DTN Ag Headlines

By Chris Clayton
DTN Ag Policy Editor

DES MOINES (DTN) -- Marty Matlock sees the efforts to address climate change, global population rise and agricultural sustainability as the need to further intensify food production on current cropland while better explaining the story of modern food production to consumers.

Matlock, a professor of biological and agricultural engineering at the University of Arkansas, was recognized Wednesday with the annual science communications award from the Council for Agricultural Science and Technology (CAST) at the World Food Prize's Borlaug Dialogue this week in Des Moines.

Nobel Prize laureate Dr. Norman Borlaug was a wheat breeder and considered father of the Green Revolution. Matlock said his message was tied to views expressed by Borlaug before he passed away in 2009.

"If we're going to feed 10 billion people on this planet without destroying all other life, we're going to have to strategically intensify agricultural production on the planet," Matlock said, adding that the footprint of agriculture needs to be frozen rather than expanded.

Matlock, who also serves as executive director of the University of Arkansas Resiliency Center, noted those views are shared by global conservation groups such as the World Wildlife Fund, reflecting a coming together of some conservation and farm organizations.

In a panel discussion on Wednesday, Matlock said consumers should not have to decide between "sustainable and unsustainable food." Consumers have a standard expectation of safety and should have the same expectation for sustainability. Food production, due to farmer stewardship, may already meet sustainability goals, but that message might not be reaching consumers, he said.

"What we have to do is tell that story better," Matlock said. "We have a very good story to tell. We're not done, but we have to tell it better because we're not telling it well."

Erin Fitzgerald, CEO of the U.S. Farmers & Ranchers Alliance, said consumer trust starts with stewardship. She noted every sector of the economy is trying to place an emphasis on sustainability.

"I believe the food and agriculture sector absolutely needs to own the topics of both stewardship and sustainability," Fitzgerald said. "There's no other sector that is actually delivering on the topics of sustainability other than the food sector."

Jason Weller, senior director of sustainability for Land O'Lakes SUSTAIN, pointed to the explosion of consumer interest in topics about how food is grown, tied to environmental and social issues.

"There's a reason why a lot of these big multinational food companies and retailers are moving in the direction towards trying to communicate how sustainable their products or their storefronts are driving sustainability," Weller said, adding that the focus is not just in coastal states or one demographic or generation. "Agriculture has a moment in time, as an industry, as a grower or as a cooperative system, a food company or an input company, to communicate how modern agriculture really is ensuring the integrity, not just the safety, the value of an item, but also the stewardship of the natural resources."

The risk, Weller added, is that agriculture might not be engaged enough in efforts to define sustainability, leading critics of modern food production to create definitions "and it will be defined for all of us and in ways that are not necessarily advantageous to the farmer."

Food companies like Pepperidge Farm, are working with Land O'Lakes because they want to make sustainability claims about its Goldfish crackers. The company is sourcing wheat in the Chesapeake Bay, tying it to efforts to reduce nutrient loads in the bay. This differentiates wheat but also highlights the relationship between the consumer and the farmer.

"That's actually constructive of the notion that our food systems are sustainable," Matlock said. He added, "I think that's a very positive message."

Fitzgerald later added there are change makers in other fields working on new technologies or space travel. She would like to see such an effort applied to agriculture and climate change.

"I would really like to encourage all of us to how we enable farmers to be the change makers of the future," Fitzgerald said.

Citing the growth in population, Matlock added that agriculture and society as well have to find ways to re-engage in developing trust that will ensure sustainable agriculture production as the population rises and the planet warms.

"Our challenges are urgent because our demographic changes are happening fast," Matlock said.

In redesigning agriculture, Matlock said the role of urban farming can't be dismissed. Because of high land values, more agriculture will be grown in greenhouses and small acreages intensely growing vegetables.

Matlock later acknowledged having a conversation around climate change isn't easy, because most grassroots farm organizations are reluctant to broach the topic. He said such efforts must begin with common values rather than division and blame.

"You build on what we agree, not where we disagree," Matlock said. "Every farmer out there knows their weather is changing. We're facing record floods, record droughts, record heat and record cold -- all in the last decade. This is part of their experience. They are not interested in casting blame, they are interested in understanding how they can respond. The problem we have with the climate change debate is about blame."

The larger theme at the World Food Prize symposium this week was nutrition, especially drawing attention to the dangers of early childhood stunted growth, a condition directly linked to malnutrition. This year's 2018 World Food Prize laureates Lawrence Haddad and David Nabarro spoke earlier this week at a side event on science and storytelling. They noted stunting has long-term economic impacts on nations, because stunting doesn't just damage children physically but has lasting impacts on mental capabilities as well.

"There's a direct link between early childhood malnutrition and education," Nabarro said. "Politicians are just starting to see that malnutrition is an issue that needs to be addressed for national development."

The pair talked about work to influence policymakers to give a higher priority to nutrition in government and aid-relief budgets.

