Market Matters Blog
Katie Micik DTN Markets Editor

Wednesday 08/26/15

2014-15 Crop Year Ends For Corn, Soybeans, Spring Wheat Basis

As the 2014-15 crop marketing year draws to a close, let's look at how basis fared in the past 12 months. In general, at the end of August 2015, corn, soybean and wheat basis is about 30 to 40 cents weaker than the 5-year averages for each crop.

(DTN chart)


The national average soybean basis for the last week of the crop year is at 7 cents under the November futures, 1 cent weaker than last week and 34 cents weaker than the DTN five-year average at this time.

The average soybean basis for the 2014-15 crop year was -35. Basis spiked at the beginning of the crop year as supplies became tight ahead of new-crop harvest. Processors were bidding strong with many paying above posted prices in order to meet their needs for crushing.

Once harvest began in late September 2014, with good yields reported, soybean basis dove off its highs -- which can be seen on the accompanying chart.

Soybean basis spiked a little in June as heavy rains caused the closure of the Illinois River twice, stopping river terminals from loading out beans. High water problems also existed in St. Louis, slowing and in some cases, stopping barges from getting to the Gulf and preventing empties from moving back up river.

After USDA surprised the market on August 12 with an average soybean yield estimate of 46.9 bushel per acre, the cash price fell apart, leaving the basis to do the work of enticing farmer selling in order to meet exporter and processor needs. The market had expected USDA to report lower yields due to heavy rains and flooding in much of the Eastern Corn Belt, causing many fields to go unplanted and damaging waterlogged soybean plants. As the crop year comes to a close, basis has been mixed, but new-crop basis has been stronger as exporters need soybeans to start fulfilling export contracts at the Gulf and Pacific Northwest.


The national average corn basis for the last week of the 2014-15 crop year is at 23 cents under the September futures, 1 cent stronger than last week and 29 cents weaker than the DTN five-year average at this time. The average basis for the crop year was -28.

Corn basis was steady most of this crop year thanks to decent export and ethanol demand. Ethanol plants have enjoyed positive margins much of this year, encouraging them to keep producing ethanol, which in turn requires more corn usage. In June, basis was firm due to the heavy rains caused by Tropical Storm Bill, which greatly affected the Illinois and Upper Mississippi river levels and caused problems down river as flood debris threatened moving tows and barges. Basis remained steady as the year came to an end, mainly due to continued demand from exporters and ethanol plants and lower cash prices caused by the prospects for a large harvest this fall.


The national average spring wheat basis for the last week of the 2014-15 crop year is at 47 cents under the September Minneapolis futures, unchanged from last week and 37 cents weaker than the DTN five-year average at this time. The average basis for the crop year was -10. Spring wheat basis was strong at the beginning of the crop year due to lower protein and low vitreous kernel content, along with rain, which prolonged harvest. Premiums for higher protein milling quality wheat spiked as mills vied for blending material. The high basis for the crop year for spot 14 protein on the MGEX spot market was at +350mwz and the high for spot 15 protein was at +675mwz. In contrast, current MGEX spot 14s are trading at +70 to +105 and 15 proteins are at +160.

As the 2015 new-crop harvest moves along, average protein so far has been reported at 14.3 vs. the final 2014 average of 13.6. With 75% of the spring wheat harvested as of one week ago, the samples so far are showing test weights of 61.9 pounds vs. last year of 60.6 and average vitreous kernel count is at 77% vs. last year of 65%, making the new-crop grade DNS vs. NS last year. Dark Northern Spring Wheat is the preferred flavor of wheat by the nearly all buyers of U.S. spring wheat.

Mary Kennedy can be reached at

Follow her on Twitter @MaryCKenn


Posted at 3:41PM CDT 08/26/15 by Mary Kennedy

Monday 08/10/15

STB Needs to Make Timely Decision on Revenue Adequacy, Grain Rates

MINNEAPOLIS (DTN) -- The Surface Transportation Board needs to quickly move ahead with a comprehensive set of proposals for railroad grain shipping rates and rail revenue adequacy in order to create more certainty for both shippers and railroads, the former acting chairman of the STB told attendees at this year's National Grain and Feed Association Ag Transportation Summit. The event was held Aug. 4-5 in Rosemont, Illinois.

A BNSF train heads east on the Northern Transcon. (DTN photo by Mary Kennedy)

Deb Miller, former acting chairman of the STB, told attendees at the summit that, in her opinion, "The STB should move forward with a comprehensive package of all current proposals before the board and not piecemeal them one by one." Miller said that "shippers and railroads need more certainty as some of the issues have been open for years."

The STB is currently reviewing whether to establish a new process that agricultural commodity shippers could use to challenge freight rates they believe are unreasonable or unlawful under the Staggers Rail Act of 1980. It is also reviewing how it annually determines whether a rail carrier is revenue adequate -- that is, whether it is earning sufficient revenue to cover its costs and earn a reasonable return sufficient to attract capital.

Shippers and railroads had until Aug. 6 to submit new or additional comments to the STB on these two key issues before the board. The STB also held two hearing prior to the public comment period deadline. The first, on June 10, addressed the rail transportation of grain and rate regulation review. A second hearing addressing railroad revenue adequacy was held July 22-23.

Miller told attendees at the NGFA Transportation Summit last week that she was "amazed by the level of complexity for a shipper to bring a rate case before the board." She said that she felt there were "fairly simple" things the board could do to make the process more helpful. She said that "many shippers have complained that it's not easy to get tariff rates, especially those that are password protected." The current process is unclear if a group of shippers, rather than just one shipper, could bring a rate case before the board, which would spread out the legal costs, she said.

In a June 23 filing commenting on the June 10 STB hearing, a group of shippers said that they "concur with the NGFA, the Alliance for Rail Competition, and the U.S. Department of Agriculture that the board's current rail rate reasonableness rules are not usable to test the reasonableness of railroad rates for the transportation of agricultural commodities. For the multitude reasons explained by these parties, the current rules are too costly, too unwieldy, too time consuming and provide no opportunity for relief to the vast majority of captive rail shippers of agricultural commodities." The group included the National Oilseed Processors Association, South Dakota Grain and Feed Association, Wisconsin Agribusiness Association, Michigan Agri-Business Association and Minnesota Grain and Feed Association among other state shipper organizations.…

Miller also talked at the NGFA summit about the second issue at hand concerning rail revenue adequacy. She said that as railroads have become more revenue adequate, there needs to be a "different approach" to the issue.

Current STB Chairman Dan Elliot said at the June 22 hearing, "Now that the industry is both financially healthier and restructured with fewer large railroads, the STB needs to examine core practices to meet the goals Congress has laid out for the agency," Elliot said. "The board's reexamination of its economic regulatory policies does not mean that significant changes to these policies are in order."

Miller noted the comments from the Association of American Railroads (AAR) made it clear that re-regulation of the railroad industry "was bad."

In their comments at the July 22 hearing, the AAR urged the STB to "beware of upending numerous national economic goals if they choose to pursue re-instituting revenue caps on freight rail companies." AAR President and CEO Edward R. Hamberger testified, "Now comes a handful of interest groups that want you to cut their transportation costs by direct government intervention at the expense of the greater good. Let's call it what it is: They want you to institute a regime of wide-ranging price controls on freight railroads."

Miller said at the NGFA summit that the rail industry is a mix of public and private ownership with private companies fully funding their own business. However, she was quick to point out that what happens on one rail line can affect other networks and that since networks are shared, there is still a "common carrier obligation."

According to Wikipedia, a common carrier "offers its services to the general public under license or authority provided by a regulatory body. The regulatory body has usually been granted 'ministerial authority' by the legislation that created it. The regulatory body may create, interpret, and enforce its regulations upon the common carrier (subject to judicial review) with independence and finality, as long as it acts within the bounds of the enabling legislation."

