US Farm Incomes To Hit Lowest Point Since 2009

(Dow Jones) -- U.S. farm incomes will hit their lowest point this year since 2009, the U.S. Department of Agriculture said Tuesday, deepening pain in the Farm Belt amid a multiyear downdraft in commodity prices.

The forecast reflects a painful slump in the U.S. agricultural economy driven by bumper corn and soybean harvests, swelling grain inventories and tougher export competition. Farmers are expecting record corn and soybean harvests again this fall, potentially pushing prices for the nation's two most common crops down even further.

As a result, the USDA said, net farm income will drop 11.5% to $71.5 billion this year, from $80.7 billion in 2015. That would be the third straight annual pay cut for farmers since incomes soared to record levels in 2013.

Futures prices for corn have already fallen about 13% this year, and prices for the grain are trading at seven-year lows. Wheat prices have tumbled more than 21% in 2016 to trade at 10-year lows thanks to excess supplies. Domestic growers are also battling a strong U.S. dollar that has encouraged some of their foreign customers to find grain elsewhere.

Clement weather this summer has fueled expectations that U.S. farmers will harvest the largest U.S. corn and soybean crops in history, with the USDA earlier this month projecting that the nation's corn crop will reach about 15.2 billion bushels, and the soybean crop about 4.1 billion bushels.

Still, Tuesday's forecast was an improvement from the USDA's February estimate for net farm income of $54.8 billion this year, due mainly to signs that growers are cutting expenses -- particularly on farm equipment -- to ride out the multiyear slump. The USDA on Tuesday estimated farmers would spend $27.7 billion less this year than predicted in February.

Earlier this month, tractor supplier Deere & Co. said it would curb output of its hallmark green tractors and combines as lower crop prices chip away at farmers' appetite for new machinery.

The USDA estimated production expenses for farmers would decline $10.1 billion, or 2.8%, thanks to reduced spending on livestock and poultry-related purchases as well as on fertilizer and fuel. The declines mark the second straight year of lower farm expenses after spending peaked in 2014, and the second-biggest year-over-year reduction since 2009.

The agency also said government payments to farmers would increase nearly 25% this year to $13.5 billion, due in large part to insurance-like programs that pay growers when prices or revenues fall steeply.

Egypt Receives Just One Offer In Latest Wheat Tender

(Dow Jones) -- Egypt received just one offer in its latest wheat tender after reverting to a controversial zero-tolerance approach to the potentially harmful ergot fungus, traders said Wednesday.

One trading firm, Venus International, offered to sell one shipment of Ukrainian wheat at $179.32 a metric ton in the tender announced on Tuesday by Egypt's General Authority for Supply Commodities, or GASC, traders said.

In the previous tender on Aug. 26, GASC bought three shipments of Russian wheat, totaling 180,000 tons, after attracting offers from seven trading firms.

The rejection of several cargos of grain for containing traces of ergot earlier this year led many trading firms to boycott the tenders held by GASC, which buys grain and other essential commodities on behalf of the world's largest wheat-importing country.

California Sends Farm Worker Overtime Bill to Governor

California would become the first state in the nation to require farmers to pay overtime to farm workers under a bill that the legislature approved on Monday. Reuters said the bill now goes to Democratic Governor Jerry Brown for his approval. The bill was passed along party lines and would phase in the overtime pay rules between 2019-2022. Smaller farms that employ 25 workers or less would have three additional years to phase in the overtime pay. If the bill is signed into law, California would become the first state to require farmers to pay overtime to laborers that work more than eight hours a day or 40 hours per week. California is the largest agricultural producer in the country and opponents of the bill said it will do damage to the agricultural economy. They predict that farmers would be forced to cut work weeks to 40 hours to avoid paying time and a half or double time wages to their laborers. Supporters say the issue is about fairness because farm laborers are one of the few hourly wage groups that aren’t paid overtime. The Governor hasn’t said if he will sign the bill. 

Trump Giving Major Immigration Speech in Arizona

Republican presidential candidate Donald Trump says he will give a major speech on immigration Wednesday (today) in Arizona. The Hagstrom Report says Trump appears to be softening his stance against illegal immigration, wavering somewhat on his proposal to deport all people in the U.S. without the right papers. The softening stance on illegal immigration appears to have pleased some supporters but angered others. At a weekend campaign stop in Des Moines, Iowa, Trump said Democratic Presidential candidate Hillary Clinton would conduct a “war on farmers.” Trump said his alternative to Clinton’s policies would be to reduce regulations across the board. He also recently restated his support for the Renewable Fuels Standard, a position that Clinton has taken as well. A New York Times article said Republicans in Iowa appear to be more united in support of Trump than in other traditionally Republican states.

Low Wheat Price Support Needed in New Farm Bill

Wheat prices have tumbled to the lowest point they’ve been at in the last decade, thanks in part to a successful harvest in the U.S. and strong harvest prospects overseas. Low wheat prices are causing a dilemma for elevator operators that have too much wheat and not enough storage. The ag economy struggles are exacerbated by threats to cut vital programs in the upcoming Farm Bill debate. The National Association of Wheat Growers is conducting a Farm Bill survey of its producers to find out which policies are the most vital to their success. The overall goal is to help develop a successful and functional Farm Bill in 2018. The Wheat Growers say it’s more important than ever that producer priorities are listened to as agriculture works toward an effective Farm Bill, which maintains the safety net as well as other vital programs. The National Association of Wheat Growers wants to encourage producers to fill out the survey and contribute to the successful planning of the next Farm Bill. The survey is on the Wheat Grower’s website at wheat world dot org.

Japan to Resume Importing U.S. Wheat

Earlier this month, Japan halted imports of western white and feed wheat from the pacific coast ports after unapproved genetically modified crops were found in an unplanted field in Washington state.  Imports from the U.S. Gulf Coast were allowed to continue. Pro Farmer’s First Thing Today reports that Japan announced this week they’ll resume purchases of western white wheat this Thursday.  Imports were allowed to resume after Japan established a system to test for GMO grains and keep contaminated supplies from getting into the country.  Japan’s ag ministry also announced they’ll resume purchases of U.S. feed wheat too.  Japan is the second biggest buyer of wheat in Asia. The U.S. is the largest wheat supplier to Japan, representing roughly 60 percent of Japan’s wheat imports.

US Beef Exports Expected To Rise In 2017

U.S. beef exports are expected to rise in 2017 as expanding production and declining wholesale prices, along with a pickup in global economic growth, drive greater demand, USDA said.

