EPA Proposes Changes to Clean Water Act
According to the Commerce Department, retail sales rose in August to a seasonally adjusted 2.7 percent in the largest month-over-month gain in three-and-a-half years.
Much of the increase was attributed to the "Cash for Clunkers" program which drove a 10.6 percent increase in auto sales.
Meanwhile, higher energy prices fueled a 1.7 percent spike in wholesale prices in August. But the Consumer Price Index rose less than one-half of one percent revealing inflation -- at least at the retail level -- is virtually non-existent.
And construction of new homes rose by 1.5 percent last month to an annual rate of 598,000 units. While that's their best showing since November, housing starts remain nearly 75 percent below their peak in 2006.
First-time homebuyers have until the end of November to take advantage of a federal tax credit of up to $8,000. A smaller credit of up to $1,500 also is available for homeowners who install products increasing energy efficiency.
Homeowners might be wise to make the improvements.
Pending legislation to reduce carbon emissions is expected to boost energy costs. And this week, the EPA announced it's considering new regulations for power utilities to make sure efforts to protect the air don't foul the nation's waterways.
Though EPA officials say the Clean Air Act has done much to clean the air people breathe while reducing acid rain and respiratory illnesses the Clean Water Act has not kept pace. Much of the pollution reduction technology at coal-fired electric generating stations utilizes water to clean smoke-stack gas. The water, when improperly managed, can end up in rivers, lakes, and streams. EPA plans to tighten allowable levels of heavy metals like selenium, mercury and lead after conducting a multi-year study.
Despite the move by EPA, the environmental coalition is still planning to pursue its lawsuit.
The EPA also released new application limits on three pesticides to keep the chemicals out of waterways in the western United States. Used mainly to control pests in fruit, vegetable, and other crops the chemicals were found by the U.S. Geological Survey to interfere with salmon feeding and breeding. The new rules limit the use of the products within 100 to 1,000 feet of riparian areas depending upon the size of the waterway.
And the Obama Administration has submitted a new strategy on how to protect those salmon. The plan calls for, among other things, climate-change monitoring and the possibility of hydro-electric dam removal. Environmentalists call the plan a revamp of an old Bush proposal that has already been rejected. Business leaders are concerned that removing hydro-electric dams would reduce the number of power plants they feel produce cheap power.
Remembering the Father of the Green Revolution
Dr. Norman Borlaug is believed to have saved more than a billion lives by developing high-yielding strains of drought and disease-resistant wheat.
During the 1960s, the hybrids played a pivotal role in preventing massive famine in the third world... and Borlaug came to be known as the "Father of the Green Revolution" -- the period with the greatest increase in food production in history.
Borlaug was awarded the Nobel Peace Prize in 1970 and to this day, he is the only person from the agricultural community ever to do so.
Producer Andrew Batt examined the life and legacy of Norman Borlaug and files this report.
Few young people grow up dreaming they will someday save one billion lives. Norman Borlaug was no different…the Iowa farm boy certainly never imagined a life full of seemingly insurmountable challenges would later become triumphs leading him to the world’s utmost honors.Yet, when the highly esteemed Dr. Norman E. Borlaug passed away last Saturday at the age of 95, the world-renowned agriculturist left a legacy few could have possibly imagined nearly one century ago.
The son of Norwegian immigrants was born and raised in Cresco, Iowa, studied at the University of Minnesota and later sent by the Rockefeller Foundation to rural Mexico in the 1940’s. A youthful Borlaug soon discovered a starving public toiling over an agricultural wasteland devoid of healthy crops.
Dr. Norman Borlaug (1994): “I never thought I could accomplish anything. When we got to Mexico…so much poverty and they had no technology. No machinery.”
Borlaug tediously collected thousands of strains of wheat…crossbreeding them to develop disease-resistant crops with ever-increasing productivity. The results were astounding…a wheat crop that resisted rust and brought record yields.