Miller said that the resolution on the proposals could take place by the end of this year.

Mary Kennedy can be reached at

Follow Mary Kennedy on Twitter @MaryCKenn


Posted at 12:59PM CDT 08/10/15 by Mary Kennedy

Friday 08/07/15

A Windshield Tour

I've done a wee bit of driving over the past week. It started with a trip to see my sister in Springfield, Illinois. I left Omaha, drove south and cut across northern Missouri. On Monday I drove to Chicago for the Agricultural Transportation Summit, and on Wednesday took a straight shot back to Omaha across northern Illinois and central Iowa.

I drove more than 1,000 miles in the past week, and what I saw was all over the board. As for general observations, the best crop seems to be in Iowa. Corn had great color, height and consistency. There's lots of variability in Illinois, and it's clear that some fields lost a lot of nitrogen.

Missouri was banking on beans, but just couldn't get them in the ground. There's been a lot of corn planted across US 36 the past few years, but there's a lot that just didn't get planted this year. I have a feeling USDA will trim soybean acres in next week's report (they resurveyed producers in Missouri due to the lateness of planting).

Holy weeds, Batman. Even if farmers got the crop planted, it looks like a lot of folks in Missouri and Illinois couldn't get into their bean fields to spray.

Now, for more details.

I-29 to Rockport, Missouri --- Crops looked like they were planted late, but overall corn height was pretty consistent across the fields. Soybean fields were late, but looked okay. There were a few good looking bean fields closer to Omaha.

I-29 Rockport to St. Joseph --- There was a fair amount of prevent planting in the river bottoms. Weeds were everywhere in some of those fields. Most of the beans were tiny & hadn't closed rows yet, some were a rather yellowish green. Corn was a lighter color green than you'd like to see, and it looked like the crop emerged unevenly.

US 36 from St. Joseph to Chillicothe --- It's very, very variable with a lot of prevented planting. I think oats and oat mixes were a very popular cover crop choice. Some of the double crop beans that were planted into wheat stubble looked like they were up to about 8 leaves per plant. First crop beans, if they got planted, were really uneven and weren't the right color. I saw a few fields of what looked like corn that hadn't tasseled, but I noticed a few fields of sorghum that had just started to flower near Chillicothe, so I wonder if that wasn't what I saw. Corn in the area looked decent, but it depended on whether the field was on a hill or in a valley. Farmers had definitely planned on expanding soybean acreage here. In years past this road was corn, corn, corn, and it was not that way this year.

US 36 Chillicothe to Hannibal --- The crops looked better than the western half of the state. Much less prevent plant, and some soybean fields had closed rows and had a nice deep green color. Others still looked sickly and small, but overall there was a more equal mix between decent and poor fields. Corn had some height variability issues, but I didn't see as many fields turning yellowish green. Overall it looked healthier.

I-72 to Springfield, Illinois --- Lots of corn on this side of the river, and it looked much better and much more consistent than anything I saw in Missouri. The corn was a deeper green and there were more even fields, except around the Illinois River bottom. Corn straight-up died in some of the wettest fields there, and there was hardly a soybean field to be seen. Crops looked much better from Jacksonville to Springfield, but there were still signs of wetness.

I-55 Springfield to Bloomington --- You could see the issues related to a wet spring in Illinois --- corn of varying heights, yellowing, etc. It's far from dead, however. There were some bean fields planted really, really late, but others looked pretty healthy.

I-88 Chicago to Davenport, Iowa -- Corn east of Interstate 39 showed signs of wet spring. Most cornfields had varying heights, and rows were still visible in a large number of soybean fields. I saw one or two fields that were more mature than others, but they also had a brownish tint. In the western part of the state, it seemed like crops planted on the hills looked much better than what was planted in the low spots. I've seen years where those low spots have had more ponding issues than this year.

I-80 across Iowa -- Best crops I saw. The corn had consistent color and height. I'd almost forgotten what corn was supposed to look like until I got to Iowa. Sure, I'd seen a few good fields scattered across parts of Missouri and Illinois, but the change was dramatic. Soybean fields looked healthy, consistent and like farmers had a chance to spray for weeds. What a change!

In summary, corn's all over the board. I didn't see too much that looked outstanding (except in Iowa), but there are some good fields out there. It's not dead by any means. It's just not ideal. Soybean fields were generally planted late, and some look better than others.


Posted at 9:58AM CDT 08/07/15 by Katie Micik
Comments (3)
Not everyone is/was wet. My little pocket is extremely dry - been missed by the rains.
Posted by Unknown at 10:30AM CDT 08/07/15
Thank You Katie you are the first report to admitt things are not at all rosie. Sounds like you seen the same as I did in July on our trip from michigan to Texas. Yet USDA and those reporting want us to believe the corn crop will recover.
Posted by Raymond Simpkins at 11:22AM CDT 08/07/15
yes I'm from Wis. and was down 88 and 80 two weeks ago and the biggest thing was the color very pale corn way short of N they must of forgot what corn looks like to get high yields. Up here corn and beans look good for now but it have forgotten to rain the last two weeks and starting to see a little stress
Posted by Unknown at 9:06PM CDT 08/09/15

Wednesday 08/05/15

Mr. Market Lives In China Too

Famed investor Warren Buffett once wrote about a creation of his teacher, Ben Graham, named Mr. Market. Mr. Market, he explained, is a poor, unstable fellow with incurable emotional problems. He shows up each day to offer a price at which he will either buy your interest in a business or sell you his. "Under these conditions," Buffett explained, "the more manic-depressive his behavior, the better for you."*

Recent selling in China's stock market have ignited bearish concerns for soybean prices, but so far, soybean demand remains intact (Source: DTN ProphetX chart).

I couldn't help but think of Mr. Market as I watched soybean prices get hit with selling in the month of July, part of which was blamed on the recent decline in China's stock market. So far, 1.087 billion bushels of U.S. soybeans have been exported to China in 2014-15, so it is understandable why soybeans are allergic to this kind of bearish news; but were these concerns about China legitimate or just another example of Mr. Market's neurotic behavior?

China's state-run economy is inherently difficult to assess as it is hard to know exactly what information is credible and what might be politically motivated. Many analysts cite slower economic growth in China this year, but the same analysts peg China's real GDP growth at roughly 6.5% to 7.0% -- hardly a cause for concern yet.

According to Dow Jones, China's Customs Office reported soybean imports in the first half of 2015 as being up 2.8% from a year ago and we can see USDA showing U.S. exports to China up 7.4% in 2014-15 from a year ago.** More concerning however, is that new-crop sales of U.S. soybeans are down 50% from a year ago. Is this the proof of China's falling demand for soybeans, which many fear?

It might be, but there may also be a better explanation. It is difficult to compare this year's pace of soybean sales to a year ago simply because expectations are much different. A year ago at this time, the U.S. market was at risk of running out of soybeans before harvest. The pipeline was short of supplies, so there was plenty of incentive to get your new-crop orders in early.

This year, there has been no threat of running out of soybeans and the market has been concerned about a big harvest adding to the soybean surplus, pushing prices lower. As a potential buyer, why would you secure soybean supplies early for 2015-16, especially when prices are looking lower at harvest time? That does not necessarily mean you won't be buying soybeans in 2015-16, just that the urgency has not been there.

China's economy bears watching, but so far, this year's bullish soybean demand remains intact. As far as China's stock market goes, it turns out the tumble in July took the Shanghai Composite Index down to the support of its 200-day average, but prices have held above that support since. As Mr. Buffett counsels, "... you are free to either ignore (Mr. Market) or take advantage of him, but it will be disastrous if you fall under his influence."

