Ag Groups Focus on Crop Insurance

The House Agriculture Committee continues key farm bill hearings this week, and as it does a dozen farm groups have sent a letter to House Ag Chairman Frank Lucas and Ranking Member Collin Peterson on the importance of crop insurance. In their letter the groups state – Federal crop insurance provides an effective risk management tool to farmers and ranchers when they are facing losses beyond their control. They note – it reduces taxpayer risk exposure; it makes hedging possible to help mitigate market volatility; and it provides lenders with greater certainty that loans made to producers will be repaid.

One of the groups that signed the letter was the National Corn Growers Association. NCGA has previously stated that crop insurance remains the number one priority in the new farm bill as well as a market oriented, risk management tool to cover multi-year price declines.

Other groups signing the letter were: American Farm Bureau Federation; American Soybean Association; American Sugarbeet Growers Association; National Association of Wheat Growers; National Barley Growers Association; National Cotton Council; National Farmers Union; National Sorghum Producers; National Sunflower Association; U.S. Canola Association; and the USA Dry Pea & Lentil Council.

Source: NAFB News Service

Agriculture lender Farm Credit Services of Mid-America announced 2012 first quarter earnings of $ 72.9 million, compared to $ 48.7 million in the same period in 2011. Owned and managed assets surpassed $ 18 billion, a 6.8 percent increase over March, 2011.

Farm Credit’s first quarter performance was directly related to the strong agricultural economy and robust farm land values. “While farmers are able to pay down debt, we saw an increase in new loan activity, particularly on mortgage loans,” said Bill Johnson, president and chief executive officer.  “For the first quarter, loan closings were up more than 20 percent for farm land purchases and almost 50 percent for consumer mortgages.”

Credit quality of the association’s portfolio was also stable. Adversely classified loans decreased to 3.8 percent of the loan portfolio compared to 3.9 percent at December 31, 2011.

The association’s commitment to rural America remained strong and Johnson sited conversion activity as one example of that commitment. “Since the beginning of the year, Farm Credit has converted – or refinanced – nearly 15,000 customer loans representing more than $ 2.2 billion in volume with a customer interest expense savings of $ 57 million over a three year period. Our fee for conversions is minimal with very little paperwork involved and our customers are often surprised that we can lower their interest rate even on fixed rate loans.”

Another way the association provided value to rural communities was through the availability of long-term fixed rate financing for farms. “Almost 50 percent of our customers have fixed rate loans of 10 years or longer. In today’s volatile farm environment, one way to ensure that the cost of farmer’s financing remains consistent is through fixed rates.”

Johnson added that the association’s strategic plan calls for continued growth. “We’ll do that by making certain that our products and programs fit our customers’ needs and adapting to the changing demands of a new agriculture marketplace.  It’s all about providing value to those who live and work in rural America.”

To see the complete results, go to www.e-farmcredit.com, select News, then Quarterly Report.

About Farm Credit Mid-America

Farm Credit Mid-America is an $ 18.3 billion financial services cooperative serving more than 95,000 farmers, agribusinesses and rural residents in Indiana, Ohio, Kentucky and Tennessee. The association provides loans for all farm and rural living purposes including real estate, operating equipment and housing and related services such as crop insurance, and vehicle, equipment and building leases. For more information about Farm Credit, call 1-800-444-FARM or visit them on the web at www.e-farmcredit.com.

Source: Farm Credit Mid-America

Financial
Dow sags into a 63 point lower close
S&P 500 down 8 to 1330 with next support at 1300
Crude trades down to $93.26
Dollar bolts up 66 to 81.27 with an 81.78 yearly high (The best bet in a troubled world)
The Greek tragedy and Spain and Italy close behind continue to weigh on values, especially oil
DAX off .8% watch Wednesday morning first thing
Bernanke warns that US is approaching a fiscal cliff
French President Plane hit by lightening—an omen?

