READ the NAFB’s National Ag News for Tuesday, January 16th

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READ the NAFB’s National Ag News for Tuesday, January 16th

Canada Welcomes Possible NAFTA Deadline Extension

President Donald Trump suggested that the deadline for renegotiating the North American Free Trade Agreement might need to be extended. A Reuters report says Canada is agreeable to the idea. Trump told the Wall Street Journal on Thursday that “a lot of things are hard to negotiate” as the Mexican presidential election is coming up in July. Canadian Foreign Minister Chrystia Freeland spoke to reporters during a Cabinet retreat, saying, “I think that was a sensible suggestion from the President. I think all of us are mindful of the Mexican election.” Talks on updating the agreement are scheduled to conclude by the end of March. However, the pace of the talks has slowed due to some major disagreements. Once again, Trump talked about his threat to pull out of the agreement unless major changes take place. However, the president also said he’s “leaving it a little bit flexible” until after the election. Freeland adds, “We have always felt that adding an artificial deadline wasn’t necessary from our standpoint. I thought it was a very constructive proposal from the president.”

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Possible Breakthrough in a Major NAFTA Obstacle

One of the biggest sticking points in the North American Free Trade Agreement has to do with the auto industry. There’s a little more optimism about progress after Canada joined Mexico in indicating there may be room for negotiation in the auto sector. The development comes just one day after markets dipped on Canada’s fear that the odds are rising on President Trump following through on his threat to walk away from the deal. He also suggests that officials are looking for progress during the next round of discussions in Montreal as a way to keep negotiations moving. Two unidentified Canadian government officials told Bloomberg that their country is preparing new proposals related to automobiles at the Montreal negotiations. Mexico has also signaled that there may be room for a breakthrough in discussions on the automobile industry. Canada’s Foreign Minister, Chrystia Freeland, says they’ll bring some new ideas on some of the more contentious U.S. proposals, but she didn’t identify them. The two unidentified officials that spoke with Bloomberg say she’s referring to the auto sector. Freeland also says the three countries are close to agreements on several of the “bread-and-butter” issues in the NAFTA discussions.

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USDA Sending Extra Financial Help to Farmers in Seven States

The U.S. Department of Agriculture will start sending additional money to row crop farmers in 14 counties throughout seven states who are enrolled in the Agriculture Risk Coverage program. The move comes after the USDA reevaluated the program using a different method of determining county yields. Politico says the reevaluation was directed by a provision in the fiscal 2017 government spending measure, which authorized up to $5 million for a pilot project. North Dakota Senator John Hoeven sponsored the pilot program and announced on Thursday that USDA was putting it into place. The pilot program is intended to address farmers’ reports of widespread differences in ARC subsidies from one county to the next, due to the yield data the department uses when calculating payments. USDA uses the data obtained by the National Ag Statistics Service through survey responses. The problem is those survey responses have declined in recent years. When enough farmers in a county don’t respond to the surveys, the department uses data from the Risk Management Agency, and those two sets of data can be very different. The pilot program gives the USDA’s Farm Service Agency state offices a larger role in ensuring accurate yield calculations, which should fix data differences between counties.

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Latest WASDE Report from USDA

 

WHEAT: Projected 2017/18 U.S. wheat ending stocks are raised 29 million bushels on increased supplies and decreased use. Seed use is lowered 4 million bushels on the winter wheat planted area released today in the NASS Winter Wheat and Canola Seedings report. Wheat feed and residual use for 2017/18 is lowered 20 million bushels. Global wheat supplies for 2017/18 are lowered 0.8 million tons on reduced beginning stocks, more than offsetting increased production. World beginning stocks are lowered 2.6 million tons mostly on a large 2016/17 production cut for Australia, reflecting updated Australia Bureau of Statistics data. World production for 2017/18 is raised 1.8 million tons led by a 2.0-million-ton increase for Russia and a 0.8-million-ton increased for Pakistan.

COARSE GRAINS: This month’s 2017/18 U.S. corn outlook is for larger production, increased food, seed, and industrial use (FSI), lower feed and residual use, and greater stocks. Corn production is estimated at 14.604 billion bushels, up 26 million from last month as an increase in yield to a record 176.6 bushels per acre is partially offset by a 0.4-million acre reduction in harvested area. Among the major producing states, yields are estimated to be record high in Illinois, Minnesota, and Ohio. Sorghum production for 2017/18 is estimated 8 million bushels higher as an increase in yield to 72.1 bushels per acre more than offsets a marginal reduction in harvested area. Grain sorghum prices are forecast at $3.15 per bushel, up 5 cents at the midpoint.

Global coarse grain production for 2017/18 is forecast 0.3 million tons higher to 1,324.2 million. This month’s 2017/18 foreign coarse grain outlook is for lower production and consumption and greater trade relative to last month. Barley production is down as a reduction for Russia more than offsets an increase for Argentina.

RICE: U.S. 2017/18 all rice production is 178.2 million cwt, down fractionally from the previous estimate and down 20 percent from last year. The all rice average yield is estimated at 7,507 pounds per acre, up 46 pounds from the prior estimate. Long-grain production is raised to 127.9 million cwt and medium- and short-grain production is lowered to 50.4 million. All rice domestic and residual usage is increased by 5.0 million cwt to 120.0 million on higher-than-expected usage for August-November. Global 2017/18 rice supplies are increased by 1.3 million tons to 622.8 million, primarily on larger crops for the Philippines and Pakistan.