* Warren Buffett's explanation of Mr. Market found at:…

** USDA export sales report for soybeans as of July 23, 2015 found at:…

Todd Hultman can be reached at

Follow Todd on Twitter @ToddHultman1


Posted at 10:40AM CDT 08/05/15 by Todd Hultman

Monday 07/27/15

Shipper Groups, Railroads at Odds Over Rules Regarding Railroads' Revenue-Adequate Status

MINNEAPOLIS, Minn. (DTN) -- Testimony presented during a hearing last week on whether railroads should be able to continue to differentially price rail service to captive shippers once they reach revenue-adequate status showed a wide divide between railroads and shipper groups on the issue.

A BNSF train heads east through Randall, Minnesota, on the Northern Transcon. (DTN photo by Mary Kennedy)

The hearing was conducted July 22-23 by the federal Surface Transportation Board. DTN listened to the hearing online.

Newly reinstated Surface Transportation Board Chairman, Dan Elliot, opened the two-day public hearing by stating, "We are in the midst of a rail renaissance." In his opening remarks, Elliot said that the railroad industry carries a "vast range of commodities, with traffic accounting for 1.7 billion tons of freight each year."

"Now that the industry is both financially healthier and restructured with fewer large railroads, the STB needs to examine core practices to meet the goals Congress has laid out for the agency," Elliot said. "The board's reexamination of its economic regulatory policies does not mean that significant changes to these policies are in order."

"Assessing the effects of any proposed regulatory actions in these proceedings is a consideration of the utmost importance. The goal is that the board policies reflect thoughtful, balanced decision-making that takes into account a modernized railroad industry and sound economic principles," said Elliot.

Vice Chairman Ann Begeman said that while she had definite views on the subject, she would remain "open minded" and stated she was not looking "to turn the clock back on the rail industry."

Progressive Railroad reported that, "The STB annually determines whether Class I railroads are revenue adequate, a concept that describes whether a railroad is earning sufficient revenue to cover its costs and earn a reasonable return sufficient to attract capital. The hearing explored how the board should regulate railroads that are revenue adequate, and how such an adequacy finding should impact the regulation of rail rates, among other issues."

A group representing concerned shippers presented their arguments for change, stating, "The four major railroads consistently carried fewer carloads between 2005 and 2014, and during that time, operations have not improved." They also presented graphs showing that rail industry earnings were above revenue adequate level between 2011 through 2014. (For the full testimony of the shipper associations, visit:…)

Consumers United for Rail Equity (CURE) President David Sauer, in his written comments to the STB said, "CURE has long been concerned that the STB's annual determinations of the 'revenue adequacy' for Class I carriers does not reflect the true health of the industry and its members. Further, CURE believes that the carriers' falsely perceived lack of adequate revenues has served to shield the railroads' exercise of their monopoly pricing power from STB scrutiny and prevented shippers from obtaining appropriate relief. This should change, especially as the carriers have achieved revenue adequacy."…

During their presentation to the STB, the BNSF stated that, "BNSF's investment is unprecedented; investment is driving improved service and efficiency for customers and customers are responding with investment and volumes on our railroad. Regulatory changes that disrupt the current balance will have unintended consequences and lower capital investment. Any board consideration of long-term revenue adequacy should only occur within individualized rate review process."…

The Association of American Railroads (AAR) leaders from its member railroads and economic experts urged the STB during the hearing to "beware of upending numerous national economic goals if they choose to pursue re-instituting revenue caps on freight rail companies."

AAR President and CEO Edward R. Hamberger told the board that "misapplying regulations would have far-reaching impacts on the freight rail industry's ability to sustain the billions of private funds spent by railroads each year to build, maintain and upgrade the nation's 140,000-mile rail network," according to the AAR press release of their testimony on July 22.

"Now comes a handful of interest groups that want you to cut their transportation costs by direct government intervention at the expense of the greater good. Let's call it what it is: They want you to institute a regime of wide-ranging price controls on freight railroads," Hamberger testified.

"Regulation of railroads' overall revenue levels would run counter to Congress' goals in the Staggers Act of 1980 that partially deregulated the freight rail industry to allow railroads to earn sufficient revenue to meet their long-term needs without having to rely on the federal government. As Dr. Roger Brinner, chief economist with SandPointe LLC testified, the concept of revenue adequacy should be a goal, and not a directive to constrain revenues; railroads should not be penalized for improved financial performance."

NGFA Chief Operating Officer Randy Gordy said in a press release on July 24 that, "Under the Staggers Rail Act, rail users are authorized to challenge rates for revenue-adequate railroads that have market dominance and whose rates exceed 180% of the variable cost of providing the service."

Gordon wrote that STB member Debra Miller stated that it was "time to give meaning to the concept of revenue adequacy" and reiterated her earlier statements made at the June 10 STB hearing, at which the NGFA testified on the agency's grain rail rate proceeding. At that meeting, the NGFA said that it was time to review revenue adequacy and rail rate policy in the context of other ongoing STB proceedings, including one on competitive switching.…

Gordon said that the STB commissioners, while reserving judgment, did appear to indicate that a review was necessary.

Mary Kennedy can be reached at

Follow Mary Kennedy on Twitter @MaryCKenn


Posted at 2:01PM CDT 07/27/15 by Mary Kennedy

Tuesday 07/21/15

Sorghum's GMO Question

This week, reporter Emily Unglesbee and I take broader look at what it will take for grain sorghum to increase its share of farmers' crop mixes and become a 1 billion bushel crop. There are some important hurdles sorghum will have to face if it's going to get there, with maintaining profitability and strong markets at the top of that list, followed by better weed and insect management. Its drought tolerance and ability to perform on marginal land helps it out, too.

Kind granola bars trumpet their non-GMO status and use of popped kernels of sorghum, which is enjoying new consumer interest in part thanks to its lack of genetic engineering. (DTN photo by Emily Unglesbee)

One thing we don't dive into in detail in this week's series is that sorghum is a non-genetically engineered crop. Why? Sorghum's reaping market advantages right now due to its non-GE status, and until annual production achieves a critical mass, it's not likely to be a profitable endeavor for technology companies ora contentious issue. Few farmers are pushing for change now, butthey are keenly aware of the advantages GE sorghum could bring to sorghumproduction.

Emily took a deeper look at the questions around GE sorghum while attending the Export Sorghum meeting in Houston last month. We feel the story she wrote then adds important context to our series, so we're including it here for reference.

Sorghum's GMO Question

Industry Reaps Advantages of Non-GMO Markets ... For Now

Between domestic and international markets, sorghum's status as an ancient grain with no genetic engineering is paying off, but how long will that last?

By Emily Unglesbee

DTN Staff Reporter

HOUSTON (DTN) -- Doug Bice chooses his words carefully when he talks about sorghum's status as a non-genetically engineered (GE) crop.

As director of high-value markets for the Sorghum Checkoff, Bice is well aware that the grain's history of traditional breeding has worked wonders for the industry recently. After continued rejections of GE corn shipments, China started a major switch in 2013 to U.S. grain sorghum to feed its poultry, cattle and hogs. This unprecedented demand has sent sorghum prices soaring above King Corn in some parts of the country.

Stateside, sorghum's status as an ancient grain, untouched by genetic engineering, has made it increasingly attractive to the growing number of consumers who don't want to eat food with GE ingredients. As a result, the Sorghum Checkoff's marketing efforts for food-grade sorghum have included this aspect of the grain, alongside other attributes, such as being gluten-free and being packed with antioxidants.

Yet the sorghum industry is leery of taking too strong a stance against GE sorghum, which could speed up important crop traits such as pest and weed resistance in the future, farmers and industry experts told DTN.

"The industry will have to make a judgment call on this in the next few years," Bice admitted. "But at this point, we don't have a strong commercial reason to become GMO."

"I wouldn't want to close the door on it," agreed Spence Pennington, a sorghum producer from Raymondville, Texas. "We might need it down the line."

