Moscow very publicly has used energy supplies as a political weapon, either by raising prices or cutting supplies," it said in a note. "Grain exports fall very easily into Moscow's box of economic tools."
Several key importers of Russian wheat including Saudi Arabia, Turkey and Jordan have been swift to say they have enough stocks and there will be no immediate impact on ordinary people. But they are nervous.
"The risks are always greatest where there are large numbers of urban poor and where food makes up more than 60 percent of the consumer purchase index basket," said Alastair Newton, political analyst at Nomura.
"My top pick for potential trouble would be Egypt where tensions are already high with elections coming up and concerns about succession. Egypt has a long history of food price riots -- but my guess is the main impact will be on the deficit as the cost of subsidies go up."
Food prices and subsidies have always been notoriously political in Egypt, which faces elections next year with little clarity on whether 82-year-old President Hosni Mubarak -- in power for almost three decades -- will stand again.
POLITICAL RISK PREMIUMS
There have been occasional scuffles at Ramadan food handouts in recent weeks and grumbling over raised pre-Ramadan prices but no repeat of the widespread protests seen in 2008.
The government met those first with a security clampdown then with the promise of higher wages.
Other countries being particularly closely watched for signs of unrest include Algeria, drought-hit Syria and already unstable Yemen.
In contrast, there is seen less immediate impact on Africa, in part because of stronger other staple crops particularly maize in the continent's south. Nigerian food price rises have also slowed because of good local crops.
Even in West Africa's Sahel -- scene of a pre-existing food crisis -- aid agencies say the Russian grain crisis and global price surge has had little local impact as yet.
But rising global prices could still put pressure on some recent land deals for food production in which Middle Eastern and Asian nations have bought up tracts of land in Africa and elsewhere including Ukraine and Pakistan for food. Hungry local populations might not like seeing food being trucked abroad.
The only major change of government linked to the last food spike was the 2009 coup in Madagascar, in which popular desire to overturn a South Korean land purchase was seen as a key factor.
Insurer Zurich believes food-related unrest worries will prompt more investors to seek protection against political violence damage and expropriation. That could push up premiums and the cost of foreign direct investment in affected markets.
"We would expect to see increased demand for our political risk products as a result of this," said Dan Riordan, Zurich president for specialty products.
Monday, August 9, 2010
Bloomberg news reports that wheat speculators slowed their bets on higher prices after the biggest monthly gain in Chicago Board of Trade futures in 37 years, a sign the rally may be peaking, according to Grain Service Corp.
Speculators including hedge funds raised their net-long positions in futures and options by 5.3 percent in the week ended Aug. 3, the smallest increase since they turned bullish last month, U.S. Commodity Futures Trading Commission data on Aug. 6 show. Prices that had as much as doubled to $8.68 a bushel since June 9 fell 20.75 cents, or 2.9 percent, to $7.05 a bushel as of 11:08 a.m. London time.
“If we haven’t seen the top, we’re probably very close,” said Diana Klemme, director of the grain division of Grain Service Corp., a consultant and broker in Atlanta. Klemme worked in the cash-grain industry in the 1970s and sits on the risk- management committee of the National Grain & Feed Association, whose members handle 70 percent of U.S. grains and oilseeds.
Wheat prices surged as a lack of rain in Russia, Kazakhstan and the European Union and flooding in Canada ruined crops. Russia, the world’s third-biggest producer, declared drought emergencies in at least 27 regions by Aug. 3 and last week imposed an export ban through the end of the year. It also said neighbors including Kazakhstan and Belarus should join the ban.
Prices jumped to a 23-month high of $8.68 on Aug. 6 before closing down 7.4 percent, the biggest drop since June 2009.
Speculators shifted to a net-long position in wheat during the week that ended July 13, after betting all year that prices would fall. They have increased that bullish holding in the past three weeks. Index funds that doubled their holdings since March 2009 cut their net-long positions in two of the past three weeks, CFTC data show.
Long positions outnumbered shorts, or bets prices will fall, by 36,118 futures and options contracts on Aug. 3, the data show. The net-long position rose 37 percent a week earlier and more than doubled in each of the previous two weeks.
Commodity index funds had a net-long position of 197,401 contracts, down 252 from the previous week, or 0.1 percent, CFTC data show. Before then, the position had jumped 35 percent this year and in May reached 197,713 contracts, the highest level since at least June 2006, the earliest data available.
Wheat futures for delivery in September, the closest to expiration, may sink as low as $6.25 “pretty rapidly,” said Roy Huckabay, the executive vice president of the Linn Group, a commodity trading adviser in Chicago. That would be 11 percent below current prices.
The slowing pace of speculator holdings may signal traders “are shifting attention now out of wheat and into corn,” where demand is increasing from end users including livestock producers, Grain Service Corp.’s Klemme said.
Last year, world livestock producers used 18 percent of the wheat crop for animal feed, and the surge in prices last week will force some to use corn, a cheaper alternative, Huckabay said.
Cash wheat prices in Kansas City, Kansas, rose to a premium of $1.7662 a bushel over corn on Aug. 5, the highest since July 2009, USDA data show. Wheat futures for December delivery on the CBOT were almost twice the value of December corn futures, the highest spread since March 2008. In the past two years, wheat averaged about 1.43 times more than corn, exchange data show.
