DTN Ag Headlines

By Russ Quinn
DTN Staff Reporter

OMAHA (DTN) -- Bob Birdsell sold his 2019 calves last week. The farmer and cattle producer from Stanberry, Missouri, said a wet spring last year delayed his planting. This then slowed his harvest last fall, which pushed back his calf weaning. These delays forced him to sell his calves in March instead of February.

The delays also forced him to sell in the midst of the COVID-19 pandemic and the new world of social distancing, which also affects how sale barns and auctioneers operate. With livestock auctions deemed essential business because they're part of the food supply, these businesses are staying open.

However, there are major changes in how they operate.

NO SELLERS

The cattle market, much like the rest of the commodity market, did not react well to the first days of the national coronavirus shutdown. The cattle futures markets saw large losses, which kept many cattle producers away from sale barns. Livestock sales were even cancelled.

With the cattle market recovering early last week, Birdsell decided it was time to sell his calves. His local livestock auction was open for business, but with some major alterations -- first and foremost, sellers were not allowed to attend the sale to represent their animals.

"We couldn't watch them sell at the sale barn, but we did watch it online," Birdsell said. "It was different, but they still brought good money."

Birdsell sold his calves at the Clarinda Livestock Auction located in Clarinda, Iowa, about 60 miles north of his northwest Missouri farm. John Anderson, co-owner of the Clarinda Livestock Auction, said last week's sale was the first one they had in which these rules were in full effect.

Only buyers and auction staff could be admitted into the sale barn, and sellers were not allowed to attend the sale in person, Anderson said. The sale barn restaurant was open but only for takeout, and those in attendance were told to maintain the 6-foot social distancing rule.

Anderson said the sale last week was broadcast online for the first time ever for those buyers who couldn't attend in person and for sellers to view their animals being sold. A local company helped install the video equipment and teach the staff how to operate it, he added.

"It was normal business with a few changes," Anderson told DTN. "We had to turn a few folks away who weren't buyers, but they seemed to understand."

MAINTAINING SPACE IN HAY AUCTION

Across the state in northeastern Iowa, hay auctions continue at the Dyersville Sales Company. Dyersville Hay Auction Manager Dale Leslein said they had to change how they sold at their facility's outdoor lot.

They split the hay auction into three parts -- selling large squares bales first, followed by bedding hay and cornstalk bales, and then round bales followed. They waited roughly 15 minutes between each part of the sale to help limit their crowd size, he said.

"It added about a half hour to the sale doing it this way, but it seemed to work. I didn't have anyone within 10 feet of me during the sale," Leslein said. "Everyone is just being a little more cautious."

Leslein said sellers were not allowed to pick up checks; they were mailed out so there was no close contact in the company's office after the sale. Local hay buyers in the market for hay may have been more willing to utilize order buyers, he said.

Their hay sale is every Wednesday morning and he did notice much more traffic in their lot on Tuesday, as people looked over the hay inventory for the upcoming sale. Demand for hay, especially good alfalfa hay, is high now, and he speculated local producers made more of an effort to preview their sale before they decided if they would attend in person or not.

AUCTIONEERS ADJUST

The COVID-19 pandemic has affected nearly all aspects of life and business. Auctioneers see this firsthand. Their business thrives on large crowds, which is the exact opposite of current government regulations.

The National Auctioneers Association published a report last week titled "State of the Auction Industry Amid COVID-19" (http://ftp.auctioneers.org/…). The report was built from a survey sent to members and nonmember contacts.

The auction industry, which includes real estate, fundraising and automobiles, has seen an "unprecedented" number of cancellations since the outbreak of the virus in the U.S. Auctioneers are managing fearful and conservative buyers and sellers, the report stated.

While the live auction attendance has been reduced to zero, the survey reported online auctions have seen less of an effect on business. This situation has pushed more auctions to be online as a way to stay in business.

David Whitaker, the co-owner and auctioneer for the Whitaker Marketing Group Auctions and Real Estate of Ames, Iowa, told DTN the different asset classes sold by auctioneers have seen various effects on their businesses. Auctioneers selling at a sale barn have seen little to no effect, he said.

Whitaker, whose business deals in farmland, fundraisers and personal property, said the fundraiser side of his business has come to almost a complete stop. He was supposed to have a fundraiser auction Saturday for a local bible camp, but it had to be moved online, he said.

As for his farmland and personal property auction, these aspects of his business had to also change and all moved to online format, he said.

"We saw quite a few auctions cancelled, so a lot of people went this way," Whitaker said.

OPTIONS FOR ONLINE AUCTIONS

Whitaker said there are a couple of ways to operate an online auction. One way would be an online simulcast auction where people would log in and bid on whatever is being sold.

