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Market Matters Blog           11/30 11:43
Dairy Industry Asks for Heavier Truck Weight Permits
STB Seeks More Information on Proposed Rules for Weekly Rail Performance Reports
How the CME Makes Money
Minnesota Expected to Produce Record Corn Crop 
Ag Groups Disappointed; Will Continue to Advocate for SAFE
DDG Exports to China Ahead of Last Year
Shutdowns Threatened by Class 1 Railroads Averted
High Marks for 2015 HRS Wheat
How Big Should Big Rigs Be?
Legislation Introduced to Extend PTC Deadline

Dairy Industry Asks for Heavier Truck Weight Permits

   Several U.S. senators are asking for truck weight flexibility for America's 
dairy farmers to be included in the final draft of a national transportation 

   On Nov. 20, President Barack Obama signed into law a bill to extend highway 
funding for two weeks. Lawmakers are now working to push a long-term surface 
transportation funding package through Congress and send the bill to the 
president by Dec. 4.

   One of the items missing from the short-term funding extension was the Safe, 
Flexible, and Efficient (SAFE) Trucking Act that would have allowed states the 
option of increasing weight limits on interstate highways from 80,000 to 91,000 
pounds for trucks with additional sixth axles. The U.S. House of 
Representatives voted against the heavier weights on Nov. 3. (For more on House 
vote, visit 

   However, on Nov. 23, U.S. Sens. Al Franken, D-Minn.; Ron Johnson, R-Wis.; 
Tammy Baldwin, D-Wis.; Mike Crapo, R-Idaho; Chris Murphy, D-Conn.; Jim Risch, 
R-Idaho; Patrick Leahy, D-Vt.; Kelly Ayotte, D-N.H.; and Angus King, I-Maine, 
sent a letter to bipartisan leaders on the conference committee asking that the 
final bill allow bulk milk trucks to carry milk "without being forced to 
offload portions, which increases food safety risks for consumers and costs for 
dairy farmers," according to Sen. Franken's website.

   The senators wrote: "By classifying milk as a non-divisible load, this 
provision acknowledges that milk cannot be easily divided or dismantled between 
farms and processing plants. Milk is a perishable product that must be sealed 
for safety and transported quickly. When milk truckers pick up bulk milk, they 
must load the entire stock of bulk milk that a farm produced that day -- not 
just the amount of milk that would keep the trucker in compliance with state 
truck weight limits. This is problematic because the amount of milk produced at 
a farm varies from day-to-day, based on weather, feed, and other factors. As a 
result, milk truckers perpetually risk being overweight. While milk truckers 
can break the seal and offload a portion of the milk to bring their truck 
weight into compliance, doing so increases transportation time and compromises 
the safety and security of the milk."

   Current law already permits states to issue special permits for 
"non-divisible" loads, such as trees, boats, or any other products whose 
integrity would be compromised through division. 

   "Adding milk to the list of products that qualify as non-divisible loads 
would improve the safety and security of bulk milk," the senators stated in 
their letter. "What's more, this provision would improve the stability of 
trucks loaded with fluid milk. As the conference committee deliberates which 
provisions will be included in the final version of the DRIVE Act, we strongly 
urge your support the inclusion of this important milk classification." (For 
the full text of the letter, visit 

   Congresswoman Elizabeth Esty, D-Conn., a member of the House Transportation 
and Infrastructure Committee, and Rep. Richard Hanna, R-N.Y., co-introduced an 
amendment to the national highway bill to classify milk as a non-divisible 
load. Rep. Esty said on her website that the Hanna-Esty Amendment was 
introduced "after hearing from dairy farmers in Connecticut about the 
challenges they face transporting bulk milk."

   Mary Kennedy can be reached at 

   Follow Mary Kennedy on Twitter @MaryCKenn


STB Seeks More Information on Proposed Rules for Weekly Rail Performance Reports

   In an effort to collect as much information as it can on proposed rules on 
railroad performance data reporting, the Surface Transportation Board earlier 
this month announced it will waive its prohibition on ex parte communications. 
The move means that instead of having to submit all comments to the board 
through public meetings and/or written records, interested parties may schedule 
meetings with board staff to discuss the proposed rules.

   The STB first addressed the issue of performance data reporting on Oct. 8, 
2014, when the board announced it was requiring all Class 1 railroads to 
publicly file weekly data reports to the STB to "promote industry-wide 
transparency, accountability and improvements in rail service." 

   DTN reported in January 2015 that on Dec. 30, 2014, the STB issued two 
decisions in regard to rail service issues and service issues-performance data. 
The first proposal would require new regulations of permanent weekly reporting 
by all Class 1 railroads and the Chicago Transportation Coordination Office 
(CTCO). The board also proposed to make the weekly rail service reports 
permanent, saying that collection of performance data on a weekly basis would 
allow continuity of the current reporting and improve their ability to 
"identify and help resolve future regional or national service disruptions more 
quickly, should they occur."