"That's what I'm trying to do is get nutrition on the public agenda," said Nabarro, a former United Nations official.

Haddad, executive director of the Global Alliance for Improved Nutrition, said the U.S. is plagued by nutrition-related diseases such as diabetes. Healthier foods should be focused on adolescents who pick up eating habits they carry throughout their lives.

Haddad also said celebrity chefs have shown the ability to shift food consumption and demand as well. He also questioned the logic some argue of shifting to plant-based diets. That may be better for the environment, he said, "but on the health side, it seems much more complicated."

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

Follow him on Twitter @ChrisClaytonDTN

(AG/BAS)

By Russ Quinn
DTN Staff Reporter

OMAHA (DTN) -- Retail fertilizer prices continue to move higher slowly, according to prices tracked by DTN for the second week of October 2018. For the fifth week in a row, all eight major fertilizers were higher compared to a month earlier.

None of the eight, however, were up a significant amount. DAP had an average price of $501/ton, MAP $523/ton, potash $365/ton, urea $393/ton, 10-34-0 $452/ton, anhydrous $488/ton, UAN28 $238/ton and UAN32 $280/ton.

On a price per pound of nitrogen basis, the average urea price was at $0.43/lb.N, anhydrous $0.30/lb.N, UAN28 $0.43/lb.N and UAN32 $0.44/lb.N.

A recent DTN 360 Poll asked farmers: "With the fall fertilizer application season rapidly approaching, what best describes your fall fertilizer application season plan?"

The poll received nearly 400 responses between Sept. 14 and Oct. 15.

-- 45% chose "I do not plan to apply fertilizer this fall as I apply everything in the spring."

-- 27% picked "I plan on applying fertilizer this fall and I have locked in some of my fertilizer prices.

-- 21% responded "I plan on applying fertilizer this fall but have not yet locked in fertilizer prices."

-- 6% said "I plan on applying fertilizer this fall and will not be locking in fertilizer prices."

DTN asked a similar question last fall at the same time: "With harvest rapidly approaching, fall fertilizer application is also not that far away. What best describes to how you are handling fertilizer purchases for fall application?"

-- 52% of respondents said "Will not per-order fertilizer at all for fall application."

-- 29% chose "Will purchase fertilizer within the next month for fall application." --

12% said "Pre-ordered fertilizer within the last month for fall application"

-- 7% responded with "Pre-ordered fertilizer months ago for fall application."

Even though the questions weren't worded the same, they yield an interesting comparison. When you combine the answers about pre-ordering fertilizer, 48% of respondents locked in fertilizer prices ahead of application last year, while this year, only 27% did so.

Several factors could be driving this divergence. It's been a wet, slow harvest across a wide swath of the Corn Belt this year, and some farmers may run out of time to apply fertilizer this fall.

Another possibility: higher prices. Compared to last year, the retail price of all eight major fertilizers tracked by DTN are higher, with urea and anhydrous leading the way at 21% and 23% more expensive, respectively. Potash is 5% higher, 10-34-0 and UAN32 are both 10% more expensive, while UAN28, DAP and MAP are all 16% higher.

DTN would like to know: Are you pre-pricing fertilizer this year? Why or why not? Are your concerns primarily around the expense, the last harvest season or uncertainty about what you plan to grow next year?

Please send responses to: talk@dtn.com

DTN collects roughly 1,700 retail fertilizer bids from 310 retailer locations weekly. Not all fertilizer prices change each week. Prices are subject to change at any time.

DTN Pro Grains subscribers can find current retail fertilizer price in the DTN Fertilizer Index on the Fertilizer page under Farm Business.

Retail fertilizer charts dating back to 2010 are available in the DTN fertilizer segment. The charts included cost of N/lb., DAP, MAP, potash, urea, 10-34-0, anhydrous, UAN28 and UAN32.

DRY
Date Range DAP MAP POTASH UREA
Oct 9-13 2017 432 453 347 325
Nov 6-10 2017 434 459 341 338
Dec 4-8 2017 438 471 343 344
Jan 1-5 2018 452 490 345 350
Jan 29-Feb 2 2018 458 492 344 355
Feb 26-Mar 2 2018 461 497 346 361
Mar 26-30 2018 470 506 350 370
Apr 23-27 2018 485 504 353 367
May 21-25 2018 483 504 354 364
Jun 18-22 2018 485 505 354 364
Jul 16-20 2018 486 505 354 366
Aug 13-17 2018 487 508 356 363
Sep 10-14 2018 491 518 362 380
Oct 8-12 2018 501 523 365 393
LIQUID
Date Range 10-34-0 ANHYD UAN28 UAN32
Oct 9-13 2017 413 397 206 253
Nov 6-10 2017 403 409 216 272
Dec 4-8 2017 404 424 215 251
Jan 1-5 2018 409 474 219 256
Jan 29-Feb 2 2018 415 491 227 261
Feb 26-Mar 2 2018 416 496 233 279
Mar 26-30 2018 425 507 237 272
Apr 23-27 2018 431 507 241 277
May 21-25 2018 439 504 241 276
Jun 18-22 2018 440 503 242 277
Jul 16-20 2018 442 503 243 279
Aug 13-17 2018 446 481 233 271
Sep 10-14 2018 449 487 238 278
Oct 8-12 2018 452 488 238 280