U.S. beef production is recovering after plummeting last year to the lowest level since 1993, slowing exports, USDA said. The strong dollar also dampened foreign demand for U.S. beef.

U.S. beef exports are forecast to rise to $5.3 billion in fiscal 2017, up from $5.2 billion in 2016. This is well above the value of 2003 exports and -- at a projected 800 million tons -- marginally below on volume.

U.S. beef shipments dropped after the discovery of a case of bovine spongiform encephalopathy (BSE) in December 2003. Exports had regained pre-BSE volumes by 2011 and reached record values by 2014.

In May 2013, the World Organization for Animal Health (OIE) upgraded the United States to negligible risk status for BSE. USDA has worked to eliminate BSE-related restrictions in 16 countries and gained additional market access for U.S. beef in Colombia, Costa Rica, Egypt, Guatemala, Iraq, Lebanon, Macau, New Zealand, Peru, Philippines, Saint Lucia, Singapore, South Africa, Ukraine, Vietnam and Brazil.

The agency said it continues to work to remove all remaining BSE-related restrictions on beef to overseas markets such as China, Taiwan, Korea, Japan and Australia.

US On Track To Post Longest Stretch Of Falling Food Prices In More Than 50 Years

(Dow Jones) -- The U.S. is on track this year to post the longest stretch of falling food prices in more than 50 years, a streak that is cheering U.S. shoppers at the checkout line but putting a financial strain on farmers, grocery stores and restaurants.

The trend is being fueled by an excess supply of dairy products, meat, grains and other staples and less demand for many of those same products from China and elsewhere due to the strong dollar. Lower energy costs for transportation and refrigeration also are contributing to sagging food prices, say economists.

"Deflation is a godsend for consumers," said Bob Goldin, vice chairman of food consultancy Technomic Inc.

Nationwide, the price of a gallon of whole milk on average was off 11% to $3.06 in July over a year ago; the price of a dozen large eggs fell 40% to $1.55 in the same period.

Those great bargains at the grocery store are spreading pain across the Farm Belt. Farmers and ranchers are getting less money for raw milk, cheese and cattle, forcing them to slash spending. Tractor suppliers like Deere & Co. are cutting production due to the farming slump.

Economists and food analysts say the supermarket price declines could last at least through year-end. The drop comes as weaker demand from China is broadly resetting commodities prices in everything from cheese to iron ore. The current food-price slump soon could beat the nine months of year-to-year declines experienced in 2009 and 2010 -- the longest stretch since 1960, according to the Bureau of Labor Statistics.

The price of food at home is down 1.6% on a seasonally unadjusted basis in the 12 months ended in July, according to the BLS.

Stephanie Hegre, a 46-year-old nanny in Thousand Oaks, Calif., has noticed an about 10% drop in her weekly food shopping bill. Her 16-year-old twin daughters go through a lot of milk, meat and bread, adding up to an average weekly grocery bill of about $200.

"I feel it has dropped by $20 a week which, when you're on a budget, is noticeable," said Ms. Hegre, who has been stockpiling staples in case prices increase. "We freeze bread and buy two weeks' worth of bacon at a time," she said.

The glut is so severe in some places that dairy farmers have been dumping millions of pounds of excess milk onto fields. The U.S. Department of Agriculture just bought $20 million worth of cheese in response to hard-hit dairy farmers' requests. The cheese was given to food banks and others through USDA nutrition-assistance programs.

Ben Moore, a sixth-generation farmer who grows corn and soybeans on some 5,000 acres in Indiana and Ohio, said 2016 is shaping up to be his least profitable year in 20 years. Facing weak crop prices, he is making do with his current tractors and combines rather than upgrading his equipment, and is pushing for lower prices on pesticides, seeds and fertilizer.

On Friday, corn futures, which peaked in 2012 at more than $8 a bushel, closed at $3.16 a bushel, a seven-year low, on the Chicago Board of Trade.

"We cannot withstand $4 a bushel corn," Mr. Moore said.

Farmers who had built a nest egg after a robust period earlier this decade now have exhausted those reserves, said Karl Setzer, a market analyst for MaxYield Cooperative, a West Bend, Iowa, grain marketer. "The guys that are heavily leveraged and those who don't have a plan of action will suffer for a while."

Falling costs are taking a toll on many food retailers. Grocery stores already have thin profit margins and deflation tends to reduce the value of their inventory. To stay competitive, they must cut prices on existing goods before lower-priced stables land on the loading dock, and have fewer opportunities to raise prices.

At least six national food retailers, including Costco Wholesale Corp. and Whole Foods Market Inc., and four of the five largest publicly traded food distributors, including Sysco Corp. and US Foods Holding Corp., have reported that their margins suffered in the last quarter because of food deflation, the first time analysts can recall so many grocers singling out deflation as a big problem.

"Deflation is kind of the elephant in the room," Dennis Eidson, chief executive of SpartanNash Co., which operates 160 grocery stores from Colorado to Ohio and distributes food to 1,900 retailers across the country, told investors this month.

Grocers such as Supervalu Inc. and Smart & Final Stores Inc. have been hit particularly hard. Even when the volume of products increased, profits have decreased in some categories because the price declines were so steep. Smart & Final's division catering to restaurants sold 42% more packages of eggs during its most recent quarter but recorded a 34% drop in egg revenue because of the lower prices, Chief Executive David Hirz told investors.

Not all food has gotten cheaper. Total fruits and vegetables prices were up 1.4% in July from a year earlier in part due to the drought in California.

Wal-Mart Stores Inc., the nation's largest food retailer, has been one of the few to benefit from the falling prices, partly because it attracted more customers after slashing prices earlier this year. It reported strong second-quarter results this month despite "ongoing deflationary impacts in food."

Normally, falling food prices would be good for restaurants, but with higher labor costs, they have had to raise menu prices, resulting in lost business. The second quarter was the industry's weakest since the first quarter of 2010.

Three restaurant types posted declining sales in the quarter -- fast casual, casual dining and family dining -- and sales growth in every other restaurant category slowed except pizza, according to equity researcher William Blair & Co.

It has gotten a lot cheaper "to get beef at your local butcher and go home and grill," said Todd Penegor, chief executive of burger chain Wendy's Co., which reported second-quarter sales below expectations.

Cattle Industry Looking At Prices 5-15% Lower Than Current Into Fall

By the time this year's fall-born calves are being weaned, the cattle industry will be looking at prices 5% to 15% lower than they are today -- think somewhere between $100 per cwt to $120 per cwt for 500-pound feeders. It's the continuation of a downward trend not nearly as remarkable as the 40% to 50% drop producers endured during the last two years, but one that will likely plod along at a more predictable pace for the foreseeable future.