   The STB required comments on both decisions to be submitted by March 2, 
2015. Reply comments were due by April 29, 2015. The STB reported on their 
website that, "The board received 17 opening comments submitted by 35 parties 
and nine reply comments from 30 parties. A number of parties filed written 
comments requesting meetings with Board staff to discuss the proposed rail 
service performance metrics."

   On Nov. 9, the STB announced it "will waive its general prohibition on ex 
parte communications and permit interested parties to schedule meetings with 
board staff to discuss the proposed rules on railroad performance data 

   "The agency has long interpreted its general ex parte communication 
prohibition to encompass informal rulemakings such as this one. Our predecessor 
agency, the Interstate Commerce Commission, stated 'that ex parte communication 
during a rulemaking is just as improper as it is during any other proceeding. 
The commission's decisions should be influenced only by statements that are a 
matter of public record.'"

   However, the STB said it can waive its regulation on ex parte communications 
in appropriate proceedings. "In doing so, the board can take steps to ensure 
that a fair process is established, including notice, disclosure, and an 
opportunity for all parties to comment on information discussed during informal 

   "In this quasi-legislative proceeding, we find good reason to waive our 
prohibition on ex parte communications. It is important to make sure that any 
rule we adopt regarding service data results in the collection of information 
that will be useful to the agency and its stakeholders. As the comments 
submitted so far have demonstrated, the manner in which railroads collect and 
maintain data has a number of technical aspects and varies between carriers." 

   Here is the STB's complete decision on waiving its prohibition on ex parte 
communications and information on how the process will be expected to work:


   The massive transportation backlog of 2014 cost farmers and grain shippers 
hundreds of thousands of dollars in lost revenue because rail cars were behind 
in getting placed, which left elevators full and in turn left farmers with no 
place to sell or haul their grain. 

   At the end of September 2014 with a record corn harvest facing South Dakota, 
Tim Luken, elevator manager at Oahe Grain, Onida, South Dakota, told DTN that 
one of his producers asked, "How am I going to get cash to pay bills if no one 
will take any grain because they're full?" Oahe Grain is serviced by the Rapid 
City, Pierre & Eastern Railroad (RCPE) a shortline that receives cars from the 
Canadian Pacific, but also has trackage rights over the BNSF Railway between 
Yale and Watertown, South Dakota.

   Fast forward to one year later and Luken has a different story to tell. "The 
service on the RCPE has been outstanding. I have not one bad thing to say about 

   It is important to note that during 2014 when Luken was behind on railcars, 
it was because the Canadian Pacific (CP) was behind in supplying them to the 
RCPE. However, Luken said he feels "weekly reporting is a great thing; maybe 
not today, but we will see a day again when it will be a viable resource of 
information how railroads are performing."

   Luken said there are plenty of cars to go around now because "producers are 
having a harder time with cash values today than they did the last seven years 
when we had robust exports and lower U.S. dollar values. Another factor for the 
good performance is that I believe since the Bakken oil fields have cut back on 
oil production, there are less oil trains crowding the tracks." 

   "Remember, too, that famers have more grain storage today than they did 10 
years ago," Luken said. "I am not talking 15,000- and 20,000-bushel bins, I am 
talking 50,000- to 100,000-bushel bins. It's the domino effect. When grain 
isn't moving, it affects everyone in the grain business: elevators, implement 
dealers, railroads, and so on." 

   An elevator on the Canadian Pacific mainline in North Dakota told DTN, "I 
think some reporting should continue. When grain movement picks up and the 
railroads fall behind, the STB will have some benchmark. Keep some thumb 
pressure on them. We never completely find out everything anyway."

   He added that, "Current service is good, almost too good. Dedicated trains 
are turning in 10 to 14 days, which is too quick in this market environment. CP 
freight is trading at tariff to -$100/car and will probably go to -$300 by 
mid-December. One issue facing the CP is that they lack competitive 
destinations, in particular for corn. The BNSF takes everything straight 
through while the CP has to hand off to other railroads." 

   Things have definitely changed from the disaster of 2014. Besides the 
cheaper secondary freight costs on both the BNSF and CP, tariff rates have also 
been reduced in some corridors as the railroads are trying to generate revenue. 
Even still, it is likely that the STB will continue to require the railroads to 
provide service updates. The question remains as to how detailed and how often 
those reports will be.

   Mary Kennedy can be reached at 

   Follow Mary Kennedy on Twitter @MaryCKenn

How the CME Makes Money

   Futures contracts are important tools for farmers in their marketing. I've 
met some who use them more than others, and yet others who have a gift for 
seeing option strategies. I've also met many farmers who would prefer to sign a 
contract with their local elevator, and the let the elevator shoulder the 
margin call. 

   Whatever your relationship with futures and options -- I understand that 
some in farm country are still upset about CME's decision to shift from a 
member-owned club to a for-profit company back in 2000 -- there's an article in 
the Financial Times that you need to read. 