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

Follow him on Twitter @RussQuinnDTN

(KD/BAS)

By Bryce Anderson
DTN Senior Ag Meteorologist

OMAHA (DTN) -- The weather recordkeeping winter season, from December 2018 through February 2019, is about five weeks away. Ahead of winter, the U.S. National Oceanic and Atmospheric Administration (NOAA), is calling for above-normal temperatures over the northern and western U.S. -- including the Plains and the northern and western Midwest -- with "equal chances" for above, normal, or below-normal temperatures elsewhere.

There is no region of the contiguous U.S. with below-normal temperatures forecast in the NOAA outlook.

That call is not universal in the weather community. DTN's winter forecast, issued in early October, contrasts sharply with NOAA's prediction. The DTN forecast is for below-normal temperatures -- a cold winter -- over much of the U.S. east of the Rockies.

This large departure has to do with how the influence of a weak El Nino temperature pattern in the equatorial Pacific Ocean is factored into the forecast. NOAA Climate Prediction Center Deputy Director Mike Halpert credits El Nino influence developing. "We expect El Nino to be in place in late fall to early winter," Halpert said. "Although a weak El Nino is expected, it may still influence the winter season by bringing ... warmer, drier conditions to parts of the north."

El Nino is an ocean-atmosphere climate interaction that is linked to periodic warm sea-surface temperatures in the central and eastern equatorial Pacific Ocean.

In contrast, DTN's forecast view is based on the weak El Nino having very little influence on the winter pattern, according to DTN long-range forecaster Nathan Hamblin.

"If there is a moderate or strong El Nino, the chances increase markedly for warmer than normal temperatures in the Midwest. We don't think that will happen, given the slow start to the development of this El Nino," Hamblin said. "A weak El Nino increases the risk for cold intrusions (the appearance of the 'Polar Vortex') during the winter, especially later in the winter."

With a weak El Nino likely, DTN's method gave more weight to winter weather patterns in similar (analog) years. The winter seasons selected were: 1968-69; 1977-78; 1994-95; 2003-04; and 2009-10. There were, indeed, some cold winters in this array of seasons.

Hamblin also noted that well-known weather agencies in the European Union and the United Kingdom are closer to the DTN viewpoint than they are to the NOAA forecast. "We leaned toward the ECMWF and UKMET models, which were in better phase with the type of pattern the analogs were showing," Hamblin said.

A key development will be how the Pacific El Nino evolves. A stronger El Nino would work in favor of the NOAA forecast call. "The stronger this El Nino gets, the better chance the (NOAA) CFS models will be correct," Hamblin said. "The next 30 days will reveal a considerable amount of insight as we observe El Nino's evolution."

Bryce Anderson can be reached at bryce.anderson@dtn.com

Follow him on Twitter @BAndersonDTN

(ES)

By Todd Neeley
DTN Staff Reporter

OMAHA (DTN) -- Agriculture interests waiting to hear what's next from EPA on the regulatory front -- including a possible rule to allow year-round E15 -- need wait no longer.

On Wednesday, the agency released its unified fall 2018 agenda. Included is EPA's plan to release a proposed E15 rule by February 2019 with the idea of finalizing the rule by May 2019.

Included in that rule, according to the agenda, are proposed reforms to the market for renewable identification numbers, or RINs, in response to refiner concerns about the costs to comply with the Renewable Fuel Standard.

Last week, President Donald Trump announced during a rally in Council Bluffs, Iowa, that his administration was ready to "unleash the power of E15."

In addition, the agency provided some insight into its plans for rewriting the waters of the United States, or WOTUS, rule.

By March 2019, the EPA is set to finalize a first rule to revert the WOTUS definition back to pre-2015, the year the Obama-era rule was completed. Then, the overall rewrite of the WOTUS rule is set for finalization in September 2019.

EPA Spokesman Michael Abboud told DTN the dates aren't necessarily set in stone, as the agency has the ability to advance rules on a faster timeline if needed.

In addition, the EPA agenda includes finalizing RFS volumes for 2019 and biomass-based diesel volumes for 2020 sometime next month. The agency also has the next round of proposed volumes set for finalizing in December 2019.

SCIENCE TRANSPARENCY RULE

On April 30, 2018, the EPA, led by then Administrator Scott Pruitt, proposed a data transparency rule to improve transparency in the science used by the agency to draft regulations.

That proposal has faced heavy criticism because of concern it would exclude the use of otherwise valuable science from EPA rulemaking.

On Wednesday, the agency announced in its agenda the rule is set for finalization in January 2020. Abboud told DTN the transparency rule was placed on the long-term action list because the agency does not expect to publish an action on the rule within the next 12 months.

