EPA Opens Comments for Atrazine Review
According to the Labor Department, U.S. employers trimmed 190,000 positions from their payrolls last month.
The cuts pushed the nation's unemployment rate to a 26-year high of 10.2 percent.
There were some bright spots in this week's employment report. Professional and business services companies added 18,000 jobs. And after losing ground for months, temporary employment grew by nearly 34,000 positions. That's a positive development because employers typically add temporary workers prior to hiring permanent staff.
Meanwhile, many companies are squeezing more production from existing work forces. Productivity, the amount of output per hour worked, jumped 9.5 percent in the third quarter in its sharpest increase in six years.
All told, more than 7.3 million jobs have been lost since the recession began in December of 2007 and a record 5.6 million people have been unemployed for six months or longer. President Obama signed a $24 billion economic stimulus bill into law Friday, extending jobless benefits for the fourth time since the recession began and providing more tax incentives to prospective homebuyers.
Elsewhere in "The Beltway," officials held a special meeting this week to assess whether a popular herbicide poses a threat to the environment.
Jere White, Kansas Grain and Sorghum Producers Association: "What we're not sure, in this case, how we bypassed some of what I'd call a more formal internal review by agency staff and instead have gone to a peer review by the New York Times."
Those presenting comments included pesticide manufacturers, farm advocacy organizations, and environmental groups.
Dr. Jennifer Sass, Senior Scientist in the Health Program, Natural Resources Defense Council: “There's no statute of limitations on the truth. And in this case, I think that the science has been increasing in making a stronger argument supporting the concern that atrazine in our waterways, both in drinking water and in open surface water systems is a concern for wildlife."
Alex Avery, Director of Research, Hudson Institute: "The witch-hunt against atrazine has been perpetrated for more than a decade by the Natural Resources Defense Council and they will not take no for an answer. And they realize they don't need sound science, or any good scientific evidence, to justify a ban on atrazine. All they know, they know full well that, based on the alar scandal, that all they need is innuendo. All they need is innuendo and enough concocted public fear."
In use for more than 50 years, atrazine is widely considered a boon to agriculture and is used on 60 percent of the U.S. corn crop. Proponents credit the herbicide with effective weed control which helps to increase yields and reduce soil erosion when used as part of a no-till protocol.
Despite published EPA studies concluding the widely used farm chemical does not cause cancer in humans or harm amphibians, the agency says more study is warranted.
Gary Marshall, CEO, Missouri Corn Growers Association: " When is enough "enough." We think the science is there we've seen it. We've looked at some of the science that's out there and we don't believe that it tells us that we need to be looking, again, at more science."
Even though atrazine, technically, has been given a clean bill of health by both U.S. and European Union governmental agencies the chemical is still under what EPA calls "a special review." The investigation began in 1994 and is expected to be concluded sometime next year.
According to EPA, no regulatory decisions are expected on atrazine until December of next year.
Record Harvest Predicted
Transporting more than a million carloads of farm commodities in 2007, BNSF is the nation's largest rail carrier of agricultural products. Shipments of corn, wheat and soybeans, account for about 20 percent of the railway's total revenue. And with harvest now in full swing, that number will grow substantially in the days ahead.
The Agriculture Department will release its much-anticipated crop production estimates later this month, but that didn't keep private firms from issuing a few predictions of their own this week.
Prior to USDA’s release of its November production estimates, the analytical firms Allendale and Informa Economics released their own predictions.
Allendale pegs this year’s soybean harvest at nearly 3.3 billion bushels with an average yield of 42.52 bushels per acre.
Informa’s new numbers show a reduction in their October estimate but the company still has this year’s bean harvest higher at right at 3.3 billion bushels yielding 43.5 bushels per acre. If realized the estimates of both firms would be records.
Informa’s also predicts a record corn harvest estimates a record corn harvest of just over 13 billion bushels with an average yield of 164.8 bushels per acre.
Allendale’s numbers are slightly lower for corn production, at 13.034 billion bushels or 164.37 bushels per acre.
USDA will issue its official production estimates November 10th.
Missouri National Guardsmen Work to Win Hearts and Minds of Afghani Farmers
Market to Market joined an airlift this week of more than 350 World War II Veterans on a pilgrimage to THEIR memorial in Washington D.C. and we're proud to bring you their story on next week's show.