When it comes to markets, predictability at any level is a good thing. Oklahoma State University's Derrell Peel hinted the new reality will bring with it additional opportunity for those willing to take on more risk in the cattle business.

"You know, we had fun in 2014 and even in 2013 as we watched prices run up. But that is not the long-term reality of the cattle industry. We are back to doing business," the marketing specialist said.

He pointed out as revenue is under more pressure, producers will put renewed focus on managing the cost side of their businesses.

"That's not to say we ignore markets, or we don't look for opportunities to forward-contract. But you'll never know if something is an opportunity if you don't know your costs in the first place," Peel cautioned.

Costs include debt, and how much a producer is leveraged will be key to his ability to take on additional risk. The bottom line will not be as much market driven in the months to come as management driven.

"If a producer is not carrying a lot of debt and can afford to take more risks on the chance that prices will go up, that's one approach. Someone who is heavily leveraged, however, could be in a situation where one bad decision risks the viability of the operation. It's just really important to know how much risk you can stand to take as we move forward," Peel stresses.

RETAINED OWNERSHIP

One of those risks producers may soon be considering is retained ownership. On the positive side, Peel expects corn prices to stay level moving forward. While this would limit the value of stocker-based gains, it could make retained ownership at the feedlot level more attractive.

"Going to the feedlot with retained ownership is starting to look more possible than it has for most of the last couple years," Peel said. "It certainly has more potential in the next two to three years to be a good strategy for some producers."

Texas A&M Extension economist David Anderson agrees, adding: "When calf prices were at record highs, the advantage was in selling calves, pure and simple. But as they become cheaper, you always have to look at retained ownership as an option. Does it become a smart management decision again? I don't think we are there just yet, but I don't think it's too far off when we talk about strategies to maximize returns."

Retaining calves through the backgrounding, or stocking, level could be the riskier move in today's market, Peel explained. He said the value of putting on additional weight at the stocker level will be driven by the cost of gain in feedlots. Potential backgrounders will need to ask themselves if their grass is more valuable in producing another calf or in putting gains on stockers.

Anderson agreed the wild card going forward will be feed costs. "If feed costs are higher, then calf prices are going to be lower. Understand, we are in a market where the overall trend is for lower prices. You have to manage around that. If you have a lot of grass and cheap feed, you may be able to keep calves longer. It's just going to be an operation-to-operation call."

VALUE-ADDED CALVES

One area of cost always debated as calf prices slip is preconditioning. Texas' Anderson said a lower market usually means value-added programs will be more sought after by buyers.

"When we were looking at the fewest beef cattle in 60 years, anything alive and walking brought high prices. As numbers build, buyers can be more choosey. Those producers who have done more to differentiate their product will tend to see rewards," he said. That means a program including weaning, vaccinations and castration should be worth the expense.

FORWARD CONTRACTS

Of the last seven years, five have favored forward-contracting calves over spot-pricing them. Looking toward the end of 2016 and into 2017, Peel believes the industry is once again looking at a scenario where forward contracts are likely to bring the higher overall average price. He adds, however, it may be challenging to find buyers in an environment where everyone assumes prices will continue to fall. For that reason, he likes the idea of splitting calves into more than one marketing group to grab unexpected bumps in the market.

"I think we'll see little run-ups in the price. All else being equal, forward-contracting is potentially more attractive. But it's not a slam dunk by any means," he said.

Peel encourages producers to consider a forward contract on part of their calf crops looking to cover production costs. This, then, becomes a risk-management plan. On the remaining calves, look for spot-pricing opportunities throughout the year, always making sure that holding back calves isn't costing you more than you could make selling them.

CULL COW PRICES

Fall calvers who will cull cows in the spring can expect prices for that segment to be stable. Peel said this part of the market traditionally has the most dramatic seasonal price pattern of any, a trend he expects to continue.

"The fall calvers will make culling decisions in May and June, which is the seasonal peak for cull prices, typically. If cows are thin, you can turn them out on grass for 30 days to put on some additional pounds, if that is to your advantage. Typically, those prices will stay strong through the summer," he said.

GROW OR STAY

As prices trend down, will producers continue to hold back replacements and expand their herds? Peel said every operation is different, but he's reminding cattlemen that they ultimately are selling grass. It's time to ask where the grass has its greatest value in today's market.

"Is my grass worth the most if I'm selling it through a weaned calf or putting weight on stockers? Maybe it's worth more for hay production or even a hunting lease. When I'm asked if a producer should still be expanding their cattle operation, the real question is do they have the capacity to produce more, and how can they allocate that grass resource to receive the highest return in the market. The answers change over time and by circumstance."

Texas' Anderson said whether continued herd growth is in the best interest of an individual operation should be part of an overall management plan tied to production costs and future plans.

THE COST QUESTION

In light of high prices, it can be easy to focus on the income side. Costs, however, have been just a few cents behind, meaning profit levels may not have been as remarkable as it seems.

David Lalman, Oklahoma State University animal scientist, said cost per cwt of calves produced has accelerated at a rate of $5 annually, calf prices at an average rate of $5.25.

Those figures come from recent SPA (Standard Performance Analysis) data for the Southern Great Plains (Texas, Oklahoma and New Mexico). The numbers also reflected the cost to maintain beef cows increased at a rate of $22.45 per cow each year. Figures go back to 1991.

Anderson stressed, however, that averages don't tell the whole story. Variation in profitability among operations can be wide and dramatically impact profits.

A 2015 study looking at 79 Kansas cow/calf operations, for example, found one-third of the ranches averaged $415.03 more net return per cow than the lower one-third.

"When comparing the characteristics driving differences in profitability between the high-third and the low-third groups, they found that 67.8% of this difference was due to lower cost of production in the high-profit group," Lalman reported. The remaining 32.2% difference was due to gross income per cow.

The higher profitability herds had slightly higher average weaning rates, weaning weights and calf sale prices.

Texas A&M's Anderson said it's not unusual to hear that cow/calf producers don't know their true cost of production. He believes, however, that most have a big-picture number in mind, though it may not always include everything it should.

"I do think many times we underestimate our true costs of production. This is particularly true when we don't put in a cost for depreciation of equipment," Anderson said. "It's easy to forget something when you're not writing a check for it all the time. Ultimately, though, it's fair to say those producers who know their true costs do a better job of making management and marketing decisions."