After the transparency rule was released, EPA received a variety of public feedback. The agency held a public hearing on July 17, 2018, in Washington, D.C. During a 108-day public comment period, EPA received more than 597,000 written comments. Because of the scope and volume of comments, the agency needs time to consider all aspects of the rule before taking final action.

The EPA also expects to finalize a rule in May 2019 that exempts farms from reporting requirements on air emissions from animal waste, from the emergency release notification requirements in the Emergency Planning and Community Right-to-Know Act.

The EPA agenda said the agency also is proposing the addition of definitions of "farm" and "animal waste" to the EPCRA regulations.

In addition, EPA intends to finalize a rule in September 2019 to reconsider minimum age requirements for pesticide applicators.

A rule went into effect on March 6, 2017, but as a result of Trump's executive order 13777 that called on federal agencies to identify possible regulations for repeal, the EPA announced in December 2017 it was reconsidering the minimum age provision.

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

Follow him on Twitter @toddneeleyDTN

(AG/CZ)

By Chris Clayton
DTN Ag Policy Editor

DES MOINES (DTN) -- The Trump administration on Wednesday announced ambitious plans to negotiate separate trade agreements with Japan, the European Union and the United Kingdom. Coming off the completion of the new North American free-trade deal -- the United States-Mexico-Canada Agreement (USMCA) -- the Office of the U.S. Trade Representative announced the new talks to create three possible trade agreements.

"Under President (Donald) Trump's leadership, we will continue to expand U.S. trade and investment by negotiating trade agreements with Japan, the EU and the United Kingdom," said Ambassador Robert Lighthizer. "Today's announcement is an important milestone in that process. We are committed to concluding these negotiations with timely and substantive results for American workers, farmers, ranchers, and businesses."

Lighthizer's office sent letters to Congress notifying lawmakers of the talks. Under rules of a 2015 trade-promotion law, the USTR will publish objectives for all three potential trade deals at least 30 days before talks officially begin.

Senate Agriculture Committee Chairman Pat Roberts, R-Kan., said Wednesday he was encouraged by the administration's announcement, adding both President Trump and USTR Lighthizer "Recognize these are critical markets for farmers, ranchers and other businesses, representing hundreds of billions in exports of U.S. goods and services."

Roberts added, "I appreciate the Trump administration's work to ensure American agriculture has a seat at the negotiating table."

The American Soybean Association noted it has called for a negotiated solution between the U.S. and China, stating its farmers hope that lost exports to China can be offset through new free-trade agreements. Entering into talks with the EU, Japan and U.K., "Will make a settlement with China a plausible next step, bringing an end to the devastating tariff imposed on American soybeans."

China and the U.S. have been back and forth with retaliatory tariffs that have left U.S. agriculture effectively losing what was the top destination for U.S. farm products, especially soybeans. Trump was briefly asked about China at the White House on Wednesday, noting that China wanted to make a trade deal. "I told them they are not ready," Trump said. "It's hard for them, they've had it so good for so long."

Japan was the fourth-largest market for overall U.S. exports at $67.6 billion in 2017 and the fourth-largest market for agricultural products at $12 billion. Still, the USTR noted there are significant challenges for key exporters in areas such as automobiles and agriculture, and the U.S. maintains nearly a $69 billion trade deficit with Japan. The U.S. already is slightly behind the European Union, which completed talks for a trade agreement with Japan in early July.

According to USDA, the top U.S. agricultural products sent to Japan in 2017 were corn at $2.16 billion; beef and beef products at $1.86 billion; pork and pork products at $1.68 billion; soybeans at $980 million; and wheat at $720 million. In looking at the European Union, the USTR noted the U.S. and EU have a large complex volume of trade reaching more than $1.1 trillion in bilateral trade. At the same time, the EU maintains a $151.4 billion trade surplus with the U.S., which has become a sticking point with President Trump.

In seeking to work with the EU, Trump and EU leaders back in July announced plans to lower tariffs on industrial goods while Europe agreed to buy more U.S. natural gas and U.S. soybeans.

The Obama administration had worked for nearly six years to negotiate the Transatlantic Trade and Investment Partnership (TTIP) with the EU, but those talks ended just before Trump became president.

Trump administration officials are just beginning talks with the EU, but there is already some frustration. Dow Jones reported Wednesday that U.S. Commerce Secretary Wilbur Ross said President Trump wants quick results from trade talks with the European Union and warned that progress was unsatisfactory.

"We really need tangible progress, our president's patience is not unlimited," Dow Jones quoted Ross saying during a press briefing in Brussels, Belgium, after meeting European Trade Commissioner Cecilia Malmstrom in the EU's capital.

The United Kingdom will not be allowed to negotiate individual trade agreements until the UK officially leaves the European Union, which is set for March 29, 2019.

Over the past two years, the Trump administration has had a working group talking with UK officials on the possible outlines of a trade deal. On an equivalency level, U.S.-UK trade is estimated at $235.9 billion last year with the U.S. carrying a trade surplus of about $15.9 billion.

