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Market Matters Blog           08/26 15:42
2014-15 Crop Year Ends For Corn, Soybeans, Spring Wheat Basis
STB Needs to Make Timely Decision on Revenue Adequacy, Grain Rates
A Windshield Tour
Mr. Market Lives In China Too
Shipper Groups, Railroads at Odds Over Rules Regarding Railroads' 
Revenue-Adequate Status
Sorghum's GMO Question
More Heavy Rains Cause Major Headaches, Weak Basis
DDG, Ethanol Exports Climb
Record Trading Volumes in Ag
Additional Rains Add Insult to Injury Caused by Tropical Storm Bill 

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. 


   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 

   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 

   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


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.  

   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 

   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 

   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

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 

   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 

   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 

   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. 

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."*

   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 

   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


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. 

   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 

   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

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, 

   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 or a contentious issue. Few farmers are pushing for change now, but 
they are keenly aware of the advantages GE sorghum could bring to sorghum 

   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 


   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

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.

   "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

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. 

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 

   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 

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

   *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 

   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. 

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.

   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 

   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


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