He added having a profitable operation is about more than the economics; it's about knowing who you are and what you do well.

"Once you know that, then you know what your market is. Everyone has a different strength. It has to do with where they are based and their management style," Anderson said. "And there is nothing wrong with that. You have to make that decision, and then you can set your goals and improve. Target things that make sense for your operation.

"At the end of the day, cow/calf people get paid the most for having calves to sell. So whatever technology or ranch improvements may give you more calves to sell, those are probably good places to look to improve, because that's most likely where your greatest return is going to come from."

White House Seeks Commodity Credit Corporation Funding Replenishment

The USDA entity tasked with helping farmers weather unstable agricultural commodity prices will run out of money soon, unless the government moves up its reimbursement as part of an end-of-year funding bill.

Contained in a list of requested additions, known as anomalies, to a continuing resolution (CR) to fund the government into Fiscal year 2017, the Obama administration said that the Commodity Credit Corporation (CCC) would exceed its $30 billion borrowing limit during the period of the CR. The fund is always replenished by an annual reimbursement.

The request calls for the CR to accelerate reimbursement of the CCC so that it can continue to operate past Oct. 1, 2016, when the majority of its first-quarter Fiscal Year 2017 payments are due. The CCC would typically receive reimbursement after it submits its financial statement for reimbursement in early November.

"Without the anomaly, CCC would have to stop making payments as soon as the borrowing ceiling is reached, posing a serious risk for the farmers and ranchers supported by these programs," the document said.

Washington Insider: Warnings of Food Safety Problems

There has been a lot of heated discussion recently about labeling foods for a range of purposes generally unrelated to food safety, including the continuing battle over food technology. However, Food Safety News (FSN) is reporting this week on a different kind of labeling that is falling short, and that is the unpleasant duty by the industry to warn customers about food safety recalls.

The FSN article reports on a new survey of 32 leading grocery chains about their in-store recall notification practices. The survey was by the Center for Science in the Public Interest, a Washington, D.C.-based nonprofit group formed in 1971. It finds policies of several companies so "woefully inadequate" that consumers may or may not hear about even serious food safety problems.

The center was concerned that some important features of the Food Safety Modernization Act (FSMA), the sweeping reform of food safety laws that was signed into law in 2011 are not being fully implemented. The law included a number of provisions that shifted the focus of food safety efforts from responses to contamination to efforts to prevent it. Notifying consumers when products have been found to be contaminated is an important part of the industry's new responsibilities, CSPI notes.

Some stores routinely post recall notices where shoppers are likely to see them. Yet others, such as Pittsburgh, PA-based Giant Eagle, do not. These including Whole Foods and Aldi who "would not reveal their recall notification policies," CSPI says, and this risks serious food safety loopholes.

While most chains responding to the CSPI survey said they post product recall notices in their stores, "the placement varies." Some post them at store entrances, some at cash registers and some where the recalled product had been removed from store shelves. CSPI suggests these rules need to be tightened.

The new food safety law requires FDA to put together recall notices based on producer information and expects grocery chains of 15 stores or larger to keep the notices in easily visible locations for two weeks. However, CSPI says that FDA has yet to adopt any such notification system even though the FSMA was signed into law in 2011.

In a letter sent Wednesday to FDA Deputy Commissioner Stephen Ostroff, CSPI's senior staff attorney, David Plunkett, wrote that FDA has so far only conducted one public hearing and issued an advanced notice of proposed rulemaking about the recall notification process. "We surveyed the leading chains for the report and found that most already post notices in the store. The practice, however, is not universal, demonstrating that voluntary actions, while laudable, cannot replace mandatory rules," Plunkett told Ostroff in the letter.

CSPI noted that they had also asked retailers if they use data collected by loyalty cards or other programs to directly notify consumers who have purchased recalled foods. The top three, which are Walmart, Kroger and Costco, all said that they do directly notify consumers. Others, such as Publix, H-E-B and Whole Foods, don't have loyalty cards or frequent shopper programs that collect data. Food Lion, Cub Foods and Winn-Dixie, which indicated that they do collect such data, didn't disclose whether they use it to notify consumers about recalls, CSPI reported.

CSPI recommended that consumers watch for recall notices in supermarkets and safely dispose of, or return, recalled products, and that consumers should make sure that stores loyalty programs have accurate contact information on file.

Given the amount of interest consumer advocates claim in consumers' "right to know" about food contents, it is possible that the CSPI report will become a best seller and that firms that do not make serious efforts to inform consumers of recalls will be punished. It is particularly surprising that retailers with prominent "healthy food" profiles would be slow to inform consumers of severe potential health threats.

Still, CSPI is right that FDA should be much more active on this issue and press the industry to insure that consumers are fully warned when such threats occur. Certainly, an effective food safety system is in the interest of producers nationwide, and FDA's response to this concern should be watched carefully, Washington Insider believes.

EU Downplaying TTIP Failure Comments

The European Union is downplaying comments from Germany’s economy minister over the weekend who said the Transatlantic Trade and Investment Partnership talks had "de facto failed.” Germany is the EU’s biggest economy, and despite the comments, a spokesperson for the European Commission said “the ball is still rolling,” according to Reuters. The comments come after three years of negotiations failed to resolve multiple differences, including over food and environmental safety. The European Commission says it is “ready to finalize the deal by the end of the year, but not at the expense of Europe's safety, health, social and data protection standards.” EU trade ministers will discuss the trade agreement when they next meet late next month.

10 Percent of Farmland to Change Ownership

New data from the U.S. Department of Agriculture shows 10 percent of all farmland will be transferred to new ownership by 2019. USDA says farmland owners plan to transfer 93 million acres by 2019. Landowners anticipate selling 3.8 percent of all farmland, with 2.3 percent planned to be sold to non-relatives. A larger share of land—6.5 percent—is expected to be transferred through trusts, gifts, and wills. The share of farmland available for purchase by non-relatives from now until 2019 will likely rise above 2.3 percent as some individuals who inherit land may choose to sell it, according to USDA. And, those who inherit land but don't sell may decide to rent the land to farm operators. Data from 2014 shows 39 percent of all farmland was rented and 61 percent was owned by farm operators.