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

Follow him on Twitter @ChrisClaytonDTN

(BAS/AG)

By Chris Clayton
DTN Ag Policy Editor

DES MOINES (DTN) -- The gap is growing between global food demand in the future and the projection on the rate of growth for agricultural production, a new report shows.

The 2018 Global Agricultural Productivity (GAP) Index, put together by the Global Harvest Initiative, continues to highlight that food production is not growing fast enough to sustainably feed the world in 2050.

This is the fifth-straight year the report has shown a wider spread between future food supply and future demand. The report warns that if this trend isn't reversed, the world may not be able to provide the necessary food, feed, fiber and biofuels for a growing global population.

The productivity gap for food production is more pronounced in low-income countries, which are not growing food production nearly enough to keep pace with future demand. "Total Factor Productivity" in low-income countries is growing at 0.96% annually, which is down from projected growth over the past two years, the GAP report stated. This falls well below the growth rate needed to achieve sustainability goals of doubling food productivity in low-income countries and achieving "zero hunger" by 2050.

To meet the projected demand of 10 billion people in 2050, the GAP report stated global agricultural productivity must increase by 1.75% annually. Such growth is needed even as climate scientists warn crop production will decline, especially in tropical environments in coming decades because of higher temperatures and more volatile weather patterns.

The GAP report noted the impact of climate change on both production and food prices, citing 10 different models that suggest "climate change will generate higher prices for agricultural commodities in general and particularly for crops. The impact of climate change must be considered to avoid a downward bias in projected supply estimates."

The GAP report called the U.S. an "agricultural powerhouse" because of decades of improved efficiency and rising production. But the report also cited that average U.S. Total Factor Productivity did not grow from 2006 to 2015 as quickly as it had in previous decades. The Total Factor Productivity looks at increases in crop production, but also the costs to farmers to produce food, loss and waste in the supply chain and costs to consumers.

Yet the report comes as USDA cites the U.S. facing record U.S. corn and soybean supplies for the 2018-19 marketing year. Last week, USDA's World Agricultural Supply and Demand Estimates showed corn production at 14.78 billion bushels -- not a record -- but corn supplies are forecast at a record because of old-crop carryover of 2.1 bb. Soybean supplies in the U.S. are pegged at 5.15 bb, based on record production and higher beginning stocks as well.

Coupled with farm production, the GAP report cited that economic prosperity continues to slip in rural America. Three-quarters of counties with the highest rates of food insecurity are in rural America. Farm income has also seen roughly a 52% decline since 2013, the steepest drop since the 1930s.

"As a result, the amount of working capital that (U.S.) farmers have available to maintain, improve and expand their operations is at the lowest level in 10 years," the GAP report stated.

Global hunger, driven by drought and conflicts, rose last year, reaching 821 million people who were considered chronically hungry by the United Nations. As many as 124 million people faced acute malnutrition and starvation.

To achieve needed food-production growth in the coming decades, the Global Harvest Initiative cited more efforts are needed to advance research and development investments globally. More research and development is needed to avoid farmers expanding cropland into more environmentally sensitive areas that may not translate into growing more food. "Without these innovations, farmers, particularly in food-deficit countries, will put more fragile land into production to increase output and will experience greater hunger and poverty."

Beyond R&D, the GAP report cited more investment is needed in areas of public policy, such as trade, embracing science and public-private partnerships.

"Innovation and productivity are essential to keeping pace with the quantity and quality of food that consumers are demanding. We all have a role to play in creating a healthier, more sustainable world. The power of robust public research and strong public policy are often overlooked," said Doyle Karr, Biotechnology Public Policy director, Corteva Agriscience, the Agriculture Division of DowDuPont, and chair of the board for the Global Harvest Initiative.

Along with growing food production, society also is placing more demands on agriculture to reduce greenhouse gas emissions, as well as better stewardship of soil, water and wildlife, said Margaret Ziegler, executive director of the Global Harvest Initiative. Those sustainability areas are driving more consumer demand for climate-friendly production and supply chains, Ziegler said. The GAP report also highlighted some areas where this kind of consumer demand is reshaping the food and agricultural supply chains.

The Global Harvest Initiative is a group set up by John Deere, the Mosaic Co., Smithfield Foods, Monsanto Co. (now part of Bayer AG) and Corteva Agriscience, the ag division of DowDuPont.

The GAP report is released every year at the World Food Prize Symposium in Des Moines.

The full GAP report can be viewed at: https://globalagriculturalproductivity.org/…

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

Follow him on Twitter @ChrisClaytonDTN

(BAS/SK/ES)

By Emily Unglesbee
DTN Staff Reporter

ROCKVILLE, Md. (DTN) -- Most people recall the heat of the 2012 drought.

Jessie Alt remembers the sound.