But for now, Pennington likes growing a crop without any GE history. "It gives us diversity in our technology and markets," he explained.

Both Pennington and Bice were in Houston this week for the second-annual Export Sorghum conference, hosted by the Sorghum Checkoff and the Texas Grain Sorghum Producers. The event brought domestic and international grain buyers together with sorghum producers and experts for three days, in the hopes of generating new sorghum markets and improving existing ones.

This year, the event's 74 attendees included a dozen grain buyers from China, eager to learn about sorghum's feed qualities and availability in light of the country's robust new appetite for the non-GE grain. China's sorghum imports have skyrocketed from a mere 100,000 bushels in the 2012-13 marketing year to 313.7 million bushels for 2014-15, according to the Sorghum Checkoff.

Farmers have little desire to disrupt that trend, Pennington noted.

"In the U.S., we could probably feed GMO sorghum to livestock without a problem," he said. "But in Europe and China, that's not the case. So we can either try to overcome that with education, or we can just let the customer dictate the market."

On the human side of the equation, Bice believes sorghum holds serious potential. The grain's gluten-free, non-GE nature could make it a serious competitor to newly popular grains such as quinoa, as well as an ingredient in organic and gluten-free breads or beers. Pet food is another prospective market, as well as restaurants and food-service companies, he said.

Staking out even a small percentage of these markets could be a boon to the small but growing sorghum industry, he pointed out. "In a 500-million-bushel industry, to increase demand by 10, 20, or 30 million bushels per year would be very significant," he said. "And that's clearly in our sights between human consumption and pet food."

Theoretically, non-GE food-grade sorghum could co-exist with GE sorghum grown for livestock and fuel, but it would be risky, Bice noted. "We would need a lot of education to make that work," he said.

As far as crop breeding and advancements go, there are practical benefits to sticking with traditional breeding in sorghum, USDA Agricultural Research Service plant physiologist John Burke told Export Sorghum attendees.

"There's a huge amount of genetic diversity and natural variation within the sorghum germplasm collection," he said. As a result, breeders can almost always use traditional breeding to incorporate the traits they want into sorghum varieties without resorting to genetic engineering techniques that pull genes from other species, he explained.

Moreover, Burke and his team of sorghum breeders can turn over their discoveries -- sorghum lines with improved cold tolerance, for example -- to private companies that can quickly incorporate them and sell them to farmers without the slow and expensive regulatory process facing GE crops.

Nonetheless, sorghum is facing rising pest problems that could benefit from GE traits such as herbicide-tolerance and insect-resistance in the future, Pennington conceded.

Herbicide-tolerant weeds are beginning to surface in his region, and controlling grasses has always been historically difficult for sorghum growers, since the grain is itself a grass species.

The sugarcane aphid arrived in the southern U.S. abruptly two years ago and required multiple insecticide applications last year. Josh Birdwell, a sorghum farmer from Malone, Texas, told DTN that controlling the aphid last year added $60 to $70 per acre to his operation's expenses.

Other sorghum pests, such as the stink bug, midge and headworm have become significantly more problematic in recent years, adding to his workload and expenses, Pennington said.

In contrast, the availability of Bt cotton has simplified pest control in that crop dramatically on his farm, Pennington noted.

Pennington believes that future water scarcity could eventually make sorghum a sizeable enough crop to draw serious biotechnology investments from agricultural companies. By then, pest issues and global attitudes may have shifted enough to make GE sorghum worthwhile, but until then, he's content without it, he said.

Bice agreed. "If sorghum becomes a billion-bushel crop, then GMO sorghum might become a real possibility," he said. "But as long as production is where it is, I see no need to insert sorghum into that conflict."

Emily Unglesbee can be reached at

Follow Emily Unglesbee on Twitter @Emily_Unglesbee


Posted at 2:40PM CDT 07/21/15 by Katie Micik
Comments (2)
"we don't want to close the door on GE". Smart! Take a look at cassava and Hawaiian papaya. Then inform the customer that broadcast applications of pesticides to protect their food are not necessarily good for the environment.
Posted by Curt Zingula at 7:16AM CDT 07/23/15
Sorghum is an excellent choice right in line with wheat as far as crops go on the southern high plains and right behind native grass. When the wells yield to little water-that is the now for some, and the future for many! Sorghum is a big deal and without question down here a tough crop to beat in terms of yield per inch of rain, cost of production, and genetic diversity. Economics of sorghum generally matches or beats wheat, and beats native grasses. Sorghum, Wheat, native pasture, and cattle is a great combination game in the Texas panhandle.
Posted by Chris Grotegut at 6:05PM CDT 07/26/15

Monday 07/20/15

More Heavy Rains Cause Major Headaches, Weak Basis

MINNEAPOLIS, Minn. (DTN) -- Illinois River levels rose again after the area was hit by more heavy rains recently, said Tom Russell, co-owner of the Russell Marine Group.

Barges on the Mississippi River near Quincy, Illinois. (DTN file photo by Chris Clayton)

"That rain runoff was sufficient enough to cause the Illinois River to close again at mile 30 to 89," Russell told DTN by email July 7. "Navigation on the Illinois River will be touch-and-go until weather has an extended dry period. The situation will have to be monitored on a daily basis." (For current Illinois River level forecasts, see…)

On July 15, the CME announced in a special executive report that, effective immediately and until further notice, CBOT is reinstating a condition of force majeure "due to load-out impossibility at a majority of corn and soybean regular shipping stations on the Illinois River. Such shipping stations are unable to load due to high water levels and/or flooding." This came five days after the CME had lifted a June 17 force majeure on the same river. (To read the full report, see…)

On July 16, the U.S. Coast guard reopened the 50-mile stretch of the Illinois River that had been closed, but high-water restrictions remained in place, slowing barges that had been stalled trying to make their way to the Gulf of Mexico. As of that date, the force majeure remained in place.

"High water in the other main problem area from St. Louis to Cairo on the Upper Mississippi is still showing improvement," Russell told DTN. "The water off the Illinois River accounts for only about 10% of flows through the St. Louis Harbor. This stretch of river is open and traffic is moving with safety restrictions in place. The St. Louis Harbor is still extremely congested and will take some time for tows to get in front of the backlog of barges waiting to be picked up and towed south." (To view the current Upper Mississippi River level forecast, see…)


The Lower Mississippi from Cairo to New Orleans is rising and some areas will now reach flood stage. Barge traffic is moving, but some barge terminals have been forced to shut down due to high water. On July 17, the U.S. Army Corps of Engineers reported on its website that the Mississippi River at the Carrollton gage has risen to 15.0 feet, prompting the Corps to "activate the second phase of flood fight procedures to monitor levees along the Mississippi River. Closely coordinating efforts with the local levee authorities, the New Orleans District will begin daily patrolling of levees along the Mississippi River from Baton Rouge to Venice." (The current Lower Mississippi River level forecast can be seen at…)

"Increased patrols help ensure our ability to respond quickly to any problem areas that may develop along the levee system because of the elevated water levels," the Corps added. "Also, construction projects within 1,500 feet of the levee system that were previously permitted must be shut down."


River flooding caused corn basis bids to drop for barge movement. On July 1, Gulf barge basis bids were at plus 60. As of July 17, Gulf corn basis barge bids were at plus 44. Barge freight was not quoted on the Illinois River most of the month because the flooding hampered movement up and down the river.

River terminal basis has been weak to no quotes as terminals were unable to receive barges at their facilities or were unable to load barges already there. Barge freight in St. Louis to Cairo is down 15% since July 1, down 30% in the Cairo-to-Memphis corridor and down 25% in the lower Ohio corridor.