   Part profile, part think piece, it leads the read in some interesting 
directions. Is this the way our futures market should be run? At present, the 
core issue surrounds trading in CME Group's interest rate futures and the 
relative importance of that as the Federal Reserve begins to raise interest 

   It also discusses how CME's business model has helped consolidate 99.97% of 
U.S. interest rate futures and options volume on one exchange. It touches on 
the challenges of automated trading. It highlights the company's CEO, Terry 
Duffy, and the power of company's close relationship with politicians in 
Washington, D.C. And then, there's this gem: 

   "Mr. Duffy's blunt manner and deep understanding of Washington politics have 
helped CME emerge from the financial crisis as one of the most lucrative US 
businesses. As Wall Street banks scale back, the world's biggest exchange group 
racks up operating margins of 60 per cent. This ranks CME among the three most 
profitable members of the S&P 500 index, alongside Visa, the card network, and 
Gilead Sciences with its $1,000-a-day hepatitis pill."

   Agriculture is a risky business, and CME's products are core tools farmers 
and agribusinesses use to manage those risks. Whether you personally trade on 
CME's futures or options products or not, it's worth understanding how CME grew 
into one of the nation's most powerful and profitable financial institutions 
outside of the agriculture space. The Fed thinks it's systemically important 
financial utility to the general economy. It's easily 10 times as important to 
farmers, county elevators and agribusiness. 

Minnesota Expected to Produce Record Corn Crop 

   In its Nov. 10 Crop Production report, USDA raised its production estimate 
for U.S. corn, with Minnesota showing one of the larger gains. The state will 
produce an estimated 1.45 billion bushels of corn this year, 5% higher than the 
record set in 2012. Average yields are projected at 187 bushels per acre, 31 
bushels higher than last fall and 10 bushels higher than the record set in 2010.

   For confirmation of this year's bumper crop, just ask Tyler Sunderman, owner 
of Patriot Grain in Cleveland, Minnesota, a small town east of St. Peter. He 
and his father have owned the 425,000-bushel elevator since 2012 which services 
producers in the area. 

   Sunderman told DTN that when the corn price rallied in July, his customers 
sold old-crop corn and contracted new crop as well. By the time harvest was in 
full swing this fall, Sunderman ran out of bin space and had to pile corn on 
the ground. He told DTN that his father always wanted to pile corn, and now he 
could "check it off his bucket list."

   Patriot Grain has two 100,000-bushel piles that consist of high-test-weight 
corn with average moisture of 15%. Sunderman said he didn't see any corn below 
57 pounds, which would help account for the average yield of 210 bpa in his 
area. He does have fans running on both piles, and when it came time to tarp 
the piles, he enlisted the help of the Le Sueur-Henderson wrestling team. He 
said it was quite a sight watching the boys crawling all over the pile pulling 
the tarp as they moved.

   While a tarped pile of dry corn is good temporary storage, it's not without 
some spoilage in the end. Chad Schmidt, a 14-year veteran of the grain industry 
and former grain manager at a Mississippi River terminal, told DTN that the 
main reason for running a fan is "to keep the tarp sucked into the pile and 
less susceptible to wind pulling it off the pile." Schmidt piled 1.2 million 
bushels of corn at the terminal in 2010 and held it all winter until the river 
opened up in the spring." 

   He added that it is not a cheap investment to pile corn and "costs such as 
interest, tarps, the labor cost to pile and pick up; all need to be figured 
into the final price you want to net."

   "The first key to storing corn outside is using good-quality corn above 56 
pounds. Then, have a good base that is crowned to keep rain and melted snow 
from seeping under the tarp and walls," Schmidt said. "The base is peaked in 
the center both length- and width-wise so the water would run away from the 
pile. It was a challenge to get our pile half full and tarped before rain."

   Schmidt added, "Seepage would be the second biggest source of spoilage. 
Then, hope the weather is dry from when the pile goes down until it is picked 
up. It did seem that having too many fans will pull moisture into the pile. 
Usually, the most spoilage occurs is around the aeration tube inside the pile, 
where the moisture has collected." 


   Sunderman, who with his family farms 5,200 acres of corn and soybeans, told 
DTN that his corn is all hedged in the futures, but he is a "fan of the basis" 
now. So far, he has been doing well as the corn basis has been getting stronger 
this fall. Since the start of the corn harvest in late September, the weekly 
DTN National Average basis has strengthened by 11 cents as of the third week of 

   Since Patriot Grain has no rail service, Sunderman relies completely on 
trucks to move his corn. He said he usually feeds two ethanol plants south of 
him and also has a contract with a large dairy to provide 11,000 bushels of 
corn for feed each week.

   His plan right now is to get rid of the pile after the first of the year. He 
said when he opens a pile, he will keep the trucks moving until the pile is off 
the ground to avoid spoilage.