"In 2012, when soybeans were shattering due to dry conditions, the pod can really burst open and the seed can literally spread itself out and you can hear it happening -- it's like popcorn out in the field," said Alt, who works as a research scientist and soybean breeder for Pioneer, now under Corteva Agriscience. "It's a stomach-turning thing to hear because you realize what's happening out there."

Fast forward to 2018 and the same phenomenon of shattered soybeans is plaguing many growers across the Midwest and South. But this time, it's excessive moisture and delayed harvest that's to blame, Alt said.

The science behind shattered pods and dropped beans is a delicate dance between genetics and environment. Alt, as well as University of Minnesota Extension agronomist Seth Naeve, helped us tease out the reasons why this phenomenon is causing so much trouble for farmers this fall.

THE GENETICS BEHIND SHATTERING

In the long battle to free soybeans from their tendency to shatter, soybean breeders like Alt are working against the plant's fierce drive to reproduce successfully.

"Breeders are pulling this trait out of eons of evolution," said Naeve. "Wild soybean plants actually evolved to preferentially throw seed as far from the plant as they could -- and that had to be bred out slowly over time."

Slow is the operative word, Alt noted. Unlike diseases or insects, shattering is difficult to induce in the field, and no single gene or group of genes controls it. Untangling it from the soybean's germplasm is not a straightforward task.

"I've been doing this for over 20 years now, and shattering is something we work on every year," she explained. "Shattering is a lot more like breeding for yield -- you need lots of locations, different environments and replications to study it, and we continue to make nice, slow, steady progress -- slower perhaps than people would like at this time."

Yet breeders have already come a long way, Alt and Naeve noted. "Even just 10 to 20 years ago, shattering was a hugely significant issue," Naeve said. "Now all those lines that had serious susceptibility to shattering have just been removed from the system."

THE ENVIRONMENTAL FACTORS

Nowadays, the biggest factor behind shattering is Mother Nature.

The soybean pod is held together by a tough seam that scientists call the pod "suture." The pod suture is used to withstanding the normal wetting and drying that a mature soybean goes through in the fall, when the bean's moisture can vacillate between 8% and 13% within a day, as the air temperature and humidity rise and fall.

But the longer mature soybeans sit in the field, the more wetting and drying cycles they go through, and the weaker the pod and the pod suture become, Alt said. So anything that causes a bean to stand beyond its ideal harvest time will heighten the risk of shattering.

Some of those causes are man-made -- for example, some farmers plant shorter-season soybeans than their region requires in order to stagger their grain harvests, but then can't get them out as early as they had hoped.

But most are weather-driven. In Alt's research territory in Iowa, rains have come fast and furious since August.

"From Aug. 1 to Oct. 8 in my area in Iowa, we have seen anywhere from 3 to 16 inches above the 30-year average rainfall," she explained. "And the majority of that came from Aug. 20 and later -- right as soybeans were maturing."

The excessive rainfalls across wide swaths of the Midwest and South this year have led many soybeans to endure far more dramatic swings in moisture content, Naeve said. "Now the bean is going from 9% to 20%, and now we've increased the size of the seed [with swelling]."

A few repeats of that, and the soybean pod becomes too fragile to withstand its swollen seeds, Alt said. "That pod suture just weakens and breaks open," she said.

Some soybean seeds, especially those that sat under warm and wet conditions for many weeks, have actually sprouted within the pod, adding to the pressure against the pod suture, Naeve said.

As happened in 2012, extreme heat and dryness can also lead to abnormal shattering, Alt added. But in those cases, the pod is more brittle and more likely to launch seeds when it pops open. This year, pods have stretched open more slowly, and many seeds may hang there for a period of time before dropping.

Naeve said he observed one field shattering from a severe case of SDS, which caused the plants to mature prematurely and stand in the field too long before harvest. Other diseases, like frogeye leaf spot or SCN, can also heighten the risk of shattering by compromising the plant's health, he added.

"Once you have stressed plants, they may not function very well and have a good, protective pod on that plant," he explained.

THE CONSEQUENCES

Once soybean seeds drop to the ground, it's game over. That yield is lost.

Some soybeans may still hang from the pod, but they will be at high risk for dropping during harvest or during the wait for harvest, Naeve said. Chances are good that they, too, are lost to the farmer.

Those losses can add up quickly. Kansas State crop scientists estimated that four dropped seeds per square foot of soil surface translates to a loss of one bushel per acre. (See that article here: https://webapp.agron.ksu.edu/…)

Even if the exposed soybeans do make it into the combine, many will be rotted or sprouted, which can lead to discounts at the elevator -- from already depressed soybean prices. Remember that even if the sprout falls off a soybean seed, the bean is already compromised.

"That seed has already converted oils and carbs into sugars," Naeve said. "It will cause problems from an elevator standpoint, with quality issues, and from a storage standpoint, with molding in bins."

Naeve strongly recommends scouting before harvest to see the extent of shattering in fields. If possible, he urges farmers to segregate the worst sections of the farm or field, and resist the temptation to blend those soybeans with better ones.