USDA Buying Eggs to Ease Surplus

The U.S. Department of Agriculture will purchase $11.7 million worth of shell eggs and egg products to ease a surplus as farmers and egg processors try to cope with falling prices. USDA says the products will go to various food nutrition assistance programs, and to charitable institutions. The actual dollar amount spent will depend on bid prices received after a formal solicitation, according to Agri-Pulse. The announcement  last week  followed a similar announcement regarding dairy products. Earlier last week, USDA announced the agency would purchase $20 million worth of cheese to help relieve pressure on the dairy industry amid low prices.

Egypt Changes Stance on Ergot, Again

Egypt has reinstated its zero tolerance policy on ergot fungus in wheat shipments, according to Egypt’s agriculture ministry. Pro Farmer reports Egypt announced the reinstated policy over the weekend. In July, Egypt adopted the international standard that allows up to 0.05 percent of ergot in imported wheat shipments, following a risk assessment by the Food and Agriculture Organization that concluded the fungus poses no threat to the country. But a new study commissioned by Egypt’s government claims ergot would pose a threat to the nation’s domestic wheat supply. The move back to a zero tolerance policy on ergot in wheat shipments means fewer suppliers will participate in Egyptian tenders. Earlier this year, Egypt turned away wheat shipments that contained ergot, but met international standards for contamination. Egypt is the world’s biggest buyer of wheat.

Culver’s Says Thanks to Farmers With Corn Mazes

Culver’s restaurants announced the chain has enhanced its ‘Thank You Farmers’ campaign by sponsoring 19 corn mazes across the United States. Culver’s says the program recognizes the hard work and commitment of farmers who produce food to feed the nation. To date, the Thank You Farmers initiative has raised nearly $1 million in support of the National FFA Organization and Foundation, local FFA chapters and a variety of local agriculture organizations. Each maze design includes the ‘Thank You Farmers’ message, and a variety of farm scene elements like cows and tractors. The corn mazes are located across the nation from Arizona to Florida. Find a complete list of the locations online at Culver's dot com (www.Culvers.com).

Human Brain Evolution Not Possible Without Eating Meat, Study Finds

A recent study published in Nature magazine found that human brain evolution would not have been possible without eating meat. The report stated energy saved from less chewing and the calorie-rich, nutritious benefits of meat played a large role in the evolution of the human brain. According to the report, meat requires less force to chew per calorie than the generally tough plant foods that were available to early humans. The National Pork Producers Council says another report, published in an academic journal, found that a vegan diet uses a far less sustainable agricultural land base than omnivorous diets. The report says meat production can utilize pasture land and crop land that vegetables and fruits are unable to use. While a vegan diet is less land-intensive, NPPC says reducing the amount of meat products does not necessarily free more land for cultivation.

Senate Won’t Take Up TPP This Year

Republican Senate Majority Leader Mitch McConnell of Kentucky appeared to shut the door on the Senate taking up the Trans-Pacific Partnership Bill this year. McConnell said the current agreement has some serious flaws and will not be acted upon this year. He did say while the agreement won’t pass in its current form, it could pass as early as next year with some changes when the new administration takes over. However, Republican Presidential Candidate Donald Trump and Democratic Presidential Candidate Hillary Clinton both have come out against the deal. President Obama has pledged to push for the trade deal during his remaining time in office. He even went so far as to send a draft agreement to Congress but it seems to have lost momentum on Capitol Hill. McConnell had already said the agreement wouldn’t get a vote, and Speaker of the House Paul Ryan said the bill doesn’t have enough votes to pass the House.

Chile to Send TPP Agreement to Its Congress

The government of Chile plans to send the Trans-Pacific Partnership agreement to its Congress for approval by the end of this year. The 12-nation agreement aims to liberalize trade business in 40 percent of the world’s economy. However, the agreement is struggling in the U.S. as both major-party presidential candidates have spoken out against the deal. Criticism of the deal by unions in some of the country’s member states has been fierce. Opponents have accused the negotiators of not being transparent enough. Groups protesting TPP have joined with groups that are pushing for radical reform in the education and pension systems. The Chilean President said the agreement will benefit the country while it also has protections built in for some of the country’s more sensitive areas. Chile already has bilateral agreements with other members of TPP but this would deepen its links to those countries.

Co-ops and Ag Retailers Face Economic Challenges

Farm supply co-ops and other ag retailers are seeing their accounts receivable balances on the rise and are facing challenges as a result. A new report out from Cobank says retailers are having to adjust to tougher financial conditions because of the current ag commodity cycle. This is a direct result of low commodity prices that have knocked down farm incomes and tightened up on-farm cash flows. The ag industry has seen a downturn in fertilizer prices as well as mergers in the seed and fertilizer industries. “The drop in farm income over the past three season is the biggest we’ve seen since the Great Depression,” said Tyler Ehmke, a Cobank senior economist. He said accounts receivable balances at ag retailers across the country have jumped 11 percent this year and will likely go higher as farmers continue to struggle with their cash flow balances. Fertilizers usually account for half the revenue stream for ag retailers, but those prices are falling as well, making it difficult to maintain positive margins.

USDA Quarterly Export Forecast Shows Higher Numbers

The U.S. Department of Agriculture released a revised export forecast for the remainder of 2016 as well as a forecast for 2017. Both reports show U.S. ag export have begun to rally and should be able to keep up with the record-setting pace that first began in 2009. Total exports for the fiscal year 2017 are projected to be $133 billion, which is $6 billion higher than the previous forecast and would be the sixth highest total on record. The U.S. ag trade surplus is projected to rise to $19.5 billion, which is 40% higher than 2016. Commodities like U.S. oilseeds, horticultural goods, cotton, livestock, dairy, and poultry are expected to lead the way to higher export numbers. Global beef demand is also projected to strengthen as well. China is expected to overtake Canada as the top destination for American agricultural products. USDA also revised the fiscal year 2016 export numbers to $127 billion, $2.5 billion higher than the previous forecast.

Cattle Futures Down Sharply

Cattle futures were down 2.9% this week, finishing with a $2.12 loss in the lead month on Friday. Feeder futures also posted heavy losses with nearby September losing 2.8% from a week earlier.  Cash cattle trade this week was sharply lower, with some scattered Friday reports at only $111 and $179 in the north. The weekly average will be higher, but the market is clearly panicking in the face of rising supplies and slow exports. Weekly US beef production was an estimated 494 million pounds, up 0.4% from last week and still running 6.9% larger than the same week in 2015. Beef production YTD is now up 4.6%, while export sales are up only marginally.  US export sales of beef for the week ending August 18 were only 8,030 MT, down about 43.2% from the prior week. That is not a pace that will clean up the supply.  

