Reason #47 Why I Love To Blog -- Back To Bowman And Cattle -- December 19, 2016

Two days ago I posted a link about the upcoming Bowman, ND, livestock auction, scheduled for January 9, 2017. It's a big, big deal.

It was such a big deal that I actually sent a note to a WSJ staff reporter suggesting an idea for the Journal.

Lo and behold, completely independent of that note, the WSJ has an article on livestock auctions. Incredible. It was apparently posted by WSJ a couple of days ago, but it's in the print edition today.

The article begins:

Unruly trading of cattle futures is leading to a revival of live auctions, as ranchers look to bring robust pricing data to the market and guide understanding of supply and demand in their industry.

Cattlemen trade futures, or contracts to buy or sell cattle at a given price on a future date, as a form of insurance on their borrowings to feed hundreds or thousands of animals at a time.

In the past year, values of cattle futures contracts have swung wildly, from near-record highs to six-year lows. A nearly one-third drop in the price of cattle futures through the fall of 2016 has slashed ranch incomes and prompted investigations into the source of the volatility.

Background:

The lack of public bartering and price transparency in the cattle industry is one major source of the market’s problems.

At present, the predominant way of selling cattle is via private production contracts between feedyards and the four big U.S. meatpackers. So-called formula contracts price cattle ahead of sale based on the benchmark price independent cattlemen will get in the cash market, plus or minus premiums and discounts.

So where does that lead us?

Some feedyard operators now are experimenting with live auctions, returning to doing business in an open cash market. They want to generate new public price information and slow the supply of previously committed cattle to slaughter each week.

And, that, of course, takes us back to the Bowman, ND, livestock auction, January 9, 2017.

Huge, Huge Cattle Auction In Southwestern North Dakota; North Dakota State Budget Hits School Funding -- December 18, 2016

State cuts in public school funding coming to North Dakota. From The Williston Herald, data points:

• oil revenue down
• new budget released by the governor: $13.7 billion; $2 billion less than proposed budget two years ago
• foundation aid makes up 60% of the Williston district's budget; that will be frozen during first year of the biennium
• possibly a 1% rise the following year of the biennium: $9,646/child; up from $9,742/child
  2007 - 2008: 2,100 students
• currently: 3,735 students, a 56% increase, but Rapid Growth funding will be nonexistent in the new budget

North Dakota budget: probably easiest to read is at Ballotpedia.

• Between fiscal years 2014 and 2015, total government spending in North Dakota increased by approximately $1.2 billion—from $6.6 billion in fiscal year 2014 to an estimated $7.7 billion in 2015. This represents a 15.1% increase

A biennium budget always confuses me but I suppose Ballotpedia's 2015 $7.7 billion is one-half the biennium budget. If so, that equates to $15.4 billion vs $13.7 billion this biennium.

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Bowman Auction Market

Updates

 First we had:

• the Chisholm Trail
• the Santa Fe Trail
• the Oregon Trail

Now, we have the Bowman Trail:

Original Post

 

I'm hoping the national press picks up this story. I've sent a note to a reporter over at The Wall Street Journal. I don't follow the cattle "industry" in North Dakota but a reader tells me this is huge. He says that this is the largest livestock auction in Bowman in history, or at least in his history. The announcement is at the Bowman Auction Market. He says there are 4,250 head of cattle to be auctioned. I did not count, but it looks about right.

According to the reader, 4,250 head of cattle works out to fifty-five (55) semi-trucks / cattle trucks. If I see a convoy of a dozen or even two dozen cattle trucks on the road, it would catch my attention. I assume all trucks won't all be full -- different destinations, etc. -- so we could easily see five to six dozen of trucks leaving Bowman on January 9, 2017.

It's almost worth a special trip to North Dakota just to see this.  Maybe Vern Whitten will be flying that day: if so, take an aerial photo of the auction site on January 9, 2017.

In case I forget: can someone send me a note if any newspaper reports the results of this auction?

I was going to post a trucking song but wanted to go with something a bit different:

Cattle Call, Eddy Arnold

Saturday, November 26, 2016

Active rigs:

	11/26/2016	11/26/2015	11/26/2014	11/26/2013	11/26/2012
Active Rigs	37	65	183	193	185

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Wishin' and Hopin'

OPEC: from Platts -- 

All that has been settled at the moment is what was announced in Algiers: a goal for OPEC to freeze production between 32.5 million b/d to 33 million b/d, which would require a cut of between 640,000 b/d to 1.14 million b/d from October levels, according to the organization's own estimate. If finalized, it would be OPEC's first coordinated cut since 2008.

"A cut to 33 million b/d probably maintains the status quo -- slowly returning rigs to active status as prices hover in that $50-$55/b range," said Tony Starkey, managing director of analysis for S&P Global Platts Bentek in Denver. "If OPEC cuts to 32.5 million b/d, then we expect prices to reach $60/b next year which should accelerate, to an extent, the already upward trend in drilling activity here in the US."  

An incredibly long article with lots of wishin' and hopin'.

By the way, I think the non-OPEC meeting set for Monday was canceled when Saudi Arabia said it would not be attending.

Wishin' And Hopin', Dusty Springfield

 
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The Agriculture Page

From The Bismarck Tribune:

Most of North Dakota's winter wheat crop is in good shape as winter sets in.

The Agriculture Department in its latest weekly crop report says 78 percent of the state's winter wheat is in good to excellent condition. Only 4 percent is rated poor or very poor.