Livestock
Cattle creep up on cash with June at a $4 discount
Memorial Day meat pricing firms values
Boxed beef was, however, just steady at noon
Outside markets give meats the he be gibes
June hogs are at the highest point since 4/27
Cash call steady to higher
Watch pork cutout Wednesday morning

Grain and soybeans
Short covering closing near their highs in all
Little export activity
South Korea routinely buys 56,000 tons of corn
Corn plantings 87% done and beans 46% with spring wheat 94% complete
Kansas wheat 52% good to excellent down from 60% last week and watch western plains dryness
Watch for stories of woe out of the Ukraine
European rapeseed production at a six year low
Chinese corn plantings seen up 2%
On weakness December support is at $5
Remember short covering is the weakest form of buying
Wheat harvest beginning means hedge pressure

10:58  update

Greek possible exit from EU offsets better German 4Q GDP

US on fiscal cliff?  I hear that kind of talk from credible sources

Bargain hunters rally palm oil which is sensitive to European woes

India grain stock as of 5-1 at 38 MT versus a 4 MT average

Moderate short covering in grains and soybeans

10:29 update

Dow up 18
JP Morgan comes back 2.1%
Builder’s sentiment improves
Short covering in grains and oilseeds
Wheat harvest beginning and so shall hedge pressure
Beef and pork benefit from Memorial Day pricing

Financial
German GDP up.5% in 4Q, versus .1% expected and -2% in 3Q
Europe stagnates for the day
S&P 500 support 1340 and then 1300
Dow closes below 12,700 with 12,500 next
Pre open Dow trade was up 75 points—Dow beats quick retreat down 10 at 8:48
DAX up just.2%
Crude little changed at $94.73
Dollar index pushes higher up 22 at 80.83 with years high at 81.78
Gold static at $1560
Euro zone worries just distracted by German GDP

Livestock
Retailers begin pricing Memorial Day features and choice beef raises $1.93 and select up $2.05
Last weekend clearance helped by weather and next two weeks look ducky
COF Friday
Cattle technical action positive Monday
Cattle slaughter 127,000 up 8000 v last week and hogs down 10,000
Pork cutout $1.44 better with loins up $2.69 and hams + $.69
Some see Chinese hog prices falling 20%

Grain and soybeans
Corn 87% planted as expected and beans 46% also on target both about one month ahead of schedule
Spring wheat 94%
Winter wheat condition 60% good-excellent down from 63%
Brazilian bean harvest done
Brazilian corn estimate 64 MT up from 62 MT
December corn support at $5.00
Watch western wheat area for dryness
22 hour trade begins 5-21 amidst some Ag industry opposition
Export sales Thursday, June crop estimate (Not a survey and none until August) on 6-12 with the quarterly stocks on 6-29
Short covering rallies over night

The U.S. and Colombia Trade Promotion Agreement is now in force. According to Ag Secretary Tom Vilsack, – as of Tuesday, U.S. agricultural exporters receive duty-free access on more than half of the products we currently export to Colombia, and virtually all remaining tariffs will be eliminated within 15 years. Estimates show that the tariff reductions in the U.S.-Colombia Trade Promotion Agreement will expand total U.S. exports by more than 1.1-billion dollars, while increasing U.S. GDP by 2.5-billion.

For agriculture, the agreement with South America’s third-largest economy achieves two key trade objectives for the United States: it immediately provides vastly improved access to Colombia’s market, and it levels the playing field with respect to third-country competitors. Under the agreement, American farmers and ranchers can expect to see their exports grow by more than 370-million dollars, or more than one-third of the current total.

Colombia will immediately eliminate duties on wheat, barley, soybeans, soybean meal and flour, high-quality beef, bacon, almost all fruit and vegetable products, wheat, peanuts, whey, cotton, and the vast majority of processed products. The Colombia TPA also provides duty free tariff rate quotas on standard beef, chicken leg quarters, dairy products, corn, sorghum, animal feeds, rice, and soybean oil.

Steve Wellman, President of the American Soybean Association, and a soybean farmer from Syracuse, Nebraska, says – the pact expands a valuable and growing export market for American soybeans, meal, oil and products that require soy inputs like dairy, meat and poultry. The agreement also helps us regain lost market share in Central and South America’s third largest economy. Last year, the U.S. exported more than 182-million dollars in soybeans and soybean products to Colombia.

China, Japan and South Korea Considering FTA
After a decade of discussions, China, Japan and South Korea have agreed to soon launch negotiations on a three-way free trade pact. Officials say the Japan-China-Korea FTA will be – an extremely important piece of economic cooperation. According to the official Xinhua news agency, leaders also – agreed to a three-way investment treaty – one stepping stone to the bigger and much more contentious goal of a free trade deal.

Negotiations are expected to be difficult. Standing in the way are tensions on the Korean peninsula, political distrust, trade barriers and diverging investment policies. The three nations are major traders, and together accounted for 19.6 percent of the world’s economy and 18.5 percent of its exports in 2010.

Source: NAFB News service