Rail basis was also affected, as bids to St. Louis ended the week lower because congestion in the St. Louis harbor slowed down barge traffic due to high water. Freight that would have been unloaded from rail in St. Louis to move south on barges would have ended up sitting on the tracks, costing the end user demurrage.

"River levels in the New Orleans and Baton Rouge Harbors are still high with safety protocols in place," Russell said. "Baton Rouge will now reach flood stage, but New Orleans is expected to stay just under flood stage for now. Barge and ocean vessel traffic is moving, but a little slower than usual."

Mary Kennedy can be reached at

Follow Mary Kennedy on Twitter @MaryCKenn


Posted at 10:45AM CDT 07/20/15 by Mary Kennedy

Monday 07/13/15

Longshoremen Chassis Inspections Continue to Slow Trucks at Ports

MINNEAPOLIS, Minn. (DTN) -- West Coast ports lost ground to East Coast and Gulf Coast ports, with their share of imports falling to 45% in May versus 51.5% one year ago, according to a U.S. Census Bureau report released July 7, the Wall Street Journal reported.

Flatbed truck loading containers of soybeans. (Photo courtesy of SB&B Foods Inc., Casselton, N.D.)

Labor negotiations between the International Longshoremen and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) resulted in delays in shipping for nearly nine months, causing many shipping companies to move their business to other ports.

The Port of Portland suffered a blow when Hanjiin shipping company, which accounted for 78% of the business at Terminal 6, pulled their business on March 9. In April, Hapag-Lloyd shipping company stopped doing business there as well due to the ongoing shipping delays into and out of the port. The loss of these companies created headaches and higher costs for shippers who had to move some business to other PNW Ports such as Seattle or Tacoma.

Mike Hajny, vice president of Wesco International, Inc., a hay exporter in Ellensburg, Washington, told DTN via email, "While service at Seattle/Tacoma ports has improved tremendously, many terminals are still only giving us a three- to four-day window before sailing to return containers. It's tight to make that work, but operationally the trucks are in and out quickly. Some terminals are offering hoot gates." Hoot gates allow trucks to enter and leave the terminal at off-peak hours and the "hoot shift," is so named because it shares its hours with the owls, from 3 a.m. to 8 a.m.

Hajny added: "We have been returning some cargo to the rail in Portland and trucking some to Tacoma. Portland Rail has been no cost change, but Tacoma trucking is obviously costing us more.

"Most customers overseas have an oversupply of product, due the flood of product that arrived after the port slowdown. That has caused new-crop sales to be at an absolute standstill, taking some pressure off the movement of containers into terminals for now," Hajny said.


When the ILWU and PMA came to a contract agreement in February, the PMA gave the ILWU workers jurisdiction over the maintenance and repair of truck chassis. While this agreement does not allow the ILWU to inspect trucker-owned chassis, the process is creating a slowdown in trucks' ability to enter the port. All trucks are pulled over because there is no way to immediately tell if they are privately owned.

Curtis Whalen, executive director of the American Trucking Association's (ATA) intermodal conference, told DTN via phone in June, "The whole process is illegal and the ILWU has no legal right to stop the truckers."

Whalen pointed out "the intermodal equipment provider (IEP) is responsible for road-ability, and under law, inspections are done long before the trucks arrive at the ports." Shipping lines no longer own the chassis after selling most of them to IEPs, mainly to save themselves money. Whalen said this means the PMA, which represents the shipping lines, has no authority over the chassis inspection. Whalen said the "union and PMA had no right to negotiate over something they do not own."

In a June 1 article, DTN reported that the Federal Motor Carrier Safety Administration (FMCSA) has rules and regulations governing ocean carriers, railroads, chassis pool operators and other IEPs. These rules, issued in December 2008, affect the chassis, which are special trailers that hold cargo containers when they are transferred from ship or rail to truck for final delivery. The new regulations made IEPs subject to the FMCSA rules for the first time, and establish shared safety responsibility among IEPs, motor carriers, and drivers.

"We want to ensure that every piece of equipment traveling on our highways is operating safely," FMCSA Administrator John H. Hill stated in a Dec. 17, 2008, press release. Here is a link to the press release and new regulations:…

Whalen told DTN that he notified the FMCSA in Washington, D.C., over one month ago about what is happening on the West Coast. On July 11, Whalen told DTN in an email that nothing has changed and that there are still long wait lines due to ILWU labor "interfering with chassis."

"We are waiting for a Federal Maritime Commission (FMC) report on congestion that was supposed to be released last week, but still has not been posted."

The FMC is the independent federal agency responsible for regulating the U.S. international ocean transportation system for the benefit of U.S. exporters, importers and the U.S. consumer.

Whalen said if the ILWU continues to pull trucks over, truckers may refuse to haul to the ports, causing a loss of truck drivers in an industry that continues to experience driver shortages.

Mary Kennedy can be reached at

Follow Mary Kennedy on Twitter @MaryCKenn


Posted at 12:18PM CDT 07/13/15 by Mary Kennedy
Comments (1)
I just wonder when the unions are going to realize that it does not help to shoot themselves in the foot all the time. I saw this all the time when I was union. People complaining about everythig and sitting around doing nothing about it. I can remember a time when men took pride in their work, not in how long it took to do a 5 minute job.
Posted by Dale Paisley at 1:00PM CDT 07/14/15

Tuesday 07/07/15

DDG, Ethanol Exports Climb

U.S. ethanol exports totaled 64.6 million gallons in May, up 22% from a year ago, according to U.S. Census Bureau trade data. Year-to-date ethanol exports are 6% higher than last year.

"Ethanol exports account for a small portion of corn demand (roughly 300 million bushels in 2014), but the higher pace so far in 2015 is slightly bullish for corn," DTN analyst Todd Hultman said.

Distillers grain exports totaled 1.171 mmt in May, up 9% from a year ago, and the second highest monthly total on record. In July 2014, the U.S. exported 1.173 mmt. Year-to-date exports are down 9% from 2014.

"864,777 metric tons went to China in May, up 48% from a year ago and a new record high," Hultman said. "That is a bullish factor for U.S. corn demand.

Biodiesel exports totaled 35,915 mt in May, up 23% from a year ago. Hultman said it's "a slight bullish factor for soybean oil." Year-to-date exports are down 13% from 2014.


Posted at 10:54AM CDT 07/07/15 by Katie Micik
Comments (1)
Posted by James Pritchett at 10:23AM CDT 07/10/15

Thursday 07/02/15

Record Trading Volumes in Ag

Tuesday, June 30, 2015 set records.

CME Group's agricultural futures and option products did record volume: 2.87 million trades. It was the largest volume day since... last Friday (June 26).

Combined corn futures and options volume: 1.12 million

Corn futures only: 845,700

Combined soybean futures and options: 722,777

Soybean futures only: 503,063

Cash bushels traded electronically on DTN Portal: 16.7 million bushels, which was more than double the previous record set Thursday, June 25. Overall, 54.8 million bushels traded during June.*

DTN analyst Todd Hultman said excessive rainfall cast doubt on yield potential, and then USDA's Grain Stocks showed smaller supplies of both corn and beans than the market expected.

"Anytime you get a surprise that alters the prevailing view of the markets, there is a lot of running for the doors," DTN analyst Todd Hultman said. "The June 30 reports are notorious for such surprises and Tuesday’s numbers refuted a lot of early fundamental biases about this year’s balance sheets for corn and beans."

DTN Senior Analyst Darin Newsom agrees, and adds that noncommercial traders held a large net short position going into Tuesday's reports. "Buy orders were running amok, particularly in the last half hour of trade when even wheat was goosed to a higher than expected close."

Commercial traders may have been involved in the action for part of the day, "but as overnight basis and today’s action showed, they may have moved to the sidelines.

"It doesn’t change this group’s long-term outlook though: Still bullish soybeans, neutral corn, and increasingly bullish (but easily changed) toward wheat."