   Mary Kennedy can be reached at 

   Follow Mary Kennedy on Twitter @MaryCKenn

Ag Groups Disappointed; Will Continue to Advocate for SAFE

   Many ag groups were disappointed with the U.S. House of Representative vote 
against an amendment allowing heavier truck weights on interstate highways and 
vow to continue to push for the increase.

   On Nov. 3, the U.S. House of Representatives voted against an amendment in 
the highway bill that would have allowed states the option of increasing weight 
limits on interstate highways from 80,000 to 91,000 pounds for trucks with 
additional sixth axles. The $325 billion, six-year highway bill passed Nov. 5, 
minus the proposed change in weight limits.

   The National Grain and Feed Association (NGFA) issued a press release 
applauding the House of Representatives for approving the six-year 
transportation bill, but said they "will continue to advocate for provisions 
not included in the bill. For instance, the Association supported the Safe, 
Flexible, and Efficient (SAFE) Trucking Act, sponsored by Rep. Reid Ribble, 
R-Wis., that would have allowed trucks with six axles to transport up to 91,000 
pounds on interstate highways. The federal weight limit for interstate highways 
has been set at 80,000 pounds since 1982."

   "Federal highway truck weight limits currently are lower than most state 
road weight limits, and this inconsistency presents obstacles to efficient 
movement of U.S. grains," said NGFA Director of Economics and Government 
Affairs Max Fisher. "Our organization, as well as the rest of the coalition 
that supports the amendment, is evaluating how to proceed in our efforts to 
update truck weight limits on Interstate highways."


   Soy Transportation Coalition (STC) Executive Director Mike Steenhoek told 
DTN, "It is correct that certain Western states have weight allowances on their 
state (and sometimes on federal) roads that exceed the 80,000-pound limit. For 
those states, the six-axle, 91,000-pounds configuration would not be as 
consequential. For the majority of the country, though, having this increased 
weight limit would benefit agriculture and a host of additional industries."  

   "The railroads were certainly working to oppose this amendment. The reality 
is that truck and rail are increasingly not interchangeable modes of 
transportation. It's more a hub-and-spoke system -- rail are the hubs; trucks 
are the spokes. That's why we would witness a very modest amount of diversion 
from rail to truck if the Ribble amendment is adopted."

   Steenhoek said, "Supporters of the amendment represented a significant 
percentage of the freight moved in this country, so we were able to exert 
influence as well. It just wasn't enough. One of the biggest problems is that 
many of those representatives in highly urban areas -- who don't have 
constituent engagement on issues like freight transportation efficiency -- 
simply voted no without delving into the pros and cons of the legislation."

   When asked about the future of SAFE, Steenhoek said, "I don't see a path 
forward in the near future. The concept itself certainly isn't dead -- we do 
need to find a way to increase trucking efficiency in a safe, responsible 
manner. However, for the immediate term, I don't see a legislative vehicle that 
will allow this to move forward in the near future."

   Bob Zelenka, executive director of the Minnesota Grain and Feed Association, 
told DTN, "We were certainly disappointed in the outcome of the vote. In 
Minnesota, 'raw and unprocessed agricultural commodities' are allowed to be 
hauled up to 90,000 pounds on six axles and up to 97,000 pounds on seven axles. 
In the winter 'freeze period,' you are allowed to haul up to 99,000 pounds on 
six axles or seven axles. Unfortunately, this allowance does not apply to the 
interstate system in Minnesota, which is why we were actively supporting the 
Ribble amendment and for all the right reasons."

   North Dakota DOT allows a 10% weight increase permit which is valid July 15 
to Nov. 30. This permit allows a vehicle 10% more weight when hauling a 
harvested farm product from the field to the first point of storage. "Solid 
waste, sugar beets, and potatoes may be hauled from any location to a point of 
storage with 10% more weight. The weight exemption permit is valid for 10% over 
legal axle weights and/or 10% over legal exterior bridge distance (measurement 
between extreme axle centers), whichever is more restrictive. The fee is $50 
per 30-day period."

   South Dakota DOT allows vehicles hauling agricultural products from a 
harvesting combine to the point of first unloading a tolerance of 10% in excess 
of the legal limits. "These vehicles may not exceed a speed of 50 miles per 
hour, and are only granted this tolerance within a range of 50 miles from the 
harvested field. This tolerance is not permitted on the interstate highway 
system. Vehicles hauling agricultural products from farm storage or livestock 
from a farm are given a tolerance of 5% in excess of the legal limits. These 
vehicles may not exceed a speed of 50 miles per hour, and are only granted this 
tolerance within a range of 50 miles of the loading site. Such vehicles may not 
exceed any posted weight of any bridge or road. This tolerance does not apply 
during spring load restrictions and is not permitted on the interstate highway 

   Mark Rohrich, Rohrich Farms, Zeeland, North Dakota, told DTN, "I would have 
like to have seen the increases in freight efficiencies on the interstates by 
increasing payload. It would have been especially beneficial for our 
agriculture freight up here like cattle, commodities and fertilizer as they 
utilize interstate highways. Right now many trucks in North Dakota and South 
Dakota have to avoid the interstate travel to keep the opportunities to carry 
more payloads per trip on state highways. Trucks with higher gross loads and 
the right axle combinations carry loads safely. Trucking regulations will 
continue to reduce number of drivers and companies that are operating."