Wheat prices were down 11/4% on the week in CHI, with KC and MPLS down 7.4% and 7.8% respectively. There was a final bearish push on Friday with daily losses in the front months of 18 cents for CBT wheat, 16 cents for KC and 5 cents for MPLS futures. The spread between front month MPLS and front month CBT futures expanded another 5 cents Friday/Friday to $1.09 per bushel.  MPLS initially lost ground on the Canadian production report, but Chicago was sharply lower on Friday to widen the spread back out. StatsCanada published its updated estimates for the 2016 wheat crop, calling for the second largest national production figure ever.  Their projected national average yield was 48.9 bushels per acre, up 14.25% from 2015. IGC raised their world estimate by 8 MMT. US weekly wheat export sales were slightly larger than the prior 4 week average. 

China's Zika Rules Raise Fears for U.S. Exporters

(Dow Jones) -- China's recent move to add the U.S. to a list of Zika-infected countries is worrying U.S. exporters, who fear they will be required to fumigate all containers destined for Chinese ports. The cost to fumigate a container ranges from between $100 and $200.

Exporters who ship everything from agricultural products and chemicals to engine parts say they fear that conflicting information from Chinese custom officials about the new requirements could result in delays, added cost and lost business.

Since creating the list earlier this year, China has required that all containers be fumigated either at the country of origin with documentation or upon arrival in China. But exporters say some Chinese ports may accept the fumigation documents from abroad and others may not. Exporters from Brazil said they found that it depends on the local customs officers.

It is unclear whether China-bound containers should be fumigated in the U.S. or in China and if the rules will be applied across the board, said Peter Friedmann, executive director of the Agriculture Transportation Coalition, a Washington-based trade body. U.S. exporters are also concerned that fumigation by the Chinese could damage cargo.

Small and medium exporters say they stand to be hurt the most from any supply-chain disruptions.

"Oregon doesn't have the Zika problem, but we still have to fumigate and it's a significant expense," said Scott Harer, vice president of Oregon-based Columbia Seeds LLC, noting that seeds have low margins.

Columbia Seeds ships about 100 containers to China a year. It can't pass on the cost to customers because it has existing contracts, said Mr. Harer, who is also president of the Oregon Seed Association.

If exporters fumigate in China, he is concerned authorities there won't treat the boxes in a timely matter. But if they fumigate in the U.S., he said, "We fear that won't be acceptable in China and then costs pile up very quickly."

Australian Cattle Prices Now at Unsustainable Levels

(Dow Jones) -- Cattle prices continued to rise through July and the general feeling now is that "levels are unsustainable and should start to decline as some heavier cattle flows into the market in spring," says Rabobank in a note. "These prices have been supported by feedlot and producer buying activity with processors -- facing lower global prices and a competitive retail environment -- being reluctant buyers." It says that many producers are purchasing cattle to utilize pasture and fodder crops after autumn and winter rain and the challenge will be that, when they are ready to sell them, the price per kilo won't have fallen so much that they won't make money.

USDA Food Safety And Inspection Service Sets Comment Deadline For Negative Claims On Bioengineered Ingredients

USDA’s Food Safety and Inspection Service (FSIS) has set a deadline of Oct. 24, 2016, for submitting comments on its program for approving negative claims for meat, poultry and egg products that do not contain bioengineered ingredients, or that are derived from livestock that do not consume bioengineered feed, and that contain the terms "genetically modified organism" or "GMO," the agency said in a news release.

The agency outlined the program in an earlier Federal Register notification.

The agency also has posted compliance guidelines for such claims. Previously, FSIS did not allow the use of the terms “genetically modified organism” or “GMO” in negative claims unless the name of a third-party certifying organization contained these terms — for example, “Non-GMO Project.”

However, recent legislation was enacted requiring the secretary of agriculture to develop and implement a mandatory national bioengineered food disclosure standard within two years. In the wake of such legislation, FSIS is allowing the use of the terms “genetically modified organism” or “GMO” in negative claims provided that the label or labeling is otherwise truthful and not misleading.

FSIS has developed a compliance guide for companies that seek to make label or labeling claims concerning the fact that bioengineered or GM ingredients were not used in a meat, poultry or egg product.

Consistent with past practices, FSIS will continue to allow the use of synonymous terms such as “genetically engineered.” If FSIS has approved an organic claim on the product label, establishments may add an applicable negative claim of the kind discussed in the guidance.

Because FSIS cannot independently verify negative claims for ingredients or feed, the agency has required establishments that make these claims to comply with standards established by a third-party certifying organization. FSIS currently requires that the third-party certifying organization’s standards be publicly available on a website and the label or labeling disclose the website address of the third-party certifying organization.

Federal Ag Spending to Increase Through 2018

Spending on farm programs by the U.S. Department of Agriculture is projected to increase $1 billion this year, according to the Congressional Budget Office. The CBO this week projected spending on farm programs to rise from $13 billion in 2015 to $14 billion in 2016, and then to $19 billion in 2017 and 2018. CBO projects farm program spending to then go back down to $16 billion in 2019 and down again to $15 billion per year until 2026. At the same time, payments under the Supplemental Nutrition Assistance Program, also known as SNAP or food stamps, would decline continually, then rise slightly, presumably due to population growth, according to the Hagstrom Report. CBO did not say why the office projects agriculture spending would go up, but the increase likely stems from payments triggered by low commodity prices.

Farm, Dairy Groups Praise USDA Surplus Cheese Purchases

Agriculture groups and the dairy industry are praising the Agriculture Department’s announcement to reduce surplus cheese stocks in the U.S., a move requested by the American Farm Bureau and others. USDA this week announced it would purchase approximately 11 million pounds of cheese from private inventories and donate the product to food banks and pantries across the nation. The purchase, valued at $20 million, should reduce some downward pressure on dairy markets as dairy producers revenues have dropped 35 percent over the past two years. Farm Bureau President Zippy Duvall says the announcement will “help alleviate the tough realities of the market and keep family farmers in business.” Farm Bureau and the National Milk Producers Federation had asked USDA to spend more than $20 million on the purchases, but USDA cited budget restraints, limiting the purchase amount.USDA Secretrary Tom Vilsack also further extended the signup period for the dairy industry safety net—the Margin Protection Program—through December 16th.

Senate Judiciary Committee To Hold Hearing On State Of Ag Seed And Chemical Industries

(DTN) -- Sen. Chuck Grassley, R-Iowa, chair of the Senate Judiciary Committee, announced Tuesday that his committee would hold a hearing on the current state of the agricultural seed and chemical industries, in light of the number of mergers and acquisitions planned in those industries.