OILSEEDS: U.S. oilseed production for 2017/18 is estimated at 131.3 million tons, down 0.9 million from last month. Smaller soybean, peanut, and cottonseed crops are partly offset by increases for canola and sunflower seed. Soybean production is estimated at 4,392 million bushels, down 33 million on lower yields. Harvested area is estimated at 89.5 million acres, up fractionally from the previous forecast. Soybean meal production is unchanged as the higher crush is offset by a lower extraction rate. Soybean exports are reduced 65 million bushels.

Global oilseed production is projected at 580.1 million tons, up 0.5 million. Soybean production is raised 0.1 million tons to 348.6 million on gains for Brazil and the EU that are partly offset by lower production for Argentina and the United States. Global oilseed trade for 2017/18 is projected at 176.0 million tons, down 0.4 million from last month.

SUGAR: U.S. sugar supply for 2017/18 is increased by 72,353 short tons, raw value (STRV), mainly due to increases in expected cane sugar production partially offset by a decrease in beet sugar production. The ending stocks total for 2017/18 remains at 1.008 million MT, an amount to meet sugar supply requirements of domestic consumption before the next season harvest.

LIVESTOCK, POULTRY, DAIRY:  The estimate of 2017 total red meat and poultry production is reduced from last month. Based on preliminary data, beef and turkey production estimates are lowered, more than offsetting higher pork and broiler production. The egg production estimate is raised modestly on late-2017 production data. For 2018, the total red meat and poultry production forecast is raised as higher expected pork, beef, and WASDE-573-4 broiler production offsets lower turkey production. The 2018 beef production forecast is raised as higher cattle placements in late 2017 are expected to result in higher fed cattle marketings and slaughter in the first half of 2018. Average carcass weights are also expected to be heavier. USDA will release its semi-annual Cattle report on January 31, providing estimates of heifers held for breeding and an insight into the number of feeder cattle available for placement during 2018. The pork production forecast for 2018 is raised. USDA’s Quarterly Hogs and Pigs report estimated the September-November pig crop was 3 percent above 2016 which supports a higher first-half production forecast. The report also indicated producers expect to expand farrowings about 3 percent in the first half of the year which, coupled with continued gains in pigs per litter, supports higher second-half production. Forecast broiler production is raised for 2018 on favorable returns. Turkey production is reduced based on continued weak demand. The egg production forecast is raised slightly.

Beef imports are increased for 2017 on increased shipments from Oceania. No change is made to exports. Pork exports for 2017 are raised reflecting the pace of trade to date but no change is made to pork imports. Broiler imports and exports are raised for 2017, reflecting recent trade data. For 2018, livestock, broiler, and egg trade forecasts remain unchanged from last month.

The milk production estimate for 2017 is reduced on recent data. For 2018, the milk production estimate is reduced on slower anticipated growth in the dairy cow herd combined with continued slow growth in milk per cow.

COTTON: This month’s 2017/18 U.S. cotton forecasts include slightly lower production and ending stocks. Production is reduced 177,000 bales due to small declines in regions outside the Delta. Ending stocks are reduced 100,000 bales, while domestic mill use and exports are unchanged.

Offsetting changes in foreign production and consumption characterize the global 2017/18 cotton forecasts this month. Global production is raised 1.0 million bales as a 1.4-million-bale increase for China is only partly offset by small decreases in India, the United States, and Australia. Global consumption is raised 1.2 million bales largely due to a 1.0-million-bale increase for China. World consumption is forecast to grow at a 5.2 percent annual rate in 2017/18

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Ag Labor Fix Tied to DACA Bill in Congress

A complete overhaul of the American agricultural guest worker program is a major part of a House of Representatives’ plan to fix the immigration status of young people involved in the Deferred Action for Childhood Arrivals Program (DACA). The DACA program is currently tied up in an immigration reform battle on Capitol Hill. A DTN report says Virginia Republican Bob Goodlatte, as well as three other Republicans, introduced the “Securing America’s Future Act.” The bill has several provisions in it, including an end to the green card program and it claims to reduce overall immigration by 25 percent a year. At the same time, the bill increases visas for skilled workers, as well as agricultural workers too. The bill would also scrap the current H-2A program and replace it with a new one that’s called H-2C. It would allow American farmers to bring in 410,000 foreign workers for farm jobs, as well as 40,000 workers for meatpacking jobs. The number of visas will increase each year, which means farmers would be able to bring in 1.3 million foreign workers in farming and related industries.

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Congress Fixing Farm Co-op Tax Change

A provision in the overhaul of the U.S. tax code had some unintended negative side effects on certain agribusinesses across the country. The provision gives producers a chance to cut down on their taxable income if they sell their commodities to agricultural cooperatives. It appears that farmer-owned cooperatives like CHS, Inc., came out ahead of other agribusiness giants like Cargill and Archer Daniels Midland. The Republicans who crafted that part of the tax bill were John Thune of South Dakota and John Hoeven of North Dakota. Both say they were trying to preserve an important provision from the previous tax code and that the outcome for co-ops was not intentional. They’re now working with other lawmakers and officials from the agriculture industry to find a reasonable solution. USDA Undersecretary for Marketing and Regulatory Programs, Greg Ibach (Eye’-baw), says the aim of the Tax Cuts and Jobs Act was to spur economic growth across America, including agriculture. The goal was to preserve the benefits of Section 199A for cooperatives and their patrons. He says the current language picks winners and losers in the ag marketplace, which is not something that should happen.

SOURCE: NAFB News Service

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