Because of the ban on large crowds, many auctions have gone this route, which was already emerging as a popular way to have an auction. He estimated about 30% of auctioneers already utilize online auctions.

Whitaker said another option would be to have a timed online auction event with a soft close. Instead of ending at the set time, after each bid, the auction would continue for a set amount of time, eliminating the last-second bid, he said.

"I am an open-outcry auction guy all the way, but the trend in the business is for more online auctions," he said. "Will these forced online auctions change the business? If I had to guess, I would say probably yes."

Whitaker said many auctioneers were leery to go to a 100% online auction format as, in many instances, buyers were older and less inclined to want to bid online. Many of these people liked the social aspect of attending the auction, he said.

Now, many of these people will be forced to learn online auctions if they want to actively take part, he said. He added that he doesn't know if buyers will enjoy this method as much as going to auction, but he thinks more people will be willing to at least try it.

NEW FUTURE FOR AUCTIONS

As for the future of auctions, Whitaker believes after the time of social distancing and when people can assemble in large crowds again, both buyers and sellers will be more willing to utilize both forms of auctions. While some will go back to attending auctions in person only, a larger percentage may be willing to keep with the online option.

Whitaker is optimistic about the future of agriculture despite the current coronavirus concerns. People in ag are smart people who are data driven and will want to continue investing in farmland, he said.

"With the stock market falling, I think we will see people coming (to invest) in farmland," Whitaker said. "They see this market as a safer investment."

Russ Quinn can be reached at russ.quinn@dtn.com

Follow him on Twitter @RussQuinnDTN

(ES/AG/CZ)

By Dana Mantini
DTN Senior Analyst

USDA's Prospective Plantings and March 1 Grain Stocks reports held a few surprises, but market action was a bit subdued on corn and soybeans, while new-crop wheat reacted to the lowest planting intentions since those were first recorded in 1919.

Despite what, on the surface, should have been a bearish corn planting estimate, it is likely that the sharp curtailment in ethanol usage due to COVID-19 and the potential for a larger shift in acres from soybeans to corn had not yet figured into the survey from early March. It is possible that March market action and ethanol developments could ultimately shift back a large amount of acreage from corn to soybeans, with some estimates as high as 1 million acres.

CORN

NASS' March seeding intentions estimate of nearly 97 ma was 2.7 ma above the Dow Jones trade estimate prior to the report. The 97-ma figure is roughly 7 ma above final planting a year ago. Some notable increases were Michigan (25%), Indiana (16%), Illinois and Minnesota (each up 8%) and Iowa (4%). As the planting intentions survey took place in early March, traders have reservations about how accurate it is. During the month of March, the sharp plunge in crude oil, gasoline and ethanol prices, along with cutbacks and closures at many ethanol plants due to social distancing, makes the estimate suspect. It is very likely that planting intentions could ultimately shift more corn acres to soybeans.

The Prospective Plantings report was bearish for new-crop corn futures, but the futures response was modest.

In the quarterly Grains Stocks report, March 1 stocks fell by a larger-than-expected amount to 7.953 billion bushels (bb). That's about 200 million bushels (mb) below the average trade estimate and down 8% from last year's 8.613 bb. The implied higher feed usage is likely to be more than offset by the decline in corn used for ethanol, which some analysts see reaching 300 mb or more. Of the total, on-farm stocks were pegged at 4.45 bb -- down 13%, with off-farm stocks, at 3.5 bb, up just slightly from a year ago.

SOYBEANS

USDA's March planting intentions for soybeans, at 83.5 ma, were less than Dow Jones' pre-report estimate of 84.7 ma. The number is up roughly 10% from the 76.1 ma planted in 2019. As ethanol production is likely to slow with plants cutting back production or closing completely, the soybean acreage is likely to move higher in coming months.

March 1 stocks of soybeans are reported to be a slightly larger-than-expected 2.253 bb, compared to the average trade estimate of 2.237 bb, and is down 17% from the 2.727 bb last year. On-farm soybean stocks of 1.01 bb are down 20% from a year ago, with off-farm stocks of 1.24 bb down 15% from 2019.

WHEAT

Tuesday's wheat planting report featured the lowest all-wheat plantings since 1919 at 44.7 ma. That is lower than last year's record of 45.2 ma. Kansas City new-crop wheat futures closed higher Tuesday, as winter wheat seeding, at 30.8 ma, is down nearly 400,000 acres from 2019. Spring wheat planting intentions, at 12.6 ma, were down 1%, with hard red spring at 11.9 ma. Durum planting is expected to decline by 4% to just 1.29 ma. Hard red winter was 21.7 ma, soft red winter was 5.69 ma and white winter was at 3.42 ma.