These days though, American troops are battling the Taliban and Al Qaeda in Afghanistan. But U.S. troops don't always use conventional weapons.
Nearly two years ago, a group of National Guardsmen from Missouri beat their swords into plowshares in hopes of winning the hearts and minds of Afghan farmers. And, as David Miller explains, the soldiers deployed “agricultural weapons of mass PRODUCTION” in Afghanistan.
On a cold January day in 2008, this group of Missouri National Guard soldiers is participating in a training exercise at Camp Atterbury in Indiana. Their convoy is attacked by other U.S. soldiers acting as insurgents, and their unit suffers mock casualties.The exercise is designed to prepare the men for a mission deep into the rugged mountains of eastern Afghanistan. Though heavily armed with state-of- the- art weapons, their mission isn’t to intercept the Taliban or find Osama Bin Laden. Instead, they will help Afghani farmers increase their crop yields, improve the health of their animals and add value to their raw agricultural goods.
Master Sgt. Larry Godsey, Marshall, Missouri: "...they made the announcement they were looking for people with an ag background to do this particular mission, to go over to Afghanistan and, and at the time, we thought help farmers, teach them how to farm. And because of my educational background I thought that would be an interesting mission to go on. I kind of, I kind of kept quiet about it. You know you never want to volunteer to go anywhere."
At the end of January, 2008, Master Sergeant Godsey, a 20-year veteran of the Missouri National Guard, left his wife and three daughters for a one-year deployment in Afghanistan. He joined nearly 50 other volunteers who made up the 935th Agri-business Development Team or ADT. Deployed to Nangarhar Province, the team would be less than 50 miles from the Pakistani border and Osama bin Laden's suspected stronghold.
The soldiers at the core of the unit were chosen because of their agricultural backgrounds. The military capitalized on Godsey's rank, education and current job as an economist at the University of Missouri Center for Agroforestry, and put him in charge of assigning projects to various team members.
The idea for the ADT was conceived by retired Missouri National Guard General Charles Kruse, now president of the Missouri Farm Bureau, Missouri National Guard General King Sidwell, and Director of the Army National Guard General Clyde Vaughn.
Lt. Gen. Clyde Vaughn, Army National Guard: "I can't tell you how proud we are of you. This is a huge priority. You stand right on the cusp of making a huge difference in Afghanistan. "
Though there are now Agri-business Development Teams from several states, Missouri's National Guard was the first to be tasked with improving the quality of life for Afghani farmers.
At first, the soldiers thought they would be teaching basic farming techniques but after arriving in Afghanistan things changed.
Master Sgt. Larry Godsey, Marshall, Missouri: "... those farmers had been farming the same way for 2000 years. They, they know how to farm. They're good farmers. ...We thought we were going to be more on the education side. We thought we were going to teach them how to become 20th century or 21st century farmers, but that really wasn't the case. "
The members of the ADT realized local farmers were way beyond the need for basic education and that techniques used on large U. S. farms would be inappropriate for the smaller operations terraced into nearby mountainsides.
Working with local and regional government officials, projects were identified and arrangements made with local contractors to begin construction. Each project was approached with the idea of replicating the job at another location. Funding for the effort came from money set aside to rebuild the war-torn country.
A variety of projects were undertaken including stocking a local veterinary clinic with new equipment, building a slaughter facility for local producers and working out the details for a fish hatchery. Not unlike U.S. farmers trying to capture more of the profits from their labor, the men of the Missouri ADT hoped their work would help break the cycle of Afghanis selling their raw commodities to nearby countries and buying the processed products back at higher prices.
Sergeant Russell Pierce, from Mayview, Missouri, a cattle rancher and row-crop farmer, was placed in charge of the fish hatchery project. After searching the internet for information he began work with the Nangarhar Fish Producers Association.
Sgt. 1st Class Russell Pierce, Mayview, Missouri: "Even when I started that, it's hard to get out of the, you know, 21st century American mindset where you're saying, 'well we need to, you know, get some electronics this and and, ahm we need to computerize that or get aeration pumps'... Their power grid is is very poor; to a point that they don't even count on it."
Some thought was given to upgrading an existing hatchery but it was determined the facility was in a flood plane and a new location had to be found. When the ADT left in late December 2008, negotiations for a new facility just outside of Jalalabad were in progress.