Speculators may shift away from wheat because corn has better prospects for a rise in prices. Corn gained 3.3 percent to $4.20 a bushel last week, trailing the rally in wheat, partly because U.S. farmers boosted sales of inventory from last year’s corn crop. Corn for December delivery rose another 0.1 percent today to $4.205 a bushel.
Farmers and other commercial hedgers were short 740,264 corn contracts as of Aug. 3, the most since August 2008, according to the CFTC. That’s a sign that farmers already have sold most of what they have available until the next harvest, Klemme said.
“Any farmer who wanted to sell 2010-crop corn has probably sold it already,” Klemme said. “To get him to sell more, either he has to be panicked or he has to see the price go higher than what he already sold it. I don’t think they’re afraid for the moment” that prices will fall.
Wednesday, August 4, 2010
After setting a record high in 2008, U.S. farm production expenditures decreased by nearly $20 billion in 2009 – the first major decline in nearly a quarter century, according to the Farm Production Expenditures 2009 summary released today by the U.S. Department of Agriculture’s National Agricultural Statistics Service (NASS).
The average production expenditures per farm fell 6.4 percent in 2009, from $140,075 to $131,137. Total U.S. expenditures totaled $287 billion, down from $307 billion in 2008.
Falling petroleum prices were a major factor behind the decline in overall farm expenses, leading to decreases in the costs of fuels, fertilizer and agricultural chemicals. The report shows that farmers and ranchers spent $12.4 billion on fuels in 2009, down 22.5 percent from the previous year. The average U.S. farm operation spent $5,658 on fuel in 2009, $1,642 less than in 2008.
Total fuel expenditures nationwide included $7.22 billion for diesel, down 26.8 percent from 2008; $2.43 billion for gasoline, down 19.3 percent; $1.95 billion for LP gas, down 3.9 percent; and $800 million for other fuels, down 27.3 percent.
Overall, 2009 farm production expenditures decreased in all major categories. Average feed costs decreased 4 percent, to $20,533 per farm; average costs for farm services decreased 4.2 percent to $16,609 per farm; and the average costs for fertilizer, lime and soil conditioners decreased 10.7 percent to $9,171 per farm.
The Farm Production Expenditures summary provides the official estimates for production input costs on U.S. farms and ranches. These estimates are based on the results of the nationwide Agricultural Resource Management Survey, conducted annually by NASS. The Farm Production Expenditures 2009 summary and all NASS reports are available online at www.nass.usda.gov.
Monday, August 2, 2010
Associated Press reporter Nataliya Vasilyeva writes that a severe drought destroyed one-fifth of the wheat crop in Russia, the world's third-largest exporter, and now wildfires are sweeping in to finish off some of the fields that remained.
Expectations that Russia will slash exports by at least 30 percent have sent wheat prices soaring and this is good news for farmers in the world's largest wheat exporter -- the United States.
The higher wheat prices may mean that Americans and Europeans pay slightly more for bread, but the bigger burden will fall on people in the Middle East, Africa and parts of Asia, analysts say.
The Russian Grain Union said Monday that it expects exports to decline to 15 million tons, down from 21.4 million tons in 2009, while the SovEcon consultancy sees them at 12 million tons and other analysts at even less.
Russian farmers have little incentive to export. Even though grain prices are rising on world markets, with further gains on Monday, they are growing even faster in Russia, so many farmers are holding on to their harvested grain in the hopes of still higher profits.
The majority of the damage to Russia's wheat crop has been caused by the drought, one of the worst in decades as much of the country suffers through the hottest summer since record-keeping began 130 years ago. But in recent days, wildfires raging through much of western Russia have spread into farmland and there are fears that more fields will be lost.
The director of a small state farm outside Moscow said fire destroyed its entire wheat crop one night before they planned to harvest.
"The fruits of the year's labor of the farm went up in smoke -- this is very painful," said Pavel Grudinin, director of the Lenin State Farm, said Monday on Russian television. He said a woman who worked as a horticulturist at the farm was weeping in his office.
Wheat prices on the Chicago Board of Trade surged in July by 42 percent, the biggest gain in more than a half century, and are now the highest they have been in nearly two years. With no immediate end in sight for the drought in Russia, analysts expect prices to continue to rally.
Wheat futures were up another 5 percent Monday to $6.955 a bushel.
George Lee, who manages the agriculture fund at Eclectica Asset Management in London, said the United States and other exporters, principally Argentina and Australia, are set to be "big gainers," Lee said, while Canada, the third-largest global exporter, and the European Union are not looking at their best harvests.
He said the high wheat prices will hit hardest in the Middle East, Africa and parts of east Asia -- or anywhere where governments subsidize the cost of food.
"The big losers will be consumers where the diets are more pure," Lee said. In Yemen, for instance, the price of bread tracks closely with the price of flour, whereas in Europe and the U.S. the commodity costs represent only part of a mix that includes packaging, marketing, etc.
"I don't think U.S. consumers will notice the price difference very much," he said.