Cattlemen Speak Out at NAIS Listening Session
According to the Labor Department, recession-weary employers pared 467,000 positions from their payrolls in June.
The cuts pushed the nation’s total unemployment rate to 9.5% -- -- it’s highest level in 26 years.
Meanwhile, the Commerce Department reported orders to U.S. factories jumped 1.2 percent in May -- -- their largest monthly increase in nearly a year.
But the New York-based Conference Board announced its Consumer Confidence Index fell to 49.3 in June. Analysts monitor shopper sentiment closely because their spending accounts for more than two thirds of all domestic economic activity,
Rather than splurging at the mall though, a report released last week indicated Americans used most of their federal stimulus payments to boost personal savings rates to their highest level in more than 15 years.
Wall Street took the week’s developments in stride and the Dow wrapped the 4-day session with a loss of more than 150 points.
The markets were closed Friday in honor of Independence Day, but many of America’s farmers and ranchers say their freedom is threatened by an ever-increasing number of regulations. On Tuesday, they gave the government an earful.
The last of 14 scheduled USDA listening sessions concerning the National Animal Identification System, or NAIS, took place Tuesday in La Vista, Nebraska. p
Lewis Day, Nebraska Cattleman: "It's our right and our responsibility to make sure this is not rammed down our throats."
The sessions provided producers, packers and representatives of various commodity groups an opportunity to voice concerns and offer alternative solutions to the current system.
Kent Pruismann, Iowa Cattlemen’s Association: “A recently released cost benefit study has indicated that the cost to the cattle industry will be 200 million dollars or more. Who will bear those costs?”
Dan Vinton, Nebraska Cattleman: “We are price takers, not price makers. Our government is out of money. Asking for more federal dollars is foolish in our economic state.”
Christian Harvey, Nebraska Cattleman: “NAIS is not okay if somebody pays for it. NAIS is not okay if somebody guarantees privacy. It’s not okay! There are hidden agendas in this… there is no doubt.
Besides concerns over where funds to implement NAIS would come from, attendees also expressed fears that information gathered by USDA could manipulate livestock markets.
David Wright, Independent Cattlemen of Nebraska: “With that kind of information, that would be like a crystal ball. You could determine when inventories are high and when inventories are low. When inventories are high, you could bid cheap for the products and when they were low, you could step out of the markets and not be a participant. That information would be very valuable outside of production agriculture.”
Jo Stec, Nebraska Rancher: “ My cows now carry an EID tag, an 840 tag that says unlawful to remove. And I said three times, ‘no we don’t need those tags.’ I can identify any animal on this place and I can give you any information you need about that animal.”
Jo Stec’s herd is one of 43 in Nebraska quarantined because of a recent Tuberculosis outbreak. She and many of those opposing NAIS believe there are already inventory systems in place and a national program would not prevent, nor expedite identification of infected livestock.
Jo Stec, Nebraska Rancher: “I think most producers have good records, I think they know their cattle, I think they work with local vets and the local vets have good records, the local sale barns have good records. I think any animal is traceable.
Those voicing support for the current national animal ID system also expressed concerns over privacy issues and the costs of implementation. However, NAIS proponents believe it will eventually benefit producers.
Bill Luckey, Nebraska Pork Producer: “In 2008 the United States exported over 4.4 billion pounds of pork valued at over 5 billion dollars. Last year was the 17th consecutive year of record pork exports. It is critical to the continued viability of the U.S. pork industry and to the livestock, dairy and poultry industries that the United States establishes a mandatory animal identification system that allows animal health officials to identify, control and eradicate diseases that could infect the countries livestock herds and effect domestic and international markets.”
Missing Acres Reappear In June Acreage Report
Analysts were able to account for nearly a third of the missing acreage, theorizing most was located in states where extreme weather conditions forced large amounts of land out of production. Nevertheless several million acres of the nation's farmland remained in limbo.
But, USDA’s latest Planted Acreage Report revealed this week a few million more wayward acres had been found
Soybean acreage also increased as the search for missing land continued. According to USDA, farmers planted a record 77.5 million bean acres this season, up 2 percent from last year, and 1.5 million acres above the previous assessment.