*More than 45,000 farmers have made offers to sell grain to their local elevators through DTN Portal or Farms Technology DPP Grain Desk. The two programs teamed up in 2014 to maximize their strengths, and the popularity is growing.

In the first five months of 2015, more than 150 million bushels had been offered through Portal, up 40 million bushels during the same time frame the previous year, according to DTN agribusiness product manager Don Konz. More than 1.3 billion bushels have been offered for sale on Portal since it went live in 2007.

In early June, DTN Portal launched branded apps for CHS, Valero Renewables and Green Plains Grain that allow farmers to make offers to any of those companies' locations.

For farmers, DTN Portal is way to make, manage and monitor their offers to their preferred locations. For the elevators, Portal offers a comprehensive grain management platform that lets merchandisers accept offers, automatically hedge their purchases and view their entire position in real time, all while integrating with most accounting systems.

Konz argues that offers are the best way to judge how widely electronic cash markets are being adopted. How many bushels that actually trade through the platform, like Tuesday's 16.7 million bushel record, largely depends on market conditions -- like this 60-cent corn market rally.


Posted at 10:27AM CDT 07/02/15 by Katie Micik

Monday 06/29/15

Additional Rains Add Insult to Injury Caused by Tropical Storm Bill

When Tropical Storm Bill exited the U.S. on June 21, it left behind rainfall totals of 4 or more inches in eight states: Arkansas, Illinois, Indiana, Louisiana, Missouri, Ohio, Oklahoma and Texas, according to the Weather Channel.

This flooded field of soybeans is located in Wells County, Indiana, near the Huntington Reservoir along the Wabash River. The Wabash River flows over 475 miles to its confluence with the Ohio River. This field has been under water for more than a week. (Photo courtesy Derek Blair, northeast Indiana)

The arrival of Bill caused rivers in Texas and Oklahoma, which were already swollen due to heavy rains that fell over the Memorial Day weekend, to spill over again. Rivers in Missouri and Louisiana also suffered from Bill as flooding covered not only city streets, but farm fields that had just been planted with spring crops or were not yet planted. According to USDA, as of June 21, farmers in Missouri had only planted 51% of their soybeans versus the five-year average of 88% and that only 34% of the soybean crop was rated in good-to-excellent condition.

The National Weather Service issued a flood warning on Saturday, June 27, for the Missouri River at St. Charles. The river there was at 29 feet on Sunday, June 28, and is expected to crest at 30.3 feet Monday afternoon. That would be just over 5 feet above flood stage. (…) On June 28, the NWS also issued flood warnings for the Wabash River, which was 22.8 feet at Lafayette, Indiana; moderate flood stage is 20 feet. The NWS said, "At 22.0 feet, extensive flooding is in progress. During agricultural season, extensive crop damage occurs. Flooding will last from two days in central Indiana to the middle of July in southwest Indiana." (…)

Besides the stress on soybean crops, the soft red winter crop has suffered as well with diseases caused by too much rain. The CBOT price for soft red winter rose as Missouri, Indiana and Illinois were reported by USDA June 22 to have significant condition declines from the previous week. The front-month nearby Chicago wheat contracts traded to the highest levels seen since early January. For the week ending July 26, the July futures contract gained 73 3/4 cents per bushel in Chicago. Cash basis, on the other hand, was weaker at river facilities affected by the high water with basis 7-10 cents weaker on average.


Just as many rivers had crested, more rain fell during the week of June 22, causing some of the rivers to climb back toward major flood stage. Tom Russell, Russell Marine Group, updated DTN in an email on June 29 on the most current river conditions. "High water on the Illinois River, Upper Mississippi middle area mile 300, and Upper Mississippi from St Louis to Cairo remain problematic," said Russell. "The rain pattern that has dropped concentrated amounts of rain in center areas of Midwest and Illinois River dropped more rain last weekend. The rain pattern in this area is forecast to drop slight to moderate amounts of rain in the area this week. Drying not expected to occur until July 9. Navigation in these three areas is difficult and very slow at best with some areas entirely closed. The situation is 'touch and go' and will require ongoing daily monitoring until general drop in water levels start to occur."

Russell said "Illinois River will see a rise due to weekend rain and some parts of the river are near record high levels set in 2013. Areas near the mouth of the river mile 30 to 89 will close due to high water and fear that levees may be compromised. The river in area of closure will not crest until July 4 -- 5 without additional rain. However, some rain is forecast throughout this week."

"On middle part of Upper Mississippi locks 25 (mile 241), 24 (mile 273), 22 (mile 301) were closed due high water last few days. However, weekend rain has not impacted this area and these locks are opening again to navigation by June 30," added Russell. "In the Upper Mississippi River at St Louis to Cairo, the St Louis Harbor did not close this past weekend as expected. The river level stopped rising just below closure levels. Some tows are moving out of the Harbor but it is extremely slow going and the Harbor remains heavily congested with back log of barges waiting to move."

All of the above areas are at critical mass and minor changes in rainfall or adjustments in water levels can mean the difference between rivers remaining open or closed, according to Russell. "Changes are occurring daily and will require close monitoring until there is a general improvement in conditions."

On June 25, USDA reported barge operators are not quoting rates for Illinois River barge services until most loading facilities are operational, which will occur sometime after the crest. "Barge operators have limited operations in the St. Louis area partly due to accumulations of flood-caused debris that can damage towboats and barges. In addition, tows of barges greater than 600 feet are restricted to daylight-only passage while the St. Louis gauge is greater than 25 feet," USDA reported. (…)

Russell said, "Elsewhere, The northern parts of Upper Mississippi River, Ohio River, and Lower Mississippi are OK at this point. The Arkansas River that had been closed due to high water is now entirely open. Some areas are daylight transit only."

Mary Kennedy can be reached at

Follow Mary Kennedy on Twitter @MaryCKenn


Posted at 1:06PM CDT 06/29/15 by Mary Kennedy

Monday 06/22/15

Tropical Storm Bill Adds to Already High Water Conditions

OMAHA (DTN) -- Last month, heavy rains moved across Texas and Oklahoma then through the center of the Midwestern states. The result was flooding and high water on the Missouri, Arkansas, Illinois and Upper Mississippi rivers between St. Louis and Cairo, Illinois. As Tropical Storm Bill came up from the Texas coast last weekend and became a tropical depression, it moved through most of the same waterlogged states, adding more water to the already high rivers.

Upper Mississippi River Lock 27, near St. Louis, moves more cargo than any other navigation structure on the Mississippi River. The actual location of the Lock and Dam is Granite City, Illinois. (Photo courtesy of USACE)

Tom Russell of Russell Marine Group told DTN via email that, "Waters were in the process of flushing through the system when heavy weather concentrated rains in those central areas again, giving rise to the same rivers."

Russell said that the Illinois River and Upper Mississippi between St. Louis and Cairo are now at flood stage. "Two locks on the Illinois River have been closed to all navigation due to high water, resulting in the CME declaring force majeure at loading locations on the Illinois River."…

On June 17, the CME released this statement: "Effective immediately and until further notice, pursuant to CBOT Rule 701 ("Declaration of Force Majeure"), The Board of Trade of the City of Chicago, Inc. ("CBOT" or "Exchange") is hereby declaring a condition of force majeure for corn and soybean shipping stations as a majority of the facilities on the Illinois River are unable to load due to high water levels and/or flooding. As a result, CBOT Rule 703.C.G(8) is in effect for ALL corn and soybean shipping stations."…

"St. Louis Harbor has become extremely congested as a result of high water over the past weeks," Russell said. "Heavy drift debris is reported throughout the harbor. Barge traffic is moving, but slowly, and in a bit of gridlock. High-water safety protocols have been put in place."

