Fertilizer, Tractors, Propane, Deere, Bloomberg, And All That Jazz -- February 22, 2020

The Farm Page

Bloomberg: to the list of deplorables, add the American farmer. 

From January 16, 2020 -- re-posting:

Deere: buy a bigger tractor. Deere aims to reap billions with "corn warrior" technologies.

The average acre of corn planted in the U.S. yields more than 170 bushels. A bushel—an old measure of weight—is 56 pounds of corn kernels. That means corn planted on an acre—the standard U.S. measure of farming area that is a chain times a furlong, two other old measures—generates almost 5 tons of food.

That is impressive, but there are more-impressive feats of corn.

The top of the range—the best farmers can do—is more than 600 bushels an acre. One farmer grew 616 bushels of corn on an irrigated acre with Corteva (CTVA) seed in the national corn-growing contest.

Yes, there is such a contest.

The farmers competing—some of whom call themselves corn warriors—are spending a lot of time and money ensuring the health of each corn plant. Nothing is too small to measure. It might not be practical or cost-effective to adopt all the techniques used to generate incredible crop yields en masse. But the yields they achieve demonstrate the upper fertility limit of American cropland.

A few months ago, I posted: farmers need to buy a bigger tractor and a bigger propane tank.

Now this: Deere's unexpected rise in quarterly profits sends shares soaring. Link here.

Deere & Co on Friday reported an unexpected increase in first-quarter profit and retained its full-year earnings forecast as signs of stabilization in the U.S. farm sector offset weak demand for construction machines, sending its shares soaring.

"Its shares were last up 6.4% at $176.25 in pre-market trade." Its shares were last up 6.4% at $176.25 in pre-market trade.

The world's largest farm equipment maker's earnings in the past quarters were buffeted by a nearly two-year-long U.S.-China trade war that hit U.S. agricultural exports, leaving farmers struggling to turn a profit.

But President Donald Trump's interim trade deal with China has raised hopes of a recovery in farm machinery demand.

From The WSJ yesterday: Trump is prepared to give more aid to farmers. [Bloomberg: it doesn't take any gray matter to be a farmer.]

President Trump said the U.S. would consider a third round of aid payments for American farmers who have borne the brunt of retaliation for U.S. tariffs for much of the past two years.

Although the U.S. has said farmers would benefit from its signing of a phase-one trade deal with China and its ratification of the new U.S.-Mexico-Canada Agreement, Mr. Trump raised the possibility that new aid payments may be necessary until those deals bear fruit. The USMCA was signed in late January and the China deal didn’t take effect until February 14, 2020.

If farmers “need additional aid until such time as the trade deals with China, Mexico, Canada and others fully kick in, that aid will be provided by the federal government,” the president said on Twitter on Friday.

Fertilizer: US fertilizer consumption to rise with acreage -- Argus Media.

US fertilizer consumption this year will be the highest in over a decade as farmers are set to plant 94mn acres of corn and 85mn acres of soybeans.

Nitrogen consumption should be 4pc higher than last year at 8.83mn st N across corn, soybean, wheat and cotton, Argus estimates. Phosphates consumption would rise by 5pc to 4.19mn st P2O5, potash by 6pc to 4.32mn st K2O and sulfur up by 4pc to 392,000st S.

In remarks at a conference yesterday, US Department of Agriculture chief economist Robert Johansson said that US corn acreage would rise to 94mn acres — toward the upper end of previous industry estimates — as forward prices and the corn:soybean price ratio are favorable to corn. Last year farmers planted just under 90mn acres of corn as flooding and inclement weather prevented fieldwork.

But Johansson also noted that the price ratio was not even, with basis in the Dakotas favoring soybean but eastern Corn Belt and southeast prices favoring corn.