KAWG E-Update

We hope you enjoy this week’s edition of KAWG E-News.

From K-State Agronomy

Some regions of Kansas had a very good start to the 2016-17 wheat growing season, establishing a good stand at the optimum sowing date. These conditions were experienced in most of central, north central, and northwest Kansas. While northwest Kansas wheat is already experiencing some level of drought stress, most fields in central and north central Kansas are still in very good conditions. In the following article, I’ll discuss some of the major concerns that other regions of the state are currently facing.

Dry fall, poor emergence, and lack of secondary root development

The dry conditions prevailing in a large portion of the Kansas wheat growing region (Figure 1) has impacted secondary root development in many fields across the state. This is particularly prevalent in the southwest portion of the state, where drought has been established for months, current conditions are severe. (Read More.)

785-539-0255 or by email at jhildebrand@kswheat.com.

The scholarship fund will award one $500 scholarship per year, to a college or university-bound incoming freshman from Kansas, pursuing a career in the field of agriculture. To be eligible for the scholarship, applicants must plan to be a full-time student at any two or four year, Kansas college or university. Recipients will be selected based on academic achievement, leadership qualities and career objectives focused around the field of agriculture. Recipients will receive the scholarship to be applied toward tuition for the student’s college or university education. The scholarship is non-renewable. (Read more.)

Despite objections from some in the Senate over the bill’s contents, the chamber acted last Friday night to pass a Continuing Resolution to continue funding the federal government at largely FY 2016 levels through April 28, 2017.  Unfortunately, action on a CR means that the funding increases for important wheat research programs that were included in the Senate and House versions of the FY 2017 Agriculture Appropriations bill are not yet enacted.  However, the CR does contain a provision that would allocate resources to the Farm Service Agency’s (FSA) direct and guarantee operating and ownership loan programs, which have been in abnormally high demand following an extended period of low prices for wheat farmers.  As the 115th Congress comes into session in January and as the transition from the Obama Administration to the Trump Administration proceeds, NAWG will continue efforts to increase funding for the U.S. Wheat and Barley Scab Initiative and the Small Grains Genomic Initiative, as well as other programs that have a direct impact on wheat growers.
Congress Acts to Reauthorize Waterways Infrastructure Projects, SPCC Exemptions, Drought Relief

Late last week Congress finalized legislation to reauthorize the Water Resources Development Act (WRDA), officially called the Winter Infrastructure Improvements for the Nation (WIIN) Act.  The House approved the legislation on a 360-61 vote followed by Senate action with a 78-21 vote.  As of this writing, President Obama had not yet signed the legislation into law.  The bill included several critical provisions that will have an impact on wheat farmers across the country.  In particular, the bill ensure that the authorized funding through the Harbor Maintenance Trust Fund will continue and authorizes a number of infrastructure projects to improve our ports and waterways.

Beyond waterways projects, the bill also includes a provision exempting from Spill Prevention Control and Countermeasures (SPCC) requirements containers on separate parcels that have an individual capacity of not greater than 1,000 gallons and an aggregate capacity of not greater than 2,500 gallons.  Containers holding animal feed ingredients approved for use in livestock feed are also exempt.

The legislation also includes drought provisions to expedite water storage and delivery as well as alternative water supply programs in the West.  The provision also provides regulatory flexibility to capture more water in existing reservoirs during wet months in California.

Field to Market Releases Third Edition of National Indicators Report; Indicators for Wheat Positive

Earlier this month, Field to Market: The Alliance for Sustainable Agriculture released the report “Environmental and Socioeconomic Indicators for Measuring Outcomes of On-Farm Agricultural Production in the United States”, commonly referred to as the National Indicators Report.  This report analyses national sustainability trends over time for ten commodities, including wheat. The commodity specific environmental indicators include land use, soil conservation, irrigation water use, energy use, and greenhouse gas emissions. Wheat production in the study period of 1980-2015 improved in land use (acres per bushel), soil conservation, irrigation water use efficiency and energy use per bushel.  Greenhouse gas emissions remained consistent over the study period.  These results reflect improvements in crop yield and adoption of conservation practices. The report also includes national level trends in biodiversity, soil carbon and water quality.  Socioecononmic indicators of farm financial health, farm profitability, worker safety, labor productivity and the generation of economic value are also assessed in the report.  Read more…
Happy Holidays from the NAWG Staff!

The NAWG staff would like to wish you all happy holidays as 2016 winds down!  This will be our last e-newsletter for the year, and we look forward to interacting with you all again in a few weeks!

It seems like during the last six months, when the wheat price tried to stage a rally, some bearish news surfaced and the wheat price drifted lower.  It happened again this week.  As the wheat chart shows, a short term uptrend for the wheat price established.  Early week buying extended last week’s rally.  By the end of the week, the lines on the short term trend indicators crossed to the down side.  Wheat technical traders will see a reversal in the price trend when they glance at the charts to start next week.

The cause of this week’s break in the wheat price: the action in our Dollar Index.  After the Fed raised interest rates on Wednesday, the U. S. Dollar staged a major rally.  The Dollar is at a level we haven’t seen in over ten years.  The strength in our dollar makes the price of our exports higher.  The wheat market is the grain that is affected the most with the action in our dollar.

While the activity in our dollar dominated the news, additional fundamental news seemed balanced.  India is importing wheat to the tune of 2.5 million metric tons.  Australia is looking at a record wheat crop.  Dryness persist across our southern plains and in the Black Sea Region.  Algeria tendered for milling quality wheat.  Our weekly export sales number exceeded estimates.  China was listed as a whet buyer on this week’s export sales report.  This week’s news provided something for everyone.

The next hope for a rally in the wheat price is in the hands of the funds.  Funds are considering buying commodities for a hedge against inflation.  Wheat would be a likely commodity if they follow through with their plan.  Index funds will re-balance their portfolio after the first of the year.  They will consider wheat as it is an undervalued commodity.  If these two groups become active buyers of wheat, they could chase technical traders out of their long held short positions.

LARRY GLENN

FRONTIER AG

800-270-7694

PLEASE NOTE THAT THERE IS AN INHERENT RISK OF LOSS ASSOCIATED WITH TRADING FUTURES AND OPTION CONTRACTS EVEN, WHEN USED FOR HEDGING PURPOSES.  PLEASE CAREFULLY CONSIDER YOUR FINANCIAL CONDITION BEFORE INVESTING IN FUTURES AND OPTION CONTRACTS.  FUTURE’S TRADING IS NOT SUITABLE FOR ALL INVESTORS.  OPTIONS CAN AND DO EXPIRE WORTHLESS.  IF YOU PURCHASE A COMMODITY OPTION, YOU MAY SUSTAIN A TOTAL LOSS OF THE PREMIUM AND OF ALL TRANSACTION COSTS.

PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.

 SEASONAL TENDENCIES ARE A COMPOSITE OF SOME OF THE MOST CONSISTENT COMMODITY FUTURES SEASONALS THAT HAVE OCCURRED IN THE PAST SEVERAL YEARS.  EVEN IF A SEASONAL TENDENCY OCCURS IN THE FUTURE, IT MAY NOT RESULT IN A PROFITABLE TRANSACTION AS FEES AND THE TIMING OF THE ENTRY AND LIQUIDATION MAY AFFECT THE RESULTS.