March 1 wheat stocks of 1.412 bb were 25 mb under the average trade estimate, but down 11% from the 1.593 bb in 2019. On-farm stocks figured down 8%, at 339 mb, with off-farm stocks of 1.07 bb down 12% versus a year ago.

The stocks report was largely neutral to the market.

CONCLUSION

The 2020 USDA Prospective Plantings and March 1 Grain Stocks reports had little impact on the futures markets following their release. Perhaps the most surprising features were the higher-than-expected corn planting intentions and the lowest-ever all-wheat planting intentions. Other than a modest rally in Kansas City new-crop futures and a decline in new-crop corn futures, the markets are right back to trading fundamentals and outside macro influences.

The uncertainty of the extent of bearish demand influences from COVID-19 and the potential for more flooding issues this spring will continue to keep the jury out on ultimate planting decisions.

Dana Mantini can be reached at dana.mantini@dtn.com

Follow Dana Mantini on Twitter @mantini_r

(BE/AG)

By DTN Staff

This article was originally posted at 11:03 a.m. CDT. It was updated at 12:02 p.m.

**

OMAHA (DTN) -- USDA on Tuesday released its annual Planting Intentions and quarterly March 1 Grain Stocks reports.

Because DTN and other news outlets no longer have pre-release access to the reports, instead of one story, we are now sending a series of updates with each including more information as our analysts and reporters digest and analyze the new numbers.

According to DTN Lead Analyst Todd Hultman, Tuesday's Grain Stocks report was bullish for corn, and neutral for soybeans and wheat. USDA's planting intentions are bearish for new-crop corn, bullish for new-crop soybeans and neutral for new-crop wheat.

Check this page throughout the morning for important highlights from the reports and commentary from our analysts on what the numbers mean.

You can also access the full reports here:

For DTN's exclusive audio comments on today's reports, visit: http://listen.aghost.net/…

-- Grain Stocks and Prospective Plantings: https://www.nass.usda.gov/…

PROSPECTIVE PLANTINGS

USDA expects farmers to plant 97 million acres to corn, above the range of pre-report expectations. If realized, it will the highest acreage since 2012. Planted acreage is expected to be higher than last year in 38 of the 48 reporting states. USDA surveyed farmers in the first two weeks of March, during which Saudi Arabia and Russia’s oil dispute shook global markets including ethanol.

Soybean acreage is estimated at 83.5 million acres, toward the low end of pre-report expectations. Compared to last year, planting intentions are up or unchanged in 22 of the 29 reporting states, with large increases anticipated in Arkansas, Illinois, Kansas, Michigan, Minnesota, Missouri, North Dakota, Ohio and South Dakota.

All wheat acreage is estimated at 44.7 million acres, 1% below last year's levels and the lowest since recordkeeping began in 1919. Winter wheat area, at 30.8 million acres is down from last year but even with pre-report expectations. Of that total, 21.7 ma will be planted to hard red winter, 5.69 to soft red winter, 3.42 ma to white winter. Spring wheat acreage is expected to decline 1% from last year to 12.6 million acres.

All cotton area is estimated at 13.7 ma, down less than 1% from last year.

USDA MARCH 1 GRAIN STOCKS

CORN

Corn stocks on March 1 totaled 7.95 billion bushels (bb), down 8% from stocks a year ago and lower than the average pre-report analyst estimates. Of those corn stocks, farmers were holding 4.45 bb on the farm, which is 13% lower than a year ago. Off-farm stocks were at 3.5 bb, up just slightly from the same period in 2019.

Disappearance, or use, from December 2019 to February 2020 was 3.45 bb, compared to 3.32 bb for the same period last year.

SOYBEANS

As of March 1, soybean grain stocks were pegged at 2.25 bb, down 17% from last year and within the range analysts expected. Of those, USDA estimated 1.01 bb were stored on farm, down 20% from last year, and 1.24 bbwere stored off-farm, down 15% from last year.

The agency estimated that soybean usage for this past quarter (December 2019-February 2020) totaled 1 bb, down 1% from the same time period last year.

WHEAT

Total wheat stocks were estimated at 1.41 bb on March 1, down 11% from a year ago and within analysts' pre-report range of estimates. On-farm stocks were pegged at 339 million bushels (mb), down 8% from last year, while off-farm stocks came in at 1.07 bb, down 12% from last year.

Usage from December 2019 through February 2020 was estimated at 428 mb, 3% up from the same period last year.