Once in Afghanistan, the ADT considered the knowledge they were imparting might be used to grow more opium poppies, the main ingredient in the illegal drug heroin. But after asking local farmers about the issue they were assured poppy growing was a criminal problem not an agricultural one.
Master Sgt. Larry Godsey, Marshall, Missouri: "With...world wheat prices what they were this past year wheat actually was more profitable than poppy. So that probably helped us I don't know...But I guess you have to look at it in terms of incentives. There's a reason why people grow poppy and, and typically they grow it, number one, either because that's the only alternative they have or, number two, is because they're being forced to grow it.
The focal point of the mission became water management for electrical power generation and irrigation.
To help bring electricity to rural regions of the country the team completely refurbished two hydroelectric dam. The generating plants now supply power to the nearby villages of Sengani and Omarkheyl and to the small grain mills installed at each dam site.
Larry Godsey, Marshall, Missouri: "They don't know who we were and by going into these communities and getting them electricity or getting them a wheat mill or a corn mill or whatever it's you know its winning the hearts and minds and that's what we were trying to do."
The one project Godsey and his team thought might help the most was the installation of check-dams to hold back spring melt water. The water would then be available for irrigation during the heat of the region's sweltering summers when the mercury often passes 130 degrees. Three optimal locations were found high in the nearby mountains.
To reach these sites, the team often would drive several hours and, once the trail became too rough for vehicles, walk several more.
Sgt. 1st Class Russell Pierce, Mayview, Missouri:"...I think there were times that we were in areas that were um definitely not exactly friendly to US Forces but because of who we were and what we were doing and the reputation that we um built quickly among those individuals over there. We got away with a lot of stuff we shouldn't have."
Gratification aside, ADT members are quick to count the cost of their mission against the benefits of their work. Despite the Pentagon's commitment of more than a million dollars Godsey continues to weigh the risks and rewards.
Master Sgt. Larry Godsey, Marshall, Missouri: "I enjoyed the mission, it was dangerous, it was challenging, um, it was frustrating at times, but it was one of those missions where you really felt like you were making an impact. And you're doing something for people and you felt like you're making progress. And so do I want to go back? Yeah, I'd go back. I don't know if I want to go back for another year but I'd go back."
For Market to Market, I'm David Miller.
Market Analysis: Jamey Kohake
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For the week, December wheat lost nearly 3 cents, while the nearby corn contract moved a penny lower.
For the second consecutive week, November soybeans lost 30 cents, while the nearby meal contract fell more than $8 per ton.
In the softs, cotton moved lower again this week with the December contract posting a loss of $1.10.
In the dairy market, nearby Class III Milk futures advanced 6 cents, but the deferred contract was down 27 cents.
Over in livestock, December cattle lost 67 cents. Nearby feeders were off 15 cents. And the December lean hog contract was down exactly $1.00
In other markets of interest, the Euro gained 109 basis points against the dollar. Crude oil declined 43 cents per barrel. Comex Gold gained more than $55 per ounce. And the Goldman Sachs Commodity Index ended the week exactly where it began at 495.50.
Kohake:Thanks for having me.
Pearson: Let’s talk about this whole world situation. Warren Buffet buying Burlington, northern Santa Fe. That seems like a vote of confidence in the carrying of not just grain but coal too.
Kohake:That’s pretty much what he said too, that this was a long-term investment on the U.S. economy for ten, twenty, thirty years out, that the markets will stabilize and he can make a return on his investment.
Pearson: All right. Well, that’s what it’s all about and it’s all about in his business and agriculture too. Let’s talk a little bit about worldwide what’s going on. Are we strengthening the world economy? Obviously unemployment numbers in the U.S. came out. It’s a lagging indicator, they tell me, so it’s not something we really focus on. And it looked like some of the numbers were actually encouraging. GDP was out this week. It was also fairly encouraging for the United States. Worldwide are we seeing the same thing?
Kohake:We are seeing that in some of the more emerging economies parts of Brazil, Russia, India and China, the brick countries seeing some growth there. I think we’re close to top in here yet, maybe a short-term bubble in some of these markets. And it’s getting in overcrowded trades. Some awfully, awfully bullish people still talking 11,000, 12,000 Dow. And I think as we came to the close of the year, you probably will see some profit taking, see some money come off the table. The funds have put $40 billion in the markets since summer. There’s talk of another $40 billion for next year, but I think they will take some profits first.