Borlaug: “After 13 years of struggle, Mexico became self-sufficient in wheat production.”
Ambassador Ken Quinn: “This man fed the world. No question. The work later in India and Pakistan was groundbreaking.”
Borlaug’s Mexico triumph led to efforts in both India and Pakistan – two developing countries on the verge of widespread food shortages.
Borlaug: “This is a plant that is too tall for irrigation in India and Pakistan but under the dry or semi-dry conditions of Afghanistan it’s probably what you want.”
As alarmists claimed a looming “population explosion” would lead to widespread famine in both third-world countries, Borlaug insisted the two developing nations could be saved by science.
Borlaug: “The peasant farmer has always been accused of being conservative. He’s not conservative. You show him a chance of making an improvement in his way of life. And if the difference between his former method and the results he gets with the new is great enough he’ll go ahead with it.”
Borlaug’s vision was paved through decades of hard work and an earnestness to help those in need. Commonly known as the father of the “Green Revolution,” Borlaug was praised by peasants and Presidents alike.
President Jimmy Carter (1994): "It's his practical willingness, even eagerness, to getting his shoes dusty or muddy and to stand side by side with farmers with sweat dripping off his face and with his shirt soaked...he feels at home there."
Borlaug’s commitment to fighting world hunger and specifically the successes in India and Pakistan, were honored with the 1970 Nobel Peace Prize.
Dr. Norman E. Borlaug Nobel Peace Prize ceremony, 1970: "There can be no permanent progress in the battle against hunger until the agencies that fight for increased food production and those that fight for population control unite in a common effort."
Borlaug’s Nobel Peace Prize was a triumph for global agriculturalists and the former Iowa farm boy appealed to the Nobel Foundation to establish a recurring prize for agriculture – a request the Foundation declined. His vision to honor individuals making significant contributions to of food security gave birth to the World Food Prize in 1986.
Now awarded in Des Moines, Iowa, the World Food Prize has honored scientists and politicians alike – each driven with the goal of eradicating world hunger.
Despite resounding praise, Borlaug’s work was not without its critics. Opponents of chemical fertilizers and genetically modified crops have accused Dr. Borlaug of harming the environment and tarnishing his legacy of feeding the world’s hungriest people. Borlaug gave scant credence to those accusations and showed little patience for world leaders slow to embrace technological advances.
Borlaug (1994): "Your hands are untied now. You didn't have the technology before. Now it’s there. Now all you have to do is implement this and things will change and sometimes they have changed. That is to me the biggest satisfaction."
Numerous international food programs brought a glimmer to Borlaug’s eyes…especially global fellowships for students through the World Food Prize Youth Institute.
Ken Quinn: “Dr. Borlaug would always call and say ‘How are my students doing?’ He was immensely hopeful for the next generation of scientists”
Dr. Norman Borlaug: “Will Rogers said it best when he said we are all ignorant – just ignorant about different things. So I tell my students to keep reaching for that star, study across discipline and be happy.”
Questioner: “Are you happy?”
Dr. Norman Borlaug: “Yes. I think so.”
In December 2006, Borlaug’s life work was honored with yet another award – the Congressional Gold Medal. The lifelong friend to agriculture joined Dr. Martin Luther King Jr., Nelson Mandela, Mother Theresa, and Holocaust survivor Elie Wiesel as the only individuals to receive the Nobel Prize, the Presidential Medal of Freedom, and the Congressional Gold Medal.
President George W. Bush: "The most fitting tribute we can offer this good man is to renew his life's work and lead a second Green Revolution to feed the world and today we pledge to do so. Dr. Borlaug, I thank you for your service. I thank you for living a life of great purpose and achievement. I thank you for proving to Americans that what we learned as children is still true that one human being can change the world."
Dr. Norman Borlaug: "Thank you for your years of support, especially in the 60s ... when everyone said it couldn't be done. Look at it now. Thank you."