**

Editor's Note: Join us for a post-report webinar at noon, CDT on Tuesday, March 31. In addition, DTN's Senior Ag Meteorologist Bryce Anderson will offer comments about spring planting weather and Livestock Analyst ShayLe Stewart will explain how coronavirus has affected livestock markets. To register, visit: https://dtn.webex.com/…

QUARTERLY STOCKS (million bushels)
3/1/20 Avg High Low 12/1/19 3/1/19
Corn 7,953 8,162 8,492 7,892 11,389 8,613
Soybeans 2,253 2,237 2,701 2,075 3,252 2,727
Wheat 1,412 1,437 1,572 1,385 1,834 1,593
PROSPECTIVE PLANTINGS
ACREAGE (million acres) USDA USDA
3/31/19 Avg High Low 2018-19 3/29/19
Corn 97.0 94.3 96.4 92.5 89.7 92.8
Soybeans 83.5 84.7 87.0 82.7 76.1 84.6
Cotton 13.7 13.8
Grain Sorghum 5.8 5.1
All Wheat 44.7 44.9 46.0 42.3 45.2 45.8
Winter 30.8 30.8 31.7 30.1 31.2 31.5
Spring 12.6 12.6 13.4 12.0 12.7 12.8
Durum 1.3 1.5 2.4 1.1 1.3 1.4

(BE/AG)

By DTN/Progressive Farmer Staff

OMAHA (DTN) -- Farmers are showing general concern about how the coronavirus pandemic will influence the coming crop year, their businesses in general and even their family's health, according to a current online poll conducted by DTN and data analytics company Farm Market iD. More than 69% of farmers polled don't have a prepared backup plan should they become sick with the virus themselves.

"We know that COVID-19 is taking a toll on populations around the world," said John Teeple, DTN senior vice president-agriculture. "Our farmers are entering a stressful planting season and now have to contend with the challenges associated with this global pandemic. They are on the front lines of ensuring that our world has food to eat."

Farmers were sent email invitations to take part in the poll, "Coronavirus Impact on the Farmer and the Business of Farming," starting March 27. Percentages quoted are as of late evening March 29, when more than 420 farmers had responded to a 23-question poll. The general levels have varied only a percentage point or two through the March 27-29 period. An open poll of this type has a margin of error of plus or minus 5 percentage points.

BUSINESS, HEALTH CONCERNS

When asked about the business effects of the virus, some 88% were at least somewhat worried the issue would hurt their business. Some 56% were either very worried or extremely worried about the issue hurting business. In a recent DTN/Progressive Farmer online poll held in mid-March, more than 70% of respondents said their main concern was the overall global economy; substantially fewer were worried about their specific business success.

When asked about health concerns, 84% had at least some concern that the virus would affect the health of family or friends. More than 46% were very worried to extremely worried about health issues.

A concerning point, given the relatively high number of respondents who were worried about health issues due to COVID-19, is that the vast majority of farmers -- 69% -- said they did not have a backup plan to continue current farming operations if they themselves got sick. It's not surprising, given that many farms are still single-proprietor or have few family members or employees as part of the operation. But it also speaks to the downsides of that limited business leadership and how it can be crippled when the unexpected happens.

CHANGING FARMER BEHAVIOR

The poll included a number of questions that were exploring how farmers were changing behavior due to the coronavirus issue. At least 50% of farmers had taken steps ranging from meeting less and being more careful with money expenditures. More than 85% were taking steps such as practicing social distancing and putting more effort into washing hands or using hand sanitizers regularly.

Farmers also were looking to various input suppliers and other vendors to work with them during this pandemic period.

More than half of farmers were looking for improved flexibility in pick-up and delivery of supplies and thought that suppliers should offer flexible financing terms. Some 68% were looking for price reductions from suppliers. The most popular expectation, with 71% of respondents agreeing to the need, was for more communications and openness from farm suppliers.

"The survey results indicate that farmers are delaying large purchases and instituting conservative farming decisions," said Steve Rao, CEO of Farm Market iD. "Agribusinesses should take notice to the challenges this presents their businesses.

STRONG SUPPORT FOR PRESIDENT

Farmers were also asked about their support for the Trump administration and how officials were handling the coronavirus pandemic. It's been well documented that the president has strong support in farm country. More than 70% of respondents said they were satisfied with the response to the virus by the administration.

"This may be an important and early indicator for the 2020 presidential election, as we found that 90% of respondents plan to vote in the fall," said Steve Matthesen, CEO of DTN. "If they were pressed to vote today, more than 80% would vote for the current administration."

**

Editor's note: To encourage response to this timely coronavirus poll, DTN and Farm Market iD are each making a $1,000 donation to Feeding America (www.feedingamerica.org ) to support that organization's 200 food banks and 60,000 food pantries.