Pearson: All right. Well, let’s talk about the grain markets, and let’s talk about one of the big factors we talked about in the open of this segment, and that is cheap dollar, which continued cheap this week. Is there a bottom in sight and is that still going to leverage ag commodities higher?
Kohake:I think it will longer term. That is the big play for the funds. Sell the dollar, buy the grains as an inflationary hedge. The dollar looked more range bound to me, 75 to 77. I don’t like getting short where we’re at right now, but I would look at it up around 77 as we finish the year off. And if we do break 75, I think that’s what pulls corn back to $4 and beans up over 10.5 again.
Pearson: So we may get another chance so people shouldn’t get too long faced if they miss some of these selling opportunities here of late.
Kohake:Right. I don’t think so at all. I think it’s going to get very volatile as you finish the year out. Are the funds going to take profits? Who tries to out guess how they’re going to do it?
Pearson: What about gold? Is it done or is it going to keep going higher? What’s your thought?
Kohake:I would take profits. If I was long futures, long calls, I would go ahead and get my money and get out. The big news there was India this week, they bought 200 million – 200 metric tons of gold this week and that pushed it to roughly $1,100 an ounce, and then we backed off of it. It’s a bevel, in my opinion, a short-term bevel.
Pearson: All right. Well, let’s talk specifics. Let’s talk about the wheat market first. There’s some concern about the amount of winter wheat the government has planted. The soybeans still weren’t out of the field. There was a little bit of concern about that but overall plenty of wheat around the world.
Kohake:Right. Wheat is the most bearish commodity on the board – the grain board for me. World carryout is large. Domestic carryout is large. We’re not exporting a large amount. We’re still lagging there. We’re 31% behind last year’s export pace, so I would sell any rallies right now in wheat as possible. If you get over $5.20 in December, $5.40 in March, I would be a seller. In the meantime, you could sell calls just to generate some income.
Pearson: All right. Let’s talk about the corn market, then. Obviously the slowest harvest almost in history and certainly in modern times. You have to go back to the 60s to find this kind of slow harvest progress. Picked up a lot this week. We has some good weather throughout the corn belt and we’re going to see a big increase. So now the corn is going too start to come to town. It’s very wet. It’s causing some problems. Near term what’s your outlook and what’s your outlook long term for corn?
Kohake:Near term I’m a little bit bearish yet right now. We’ve got a beautiful forecast here this weekend, first part of next week. I think you’re right that we should be up around 45% to 50% on Monday’s report on the harvest progress. I think we’ll make a huge amount done by Wednesday, of course. I would be selling December anywhere up over $3.90 if that’s even possible right now. March up close to $4.00 would be a great sell. I think longer term you ride these down about another 25 to 30 cents is all right now. Then look and see how the funds are finishing the year out too and see if you need to take profits. I think the funds will be back in buying grains longer term, and we will be back to levels where we can resell – where we were at before.
Pearson: All right. These funds were supposed to reallocate. Have they reallocated? Have they sold corn and beans and wheat and moved over into other commodities? Has that happened?
Kohake:Deutsche Bank repositioned some of theirs. There’s been some speculation that other funds have too. It has not moved the market. They’re getting ahead of maybe some regulations by the feds to reorganize. They’ve gone from grains to livestocks, but it hasn’t been a big market mover.
Pearson: So your thinking on corn is a little pressure near term, got the harvest going, maybe a bounce up, and then we’ll see what spring brings?
Kohake:Right. That’s right. Near by short-term bearish. Look for another 20 to 30 cents down. By the end of the year, I’d look to see what the funds are going to do first part of January if they’re going to make a seasonal rally into planting season, often inflation type trade.
Pearson: Should bring good progress this week on soybeans as well with this good harvest progress, and hopefully some better drying conditions for the crop. So what about bean sales?
Kohake:Same thing there. I would be selling futures on a rally. I would not be selling cash right now. The basis has started to widen out just like corn. You can see some of that in some of the contract months from January versus March, January versus July. Look for that to widen out as more grains come to the elevator, same as corn. Basis is widening out. I would just come there and just sell the board as a hedge short-term. November 2010 has been a great sell up around $9.90 to $10.00. I still like that. And in the nearby too on a 30 cent rally back up, sell into that.