Ambassador Ken Quinn, World Food Prize: "How many people would have been dead? How many lives would have been cut short? How many children would have starved to death? How many mothers wouldn't be able to have the nourishment to take care of their kids? If it wasn't for Dr. Norman Borlaug.”
This October’s World Food Prize will mark the award’s first ceremony since its world-renowned founder’s passing. But the President of the World Food Prize Foundation pledges to keep Borlaug’s memory prominent for many years to come.
Ambassador Ken Quinn, World Food Prize: “He physically is not going to be there. I'm going to turn and the chair he always sat in is going to be empty. It's going to remain empty as long as I have anything to say about it."
President Jimmy Carter: "His influence will be vivid and helpful long after he and I both are no longer going out into the fields. I hate to use the expression Borlaugs of the future because there are not going to be anymore Borlaugs. But the agricultural scientists of the future, the agricultural leaders of the future will come out of the environment which Dr. Borlaug has lived and created for them.”
Dr. Norman Borlaug (1970 Nobel Peace Prize): “Alfred Nobel’s dream of nations working together will come true. Let us pledge in our wills today we shall make it so. I pledge to follow this truth for as long as I shall live.”
Market Analysis: Tomm Pfitzenmaier, market analyst
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For the week, December wheat lost 10 cents, while the nearby corn contract moved more than 17 cents lower.
With harvest looming on the horizon, a big move upward on Tuesday supported soybean prices. For the week, November soybeans gained more than 38 cents and the nearby meal contract was up nearly $10 per ton.
In the softs, cotton flirted with $65 as the December contract posted a weekly gain of nearly $3.50.
In the dairy market, Class III Milk futures continued their upward trend with a gain of 46 cents.
In livestock, October cattle lost $1.67. Nearby feeders were off $2.30. And the October lean hog contract was down $1.67.
In other markets of interest, the Euro gained nearly 130 basis points against the dollar. Crude oil gain $2.75 per barrel. Comex Gold traded at record highs this week before closing with a weekly gain of nearly $4.00. And the Goldman Sachs Commodity Index gained 15 points to close at 469-even.
Pfitzenmaier: Thanks, Mark.
Pearson: Seems like so much of what we talk about on a weekly basis pales in comparison to the tremendous work that Dr. Norman Borlaug did. Of course, a lot of his developments are leading to the feeding of this huge population that we have and that we have going forward for the next 30 years. So, we're grateful for those contributions. A lot of producers are sitting here thinking what is this crop going to be like? What are we going to see down the road? What is happening with prices? Quite a week in the commodity markets. The forecast came out showing a frost maybe 22 degrees down in the heart of the Corn Belt.
Pfitzenmaier: Yes, and then the market reacts for a day and part of a night and that was kind of the end of it as that forecast changed and the frost forecast moves sort of back up into Canada the market collapsed again. So, it was a perfect example of what happens with frost markets. They usually last one to three days, this was on the short end of that, and we had a reaction and then it fell apart.
Pearson: We're going to get into all of those markets individually here in a moment. Let's talk about some of the other things that are happening out there. Gold up over $1000, still moving higher, what are your thoughts on that?
Pfitzenmaier: Well, a lot of this is related to perceptions of coming inflation and the weakness in the dollar are tied to those two things and it's got the gold bugs all excited, they're out buying it in anticipation of future inflation. It seems to me your classic definition of inflation is too many dollars chasing too few goods, at this point in time we have no dollars chasing no goods so we're going to have to wait a while for all that to sort of kick in and I think probably they're getting a little ahead of themselves right now but we have had a positive reaction, there's no question the dollar is weaker, made new lows almost every day since the first of September, had a little pop back up this week but it's been on quite a down trend here and that is supportive to crude, supportive to grains, supportive to gold, that's kind of what is driving it.
Pearson: Let's get down to specifics here. Let's talk first about the wheat market. USDA's crop report wasn't really negative for corn or soybeans to a great extent, pretty much everybody expected it but the wheat number in that crop report was pretty negative, there's a lot of product out there.