Email Talk@dtn.com with comments or questions

(AG/CZ )

By Todd Neeley
DTN Staff Reporter

OMAHA (DTN) -- A federal judge in Montana on Friday threw out a court case against 15 state beef councils filed by R-CALF USA after the beef councils signed agreements with USDA declaring that the Department of Agriculture has authority over their activities.

Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America (R-CALF USA) had asked the U.S. District Court for the District of Montana to declare unconstitutional the beef councils in Montana, Hawaii, Indiana, Kansas, Maryland, Nebraska, Nevada, New York, North Carolina, Pennsylvania, South Carolina, South Dakota, Texas, Vermont and Wisconsin.

Brian Morris, chief district judge for the U.S. District Court in Montana, on Friday accepted Magistrate John Johnston's findings and recommendations to toss out the cases against the state beef councils because each of the councils have now signed "memorandums of understanding" giving USDA authority over their promotional, advertising and marketing activities. USDA's control over the state beef councils then fell under the umbrella of a landmark 2005 U.S. Supreme Court case that ruled the federal beef checkoff program is "government speech."

Morris and Johnston, in the 27-page ruling Friday, cited that the memorandums of understanding between the beef councils and USDA, including some state beef councils not part of the lawsuit, put the beef councils as "answerable to USDA" and thus under the same view of government speech as the national checkoff program.

Nearly three years ago, the same court granted R-CALF a preliminary injunction in ruling the federal Beef Checkoff Program violated the First Amendment to the Constitution. USDA appealed to the U.S. Court of Appeals for the Ninth Circuit where the ruling was affirmed. But as that court case began to move its way through appeal, USDA began signing these MOUs with the state beef councils.

As a result, the Montana federal judge's ruling said the speech of beef checkoffs is government speech and not subject to the same litigation that would occur with private speech under the First Amendment.

"These memorandums gave USDA broad new authority over any potential speech that the beef councils might produce," Morris stated in the ruling.

R-CALF USA CEO Bill Bullard told DTN his group may consider another appeal.

"We are obviously disappointed but not surprised given the magistrate judge's earlier findings and recommendations," he said.

"He had found that after violating the constitutional rights of cattle producers for three decades, the USDA corrected its violation by entering memorandums of understanding with the beef checkoff councils. The issue of whether a longstanding violation of the Constitution can be corrected with a revocable memorandum of understating has serious implications and so we are now reviewing the decision and will decide whether we will appeal."

National Cattlemen's Beef Association CEO Colin Woodall said the court's ruling is good for ranchers.

"The foundation of the Beef Checkoff has always been state beef councils that collect checkoff funds and determine how those investments are used for research, marketing and promotion efforts in individual states," he said.

"Those efforts are directed by the same cattlemen and cattlewomen who pay the checkoff, so this victory goes a long way toward ensuring they continue to direct those investments."

Last May, R-CALF asked the court to enjoin the federal checkoff program from authorizing private state beef councils the use of a beef checkoff tax to fund "private speech without the payers' affirmative consent."

The $1 federal checkoff sends 50 cents to the Cattlemen's Beef Promotion and Research Board while 50 cents goes to state beef councils.

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @toddneeleyDTN

(BAS/CC/AG)

By Matthew Wilde
DTN Progressive Farmer Crops Technology Editor

AUSTIN, Texas (DTN) -- The worldwide COVID-19 health and economic crisis will make it difficult, but not impossible, for cotton farmers to make a profit this year.

John R.C. Robinson, a Texas A&M professor and Extension economist, was optimistic that cotton prices could hit 75 cents per pound this year. Most farmers can make money selling cotton at that price, he said.

Recent trade agreements with two of the top importers of U.S. cotton and an anticipated drop in plantings and supply gave Robinson confidence to make that projection at the Beltwide Cotton Conference in Austin, Texas, in January.

Then, the coronavirus pandemic hit and cotton values plummeted. On Thursday, March 26, May cotton closed at 52.78 per pound, its lowest spot price since 2009 and down from 69.05 cents at the start of the year.

"Most of the trading now is based on fear and uncertainty," Robinson said. "Cotton demand, like stock markets for major retail and industrial companies, tend to follow expectations for GDP (gross domestic product).

"If the pandemic and its panic is resolved quickly, we could return to an outlook based on the fundamental ending stocks outcome," he continued.

Robinson recently downgraded his cotton plantings projection from 13 million (close to USDA's current estimate) to 10.5 million acres this year based on current economic factors. The USDA Prospective Plantings Report will be released Tuesday, March 31.

At 10.5 million acres, Robinson projects production at nearly 14.2 million bales and ending stocks close to 3.2 million bales. If the pandemic subsides in the coming months, he could see cotton prices trading in the upper 60s (cents per pound).