Grassley said the hearing was being planned for late September. Details on a date and whom would be asked to participate were still being worked out, he said.

The announcement follows Monday's news that the Committee on Foreign Investment in the United States, or CFIUS, gave its go-ahead to the proposed purchase of seed and chemical giant Syngenta by China National Chemical Corp., known as ChemChina.

The hearing is needed "because of the importance of seed and chemical industries to agriculture, and to the nation's economy," Grassley said during a call with reporters. Earlier in August, Grassley sent letters to various anti-trust and national security regulators asking that they collaborate "where appropriate" on the broader issues of seed and ag chemical industry changes.

"I've seen press reports indicating that collaboration is indeed happening," Grassley told reporters.

In addition to Syngenta and ChemChina, regulators are considering the merger of DuPont and Dow, and the industry is watching negotiations between Monsanto and Bayer AG.

CFIUS investigations focus on how a change in ownership would affect U.S. national security. In addition to the issue of food production as a security concern, Syngenta has several research or production facilities near U.S. military bases or other sensitive locations.

Grassley, among those concerned about such national security issues, said the details of CFIUS' approval of the sale remain confidential, and he did not know if those locations had been addressed.

In response to a DTN question about CFIUS details, a Syngenta spokesperson said any "mitigation measures are not material to Syngenta's businesses."

The focus, by Grassley and others in the U.S. watching the industry actions, now turns to anti-trust issues, something chief on farmer minds. Grassley told reporters that in his travels around Iowa this month, farmers had raised concerns about the consolidation.

"The concern is enough for me to have a hearing on the issue, but it's not an overreaction, it's not a massive voice against it," Grassley said of those farmer comments.

Peterson Lauds USDA Plans to Purchase Surplus Cheese

House Agriculture Committee Ranking Member Collin Peterson, D-Minn., praised USDA's announcement of plans to purchase surplus cheese for donation to food banks and extend the deadline for farmers to enroll in the dairy Margin Protection Program (MPP).

The announcement follows letters from Peterson urging USDA to extend the MPP enrollment date and use their purchasing authority to address instability in the dairy industry.

Statement from Peterson:

"Today's announcement is welcome news. The combination of declining milk prices and record high cheese stocks has left many dairy farmers struggling. Through this cheese purchase, both farmers and those using USDA nutrition programs, will get some relief. Additionally, dairy farmers will have more time to enroll in MPP and protect themselves against potential future volatility.

"MPP is an improvement over the past dairy safety net but as we look ahead to the next farm bill, I will be working closely with my colleagues and dairy farmers across the country to improve upon the program."

USDA announced they would purchase 11 million pounds of cheese from private inventories, valued at $20 million, to assist food banks and pantries across the country. Plus, USDA said it would monitor the situation and take additional actions, if needed, later this fall.

USDA also announced it is extending the deadline for dairy producers to enroll in the Margin Protection Program (MPP) for Dairy to Dec. 16, 2016, from the previous deadline of Sept. 30.

New Poll Shows Support for TPP

A New poll from Morning Consult shows the majority of voters favor trade. The poll shows 57 percent of registered voters have a favorable view of “fair trade,” and 50 percent said they would be more likely to support TPP if they knew it would provide new markets overseas for U.S. farm products. The American Farm Bureau Federation says the results are something “all candidates should keep in mind as a congressional vote on the Trans-Pacific Partnership agreement comes closer to reality.” Farm Bureau President Zippy Duvall says “the more people know, the more they will support this vitally important agreement.” Other findings include: 52 percent of voters say they would be more likely to support TPP if they knew the deal would increase annual income in the U.S. by $131 billion, and 69 percent of voters support trade policies that will open new markets for U.S. products and U.S. farmers while less than one in 10, or eight percent, oppose.

BPI Dropping Some from “Pink Slime’ Lawsuit

Beef Products Inc. is not dropping its lawsuit filed in 2012 against ABC and journalists Diane Sawyer and Jim Avila, but it has removed a number of defendants from the complaint. The lawsuit was filed over a series of reports BPI alleges were inaccurate and cost the company a significant chunk of its sales of lean finely textured beef. Politico reports BPI dropped ABC’s news division, ABC correspondent David Kerley, two former USDA microbiologists and a former BPI quality control manager who acted as a whistleblower against the company. The lawsuit seeks more than $1.2 billion in damages. It charges ABC with making more than 200 false and disparaging statements about BPI’s product, a form of beef trimmings injected with ammonia to fight pathogens, and helping to fortify the nickname "pink slime.” BPI claims ABC’s “disinformation campaign” caused sales of the product to decline from five million pounds a week to less than two million pounds, forcing BPI to close three facilities and let go of more than 700 employees.

USDA Allowing Meat, Egg Products with “No GMO” Label

The Department of Agriculture will begin allowing meat, poultry and egg producers to use labels such as “contains no GMO” or “derived from beef fed no GMO feed.” The guidance announced last week takes effect immediately and gives food makers information and examples on how to label products as non-GMO, known as a negative claim, according to Reuters. USDA says the nationwide, voluntary GMO labeling law approved by Congress and signed by the President set rules for labeling products as GMO-free, allowing for the change. Previously, USDA only allowed the use of the phrases "GMO" and "genetically modified organism" on livestock or poultry labeling. The new law gives USDA two years to create and finalize rules implementing the law.

Bayer, Monsanto Merger Talks Advancing

Merger talks between Monsanto and Bayer AG are advancing after a series of meetings in which the companies have addresses issues including the purchase price and a termination fee, according to Bloomberg News. Sources close to the talks say a deal could be reached in the next two weeks. Bayer CEO Werner Baumann and Monsanto CEO Hugh Grant have held "constructive meetings" in recent weeks, but Bloomberg said its sources caution that negotiations "could still fall apart or be delayed. Any potential merger between the two would likely face fierce antitrust approval. Any Bayer-Monsanto deal would follow two other billion-dollar acquisitions in the agricultural industry, ChemChina’s $43 billion takeover of Syngenta AG and Dow Chemical merger with DuPont to create the world’s biggest chemical company. St. Louis, Missouri Based Monsanto rejected Bayer’s previous two attempts to acquire Monsanto.

USDA Cold Storage Report Shows Largest Combined Meat In Freezers Since 2002

USDA’s latest Cold Storage report shows the largest combined volume of beef, pork, chicken and turkey in freezers since 2002, according tothe Daily Livestock Report.