Pfitzenmaier: Yes, there's a lot of product out there, we're not selling it and that's not a good combination and continuously you're going to keep pressure on the wheat market. We saw again this week -- that's in the face of what I just said was the weaker dollar is supporting it and that's not even helping it. So, the wheat market is struggling and is going to continue to struggle.
Pearson: Producer strategies, just put it away and wait?
Pfitzenmaier: We're down at low enough levels probably. You get in that $4.35 to $4.50 area I would guess you're going to find some support there and that's not that far away from where we're at now. So, I guess you've probably missed the boat pretty much and you might as well sit on it and see if you can't get some kind of a recovery into the winter.
Pearson: Let's talk about the corn market, again, a big impact this week with that frost forecast which was pretty much fully discounted by the next day but it had a huge impact in this market. Was that a selling opportunity for people who maybe haven't done anything?
Pfitzenmaier: Absolutely, they always are, those frost rallies are always selling opportunities and I think there was a fair number of people who took advantage of it. But we're quickly approaching the point where frost is a non-topic here. Most of the forecasts aren't showing anything until after the first of October and you get to that point and there's pockets in northern Illinois and here and there that are going to definitely be hurt but the vast majority of the corn is probably going to be okay.
Pearson: So, once we have that behind us really all we have to look forward to is kind of chew through the harvest. What is your advice at this stage if you haven’t' sold everything? Some are going to have more bushels than they thought they were going to have this fall which is not a bad problem to have in a lot of ways. But put it away and wait for the market to pull it back up?
Pfitzenmaier: Well, if you don't have storage I guess the sooner you can get it sold, if you're forced to sort of sell it off the combine the sooner you can get that done the better off you're going to be because there's still probably 30, maybe 40 cents down yet in the corn and you might as well have that to somebody else. If you're intent on storing I think you can wait for recovery rally, at the very least go out and sell that carry, there's 31, 32 cent carryout to July, that's a pretty good way to help pay for your bin and cover your costs of storing. So, I think you have to look at strategies like that.
Pearson: Again, it depends on whose forecast you look at for carryout and national average yield and all those things and what total production is going to look like but should a person who is concerned, should they be looking at December '10 as a place to make some sales at this point?
Pfitzenmaier: We talk about that a lot, I talk about it to people all day long and it's hard for me to get excited about it. They have discounted that far enough that I don't think for most people it works all that great so why get in a big hurry. The corn to bean ratio favors bean planting next year, if ethanol with this mandate gets bumped up a little bit, the livestock industry recovers somewhat I guess I'm not that inclined to get to be aggressively selling 2010 corn. Beans are a different story but on corn I'm not that excited about it.
Pearson: So basically let's get it harvested, if you have to sell it off the combine do you want to reown it if you do make those sales?
Pfitzenmaier: Not particularly. We've concentrated on the supply side but demand is not all that great. The USDA keeps upping the feed usage number. How can you do that when we're liquidating livestock? We'll talk about livestock later but that industry has got problems. That's not going to help. Ethanol probably USDA is about right on. Exports I don't know. We talk and talk and talk about the positive things that come from a weaker dollar but the dollar has been weaker for the last year or two and exports on cattle and hogs have been abysmal. So, if you go into a store and somebody is having a sale and you don't have any money to buy anything it doesn't mean anything to you. So, I don't know that exports are going to benefit like everybody is sort of expecting that they will.
Pearson: So, maybe we've seen the big move in corn?
Pfitzenmaier: We may have.
Pearson: Let's talk about soybeans. A little bit different scenario there. What is your take on soybeans at this point, Tomm?