Pearson: So, again, get a little more aggressive on the soybeans?
Kohake:I would for the short term right now. I think we’re going to be up over 70%, maybe 80% the first part of next week, done with harvest. And I don’t see anything out there right now besides a dollar going back towards 75 next week that should attract any buying right now.
Pearson: And South America, what do you think they’re going to do?
Kohake:I think they’re planting awfully well right now. Parts of Argentina is over 30% planted. Brazil is a little bit behind, but there’s no big surprise that their crop is going in.
Pearson: All right. So you have potential big crop down there. Acreage battle next year? Is it going to shape up to amount to very much?
Kohake:I think you can have a little one. I think you also have to declare wheat in there as well with some type of battle coming into this longer term. But I think the key is going to be sometime around January, $7 beans and still playing around with $3.90 corn.
Pearson: All right. Let’s talk flip side here on livestock and where do you see the fed cattle market going? The board hasn’t given us a lot of direction. The cash market has been a little better. Where are we going on cattle?
Kohake:It was a very surprising trade this week. Had a nice rally going until Thursday and then we started to see a little bit of profit taking. And Friday we saw a lot of sales come back in. Cash traded early in the week surprisingly Monday and Tuesday at $88.00. We finished the week off close to $86.00, a dollar lower than last week, so we kind of wrecked the futures market. I would sell rallies here as well. I like selling the April up around $91.00, $91.50 next week, just get a bounce up into that area. Supplies are still very tight now through Christmas. Get past Christmas, supplies do get larger. So any type of rally between now and Christmas, I would be locking in, putting a floor beneath the market and locking in the profits.
Parson: So, the fed cattle market, you want to take advantage of any gains you’ve picked up. Longer term – I mean, take me out for – this is not an easy deal to get a calf ready, so we’re talking a couple year gap here. Next year, 2010 into 2011, will we see beef prices strengthening?
Kohake:I think you’re going to see more of a historical type trade, high 70s, low 80s. And I think a lot of that is going to depend on too of this grain market of how much more money the funds power pour in longer term. Are they going to keep it up here around $4.00 corn now instead of $2.50 in the past as an average? You know, I think that’s going to play into these longer term cattle incomes as well.
Pearson: All right. Let’s talk about the hog market and what you see happening in pork prices. IT just seems like this is the – I don’t want to say the expansion but the continued production in the face of reduced demand that we’ve seen in history as we’ve ad this shift to this vertical integration in the hog business. These guys just don’t want to see – they want to see who blinks first.
Kohake:You’re kind of exactly right, Mark. We did get a little bit of better news this week. China is saying that they are going to open their border back up, but they weren’t buying any pork to begin with, so it’s not that big of a deal. It looks like Russia and Mexico are going to continue to be our biggest importers of pork. I’m in the same boat here with the beef as I am with the pork, selling rallies right now. Any type of dollar and a half, two cent rally in the hogs, I would sell into. I did not like the way we closed on Friday. If the cattle would see more technical pressure on Monday, I think the hogs will follow it, and look for a quick $1.50 down in the hogs next week.
Pearson: All right. So, near term you’re not upbeat at all in this hog market?
Kohake:Not near term at all. We’ve had a nice rally. The market is overbought right now and I think we’re just due for a quick correction. You can come out and do some of these deferreds and still lock in a profit and that’s what I was doing late on Thursday and Friday.
Pearson: All right. Some of those deferred contracts, they’re still strong. Take advantage of those and at least lock in or at least reduce your loss.
Kohake:Right.
Pearson: All right. Buying feed right now, Jamey. We’ve got about five seconds.
Kohake:20 cent pull back I would look at it in the corn.
Pearson: All right. So, again, pull back, you’d do it. Jamey, as usual, appreciate your insights. That’s going to wrap up this edition of Market to Market. If you’d like more information from Jamey on where these markets just may be headed, visit our Market Plus page at our Web site. You’ll find streaming video of our program and you can also download audio podcasts of our Market Analysis and Market Plus segments free right there at the Market to Market Web site. Of course, join us again next week when we’ll follow more than 350 members of the greatest generation on their honor flight to the World War II Memorial in Washington. Until then, thanks for watching. I’m Mark Pearson. Have a great week.
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