   Mary Kennedy can be reached at 

   Follow her on Twitter @MaryCKenn

DDG Exports to China Ahead of Last Year

   Exports of dried distillers grains to China may have declined 
month-to-month, but year-to-date exports to China are 30% higher than year-ago 

   September's DDG exports totaled 1.109 million metric tons, up 22% from the 
same month a year ago, said DTN Analyst Todd Hultman. The data, which is 
released by the Foreign Ag Service, is based on U.S. Census Bureau tallies. 

   China was the biggest DDG customer in September, buying 484,535 metric tons, 
192% more than the same month last year. In August, China bought more than 
600,000 mt of U.S. DDG. 

   "Yes, exports are down on the month, so it could be spun as bearish or 
bullish, but overall I would say DDG activity to China is a bullish factor this 
year," Hultman said.

   U.S. ethanol exports are also stronger than last year, up 7% from a year 
ago. Exports totaled 60.3 million gallons in September, 6% higher than the same 
month a year prior, with Canada as the largest buyer. 

   Biodiesel exports in September increased 47% from a year ago to 28,205 mt. 
Canada bought 17,796 mt of that. Year-to-date exports in 2015 are down 6%.

Shutdowns Threatened by Class 1 Railroads Averted

   MINNEAPOLIS (DTN) -- U.S. railroads will have more time to install new 
required safety systems thanks to legislation passed by Congress last week.

   On Oct. 27 and 28, bipartisan votes by lawmakers in the House and Senate 
passed HR 3819, which extended the deadline for implementing positive train 
control (PTC) by three years, to Dec. 31, 2018. President Barack Obama signed 
the bill into law on Oct. 29.

   Here is a link to the adjusted timeline planned for railroads to implement 
PTC by 2018: 

   The extension was welcome news to the rail industry, which had threatened 
slowdowns and/or shutdowns if the PTC deadline was not extended. 

   Association of American Railroads (AAR) President and CEO, Edward R. 
Hamberger said in a press release: "Members of the House and Senate are to be 
commended for taking the responsible action to extend the PTC deadline. This 
provides the certainty American industries and businesses need to serve the 
millions of Americans who rely on rail every day. The extension means freight 
and passenger railroads can continue moving forward with the ongoing 
development, installation, real-world testing and validation of this complex 

   "The rail industry remains fully committed to being accountable and 
transparent in completing PTC, and we look forward to working with Congress to 
get a broader long-term surface transportation bill to the desk of the 
president expeditiously," added Hamberger. 

   Norfolk Southern Railroad also praised the extension, saying the extra time 
to implement PTC systems would allow the railroad to continue its service 
without interruption. In a statement on its website on Oct. 30, the company 
said, "Following this commendable step by Congress and the president, Norfolk 
Southern has rescinded its cessation of service notice for 
poisonous-inhalation-hazard commodities, and for passenger and commuter trains. 
The government's action makes it possible for Norfolk Southern to conduct 
lawful operations beyond the former deadline of Dec. 31, 2015, maintaining full 
access to the rail network for customers and passengers."

   Agriculture groups also praised the deadline extension.

   In a news release, NGFA President Randy Gordon said: "U.S. agriculture 
depends upon efficient and safe transportation involving all modes -- rail, 
truck, barge and vessels -- to move commodities to domestic and international 

   National Farmers Union President Roger Johnson also applauded Congress' 
decision to extend the implementation of PTC, ensuring American family farmers, 
ranchers, and all those who rely on rail will not experience interrupted 

   "The entire country relies on freight rail to ensure delivery of everything 
from chlorine for drinking water to anhydrous ammonia for fertilizer," Johnson 
said in a news release on Oct. 28. "It has been clear for a while that the 
deadline was unreachable and could have done serious damage to the nation's 
economy if not dealt with."

   Johnson added, "Each side of the debate had legitimate concerns that we now 
must work together to address for the benefit of American consumers and 
producers. We stand ready to work with Congress to ensure the timely 
implementation of PTC technology."

   Prior to Congress extending the deadline for PTC implementation, agriculture 
and commodity groups had sought to keep railroads from suspending service if 
they failed to meet the original deadline. In a letter to the Surface 
Transportation Board on Oct. 23, 32 national agricultural producer, commodity 
and agribusiness organizations as well as NGFA state and regional affiliates, 
said they supported a petition filed with the agency arguing that "rail 
carriers cannot suspend unilaterally their common carrier obligation to serve 
shippers simply because they have not complied with the positive train control 
(PTC) requirement."

   To read the full letter, visit:

   Mary Kennedy can be reached at

   Follow Mary Kennedy on Twitter @MaryCKenn


High Marks for 2015 HRS Wheat

   Hard red spring wheat -- the preferred wheat for baking -- earned high marks 
in 2015. But with protein premium spreads quite narrow, those high numbers may 
not lead to higher prices for producers.