"A lot of farmers are probably not covering costs when futures are below 70 cents," Robinson said. "But profitability depends on region, yield and cost of production."

FARMER'S VIEW

Bryce Wilde, who grows several thousand acres of cotton with family near Lyford, Texas, hopes prices will recover soon. He'll watch markets closely to lock in profits when he can using basis contracts. (Editor’s note: Wilde is not related to the author.)

Wilde said his family's operation, Anaqua Farms, has trimmed costs and honed production to lower break-even costs of 63 to 66 cents per pound. Yields average 800 to 850 pounds per acre. USDA projects the national average at 805 pounds per acre this year.

"Demand hasn't been as high as we like. We need more for prices to go higher," Wilde said.

The family sells their cotton to Ecom USA in Lubbock, Texas. Most of the Wildes' production ends up at spinning plants and textile companies in Mexico, Bryce said. As long as the coronavirus subsides, he's hopeful recent trade agreements will boost prices.

TRADE AGREEMENTS

Canada recently ratified the United States-Mexico-Canada Agreement (USMCA), the last of the three countries to do so. The U.S. inked the phase-one trade deal with China in January. Mexico and China accounted for 37% of U.S. cotton exports during the current marketing year as of March 19, according to weekly export sales data compiled by the National Cotton Council of America.

While the agreements won't bring total stability to the industry, they do ease trade tensions, experts say.

"For cotton specifically, U.S. export commitments are running 20% above a year ago and have been active enough recently to believe USDA's export estimate of 16.5 million bales will be met in 2019-20," said Todd Hultman, DTN lead analyst.

The USMCA contained a specific textile and apparel chapter. It promotes greater use of North American-origin textile products such as sewing thread, pocketing, narrow elastics and coated fabrics for certain end items.

Canada only imports 2,000 bales of cotton a year, according to USDA. Mexico is projected to buy 800,000 bales in 2019-20, and almost all of that is from the United States. Reports indicate imports could hit 900,000 bales.

"We can produce a really high-quality cotton, but haven't got the premiums for it lately," Wilde said.

Even though cotton already enjoyed duty-free status north and south of the border, there is hope sales could increase, especially to Mexico. U.S. cotton fiber works well in high-speed textile machines often used in Mexico, according to industry reports.

The phase-one trade deal with China should be "moderately bullish" for U.S. cotton prices in 2020 and 2021, according to Hultman. However, he added it's difficult to anticipate how much exports may benefit. The additional 25% tariff on U.S. cotton by China levied during the trade war still exists, but the 15% tariff on Chinese apparel imports to the U.S. won't increase to 25% due to the trade deal.

Even though China is supposed to significantly ramp up ag imports per the trade agreement, they can't be forced to buy any more cotton than they need or can afford.

"Even so, a relaxation of tariffs for Chinese companies is expected to result, which could give U.S. cotton exports a boost of 1-1.5 million bales," Hultman said.

OIL AND COTTON

Cheap oil and cotton don't mix, Hultman said.

Saudi Arabia recently announced it was cutting oil prices for its customers and later moved to increase export capacity to 13 million barrels per day. Polyester is made from petroleum and competes with cotton.

"Given the bearish developments the past two months, it is going to be difficult for producers to get a decent price for cotton in 2020," Hultman concluded. "Unless Saudi Arabia is persuaded to return to its lower level of oil production, a spot cotton price in the upper 60s (cents per pound) may be the best producers can hope for in 2020."

Matthew Wilde can be reached at matt.wilde@dtn.com

Follow him on Twitter @progressivwilde

(SK/AG)

By Chris Clayton
DTN Ag Policy Editor

OMAHA (DTN) -- Farmers who rely on H-2A workers received a little more relief from the State Department late Thursday with an announcement that U.S. consulates will expand the group of H-2 applicants who can get visas without an in-person interview.

Agricultural groups and farmers who employ guest workers have been concerned since the State Department announced March 20 that it was suspending all non-emergency visa applications. Thursday's announcement opens the door for more H-2A and H-2B workers to continue entering the country for work. Embassies and consulate offices shut down such visa processing to eliminate direct contact with applicants because of the coronavirus.

The State Department noted, "The H-2 program is essential to the economy and food security of the United States and is a national security priority. Therefore, we intend to continue processing H-2 cases as much as possible, as permitted by post resources and local government restrictions."

The decision allows consulates to waive the visa interview requirements for both returning workers and first-time applicants, the State Department said. Also, prior H-2 workers who have held visas going back 48 months also can apply again without an interview as well. The State Department said this change should ensure the vast majority of H-2 applicants will be reviewed without needing an interview.

Agriculture Secretary Sonny Perdue credited both the State Department and the Department of Homeland Security for making the H-2 changes.