"Elevators will be really quick to dock soybeans for too high of moisture or damage," he said. "They've got more beans than they can take. The worst thing that can happen is they contaminate their whole crop with their worst beans. Better to take a loss on a small portion than take a loss on the whole crop."

For help on how to adjust your combine to minimize losses when harvesting a field with shattered pods, see this article from Pioneer here: https://www.pioneer.com/…

Emily Unglesbee can be reached at Emily.unglesbee@dtn.com

Follow her on Twitter @Emily_Unglesbee

(PS/AG)

By Katie Dehlinger
DTN Farm Business Editor

MOUNT JULIET, Tenn. (DTN) -- Acreage planted to organic field crops is on the rise while land planted to non-GMO corn and soybeans declined, according to a new report from Mercaris, a market data and trading platform for the identity-preserved grain industry.

The number of farms certified under USDA's National Organic Program increased 3% in 2018 to 17,648, with the biggest gains coming in the Northeast, Corn Belt and West Coast.

Mercaris estimates the number of certified organic acres in 2018 will total 6.5 million, up 2% from last year.

"One of the things that's most fascinating about this report is looking at total acreage expansion relative to the number of certified organic operations," said Mercaris senior economist Ryan Koory. "Actual acreage expanded at a slower pace than the number of certified farms, and there's a bit of a spatial reason behind that."

Farms along the Great Lakes and East Coast tend to be smaller overall in acreage than in other parts of the country, like the Northern Plains. They're also closer to a major centers of demand, and that's one of the reasons driving a sizeable increase in organic soybean acreage in 2018.

Mercaris uses data from USDA's Organic Integrity Database, National Agricultural Statistics Service, Economic Research Service and other surveys to compile its estimates. The company shared general production changes with DTN, but kept specific acreage and related figures confidential for its data customers.

Koory said demand for organic livestock feed is one of the main drivers of organic crop expansion. Organic corn, soybeans and wheat are expected to account for approximately 1.2 million acres in 2018.

"If you look at the relationship in terms of domestic supplies, within the organic sector, historically the United States has been a major importer of corn and soybeans," Koory said. He estimates that last year, the U.S. imported 60% to 70% of its organic soybean needs and 30% of its organic corn use.

The number of certified organic corn operations increased 4% from last year, while overall acreage is set to expand 2%.

The growth was even stronger in soybeans. More than 2,500 operations produced organic soybeans, up 7% from last year. Overall organic soybean production also saw a 7% increase from last year, with large gains in Illinois, Iowa, Michigan and Missouri.

"There's a much bigger gulf in terms of demand and supply for soybeans in the U.S. than there is corn. I think that's part of why you're seeing more expansion in soybean acres, but that's a little bit of a tricky thing to say because organic doesn't get to function like the conventional sector," Koory said. "They rely much more heavily on crop rotation, and because they must do these crop rotation regimes to protect the soil and mitigate pests, they don't have the flexibility to just rotate in a cash crop of their choosing whenever they decide to."

The crop rotation effect is especially prominent in wheat acreage this year, he said. While the overall number of certified operations with wheat in their rotation are up 4%, the Mercaris acreage report notes that most of those gains are in the Corn Belt, where the average size of certified operations are smaller than in the central Plains.

Wheat is a more common part of the crop rotation in the central Plains, and Mercaris estimates wheat acreage there will decline 1% from last year as farmers grow more organic hay, small grains, soybeans, sunflowers, and dried beans, peas and lentils.

Altogether, Mercaris estimates organic wheat acreage will increase 1% year-over-year/acres. Wheat accounts for 19% of total organic field crop acreage.

"We could see wheat swing back big next year or the year after," Koory said.

Alfalfa and hay are the most widely grown organic crops, accounting for nearly 35% of all harvested organic acres in 2019, and the primary reason for that is its role in crop rotation. "You have to have a fallow period periodically. It comes down to maintaining soil integrity and plays a major role in acreage," Koory said.

To a large degree, the organic industry is flying blind when it comes to historical data about production.

"You couldn't imagine the conventional sector not having a planting intentions report or not having yield estimates or any kind of idea of what stock levels look like. These are all things that the organic sector has no perspective on," he said.

Farmers who are considering transitioning to organic production or adding more acreage can use better knowledge about rotation cycles to make their planting choices, Koory said. "If everybody kind of knows what's going on, you'll lose these peaks and valleys, because everybody will be off-cycle from each other and help smooth out that supply."

NON-GMO ACREAGE DECLINES

Mercaris also released an estimate of crops raised from non-genetically modified seed by extrapolating from USDA data on overall acreage and biotechnology usage rates.

In 2018, farmers planted fewer total acres of corn and soybeans and used more genetically modified seed varieties. As a result, overall non-GMO acreage declined 5% from 2017 to 12.1 million acres.