The government estimates five percent fewer acres were planted in wheat this year. The largest amount of ground is still devoted to winter wheat at 43 million acres -- a 6 percent decline from 2008.
Cotton farmers were expected to plant 8.81 million acres but a little more territory was seeded than first reported. The June report shows just over 9 million acres of ground in play -- down 4 percent from last year but up 3 percentage points from the previous survey. Despite the increase, that is the smallest number of cotton acres planted in more than two decades.
The market reacted negatively as the news took some traders by surprise. Corn was limit-down on Tuesday at the beginning of the week and soybeans also trended lower.
Missouri National Guardsmen Work to Win Hearts and Minds of Afghani Farmers
The effort was the first major assault of President Obama's new war plan and proved to be the Marines' biggest mission since the November, 2004 battle for Fallujah in Iraq.
More than a year before this week’s assault however, a group of National Guard soldiers from Missouri beat their swords into plowshares to win the hearts and minds of Afghan farmers.
As David Miller explains, the soldiers deployed “agricultural weapons of mass production” in Afghanistan.
On a cold January day in 2008, this group of Missouri National Guard soldiers is participating in a training exercise at Camp Atterbury in Indiana. Their convoy is attacked by other U.S. soldiers acting as insurgents, and their unit suffers mock casualties.The exercise is designed to prepare the men for a mission deep into the rugged mountains of eastern Afghanistan. Though heavily armed with state-of- the- art weapons, their mission isn’t to intercept the Taliban or find Osama Bin Laden. Instead, they will help Afghani farmers increase their crop yields, improve the health of their animals and add value to their raw agricultural goods.
Master Sgt. Larry Godsey, Marshall, Missouri: "...they made the announcement they were looking for people with an ag background to do this particular mission, to go over to Afghanistan and, and at the time, we thought help farmers, teach them how to farm. And because of my educational background I thought that would be an interesting mission to go on. I kind of, I kind of kept quiet about it. You know you never want to volunteer to go anywhere."
At the end of January, 2008, Master Sergeant Godsey, a 20-year veteran of the Missouri National Guard, left his wife and three daughters for a one-year deployment in Afghanistan. He joined nearly 50 other volunteers who made up the 935th Agri-business Development Team or ADT. Deployed to Nangarhar Province, the team would be less than 50 miles from the Pakistani border and Osama bin Laden's suspected stronghold.
The soldiers at the core of the unit were chosen because of their agricultural backgrounds. The military capitalized on Godsey's rank, education and current job as an economist at the University of Missouri Center for Agroforestry, and put him in charge of assigning projects to various team members.
The idea for the ADT was conceived by retired Missouri National Guard General Charles Kruse, now president of the Missouri Farm Bureau, Missouri National Guard General King Sidwell, and Director of the Army National Guard General Clyde Vaughn.
Lt. Gen. Clyde Vaughn, Army National Guard: "I can't tell you how proud we are of you. This is a huge priority. You stand right on the cusp of making a huge difference in Afghanistan. "
Though there are now Agri-business Development Teams from several states, Missouri's National Guard was the first to be tasked with improving the quality of life for Afghani farmers.
At first, the soldiers thought they would be teaching basic farming techniques but after arriving in Afghanistan things changed.
Master Sgt. Larry Godsey, Marshall, Missouri: "... those farmers had been farming the same way for 2000 years. They, they know how to farm. They're good farmers. ...We thought we were going to be more on the education side. We thought we were going to teach them how to become 20th century or 21st century farmers, but that really wasn't the case. "
The members of the ADT realized local farmers were way beyond the need for basic education and that techniques used on large U. S. farms would be inappropriate for the smaller operations terraced into nearby mountainsides.
Working with local and regional government officials, projects were identified and arrangements made with local contractors to begin construction. Each project was approached with the idea of replicating the job at another location. Funding for the effort came from money set aside to rebuild the war-torn country.
A variety of projects were undertaken including stocking a local veterinary clinic with new equipment, building a slaughter facility for local producers and working out the details for a fish hatchery. Not unlike U.S. farmers trying to capture more of the profits from their labor, the men of the Missouri ADT hoped their work would help break the cycle of Afghanis selling their raw commodities to nearby countries and buying the processed products back at higher prices.