On June 21, the U.S. Army Corps of Engineers said on their website that, "Flood fight teams have been deployed across the area and are providing technical assistance to levee districts. The Jerry Costello Lock and Dam and the Lock 27 Auxiliary Lock remains closed."

The USDA Grain Transportation Report noted on Thursday that since early June, the St. Louis gauge has been above 25 feet, "a threshold where the Coast Guard restricts tows of barges greater than 600 feet to daylight-only transit in the St. Louis Harbor." With the additional rains from Tropical Depression Bill, the river level is not expected to drop to 25 feet until possibly June 27, when the daylight-only restrictions could be lifted, according to USDA.…

Oklahoma news sources reported that The Port of Catoosa was experiencing high water along the port's entire waterway system, which shut down barge traffic late in the week. Russell noted that while navigation just resumed on the Arkansas River, the remnants of Bill may stop traffic again as waters are expected to approach flood stage again.

"The Lower Mississippi is high and will remain high at least for another three to four weeks as the upper rivers run off," said Russell. "The northern part of Upper Mississippi and Ohio Rivers are at normal levels and traffic is moving. The Baton Rouge and New Orleans Harbor are in high-water protocols with safety advisory for barge tows passing through Baton Rouge. Barge and ocean vessel traffic are moving, but count on delays over the next three to four weeks."


High water can not only stall empty barges from arriving at river terminals, but it can also cause the inability of a barge to "fit" under the loading spout. The spot CIF barge basis was reported to have traded 10 cents higher on Wednesday, June 17, from Tuesday's spot price. By the end of the week, CIF basis was 5 cents weaker, but the bid/ask spread at +80 versus +97 over the Chicago July futures. CIF basis offers were 16 cents higher on Friday June 19 than from the prior week. Farmers have been selling soybeans on the futures rallies, but the logistics of getting them to the Gulf have been tedious and will likely be that way for the next week.

Mary Kennedy can be reached at

Follow Mary Kennedy on Twitter @MaryCKenn


Posted at 11:43AM CDT 06/22/15 by Mary Kennedy

Wednesday 06/17/15

Cotton's Acreage Conundrum

DTN China Correspondent Lin Tan sent us an article about China's declining cotton acreage earlier this week. Farmers there have planted 20% fewer acres to cotton than they did the year previous, marking two years of decline.

Cotton acreage in the U.S. is also taking a hit this year. According to USDA's Prospective Planting survey, farmers were only likely to plant 9.55 million acres, down 13% year over year. With the heavy rains in Texas this spring and early summer, there have been plenty of reports about cotton acreage declining even more.

It's just one of the many things to watch for in USDA's June 30 Acreage report. But the real question is: when will the world work through its glut of cotton stocks? With global stocks-to-use around 92%, it seems there's a lot of work that needs to be done to turn the cotton prices around.

In the meantime, here's Lin Tan's story for a better perspective on why cotton is falling out of favor with Chinese farmers.

China Cotton Acres Seen Down 20%

By Lin Tan

DTN China Correspondent

BEIJING (DTN) -- Cotton acreage is expected to decline 20% in China this year, down to 8.4 million acres from last year's 10.4 ma, according to a recent field survey by the China National Cotton Market Observing System.

"This is the second year of sharp decrease in cotton acreage," said Zhonghua Wang, an analyst in Beijing. "Last year's acreage was 12.5% lower than 2013/2014."

DTN Analyst Todd Hultman said a 20% decline in acreage is steeper than the 10% USDA's currently predicting. "I would say there are slow bullish changes emerging in cotton, but it is difficult to tell how long it might be before prices actually climb higher.

"It also helps that USDA is estimating a 16% drop in U.S. planted acres this year, and that may even turn out to be less with this year's excess rain in the Southern Plains. The difficulty for cotton is that it will take time to work off the heavy burden of world ending stocks that USDA estimates at 106 million (480-lb.) bales or 92% of annual use."

China's acreage is due in large part to a change in China's support policy to a target price program. Lower prices didn't help either, Wang said.

"The Chinese government terminated the floor price purchase program on cotton last year," he said. "The program had supported cotton prices for several years, but the uncertainty of the market after the policy change put pressure on farmers to produce more cotton" before the program changed.

The floor price in 2013, the last year of the program, was $1.49 per pound. The new target price program for cotton attempts to subsidize farmers based on their output and comes in the form of a direct payment, which doesn't affect the market price. The government sets the target price and then calculates an average market price for each province. Farmers are paid the difference between the average in their province and the target price.

"Upon June 10, national cotton price index is 13,329 renminbi per ton (98 U.S. cents per pound), down 23.3% compared to the price of last year," said Fang Gao, Deputy Chairwoman of China Cotton Association.

The government lowered the target price for this year's crop, Gao said. Last year, the price was $1.45 per pound. It is 5 cents lower this year at $1.40.

The current estimate of cotton production is 5.86 million metric tons, less than last year's 6.39 mmt.

"This acreage change is good for China's cotton market and also good for the state reserve," Wang said. "We are expecting the carryout in 2015/2016 will be 12.66 mmt, 0.31 mmt less than the carryout of 2014/2015."

While stocks are expected to decline, Gao said the carryout will still be too high. Overall consumption in expected to be 7.35 mmt.

Imports have fallen off sharply as China's textile industry tries to work through the stockpile. So far in the 2014/15 marketing year, China's only imported 1.17 mmt of cotton, down 44.5% from the same time period last year.

"China is expected to import only 1.58 mmt of cotton in the crop year of 2014/15," Wang said.

The U.S. is still the largest exporter to China, with a 30% market share. It's followed by India with 21%, Brazil with 15%, Australia and Uzbekistan with 12% each, and a handful of other countries sharing the remaining 10%.


Posted at 2:46PM CDT 06/17/15 by Katie Micik

Monday 06/15/15

STB Reviews Rail Transportation of Grain, Rate Regulations

OMAHA (DTN) -- Grain shippers, ag organizations and railroad companies all had the opportunity to express their opinions about improving procedures to set fair shipping rates during a hearing held by the Surface Transportation Board June 10 in Washington, D.C.

Canadian Pacific train heading through the Twin Cities corridor. (DTN file photo by Mary Kennedy)

Through these meetings the STB intends to explore the issue of "making the rate-case process more accessible" to all grain shippers who use rail as their mode of transportation. The Staggers Rail Act of 1980 provides rail shippers the ability to challenge unreasonable rates.

"Yet, despite concerns about high rates from shippers of grain over the years, no such shipper has filed a rate complaint with the agency since 1981," said the STB. Shippers say some of the reasons could be the current formula is arbitrary, too costly and onerous, which discourages them from taking part in the current process.

In her opening remarks at the hearing, acting STB Chairman Deb Miller said that she has heard from grain shippers who "don't feel they have received all benefits of Staggers Act."

Vice Chairman Ann D. Begeman added, "We are not here to debate rates, but rather to fulfill the statutory mandate to ensure a process for every shipper to have access to that rate judged fairly and timely."

The National Grain and Feed Association (NGFA) urged the STB to "issue a proposed rulemaking to establish a new process that agricultural commodity shippers could use to challenge freight rates they believe are unreasonable or unlawful under the Staggers Rail Act of 1980." (See the proposal at…)

In a June 11 press release, the day after the hearing, the NGFA said that, "As part of the STB's proceeding (Ex Parte 665, Sub-No. 1), NGFA in 2014 developed and proposed a new rate-reasonableness methodology -- dubbed the "agricultural commodity maximum rate methodology" -- as one approach that the STB could use to change its existing procedures to resolve rail rate challenges involving agricultural products."

The NGFA noted that its proposed new approach would "meet the tests of being more accessible and inexpensive to administer, including for shippers with smaller claims; provide a meaningful constraint on the ability of carriers through their rate-pricing practices to make certain facilities uncompetitive in shipping by rail, and provide for more expedited and timely decisions."