"Temporarily waiving in-person interviews for H-2 visa applicants streamlines the application process and helps provide steady labor for the agriculture sector during this time of uncertainty," Perdue said in a statement. "H-2 labor is vital to the economy and food security of America -- our farmers and producers depend on these workers to continue to feed and clothe the world."

The H-2A program brought in roughly 257,000 workers last year, of which about 90% come from Mexico. They work on nine-month visas during that time.

Organizations representing largely fruit and vegetable growers that rely on H-2A workers praised the new waivers, saying the decision will help ensure food security.

"We are grateful for the administration's recognition of our part in keeping food moving from farm to table," said Tom Stenzel, president and CEO of the United Fresh Produce Association. "We will continue to monitor the implementation and application of these revised regulations and ensure that the fresh fruit and vegetable industry has access to the workers that keep our food economy going during these uncertain times."

Dave Puglia, president and CEO of Western Growers, credited Secretary of State Mike Pompeo "for taking a practical approach" to meeting the work needs of farmers while also protecting State Department personnel.

"The steps taken by Secretary Pompeo ease the flow of guest workers at a time when our farmers are redoubling their efforts to provide our nation with safe, healthy, abundant and affordable food," Puglia said. "We are grateful to Secretary Pompeo, Secretary Perdue and all those in the Administration who listened to the needs of the agriculture community in the midst of our present crisis and acted swiftly to implement this common-sense solution."

Last week, USDA and the Department of Labor also set up a process to allow nearly 20,000 H-2A and H-2B workers already in the country to extend their contracts and transfer to different employers.

Details on that program can be found at www.farmers.gov/h2a

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

(BAS/AG)

By Todd Hultman
DTN Lead Analyst

While we're all hunkered down in forced social isolation -- keeping a safe distance away from neighbors and strangers at the store -- I couldn't help but notice the morning chorus of birds were still doing their thing, as blissful as ever. As far as I could tell, the robins were not worried one whit about all our hand wringing over coronavirus.

Lest we forget, it is spring and time again for USDA's annual survey of prospective planting intentions on Tuesday, March 31. In my book, this is not a report to be taken seriously, as good intentions aren't much of a match for weather's obstacles. Last year, USDA said farmers intended to plant 84.6 million acres (ma) of soybeans, but by the time the rain finally stopped, only 76.1 ma were able to receive seeds in the ground.

In late February, USDA said it expected farmers to plant 94.0 ma of corn and 85.0 ma of soybeans in 2020 -- a strong preference leaning to corn. Just Thursday, Dow Jones' survey of analysts said it expects Tuesday's report to show farmers wanting to plant 94.3 ma of corn and 84.7 ma of soybeans -- numbers eerily similar to USDA's February estimates.

Personally, I have no reason to doubt this popular assessment, as my own conversations with farmers over the winter also found more interest for planting more corn acres. Behind the decisions seemed to be a hope that better weather would reward corn yields more fully than it might enhance soybean yields.

Weather permitting, I agree there is a good chance farmers will plant more corn in 2020, and USDA's Prospective Plantings report may even be accurate this year. It's just that I think the popular decision to plant corn is wrong this time. Soybeans have the better odds for higher returns in 2020.

It was just two years ago that farmers planted close to a 50-50 split: 88.9 ma of corn and 89.2 ma of soybeans as the trade dispute with China was brewing.

Last year, when perpetual waves of rain kept planters out of fields and ending stocks of soybeans were being estimated near a billion bushels (bb), farmers gave up on soybeans and stuck with corn. USDA said there were 89.7 ma of corn planted versus 76.1 ma of soybeans. Given the big soybean carry and uncertainty of trade with China, the corn preference was not difficult to understand.

As we get closer to planting in 2020, the landscape looks much different than it did a year ago. Who are we kidding? It even looks a lot different than it did a month ago.

The work for USDA's survey is conducted in the first two weeks of March, and that is not normally an issue. But this year, the events of early March were game changers for corn.

On March 7, Saudi Arabia announced it was lowering the price of crude oil for its customers and said it was preparing to increase oil production. The decision was made at a time when economic growth estimates were being cut around the globe due to the spread of the coronavirus as social distancing became the new popular term, translated in many languages.

May crude oil fell over $10 a barrel the following Monday, March 16, and the rout of energy prices was on. May RBOB gasoline closed below 60 cents a gallon Thursday, March 26, and May ethanol was just under $1.00 a gallon, near all-time lows.

The Saudi decision was impulsive and ill-timed. It is difficult to say how long they will stick to it, but so far, they are. Not surprisingly, ethanol plants are scrambling to reduce production as making the fuel became deeply unprofitable overnight. To clarify, an industry that represents 39% of corn demand is in serious financial trouble.