Sergeant Russell Pierce, from Mayview, Missouri, a cattle rancher and row-crop farmer, was placed in charge of the fish hatchery project. After searching the internet for information he began work with the Nangarhar Fish Producers Association.
Sgt. 1st Class Russell Pierce, Mayview, Missouri: "Even when I started that, it's hard to get out of the, you know, 21st century American mindset where you're saying, 'well we need to, you know, get some electronics this and and, ahm we need to computerize that or get aeration pumps'... Their power grid is is very poor; to a point that they don't even count on it."
Some thought was given to upgrading an existing hatchery but it was determined the facility was in a flood plane and a new location had to be found. When the ADT left in late December 2008, negotiations for a new facility just outside of Jalalabad were in progress.
Once in Afghanistan, the ADT considered the knowledge they were imparting might be used to grow more opium poppies, the main ingredient in the illegal drug heroin. But after asking local farmers about the issue they were assured poppy growing was a criminal problem not an agricultural one.
Master Sgt. Larry Godsey, Marshall, Missouri: "With...world wheat prices what they were this past year wheat actually was more profitable than poppy. So that probably helped us I don't know...But I guess you have to look at it in terms of incentives. There's a reason why people grow poppy and, and typically they grow it, number one, either because that's the only alternative they have or, number two, is because they're being forced to grow it.
The focal point of the mission became water management for electrical power generation and irrigation.
To help bring electricity to rural regions of the country the team completely refurbished two hydroelectric dam. The generating plants now supply power to the nearby villages of Sengani and Omarkheyl and to the small grain mills installed at each dam site.
Larry Godsey, Marshall, Missouri: "They don't know who we were and by going into these communities and getting them electricity or getting them a wheat mill or a corn mill or whatever it's you know its winning the hearts and minds and that's what we were trying to do."
The one project Godsey and his team thought might help the most was the installation of check-dams to hold back spring melt water. The water would then be available for irrigation during the heat of the region's sweltering summers when the mercury often passes 130 degrees. Three optimal locations were found high in the nearby mountains.
To reach these sites, the team often would drive several hours and, once the trail became too rough for vehicles, walk several more.
Sgt. 1st Class Russell Pierce, Mayview, Missouri:"...I think there were times that we were in areas that were um definitely not exactly friendly to US Forces but because of who we were and what we were doing and the reputation that we um built quickly among those individuals over there. We got away with a lot of stuff we shouldn't have."
Gratification aside, ADT members are quick to count the cost of their mission against the benefits of their work. Despite the Pentagon's commitment of more than a million dollars Godsey continues to weigh the risks and rewards.
Master Sgt. Larry Godsey, Marshall, Missouri: "I enjoyed the mission, it was dangerous, it was challenging, um, it was frustrating at times, but it was one of those missions where you really felt like you were making an impact. And you're doing something for people and you felt like you're making progress. And so do I want to go back? Yeah, I'd go back. I don't know if I want to go back for another year but I'd go back."
For Market to Market, I'm David Miller.
Market Analysis: Darin Newsom, Market Analyst
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For the holiday-shortened week, July wheat lost nearly 35 cents, and the nearby corn contract was down 38 cents.
Tight supplies of old crop soybeans supported the rally in the soybean pits, where the July contract gained 42 cents and the nearby meal contract was up more than $6 per ton.
In the softs, cotton moved back above the $60 mark as the December contract posted a gain of $4.08.
In livestock, August cattle were up $2.47. Nearby feeders gained nearly $4.50. And the July lean hog contract gained $3.27.
In other markets of interest, the Euro lost 50 basis points against the dollar. Crude oil declined $2.43 per barrel. Comex Gold was down $10 per ounce. And the Goldman Sachs Commodity Index lost more than 15 points to close at 436-even.
Newsom: Thank you, Mark.
Pearson: Another big week in the commodities world, a big report out, I want to get to that planted acreage report. Crude oil we mentioned kind of bouncing around. The general economy, the world general economy seeming to be fairly flat right now. Are we starting to see some bright spots in this general economy worldwide?
Newsom: I'd like to say yes but really the answer is no and as you talked about earlier in the show we had this unemployment number that came out later this week that shows that we've still got some hurdles that we're going to have to get over and I think that's going to continue to weight on the Dow and then that's going to spill over into commodities and I think as we head into the late summer, get started into the fall we're going to continue to see this pressure build.