Pfitzenmaier: Soybean prices are good right now, there's selling opportunities here. We were firmer this week in soybeans and cotton because of all the wet weather halting harvest down in the southern areas, that is part of the reason you saw beans be a little more supported this week than you saw corn was or maybe it didn't drop as much after that frost thing went out of the market. I think beans up here at $9.50 or so on the January contract are a sale. I think there is $1.00 to $1.50 down side potential after we get the harvest done. You've got the potential for a huge acreage increase down in South America, their production could be up 28 to 32 million metric tons next year. They have got an El Nino coming which is going to benefit their crop production so we've got good bean prices that I think need to be taken advantage of in '09 and '10. I think there's strategies you can use, we're down closer to $9 in '10 and that kind of hurts some people's enthusiasm but if you get any recovery rally there in the $9.40 plus area I think you have to start looking at making some sales for '10.
Pearson: You mentioned cotton, the strengthening down there with harvest issues with the weather.
Pfitzenmaier: Yes, and you're banging up against, like they referred to earlier in the program, you're banging up against resistance up in that $65 area on cotton, you need to make some sales up there because that's probably not going to hang together all that well.
Pearson: Let's talk about livestock, the fed cattle market going forward in the calf market, some pressure this week on the board. A small cow herd, everyone is scratching their head when is this thing going to start to turn?
Pfitzenmaier: Well, you've got to have some profitability back in the thing before that feeder market is going to come back. Now, that was kind of the disappointing thing this week with corn ending up on a fairly weak note and you still didn't have all that great a price for feeder cattle which tells me the guys that are feeding cattle are backing away and not excited about paying up finally. So, that thing could sag a little more as far as I'm concerned until profitability comes back in here.
Pearson: What is your outlook for 2010 for cattle?
Pfitzenmaier: For fat cattle, they're going to struggle, we need to get demand back. The economy has probably turned, the recession is probably over with but we've got to get people back working and back eating meat again and you have to get those exports going again. Until that happens the beef market is going to struggle here. We could see cattle sag down into the low 80s here, we're not that far away from there but I think there's still some more down side potential as we pump up, cattle are heavy, hogs are heavy, we're having more tonnage and we're just not moving it very well.
Pearson: Let's talk about hogs, there was a lot of talk we had started to see some liquidation in the sow herd recently. Has that been the case?
Pfitzenmaier: Only slightly, we're just now beginning and everybody has been thinking since February that at some point you're going to start to see liquidation and I think apparently the capital is coming in and helping support these guys and everybody is hoping that they are going to be the last man standing to take advantage of things when they turn around and that day of reckoning is quickly coming upon us. I had thought that by the end of '09 we'd pretty much have this washed out and be starting to rebuild but the way they have resisted liquidating sows, the way we continue to have higher weights, more tonnage, lack of demand, demand has been good don't get me wrong, we've been selling the heck out of it, but it's still not keeping up with the production we've had. Until that sort of gets worked through here the hog market is going to struggle. We had a nice little $10 rally, I think we could go back and retest those lows before we're done here.
Pearson: Flipping everything over now, on the feed side, obviously we're coming into a big harvest here, typically we'd see a big harvest low, we start buying some corn?
Pfitzenmaier: Absolutely, I think this is going to be a classic year in that regard. Sometime in that probably October timeframe you need to pay attention, get your meal locked in and definitely get some corn locked in because these are going to be some lows that probably we're going to have for a while.
Pearson: So, the livestock front still a challenge ahead.
Pfitzenmaier: Yes, I think so at least into early '10.
Pearson: Tomm Pfitzenmaier, as usual, we appreciate your insight. That is going to wrap up this edition of Market to Market. If you'd like more information from Tomm on where these markets just may be headed it's always a good idea to visit the Market Plus page at our Market to Market Web site. You'll find streaming video of our program and you can download audio podcasts of our Market Analysis and our bonus segment Market Plus absolutely free right at our Market to Market Web site. Join us again next week when we'll examine a cooperative effort to provide health insurance to rural Americans. Until then, thanks for watching. I'm Mark Pearson. Have a great week.
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