At USDA's annual Ag Forum Outlook in late February, USDA not only estimated 94.0 ma of corn plantings, it also estimated 2.64 bb of U.S. ending corn stocks in 2020-21, and that did not include an assessment for collapsed ethanol demand. Such a scenario carries with it a risk of cash corn prices averaging less than $3.00 a bushel in the fall of 2020.

USDA's ending stocks estimate for soybeans, on the other hand, was potentially bullish at 320 million bushels (mb) or 7% of annual use. Frankly, the estimate now looks too bullish in the age of the coronavirus, but ending soybean stocks will not be as heavy as those expected in corn. Also, soybean demand does not have the same exposure to energy prices that corn does and is positioned to trade better in this new environment.

Let's say you get 200 bushels of corn at $3 a bushel for a $600 check per acre. That doesn't cover USDA's estimated cost of $680 an acre for corn in 2020 (USDA's Commodity Costs and Returns at https://www.ers.usda.gov/…).

Fifty bushels of soybeans at $9 a bushel pays $450 an acre, close to the $460 an acre soybean cost USDA estimates for 2020. Go ahead and finagle the numbers in different scenarios, but I think you'll see the edge goes to soybeans.

I know old habits die hard, and I don't know how many will change their preferences from corn to soybeans or even just settle on a 50-50 rotation. Guessing fall prices is never a sure thing, but as I see it, the odds favor planting soybeans in 2020.

Todd Hultman can be reached at Todd.Hultman@dtn.com

Follow him on Twitter @ToddHultman

(BE/AG)

By Chris Clayton
DTN Ag Policy Editor

OMAHA (DTN) -- The House of Representatives on Friday passed the $2.2 trillion stimulus package dubbed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, sending the legislation to President Donald Trump to sign into law.

Agriculture is among the industries with aid set aside, which includes providing USDA $14 billion more in funding authority under the Commodity Credit Corp., allowing USDA to craft an aid package to farmers who have seen commodity prices crash since the COVID-19 pandemic began.

The bill passed the House by a voice vote despite concerns raised by Rep. Thomas Massie, R-Ky., who drew the ire of both colleagues and President Trump for stalling the legislation. Massie's procedural moves led to four hours of floor debate, then he called for a roll-call vote though that request was denied. On Twitter, Trump called Massie "a grandstander" and suggested Massie be thrown out of the Republican Party. Lawmakers from both parties cheered on the House floor after the bill passed.

Senators had passed the legislation late Wednesday night.

Agricultural groups representing various commodities had praised Congress for crafting the legislation earlier in the week, recognizing how grains, livestock and specialty crops had all been affected in different ways by the economic shutdown caused by the virus.

Overall, the bill provides USDA roughly $48.9 billion to respond to the coronavirus, along with added funding for the Food and Drug Administration as well. The legislation also includes a $9.5 billion assistance program that would more directly support livestock operations, including dairy farmers, as well as specialty crop producers. Farmers who sell directly to farmers markets, schools and restaurants would also be eligible for aid.

The bill includes $15.5 billion for USDA's Supplemental Nutrition Assistance Program (SNAP), the single-largest food-aid program in the country. Child nutrition programs would receive another $8.8 billion, and there are special provisions to distribute food aid on Native American reservations as well.

USDA's Rural Development programs would receive $25 million for distance learning and telemedicine programs. Lawmakers cited the value in boosting telemedicine as a way to treat patients without possibly spreading of the disease for people who do not need hospitalization. Another $100 million would also go to further boost rural broadband as well.

Nationally, the bill creates a $500 billion direct corporate aid program. Small businesses would have access to roughly $367 billion in loan programs with the caveat that they keep their workers during the coronavirus crisis. If employers continue paying workers, the loans would be forgiven. The bill also includes $25 billion directly for the airline industry.

Beyond loans, the bill would allow the Small Business Administration to provide $10,000 grants to small businesses as well.

The bill includes direct aid that will be sent to American families as well. Individual taxpayers would receive checks of $1,200 per year if they earned less than $75,000, which would be based on the adjusted gross income of taxpayers based on 2018 or 2019 tax returns. Married couples earning less than $150,000 would receive $2,400 and every child claimed on a tax return would be worth another $500.

To deal with the ramifications for health care from the coronavirus, the bill also would provide $130 billion for hospitals as well as $150 billion for state and local governments. For certain rural hospitals classified as Critical Access Hospitals, the bill would boost Medicare payments to 125% of medical costs for at least a six-month period. The White House had already ordered that Critical Access Hospitals also could expand their beds to deal with the potential rise in patients.

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

(BAS/SK )

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