According to the NGFA press release, NGFA Board member Bruce Sutherland, vice president of Michigan Agricultural Commodities (MAC), presented "real-world" examples to the STB of current rate-pricing practices by a major Class I rail carrier that will significantly alter geographical rate spreads in the Eastern Corn Belt. Sutherland explained to the STB at the hearing that this could lead to "dramatically increased freight rates and reducing the prices elevators are able to pay to producer-customers in some parts of the region, while reducing traffic on regional short lines and making some facilities uncompetitive to serve customers by rail."

Tim Luken, manager of Oahe Grain, an elevator located on a short line railroad in Onida, South Dakota that is serviced by the Canadian Pacific, told DTN via email, "Back in 2007, it cost $2,644 per car on the short line for the 25-car rate to Chicago and beyond. Today it costs $3,881 per car to Chicago and beyond; a 46.8% increase in eight years."

Representatives from the Class 1 railroads were also present at the hearing to testify on the current rules in place. BNSF stated in its presentation that, "Formulaic, outcome-oriented regulations are not productive and would have unintended consequences." (…)

Union Pacific pointed out that, "Previous studies have concluded that many agricultural shippers have a range of transportation alternatives, that grain transportation markets are largely competitive, and that different modes of transportation often compete head-to-head to move grain." (…)

CSX Transportation told the STB that, "Agriculture is an important business to CSX; competition on origin and destination grain sourcing is vibrant. CSX is working to improve efficiencies for both CSX and our customers through mutually beneficial programs." (…)

Stu Letcher, executive vice president of the North Dakota Grain Dealers Association, told DTN in an email, "The current system for challenging rates is overly burdensome according to testimony from participants on both sides of the issue. We understand the need for and support a financially stable rail industry, but we feel a more transparent and efficient process for grain rate reviews would not put that stability in jeopardy."

The STB will conduct a separate, but related, public hearing on July 22-23, which will examine what it means for a railroad to be revenue adequate and how that should affect regulation of the railroads' rates and other related issues. The STB said that once a railroad becomes revenue adequate over a period of time, "shippers should be able to challenge such railroad's rates on grounds that the carrier is financially healthy and thus does not need to charge such high rates."


The Transportation Research Board (TRB) recently conducted a study examining the future role of the STB in overseeing and regulating the service levels and rate offerings of railroads, particularly as they become revenue adequate. The TRB said, "The study committee finds that while the U.S. freight railroad industry has become modernized and financially stable since the Staggers Rail Act of 1980, some of the industry's remaining economic regulations have not kept pace and should be replaced with practices better-suited for today's modern freight rail system." The report was released to the public June 10. (It can be found, in its entirety, on the Web site of the National Academies Press…)

In a press release on their website, Association of American Railroads (AAR) President and CEO Edward R. Hamberger provided the following response to the report released by the TRB: "The TRB report is a solution in search of a problem," said Hamberger. "The United States already enjoys the most efficient, safest freight rail network in the world. In fact, freight rail customers today pay rates that are on average 43% less than they paid in 1980. The report is a theoretical exercise that would upend the real-world concrete successes achieved since the Staggers Act passed in 1980."

The STB will begin reviewing all comments and presentations before making any decisions and stated, "Following the hearing, the record will remain open until June 24, 2015, during which time parties may submit written rebuttal testimony."

Mary Kennedy can be reached at

Follow Mary on Twitter @MaryCKenn


Posted at 12:23PM CDT 06/15/15 by Mary Kennedy

Friday 06/12/15

TAS Orders Available Starting Monday

CME Group is rolling out a new futures order type for agriculture products next Monday to help smooth the transition to electronic-only trade, and experts believe the new trade at settlement (TAS) order type has beneficial aspects for the grain industry.

TAS, as it's commonly referred to, allows market participants to buy or sell futures contracts during the day equal to the yet-to-be-determined market settlement price plus or minus 4 ticks, said CME Director of Commodity Products Tim Andriesen. One tick is one-quarter of a cent.

During harvest, this could give grain elevators the ability to pre-hedge the bushels they plan to buy after the market closes at the settlement price. It could also give the market a little more flexibility when it's locked in limit-up or limit-down trade.

"So any time during the day, I could say I want to buy 10,000 bushels of corn at the settlement price, and I'm willing to pay 1 tick more than the settlement price to get that done," Andriesen said. "It is a market, so you have to have somebody who is willing to sell it to you at 1 tick more."

The order will execute, but the absolute value of it won't be known until after the market settles at 1:15 p.m. CT.

TAS orders will replace market-on-close (MOC) orders, a type of order that can be executed in open-outcry pit trade but not on CME's Globex platform. CME will be closing its futures pits after the July 2 trading day. Options pits will remain open for grains, oilseeds and livestock markets.

Settlement in the grains will remain at 1:15, but the electronic futures market will continue to trade until 1:20 p.m. effective Sunday, July 5 for the July 6 trading day.

Diana Klemme, vice president of Grain Service Corporation, said the people who are most likely to use TAS orders already used MOC orders to buy or sell before weekends or overnight.

"Frankly, I think they will find it more useful and like it better than the old system," she said.

On a recent conference call with grain elevators, no one said they thought the idea was horrible. They had very few questions and found it reassuring that TAS has been in use in other markets for quite some time.

In the energy markets, 97% of the TAS business is done at flat, which means at the settlement price or plus 1 tick, Andriesen said. "Some of the time trying to do MOC orders, you would get a fairly good-sized range on the settlement and it might be more than 1 tick off the settlement price where you got your pre-hedge executed."

Klemme said the switch to TAS will help avoid other issues that can arise with MOC orders, like calling your broker only to find that everyone's trying to do last-minute business and you can't get the order through.

For grains, TAS orders will be available on the first three listed contracts, plus the first new-crop month, if it's not already represented in the first three months. So on June 15, TAS will be available on the July, September and December corn contracts. In February, TAS will be available on the March, May, July and new-crop December contact. TAS will be available for corn, soybean (including meal and oil) and wheat, but not for rice and oats.

In the livestock markets, TAS will only be available of the first two listed contracts.

TAS will also be available on spreads. For grains, it'll be available on the old-crop, new-crop spread and the first two listed calendar spreads. For livestock, it'll only available for the first listed spread.

Andriesen and Klemme said it'll take time for the industry to learn about TAS and start using it. They think TAS will likely be a popular tool to help grain elevators hedge at times of year when they expect to buy a lot of grain during non-market hours, like harvest. It could also be an option on days when the market locks limit up or limit down.

TAS lets you trade the settlement price +/- 4 ticks, Andriesen said. In theory, that adds about a penny to the limit. He anticipates that on locked-limit days TAS orders are more likely to be filled if they're the settlement price +/- 4 ticks because they allow a little more room for a trade to take place. It'd be less likely that a settlement +/- 1 tick would be filled.

"It does allow a little bit more space on limit days," he said. "Keep in mind that this is a market, so to trade TAS, a TAS buyer and a TAS seller have to match on price and on quantity. Putting in a TAS order doesn't necessarily mean you will get it done."

On locked-limit days, Klemme said, "we'll find out how it works. It doesn't take anything away, and it just might let us get things done that we might not have been able to do before."

Klemme said TAS reminds her of the 1980s when options were first introduced in ag products.

"No one knew what a put or a call was. But what we learned over time was that marketing with just futures was like using a sledgehammer, and marketing with options was much more like using a scalpel. There are some things TAS will let us do on the close to limit risk that we couldn't do with MOC orders. It'll take a while to learn what you can do with it, but we'll adapt."

If you'd like more information on TAS, please visit

Katie Micik can be reached at

Follow Katie Micik on Twitter @KatieMDTN


Posted at 11:02AM CDT 06/12/15 by Katie Micik
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