Total U.S. non-GMO corn acreage declined for the second year in a row. Iowa remained the largest overall grower, with total acreage flat from 2017; Indiana producers planted the second highest acreage, up 3% year-over-year. In contrast, Illinois's non-GMO corn acreage declined 39%, while the state's total corn acreage only declined 2%. Mercaris attributes the change in non-GMO acreage to farmers planting more GMO corn varieties. A number of states saw increased non-GMO corn acreage, but it wasn't enough to offset the reductions seen in other parts of the country.

Total non-GMO soybean acreage declined 7% from last year. The largest decline occurred in Missouri, which was the top grower of non-GMO beans in 2017. Illinois moved into the lead following a 3% increase, while Indiana came in second, with a 13% gain.

Koory said there are a lot of reasons why farmers choose to plant non-GMO seeds: Some are after non-GMO premiums, while others have decided they either don't need the biotech traits or are trying to save money with less-costly non-GMO seed.

"It's really hard to untangle, or nigh-impossible, with information available what is truly being produced for non-GMO markets and what's being produced because it behooves the farmer economically," he said.

Mercaris, based in Silver Spring, Maryland, issues reports and other market data aimed at providing transparency in the organic and other specialty commodities markets, as well as building a variety of auction and trading services to help farmers make better business decisions.

To learn more, visit:

https://mercaris.com/…

Mercaris and DTN in August announced an agreement to provide exclusive market data to DTN Prophet X customers.

To learn more, visit:

https://www.dtn.com/…

Katie Dehlinger can be reached at Katie.dehlinger@dtn.com

Follow her on Twitter @KatieD_DTN

(GH/BAS)

By Todd Neeley
DTN Staff Reporter

OMAHA (DTN) -- Ethanol profit margins at DTN's hypothetical 50-million-gallon plant in South Dakota hit their lowest levels of 2018 this week after corn prices dramatically increased in the past month.

Including debt service and depreciation, Neeley Biofuels reported a net loss of 34.5 cents per gallon of ethanol produced. However, assuming most corn ethanol plants today are free and clear of debt and depreciation, the net-margins picture is much different.

Operating profits, the margins not including depreciation and debt service, reported a net loss of 3 cents per gallon.

The October update marked the first time net margins and operating margins were both reporting losses at Neeley Biofuels. Since last month, margins have fallen about 11 cents per gallon.

Since our July 6 update, however, net margins including debt service and depreciation have fallen by 25.5 cents. Operating margins on July 6 posted a 22-cent gain.

DTN Analyst Rick Kment said profits have continued to fall as corn-buying activity has been on the rise.

"Ethanol plant profitability levels continue to erode with active buyer support seen in the corn market increasing overall production costs of the plant," he said.

Since our September update, the corn price paid by Neeley Biofuels has increased by 21 cents per bushel. The corn price paid by the plant for this update came in at $3.78.

"Ethanol futures have wandered within a 4-cent trading range over the last month, leaving nearly all of traders' focus on the direction of corn prices and overall cost of production," Kment said.

The price of ethanol received by Neeley Biofuels increased from $1.25 per gallon in September to $1.37 this week. The ethanol price received by the plant still remains far below the $1.53 per gallon received in August.

Pavel Molchanov, senior vice president and equity research analyst at Raymond James and Associates, said ethanol prices have been hurt by recent trade conflicts.

In 2017, the United States exported 1.4 billion gallons, or 9% of total domestic production, with the top three destinations being Brazil, Canada and India.

"Exports to China, on the other hand, dropped by more than 90% -- the direct result of China's decision to impose a 30% tariff on U.S. ethanol," Molchanov said, "one of the first manifestations of the bilateral trade war that has been escalating ever since."

The Chinese tariff on U.S. ethanol was expanded to 45% in April 2018, essentially shutting down the ethanol trade between the two countries.

"Less impactful, but still noticeable is Brazil's 20% tariff on U.S. ethanol, also dating back to 2017," Molchanov said. "The key point here is that ethanol is not immune from the global proliferation of trade conflicts. The current ethanol pricing discount versus gasoline is at historically wide levels, the widest in more than five years. I think the main culprit here is the dislocation in exports arising from the trade wars."

DTN established Neeley Biofuels in DTN's ProphetX Ethanol Edition as a way of tracking ethanol industry profitability. Using the real-time, commodity price data that flows into the "corn crush" in ProphetX and some industry-average figures for interest costs, labor and overhead, DTN is able to track current profits. It also tracks how much Neeley Biofuels would make or lose under an infinite number of "what-if" scenarios.

DTN uses industry-average figures from Iowa State University economist David Swenson. Included in the figures are annual labor and management costs, transportation costs, debt-servicing costs, depreciation and maintenance costs. Even though Neeley Biofuels is paying debt-service and depreciation costs on its plant, many real plants are not in debt.

Also, it should be noted the calculations include all other costs such as chemicals and yeasts, electricity, denaturant and water. While DTN uses natural gas spot prices for these updates, many ethanol plants lock in prices on the futures market, so they are not as vulnerable to natural gas market volatility.

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

Follow him on Twitter @toddneeleyDTN

(BAS/SK)

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