   The North Dakota Wheat Commission recently issued a report on HRS quality, 
saying that in 2015 the crop "produced high grades, high protein and is sound 
in overall kernel traits."

   Average ranking of the crop was #1 dark northern spring, compared to #1 
northern spring in 2014. NDWC said DNS has significant improvements in color 
and vitreous color than NS. "Specifically, the crop averages a 
61.6-pound-per-bushel (81 kg/hl) test weight, 0.4% damage and 83% vitreous 
kernels," NDWC stated. "Vitreous kernels are vastly improved over the 
historically low 53% recorded in 2014.

   "Average protein is 14.1%, up from 13.6% in 2014 and similar to the 
five-year average. All parts of the region show higher kernel protein levels. 
Nearly two-thirds of the 2015 crop is above 14% protein (12% moisture basis), 
compared to just 40% in 2014. Likewise, only 12% of the crop falls below 13% 
protein, compared to nearly 30% last year."


   Tim Dufault, a spring wheat farmer in Crookston, Minnesota, told DTN in 
early September: "As usual, I have protein, but it's not worth anything." This 
was in response to a conversation about how narrow the protein premiums had 
become compared to 2014. During the end of the first half of September this 
year, 13% protein was at +60 to +70 over the Minneapolis December, 14% was at 
+80 to +90 and 15% was at +140 to +175. In contrast, just one year prior at the 
same time, 13% protein was at +85 to +140, 14% protein was at +250 to +600 and 
15% protein was at +605 to +650.

   Protein premium spreads continue to remain narrow; the Minneapolis spot 
basis on Oct. 22 showed no 13% proteins for sale, 13.5% was at +105 to +140, 
14% was at +115 to + 130 and 15% was at +180 to +200. In contrast to the same 
day one year ago, 13.5% was +150 to +195, 14% was at +225 to +250 and 15% was 
at +500 to +550.       

   Dan Maltby, consultant for the Risk Management Group in Minneapolis, 
Minnesota, told DTN, "The spring wheat basis often reflects the overall protein 
content of the crop, which is almost always determined by weather, and a key 
factor is night-time temperatures during wheat filling stages.  This year, the 
crop experienced warm nights, and thus the protein content of the 2015 crop was 

   The NDWC also mentioned the protein-boosting effects of the weather. "A 
warmer, drier finish to the growing season favored the higher protein average," 
NDWC's report stated. "An extended period of warm, dry conditions supported the 
harvest of a sounder, drier crop compared to 2014."

   Malty said with the higher proteins "... one would expect the basis on 15% 
proteins to drop, relative to 14%, which it did."

   He continued, "This year, so far, there has been a stunning collapse of 
protein premiums. Fifteen percent proteins are averaging much lower, at +175 
and while this will probably increase, maybe approach +200, 15 proteins 
certainly will be down more than $2.50 per bushel. This is directly a result of 
this crop averaging almost a full point higher than last year."

   Maltby talked about export demand, stating that 14% proteins, not 15% 
proteins, are exported. "However, if 14s are tight supply, then 15s and 13s can 
be blended together to make 14s. But in years when 14s are plentiful, 15s will 
only be used for specialty milling end uses and generally, demand for these 
products does not fluctuate greatly."

   Maltby pointed out in the accompanying chart that the 15% protein average 
posted high side milling basis from 2005/06 to 2014/15 was +230 and the average 
14% protein basis in the same period was +140. He said, "Fifteens averaged a 
90-cent premium in those 10 years and currently 15s are quoted at a 70-cent 
premium to 14s, so in my opinion, they are historically a bit of a relative 


   Kernel moisture is about one-half percentage point lower, and the average 
falling number for the overall crop is 372 seconds, up from 339 seconds in 
2014. Distribution of falling number better reflects the improved crop 
soundness, as 94% of the crop averages above 350 seconds compared to just 73% 
in 2014.

   In 2015, spring wheat planting began in early April, which was well ahead of 
2014 planting pace and the five-year average. "Emergence was a bit slow to 
start due to cool, dry conditions in late May and early June," said the NDWC. 
"As temperatures warmed up, emergence took off at an above-average pace. 
Growing season conditions were more favorable than last year with lower disease 
pressure. "Overall yields were above average, but varied from record yields in 
the eastern half of the region to below-average yields in the west where much 
drier conditions prevailed throughout the growing season."

   "Regional production is up slightly from 2014, but a larger share in 2015 
was produced in the eastern half of the region due to higher planted acres and 
record per-acre/hectare yields. Production was lower across the western half 
due to less planted area and reduced yields due to minor to severe midsummer 
drought conditions."

