Seeks new formula
Nebraska’s congressional delegation wants U.S. Agriculture Secretary Tom Vilsack to change the way Farm Service Agency calculates disaster payments under the Livestock Indemnity Program.
Livestock producers who have filed claims for cattle losses from recent tornadoes are seeing lower payments than expected. The new farm bill said producers will be paid 75 percent of the market value of their cattle on the day before their death.
However, Nebraska lawmakers say FSA is calculating payments based on 75 percent of the average fair market value of the applicable livestock using nationwide prices for the previous calendar year.
The delegation said the difference in calculations translates to a $129 per head difference for 800- to 900-pound feeder cattle.
For fed cattle, the difference can be as much as $339 per head.
Though farmland values have eased a bit this year, two eye-blinking auctions occurred in June, when 80 acres located two miles east of Boyden, in Sioux County, sold for $20,400
an acre. The parcel had 78 tillable acres, reports the Landowner newsletter.
The soils on the farm were rated 76.2 on the CSR scale. That compares to the county average of 64.8.
Also last month, 389.5 acres of mostly tillable land located on the north side of Osage, in Mitchell County, passed under the gavel with prices on four tracts ranging from $19,100 to $19,700 an acre.
The newsletter said the sale prices are especially shocking because north-central Iowa was hard hit by rains a year ago, resulting in a substantial number of acres claiming prevent plant payments rather than planting a crop.
June rainfalls brought precipitation during the first half of 2014 to above normal levels for the state.
The June statewide average rainfall was almost 10 inches, and for the most recent two weeks the rainfall of 4.3 inches was nearly double the normal of 2.2 inches.
Although most of Iowa received wet weather during this period, there were exceptions. These were:
- The far northwest portion of the state received a welcome reprieve from mid-June flooding
- The far southeast portion of Iowa – centered on Van Buren County – consistently missed heavy rains.
Corn closed the week 31.75 cents lower.
Last week, private exporters announced a sale of 101,600 metric tons of U.S. corn to Japan and 107,696 mt to an unknown destination for the 2014/15 marketing year.
Weekly export sales of corn showed 14.3 million bushels of old crop sales and 15 mb of new crop sales.
In the weekly progress report, corn crop conditions improved to 75 percent good-to-excellent, unchanged compared to a week ago and well above last year’s 67 percent and the highest rating for July since 1999.
The USDA used the June acreage 2014 U.S. corn plantings estimate of 91.6 million acres and cut harvested acres by 500,000 acres to 83.8 million acres due to historical abandonment rates and the amount of corn used for silage.
Thus it forecasts 2014 U.S. corn production at an estimated 13.86 mb, the second largest crop on record using a yield of 165.3 bpa.
If weather stays benign, U.S. corn yield looks to be increased in future reports. There is much talk in the industry of 170 bpa or more.
2014/15 U.S. corn endijng stocks were estimated at 1.801 billion bushels with exports of 1.7 bb and ethanol use of 5.050 bb.
Our key yield development timeframe is occurring now, but will be over for the majority of the Corn Belt by next week.
Typically, funds exit longs during the third quarter of the year as the market trades lower into harvest, before they buy into fresh longs in the last quarter of the year in hopes of a post harvest rally.
It appears that $3.25 is a possible downside target for December corn.
Strategy and outlook: Producers are 25 percent sold of the 2014/15 crop and own December puts on 50 percent of the crop.
They bought out-of-the-money December calls on 25 percent of sales as insurance.
Soybeans closed the week 58.25 cents lower from last week. Last week, private exporters announced sales of 492,000 mt to China and 126,000 mt to an unknown destination for the 2014/15 marketing year.
Weekly export sales of soybeans showed 2.1 mb for old crop and 19.3 mb for new crop sales.
In the weekly crop progress report, soybean conditions remained unchanged from a week ago at 72 percent g/e and are above last year’s 67 percent rating.
This is the second highest soybean ratings on record for early July, trailing only 1994.
The USDA July supply/demand report was considered to be bearish with old crop soybean end stocks rising to 140 mb, well above trade estimates.
The USDA forecast 2014/15 U.S. soybean production at a record large 3.8 bb, using a yield of 45.2 bpa.
The 2014/15 soybean export estimate was raised to 1.575 bb and the 2014/15 soybean crush estimate was also raised to 1.755 bb.
By using the increased acreage figures in the June acreage report, resulted in ending stocks increased to 415 mb versus the 325 mb forecast in June.
Soybeans are a crop of August, so there is still time for this crop to be harmed due to poor weather.
However, weather looks nearly ideal for development at this time, which will keep the pressure against prices with weekly support of
$10.23 likely to be tested soon.
Strategy and outlook: Producers are 25 percent sold of 2014/15 production. Producers own November puts on 50 percent of production.
This material has been prepared by a sales or trading employee or agent of Midwest Market Solutions and is, or is in the nature of, a solicitation. This material is not a research report prepared by Midwest Market Solution’s Research Department. The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Midwest Market Solutions believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such.
Brian Hoops can be reached at (605) 660-1155.
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