Pearson: So, with that in mind, the pressure is going to continue on this global economy until we start to see some confidence regained? Is that what we're looking for?
Newsom: I think so. What we're going to have to see, instead of less bearish reports which is what we've been building some of this spring-summer rally on the Dow, we're actually going to have to start to see some bullish numbers, some actual evidence that the economy is turning around, not just stabilizing. In the last Federal Reserve meeting the comments themselves said we're seeing a stabilization in the economy. We're going to have to start seeing some growth, we're going to have to start seeing some strength and I think then the turnaround begins to come and it might be later in '09 but more than likely it's going to have to start coming in 2010.
Pearson: With that as a backdrop, planted acreage report out this week, highly anticipated, big surprise on the corn acreage but expected on soybeans, fewer wheat acres. Talk about the wheat market. You're a Kansas boy. What do you see now?
Newsom: Well, there's nothing bullish going on in wheat. No matter how hard we look and how hard we try you just can't find anything and if we look at that acreage number increased acreage for all wheat, spring wheat acres were up when they were expected to be down so it just adds more fuel to the fire here that keeps traders, keeps sellers coming into this market and then when you add in the fact that the dollar, as we were talking about, the dollar continues to move higher, it just makes the U.S. wheat that much less attractive on the world export stage.
Pearson: So, if you're a wheat producer and haven't made a lot of sales yet what are you supposed to do?
Newsom: I think you sit back. Let's get through harvest here because I still think we could see some sort of post-harvest rally. I think what we're going to have to rely on at that point is if numbers start coming in of reduced production and these kinds of things maybe that starts to give us some strength, we get into mid-August, possibly a little later than that hopefully we can start to rally this market at that point.
Pearson: What kind of a rally would you expect?
Newsom: Not very much initially particularly if we've got the Dow coming under pressure, non-commercial traders continuing to sell corn, maybe beans also working a little bit lower but if we can start to get some momentum, some 40, 50 cent moves over time I think that's going to start to attract some attention and what we'll actually see in the wheat market could possibly be some non-commercial short covering. It's one of the markets where they're actually short, they might start to cover some of those positions.
Pearson: Short covering rally and that would be a chance for producers to make additional sales. Corn number, 87 million acres, that's a lot of corn acres out there, second largest since 1946.
Newsom: It really is and if you start adding in, if you start doing all the math that USDA has provided us not only with the quarterly stocks larger so now you might have larger ending stocks going into 2009-2010, now you've got 87 million planted acres, possibly 80 million harvested acres and if yield jumps from this 153.5 that they're projecting right now up to more of a trend line 157.5, 158 we could be possibly talking about ending stocks in '09-'10 around that 1.8 billion bushel mark. Four to six weeks ago we were talking about maybe 500, 600 million bushels left. So, a huge swing in the corn market, a lot of it's still going to have to do with the weather as we go forward but it certainly has cast a bit of a bearish pall over this market.
Pearson: Same thing, corn grower who hasn't done anything for 2009, what are you telling them to do?
Newsom: Again, you have to sit back. This market has lost a lot of ground, it's actually coming back down towards support, you've got the December contract pulling back in that $3.50, $3.60 area, you've got nearby contracts moving back down towards $3.30, $3.40. I think at some point we settle down in here, we take some of this volatility out of the market and then like what we've seen in years past we start to put a harvest low in or a pre-harvest low in that August, mid-August to early September timeframe and then if this doesn't pan out as anticipated and we know we're going to see revisions in these numbers possibly that will be the catalyst to start to drive corn higher.
Pearson: Let's talk about the soybean market, a big number there but not quite as big as it could have been, certainly within the trade estimate. So, soybeans going forward they took a big hit right after this thing happened, right after this report was released.
