U.S. farmers and ranchers are forecast to earn $66.6 billion in net farm income this year, up 10 percent from last year’s $60.6 billion, according to USDA’s first farm income forecast for 2007. If realized, that figure also would be 16 percent above the 10-year average of $57.4 billion.

Department economists see cash receipts for crops and livestock hitting a record-high $258.7 billion this year, far surpassing the 10-year average of $211.4 billion. However, cash expenses for farms and ranches also are forecast to hit a record high of $222.6 billion in 2007.

According to USDA, this year’s market prices for corn, wheat and soybeans are forecast to remain above 2006 levels, which themselves were strong, especially in the last half of the year. In addition, prices for sorghum and hay are projected to be higher in 2007 as higher prices for corn result in increased demand for these commodities as feed substitutes. Cash receipts for all crops are forecast at a record $133.5 billion in 2007.

The farm income forecast reflects an expected increase in the production of corn and declines in the production of soybeans and sorghum as high corn prices encourage farmers to switch production to corn. However, says USDA, “the risk of losing the benefits of a corn/soybean rotation in the control of pests and disease will restrain the substitution.”

The method that Class I railroads use to calculate and collect increased fuel costs needs to change according to the Surface Transportation Board (STB). In its ruling on January 25, the STB concluded that computing rail fuel surcharges as a percentage of a base rate is an unreasonable practice, that double-dipping (applying to the same traffic both a fuel surcharge and a rate increase based on a cost index that includes a fuel component) is also unreasonable, and that all Class I railroads must report their fuel surcharges.

Presently, all Class I railroads except the BNSF Railway use a percent of base rate to determine the fuel surcharge. The BNSF uses a distance based approach for coal and agricultural shipments on its network. For shippers, the goal of this announcement means they will pay the representative increased fuel costs for their particular shipment. The railroads have a 90-day transition period to adjust their fuel surcharge programs. A railroad may request an extension if necessary.

The STB did not rule that a single, uniform index to measure changes in fuel prices be used. They do however encourage the use of the Energy Information Agency’s “U.S. No. 2 Diesel Retail Sales by All Sellers (Cents per Gallon)” as a reasonable index to apply to measure changes in fuel costs for purposes of a fuel surcharge program. An alternative index may be used, but could be subject to challenge.

Class I railroads will need to report monthly its fuel expenditures and consumption for the STB to monitor the industry’s fuel surcharge practices. The STB is seeking further comments on the costs and burdens of the proposed reporting requirement.

Brazil’s main biodiesel feedstock is likely to remain soy for the next four to five years, despite fears of soaring oilseed prices and keen local interest in non-food crops such as the physic nut.

While a diverse number of local feedstocks from castor, cottonseed and sunflower oils to animal fats can be used to produce biodiesel, soyoil currently accounts for about 90 percent of Brazil’s total vegetable oil production.

The physic nut is a leafy tree that blooms with pale, green fruit hanging off twigs or in bunches like gargantuan grapes. However, the tree has been so little researched it is not yet officially recognized by the Brazilian government as a recommended biodiesel feedstock.

Arkansas farmers grow enough soybeans to supply the feed stock necessary for biodiesel fuel production, but there are too few crushers and processors to grind the beans into oil, the state agriculture secretary said last week, according to the Arkansas News Bureau. “We can only do about 20 percent of our soybean crop into oil,” said Arkansas Agriculture Secretary Richard Bell, adding that the two biodiesel producers in the state have, on occasion, had to purchase it from other states.

One component of a $20 million biodiesel incentive bill, which passed the Arkansas House last week and is headed to a Senate committee for consideration, offers grants to companies wanting to build the equipment needed to grind the soybeans into oil in the state. House Bill 1379 by House Speaker Benny Petrus (D-Stuttgart), is intended to open new markets for farmers in the state, protect the environment and reduce the state’s dependency on foreign oil and gasoline. The bill passed the House and is now being debated in the state Senate.

Under the bill, the state Department of Agriculture would have $16 million available for distributing grants to companies that make biodiesel fuel from soybeans or wood products. Also, grants would be available to farmers who grow the soybeans. Biodiesel distributors also would be eligible for up to $50,000 to install the necessary heating equipment at stations.

Bell said that the department would oversee the grant process, but the money would be distributed by the state Department of Finance and Administration. Under the bill, $2 million also would go toward the University of Arkansas agriculture department for research, and $2 million to the state’s weatherization assistance fund, a program directed by the state Department of Health and Human Service.

The soy complex reached contract highs on February 15 reflecting talk of a sharp drop in soybean planted acres combined with harvest problems in Brazil. March bean futures closed up $3.03 finishing at $278.79; May was $3.03 higher, closing at $284.67; and July gained $3.40 ending at $289.72. March meal was up $2.76 closing at $248.13; May was $3.09 higher, finishing at $253,64; and July increased $3.09 to finish at $257.50. March oil closed 1.76 higher to finish at $656.09; May was up $1.32, closing at $666.89; and July gained $1.54, ending at $676.37.

Back to index