DairyProfit Update for Nov. 26, 2012
Medicare surtax and agriculture
“Passive income” – either through land rental income or the sale of some farmland – could make producers subject to the 3.8% Medicare surtax in 2013, according to Iowa State University ag law specialist Roger McEowen. To hear McEowen’s radio interview, click here.
Cow slaughter heavy in October
USDA estimated 285,400 culled dairy cows were slaughtered under federal inspection in October 2012, up 34,600 from September and 42,600 more than October 2011. Through January-October 2012, dairy cow slaughter totaled 2.574 million head, up 174,600 from the same period in 2011.
The corn market will continue to be influenced by an array of factors over the next several months. One of the important price factors in the new year will be the prospective size of the 2013 U.S. crop, according to Darrel Good and Scott Irwin, University of Illinois ag economists.
Based on stocks, consumption, corn planted acreage vs. corn harvested acreage, and trend yields, they suggest U.S. producers will need to plant about 90 million acres (and harvest an average 162 bushels per acre on 82.76 million acres) of corn in 2013. With a yield averaging 10 bushels per acre lower, planted acreage requirements grow to 95.45 million acres; if yields are 5 bushels per acre higher, planted acreage requirements shrink to 87.53 million acres.
According to USDA, there were 91.92 million acres planted in 2011; 96.95 million acres planted in 2012.
USDA study analyzes R&D spending
Analysis published by USDA’ Economic Research Service (ERS) in the journal Science examined the relationship between public and private investments in research and development (R&D) and their importance in agricultural input industries. According to the report:
• Globally, about half or more of all private investment in food and agricultural research and development have been devoted to food manufacturing, not toward input industries and other areas that directly increase agricultural production.
• Recent increases in private ag input research have mostly centered on crops; livestock-related research and crop protection chemicals have experienced less growth.
• Research into biofuels has become increasingly important.
• In both crop seed and animal breeding, biotechnology research was an important driver of consolidation in these industries.
• Private spending contributed to the overall growth in R&D for agricultural in the face of slowing or stagnant public R&D resources, but addressed a narrower set of research topics and input industries than publicly funded R&D.
• Public policies have a major influence on private-sector incentives to invest in agricultural research. Intellectual property protection, regulatory frameworks, and especially, public investments in basic science that opens up new technological opportunities, have been important drivers of the growth of private agricultural R&D.
The article can be found at: http://www.sciencemag.org/content/338/6110/1031.full.
MARKETS: Barrels up; Class III futures mostly lower
Today's market closing prices:
Butter: down 1.0¢, to $1.68/lb.
Cheddar blocks: unchanged, at $1.8250/lb.
Cheddar barrels: up 3.0¢, to $1.7750/lb.
Grade A nonfat dry milk: unchanged, at $1.5575/lb.
Extra Grade nonfat dry milk: unchanged, at $1.56/lb.
Class III milk: -4¢ to -23¢, December 2012 through June 2013. Based on current CME closing prices, the average for November-December 2012 is $19.91/cwt.; the full year 2012 average is $17.47/cwt.; and the 2013 average is $18.38/cwt.
Corn, soybeans and meal futures higher
Corn: +1¢ to +5¢/bushel through September 2013. The 2013 average is $7.04/bu.
Soybeans: +6¢ to +9¢ through September 2013. The 2013 average is $13.71/bu.
Soybean meal: +$3.10 to +$4.00/ton through September 2013. The 2013 average is $396.04/ton.