At the end of July the combined volume of beef, pork, chicken and turkey was 2.419 billion pounds, 2.8 percent higher than a year ago and 9.7 percent higher than the five-year average.

USDA reported total frozen poultry supplies on July 31, 2016, were up 2 percent from the previous month and up 7 percent from a year ago. Total stocks of chicken were up 1 percent from the previous month and up 7 percent from last year. Total pounds of turkey in freezers were up 5 percent from last month and up 7 percent from July 31, 2015.

Total red meat supplies in freezers were up 3 percent from the previous month but down 2 percent from last year. Total pounds of beef in freezers were up 3 percent from the previous month and up 2 percent from last year. Frozen pork supplies were up 2 percent from the previous month but down 5 percent from last year. Stocks of pork bellies were down 20 percent from last month but up 114 percent from last year.

The DLR analysts noted that beef supplies are increasing at a time of year they typically decline. It also noted the inventory of chicken wings in cold storage at 92.7 million pounds is 58 percent higher than last year and 36.4 percent higher than the five year average.

Environmental Groups Hamper Endangered Species Conservation

WASHINGTON (August 23, 2016) – Today, the Center for Biological Diversity along with other radical environmental groups threatened to sue the Department of Interior and Fish and Wildlife Service to force action on 417 proposed listings under the Endangered Species Act, all stemming from a massive lawsuit settlement brokered behind closed doors and without stakeholders at the table. Ethan Lane, Executive Director of the Public Lands Council and National Cattlemen’s Beef Association Federal Lands, said the behavior of these groups has hampered species recovery by placing arbitrary listing-decision deadlines that leave no time for sound research and science-based decisions. “This is precisely why the Endangered Species Act is broken,” said Lane. “Groups like the Center for Biological Diversity are attempting to force their agenda on FWS through litigation abuse. Substantive ESA reform is needed now to allow FWS the autonomy necessary to prioritize species conservation according to need, rather than political agenda.” During the nearly 40 years since the ESA was passed, the Act has a recovery rate of less than two percent and has over 2,000 domestic species listed. “Attention should be placed on creating real recovery goals and delisting species when they are no longer considered endangered, rather than overwhelming the agency with paperwork,” said Lane.

American Meat Consumption Jumps 5%

According to a recent report from Rabobank, meat consumption by Americans jumped by 5 percent in 2015 alone — faster than any other year over the past four decades. That’s not all: Rabobank expects per-person meat consumption to reach levels not seen since the turn of the millennium.

Last year, the average American ate 193 pounds of a combination of red meat and poultry annually, and report author Will Sawyer, executive director of animal protein research, wrote that protein production will grow 2.5 percent annually through 2018 – down from 3 percent in 2015 – with beef being the largest contributor.

Still, Rabobank foresees industry challenges and a struggle to keep up with that growth.

“By the end of this expansion cycle in late 2018, we expect a more challenging profit environment across the U.S. meat industry, providing strategic opportunities for those producers with the capital and foresight to take advantage of them, “ Sawyer wrote.

He also expects further industry consolidation, noting that the chicken sector in particular has seen very favorable profit margins in recent years. “Any producer considering a possible sale or divestiture should move quickly, as the outlook for margins and valuation isn’t moving in their favor,” he wrote. “And it will likely be more than a few years before industry conditions return to current levels.”

The report notes that consumers likely will be the winners of one of the largest increases in protein supply in U.S. history, with plenty of relief in the form of lower meat prices – especially in beef and pork. With feed costs back to 2009 levels, Sawyer argues that meat prices will trend lower.

“One alleviating factor to this rising tide of meat supply is that most of the decade leading up to 2015 was quite weak for U.S. meat consumption. This was primarily driven by high meat prices relative to consumer incomes and, to a lesser extend, changing preferences,” Sawyer added. “However, the rate of industry expansion may very well be too much too fact, as it is unclear as to whether consumers are willing to exceed the historical high point in consumption seen in 2005.”

Vietnam: TPP Not Open for Renegotiation

Trade negotiators representing Vietnam say the Trans-Pacific Partnership trade agreement is not open to renegotiation, pushing back against calls from select U.S. politicians that say the deal needs amended to their liking. Bloomberg reports a Vietnam trade official said the agreement strikes the best possible balance among the interests of the deal’s 12 members. Amid election-year politics, several lawmakers in Washington, D.C. have said they will note vote for TPP. Further, both candidates for President have taken stabs against the trade deal, putting approval in jeopardy. The Obama Administration is expected to send a bill that would authorize the trade agreement to Congress following the November elections.

Senator Says TPP Will be a ‘Challenge’

One U.S. Senate Agriculture Committee member is not optimistic the Trans-Pacific Partnership will pass Congress. Senate Democrat Heidi Heitkamp of North Dakota is a proponent of trade, but says in regards to TPP “I think it’s going to be a challenge.” Her comments come despite a plan by the Obama Administration to send the agreement to Congress soon. North Dakota farmers stand to benefit from the trade agreement through agricultural exports. However, Politico reports as a result of the campaign-influenced climate in Congress, Heitkamp says: “I don’t hold out a lot of hope that we can get TPP done — but that doesn’t mean that I can’t be wrong.”

U.S. Panel Clears Syngenta Takeover by ChemChina

The U.S. Committee on Foreign Investment in the United States has given its approval to the ChemChina takeover of Syngenta. Reuters says the decision removes significant uncertainty over the takeover of the world's largest pesticides maker after the two companies agreed to a deal in February. However, Syngenta did not disclose whether it had made concessions to secure approval. If completed, the $43 billion agreement would be the largest foreign acquisition ever by a Chinese company. Syngenta reiterated the company expects to finalize the deal by the end of the year. Syngenta says closing the transaction is still subject to "anti-trust review by numerous regulators around the world and other customary closing conditions.”

John Deere Slowing Tractor, Combine Production

Deere & Company said last week production at its Waterloo, Iowa plant will be cut until at least October. The move comes as the world's largest maker of farm equipment waits for used inventory levels to decrease at many of its dealerships. The Des Moines Register reports work hours at the Waterloo tractor manufacturing facility will drop 20 percent during Deere’s fourth quarter, compared with a year ago. Cuts will be even deeper at its Harvester Works plant in East Moline, Illinois, where the combine facility expects production hours to be down about 60 percent. A Deere spokesperson attributed the move to low commodity prices, weakening farm income and elevated used equipment levels. Overall, agricultural equipment sales are expected to be down 15 to 20 percent this year in the United States and Canada, according to the company.