   Hard red spring wheat is one of the six classes of wheat grown in the U.S., 
primarily in the Northern Plains. The high protein content and superior gluten 
quality of this specialty wheat makes it the "aristocrat of wheat" for use in 
some of the world's finest baked goods, according to the North Dakota Wheat 
Commission. All specialty breads such as bagels, hard rolls, hearth breads and 
even pizza crust taste better when spring wheat flour is used because they can 
be stored longer than breads made with low protein wheat, according to the 
NDWC. Adding hard red spring to lower-protein wheat improves dough handling and 
mixing characteristics as well as water absorption. The resulting flour can be 
used to make an assortment of bread products, as well as Chinese-type noodles. 

   The entire report can be found here: 

   Mary Kennedy can be reached at 

   Follow Mary Kennedy on Twitter @MaryCKenn 

How Big Should Big Rigs Be?

   Federal law says the maximum allowable weight for freight-shipping trucks is 
80,000 pounds, although some states have higher limits that were grandfathered 
in when the federal rule was passed. The U.S. Department of Transportation 
(USDOT) has been studying allowing an increase of that maximum weight to 91,000.

   On October 5, the Transportation Research Board (TRB) published a review of 
the USDOT's "Comprehensive Truck Size and Weight Limits Study" and found some 
areas lacking.

   The TRB stated that, "... a more comprehensive and useful response would 
have been possible." The TRB continued, the study "... lacks a consistent and 
complete quantitative summary of the alternative configuration scenarios, and 
major categories of costs -- such as expected bridge structural costs, 
frequency of crashes, and infrastructure costs on certain roads -- are not 

   The USDOT report should have provided a framework for understanding all the 
costs and benefits, TRB stated. "A comprehensive list of the categories of 
costs and benefits, the features of the hypothesized regulatory change that 
influence each category, the direction of change, and the categories that are 
likely to be critical to the evaluation all can be identified from results of 
the present and past studies." 

   Read the TRB's review here:


   The Soy Transportation Coalition (STC) also did a study on increasing truck 
weights which was funded by the soybean checkoff. Executive Direct Mike 
Steenhoek told DTN that trucking and rail are increasingly not interchangeable 
modes of transportation. "This is particularly the case with agriculture. Over 
the past several decades, railroads have adopted a business model of 
emphasizing long haul service, which has resulted in limiting access to the 
rail network in rural areas. Years ago, every soybean and grain handler enjoyed 
rail service at their facility. That is no longer the case. 

   "As a result, farmers and grain handlers must increasingly utilize trucking 
to access the rail network. Given how trucking and rail are less 
interchangeable, the potential modal shift from rail to trucking due to the 
adoption of 91,000 lbs. semis is significantly limited. The U.S. Department of 
Transportation calculated that the potential modal shift nationwide would 
amount to less than one third of one percent of railroad revenues. This minimal 
modal shift would be even less for agricultural shipments," said Steenhoek. 
Here is a link to the study done by the STC:

   Bob Zelenka, executive director of the Minnesota Grain and Feed Association 
told DTN, "We have been generally supportive of increased truck weights since 
the U.S. government took control of truck weight and length in the early 1980s. 
At that time, the feds grandfathered in states that had weights that exceeded 
the federal 80,000-pound limit. Unfortunately and contrary to a few of our 
neighbors, Minnesota was still at the 80,000 pound limit at that time.

   "In 2008, the Minnesota Legislature passed a law allowing permits to be 
issued for 'raw and unprocessed agricultural commodities' to be hauled at 
90,000 pounds with six axles and up to 97,000 pounds on seven axles. The fuel 
savings were a big part of the reasoning, through reduced trips to haul the 
same amount of product. However, one does wonder if real savings do occur, when 
figuring the cost of a new six- or seven-axle trailer, plus the $300 to $500 
state permit fee and with some counties also charging a fee to travel 
overweight on their roads." An elevator manager in eastern North Dakota told 
DTN that the biggest benefit to farmers would be that higher weight limits 
"lessen the work load. What was once hauled in 10 trucks can now be hauled in 
nine. That means less hours."


   The state of Michigan's truck weight laws allow more than the federal limit 
spread out over more axles.

   "Michigan has a unique system of truck-weight laws, which allows greater 
maximum gross vehicle weight (GVW) than in other states," according to The 
Michigan DOT, Bureau of Transportation Planning, Intermodal Policy Division. 
"Gross vehicle weight includes the weights of the truck, cargo carried, fuel, 
and driver. Maximum allowable axle loadings are the same in all states, 
including Michigan. Michigan and several other states allow gross vehicle 
weights greater than 80,000 pounds, when spread over more than five axles. 
These weight laws are allowable under 'grandfather clauses' in federal law, but 
if these laws are repealed, they may not be re-enacted. 