Newsom: Yes, I think the most important number coming out of the soybeans was the quarterly stocks number up near 600 million bushels. USDA is still sticking with its ending stocks figure of 110. We'll find out Friday, July 10th if they're going to stick with that or not. It's going to be very difficult to hit that level with only one quarter left and we're sitting at 600 million bushels. So, that's why we saw the initial pressure on the market but what was interesting to me is how soybeans recovered late in the week basically shrugging the shoulder and saying, look, we don't believe that quarterly stocks number, we think it's much tighter than that, we think this inverse that we've seen over the last year in the old crop future spreads is indicating that the market is much tighter than what the quarterly stocks number is indicating. So, off we went, market still remains supported by supply and demand situation, strong exports to China, strong demand all the way around I think is going to keep this market underpinned for a while.
Pearson: So, new crop sales what are your thoughts?
Newsom: We've got some on the books and I wouldn't be overly aggressive but we're at a point right now around the 4th of July where beans tend to turn lower. So, if we don't have anything done right now certainly get some on the books, possibly up to 50%, possibly a little more than that and then let's see what happens because again, this is a very critical time in the marketing year, time when the soybeans tend to start to work lower.
Pearson: Let's talk about the cotton market, again, a big jump this week, less acres in cotton, that was a bit of a surprise.
Newsom: It was and the biggest thing in the acreage report for cotton is they did bump it up to nine million acres. It's down from where we were in 2008 but visiting with some cotton analysts what we're seeing is that the increases in acres are in areas that are really not very productive. In the better growing areas they actually saw a reduction in acreage. So, it looks like we're going to be tightening up this supply and demand situation, the Dec., March new crop spread certainly is seeing some of the carry coming out of that setting the stage for this Dec. contract to make a run at 70. It looks very strong right now heading into July, early parts of July, looks like it could really start to build some momentum.
Pearson: Let's talk livestock, it's been so tough in the livestock and poultry sector it's hard to fathom. Hearing those cattlemen talk earlier there's a lot of frustration out there in cattle country and hog country and poultry country and dairy country right now. What do you see ahead for fed cattle? If this economy continues just to bang along here in first gear what do you think is going to happen?
Newsom: That's one of the concerns and I was going to point out to you when was the last time on one of these weekly shows that you got to actually say all three of those markets closed higher for the week?
Pearson: It's been ages but is it for real? We've had a lot of false starts.
Newsom: And it certainly looks like it could be but we've got some pretty good momentum particularly in the live cattle market. A couple of weeks ago we had a bullish technical signal, we've seen some follow through cash markets firming a bit but you're absolutely right, if this economy is as we think it is and it's not quite as strong and might not be able to hold going into the summer and fall that's going to put some pressure on the cattle. But I think we've built some momentum, we've built the base that we're going to be able to start for the July-August timeframe get a little bit higher market, pull the cash market with us.
Pearson: The deferred contracts in cattle, they're in some better territory already.
Newsom: Yes, they have and I think that's a good sign. We're seeing the strength starting to build out there so I think this is certainly implying that we're going to have stronger cash markets as we get into the next quarter, certainly into the fall.
Pearson: Your take on hogs?
Newsom: Hogs have really been needing something, they've been needing anything to start to give them some support. We all knew for a long time it was going to have to come from the cash market and there's been some signs here recently that that floor, that bottom may finally, finally have been established. Futures have been a little bit slow in reacting but even there we're starting to see some buying interest, we saw it this week, follow it through here on another couple of weeks and hopefully we can start to push this market higher working those two things in tandem.
Pearson: So, we're going to see hopefully things improve a little bit and obviously they're getting a break now on the feed side at least for livestock.
Newsom: I think that's a big part of it because we've seen corn coming down. Now, soybean meal tried to break early but had a strong rally. The demand for soybean meal remains very strong. It's going to be difficult to break that market unless soybeans really start to come down as is their seasonal tendency. But yes, the corn market, feed corn certainly has come down quite a ways.
Pearson: Would you tell a producer to buy cash?
Newsom: I would sit back and let the corn market continue to come down, buy as needed, wait to lock in longer.
Pearson: Darin Newsom, that's going to wrap it up, appreciate you being with us for this week on Market to Market. Now, if you'd like more information from Darin on where these markets may be headed visit the Market Plus page, it's right there at our Web site, you'll also find streaming video of our program and you can download audio podcasts of our Market Analysis and Market Plus segments absolutely free at our Web site. Of course, join us again next week when we'll examine the profits and pitfalls of urban sprawl. Until then, thanks for watching, I'm Mark Pearson. Have a great week.
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