READ the NAFB’s National Ag News for Wednesday, September 7th…

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Ag Economy Barometer Lower in August

After months of improved farmer sentiment toward the Ag economy, things took a different turn in the August Purdue/CME Group Ag Economy Barometer. Declining commodity prices weighed heaviest on farmer outlooks in August. The barometer index fell to 95 in the month of August, down from 112 in July. That represents the largest one month decline since November 2015. Farmer sentiment about the current economic climate and their future expectations both fell in August, which was a sharp contrast from July, when farmers were postitive about their long-term prospects despite current economic concerns. Farmer outlooks were more positive after a spring rally in commodity prices, but near ideal growing conditions in most corn and soybean areas pushed prices sharply lower. The USDA forecast of another record harvest led to worries of increasing carryover stocks in both crops and the lowest corn prices in a decade. Tighter cash flow margins are causing farmers to lower their anticipated production costs. The survey also asked producers about anticipated 2017 input costs, and despite the low commodity prices, most producers actually anticipate their input costs increasing in 2017.


Monsanto Confirms New Proposal from Bayer

Both Bayer and Monsanto have confirmed that negotiations for the sale of Monsanto are continuing and a new offer has been made. Bayer has updated its proposal to a non-binding $127.50 per share in cash. Monsanto says it will continue its conversations with Bayer as it evaluates the offer, but it’s also considering other offers from other companies as well. A Dow Jones report said Monsanto did acknowledge the new offer and called current negotiations “constructive.” Bayer executives said the pharmaceutical giant’s potential acquisition of Monsanto would create a global firm with a deep selection of pesticides and help farmers be better positioned to grow food for an increasing worldwide population. Bayer has faced some concern from some shareholders who are worried that the potential Monsanto acquisition would take it’s focus away from its pharmacology work. Monsanto’s board unanimously rejected Bayer’s previous offer of $125 dollars share back in July as too low. While the current offer is $127.50 per share, analysts have said $135 to $140 dollars a share might be more realistic.


FSA Reprograms $185 million for Loans

The Farm Service Agency has reprogrammed $185 million dollars to help address a backlog of direct and guaranteed farm operating loan applications. The Hagstrom Report says that’s enough to service approximately 1,900 applications, but many farm groups say more money is needed. The funds were approved by Congress and will allow the agency to cover up to 30 percent of its expected shortfall before the new fiscal year begins on October 1. The FSA said some of its customers are experiencing challenges due to the current economic climate and have been waiting 60 days for approval. This funding is expected to help those applicants who have been waiting the longest to obtain credit or restructure loans. National Farmers Union President Roger Johnson said, “The reprogramming is greatly appreciated, but this will only alleviate approximately 30 percent of FSA’s budget shortfall. NFU has been in constant contact with members of Congress and the U.S. Department of Agriculture regarding the need for additional credit.” Johson said additional steps will be needed to address the backlog of applicants for FSA loans.


New York Moving Toward E-15 Approval

The New York Department of Agriculture and Markets is proposing a new rule to allow the sale of E-15.  The new rule would apply to all vehicles model year 2001 and newer. New York state consumes over 5.5 billion gallons of gasoline annually, making it the fourth largest gasoline market in the country. POET and Growth Energy have worked extensively over the last two years to get this regulation updated. “This proposal marks a major victory for consumers,” said Growth Energy CEO Emily Skor. “Consumers will gain access to cleaner and more affordable choices at the pump. E-15 is already used on the race track in Watkins Glen (NY) and if this proposal is approved, drivers will get to experience the same economic, environmental, and performance-enhancing benefits.” Skor points out that E-15 is already approved for nearly 90 percent of the cars on the road today. By increasing biofuel blends, she said America can reduce its dependence on foreign oil, cut carbon emissions, and reduce the need for toxic additives to gasoline that are associated with cancer, contaminated water, and smog.


China Plans to Dramatically Increase Soybean Acres

China is the world’s top soybean importer, but they’re taking steps to reverse that trend. Agri Money dot Com reports that China plans to massively increase its oilseed production over the next four years. The move should reverse a trend that’s seen soybean imports rise dramatically, even as excess corn continues to stockpile in government inventories. China’s top policy body announced a goal of increasing soybean production 56 percent from 2014 to 2020. The shift toward planting more soybeans comes on the heels of policies designed to shrink the number of acres planted to corn. The goal is to rebalance commodity supplies in the domestic market.  China’s demand for soybeans is driven by the largest chicken and pork sector in the world, while rising world incomes are driving the demand for meat higher as well. The country has an oversupply of corn stocks as production has grown every year but one since 2005. The overproduction was stimulated by government subsidies that kept Chinese corn prices above the prices in the rest of the world.


Soybean Use Exceeded USDA Expectations

The 2015-2016 marketing year for corn and soybeans ended on August 31. The question is how much of each commodity was used during the marketing year? The USDA Quarterly Grain Stocks report on September 30 will reveal the total consumption of the two commodities and the amount of grain stocks available for use in the 2016-2017 marketing year. University of Illinois Ag Economist Darrell Good said available data is showing soybean consumption exceeding the 3.889 billion bushel forecast in the August World Agricultural Supply and Demand Estimates Report. Good reports that soybean consumption has exceeded the USDA’s August projection due to a strong pace of overseas exports. USDA predicted marketing year exports at 1.88 billion bushels.  Good says based on current data, he’s predicting export use at 1.939 billion bushels, which is 59 million bushels more than what was projected and 97 million bushels more than the record-setting exports of the previous year.

SOURCE: NAFB News Service