   "The maximum gross vehicle weight allowed on a 'federal-weight-law truck' is 
80,000 pounds, with four of its five axles carrying 17,000 pounds each and the 
steering axle carrying 12,000 pounds. The calculated maximum allowable gross 
vehicle weight on the heaviest 'Michigan-weight-law truck' is 164,000 pounds, 
which can only be achieved by use of 11 properly-spaced axles. Most of these 
axles carry only 13,000 pounds each. The alternative to a single Michigan 
combination carrying 160,000 lbs. on 11 axles is two standard trucks carrying 
160,000 lbs. on 10 axles. Pavement research has shown that these two smaller 
trucks actually cause about 60% more pavement damage than does the single 
heavier truck, because of their higher axle loadings and the extra weight of 
additional tractors at about ten tons each."

   States and provinces bordering Michigan also allow certain vehicles heavier 
than the federal weight law trucks. Ontario allows nine-axle vehicles carrying 
a total of 140,000 pounds. Ohio, Indiana, and Wisconsin issue permits allowing 
heavier Michigan-style trucks to travel on selected highways. This allows 
access by Michigan shippers to the steel industry in Gary, bulk rail and marine 
terminals in Toledo, and the forestry industry in northern Wisconsin. Other 
states along the Canadian and Mexican borders increasingly allow heavier trucks 
from their neighboring countries. 

   The Michigan DOT believes that state's truck weight law is based on sound 
research and results in less highway damage and improved safety relative to 
federal weight law. "Several of this state's key industries benefit by being 
able to transport their goods much more efficiently and economically," the 
Michigan DOT concluded. "Recent trends and studies suggest that the federal 
government and other jurisdictions are beginning to recognize the validity and 
benefits of the approach Michigan has used for decades." 

   The House Transportation and Infrastructure Committee will be marking up a 
surface transportation bill on October 22. Steenhoek, told DTN that, "We and 
other proponents of this legislation are working to ensure it gets included in 
the larger highway bill." 

   Mary Kennedy can be reached at

   Follow her on Twitter @MaryCKenn

Legislation Introduced to Extend PTC Deadline

   On September 30, the Transportation and Infrastructure (T&I) Committee 
introduced bipartisan legislation to extend the December 31 deadline for U.S. 
railroads to be compliant with Positive Train Control (PTC) technology. 

   The Association of American Railroads (AAR) President and CEO Edward R. 
Hamberger provided the following response to committee leaders: "The freight 
rail industry is pleased the House T&I bipartisan leadership has introduced 
legislation to extend the PTC deadline. The committee leadership clearly 
recognizes the need for immediate action to forestall the looming economic 
crisis that would result from widespread freight and passenger rail service 
disruption. We look forward to working with both the House and Senate 
bipartisan leadership to quickly get the PTC extension across the finish line 
and to the President's desk for signature." 

   The AAR said on its website that, "Train systems cannot be shut down or 
restarted overnight so freight railroads, passenger rail providers and shippers 
are being forced to make decisions now to prepare for the severe disruptions in 
rail service that will occur if Congress does not act soon on a PTC extension."

   U.S. Senator Richard Blumenthal (D-Conn.), member of the Senate Commerce, 
Science and Transportation Committee, released the following statement on his 
website in response to the House Transportation and Infrastructure Committee's 
legislation to extend the deadline for railroads to implement PTC technology:

   "Any Congressional action on PTC must ensure that railroads move swiftly and 
vigorously to install it without needless delay. It has been more than 45 years 
since the National Transportation Safety Board first urged railroads to 
implement positive train control -- an unacceptable delay in implementation of 
this critical, life-saving technology that has allowed numerous, preventable 
tragedies. Instead, the House Transportation and Infrastructure Committee's 
bill provides a blanket extension to 2018, a troubling move considering that 
some railroads are on track to meet the current deadline. Extensions should be 
granted only to railroads that have demonstrated diligent, good faith efforts 
to meet the mandate. Only by holding railroads' feet to the fire will this 
critical, life-saving technology finally be implemented."

   The legislation introduced September 30 would extend the Positive Train 
Control Enforcement and Implementation Act of 2015 deadline to the end of 2018. 
The details of the extension includes limited authority for the U.S. Department 
of Transportation Secretary to extend the deadline beyond 2018 if railroads can 
prove they are still facing difficulties in completing the mandate and have 
made every effort to install PTC. Railroads will be required to complete 
progress reports on their progress of compliance with the installation of PTC 
on their lines. (To see legislation, go to

   It's no secret that many rai1roads have said they may start the shutdowns 
before the end of the year. That's unnerving to grain shippers and farmers who 
are just getting geared up for a large harvest. Grain shipments could be 
stalled if the line they run on needs to switch cars to a neighboring railroad 
that has shut down operations or if the line they ship on is closed down. 
Railroads have said they will shut their lines down to avoid any legal 
ramifications or fines if they can't get railroad accident-avoidance equipment 
installed on time.

   It's a Catch 22 for farmers and shippers who want safe railroads, but also 
want to move their new crop corn and soybeans. They do not want nor can they 
afford a repeat of the economic disaster they experienced in 2014 when 
railroads underperformed.

   Mary Kennedy can be reached at 

   Follow Mary Kennedy on Twitter @MaryCKenn


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