Yes, it's a quiet day in north Texas.

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The Literature Page

It must have been a slow week for The Wall Street Journal, also. The "Review" section, as always, is excellent, but the lead article is "The Need to Read." The sub-title: reading books remains one of the best ways to engage with the world, become a better person and understand life's questions, big and small."

I'm not sure what the author might mean by "becoming a better person" by reading -- but we will leave that for another day.

This was in bold, a theme, I suppose of the article on reading: "A random sentence in a thriller can lead to an unexpected insight."

Wow.

This morning, while reading Edmund de Waal's The Hare With Amber Eyes I came across something that led to an unexpected insight. I posted it in draft form, and then deleted it. It was not ready for prime time, and out of context it might not have worked. All I will say is this: something completely unexpected help me understand why some folks have issues with "speculators," something I've talked about many times on the blog.

In today's "Review" section, reviews that caught my eye:

• "From Bedlam to Bellevue" -- interesting but I won't be reading the two books reviewed, books about human madness and how the insane have been treated.
• "Making Art for the Masses," Turner, by Franny Moyle. I would love to buy the book but I already have too many J. M. W. Turner coffee-table art books.
• "Our All-Conquering Armada," The Fleet at Flood Tide, by James D. Hornfischer: "to defeat Japan, the US turned the Navy into a technologically advanced seaborne civilization." I won't read the book but the essay is quite interesting.
• "The Poetry of Earth," Collected Essays by Loren Eiseley; I had not heard of Eiseley. I always enjoy essays. He may be someone I want to read: he was skeptical of the space program: he found enough objects of inquiry on Earth to last him several lifetimes. I'm intrigued to read those essays but anyone who thinks that the space program did not help answer questions on/about Earth is quite ignorant about the space program, which in this case is hard to believe considering Eiseley grew up to get his PhD, eventually becoming head of the anthropology department at the University of Pennsylvania. But then again, the current president was a constitutional scholar at Harvard. 
• Perhaps my favorite: "A Delicious Disapora," The Dim sum Field Guide by Carolyn Phillips. Many, many memories of dim sum. 

Compared to last week's "Review" the section this week is rather thin but enough to keep me busy this weekend. 

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Working On The Blog

The assistant editor is looking through file photos to see what should be posted on the blog:

Wow, CVX; Williston -- Headline Story In Oil & Gas Journal; Soybeans Surging -- October 26, 2016

Wow, CVX:

• CVX: story here; 3Q16 earnings of $1.3 billion, down from $2 billion in 3Q15; surprises with a dividend hike; stronger than expected earnings; 68 cents vs 37 to 40 cents; wow;  

I remember over the years being told that CVX was the weakest among COP, XOM, and CVX. COP posts a $1 billion loss in 3Q16; XOM under SEC investigation; and CVX surprises with earnings and an increase in the dividend, which of course sent share price up.

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Williston: Headline Story in Oil & Gas Journal

 
From Oil & Gas Journal today on US rig counts: Williston’s biggest jump in 2 years.

US land-based rigs gained 5 units this week to 533, with rigs engaged in horizontal drilling also rising 5 units, reaching 450, up 136 since May 27.

Directional drilling rigs rose 3 units to 54. North Dakota and its Williston basin led the major oil- and gas-producing regions with a 5-unit jump to 35, representing their biggest increase since Aug. 8. 2014.

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Soybeans

Soybean exports power US economy to best performance in two years. -- Reuters.

In 2014 - 2015, North Dakota moved up to 9th place: 202 million bushels in 2014; 190 million bushels in 2015.

In 2012 - 2013, North Dakota ranked 10th on the list for soybeans; 163 million bushels in 2012; 139 million bushels in 2013.

In 2004, North Dakota ranked 10th on the list for soybeans, based on cash receipts.  

$10,000 Per Turbine Each Year -- Farmers In The Midwest -- October 23, 2016

From Bloomberg: wind is the new corn for struggling farmers.

Wind energy, the fastest-growing source of electricity in the U.S., is transforming low-income rural areas in ways not seen since the federal government gave land to homesteaders 150 years ago. As commodity prices threaten to reach decade lows and farmers struggle to meet debt payments, wind has become the newest cash crop, saving family farms across a wide swath of the heartland.

The money Richard Wilson earns from leasing his land for about 35 turbines run by the Golden West Wind Energy Center outside Colorado Springs has kept him from having to sell off pieces of the 6,000-acre cattle and wheat ranch his family has owned since 1948.

“We weren’t making enough money to sustain ourselves,” he says. “Now we’re in a position where we can operate our farm for another generation at least.”

For others, turbines spin off six-figure incomes that have allowed them to retire from farming altogether.

“One turbine has changed my life,” says Ed Woolsey, a fifth-generation Iowa farmer and a principal with Crosswinds Energy Project, a community collective that manages 10 turbines and sells the power they generate to rural electric cooperatives.

“Before, I raised corn and soybeans and cattle. Now I don’t. I’m a wind farmer.” Woolsey leases his farm to others to cultivate. Neither he nor Wilson would disclose how much he earns, but landowners who sign lease agreements with wind companies typically get between $7,000 and $10,000 per turbine each year.

It's likely it's just a matter of time before venture capitalists buy farmland simply for wind farms. 

In North Dakota:

• farm subsidies for corn
• corn for ethanol
• wind energy
• royalties from oil
• easements for pipelines 
• payments for surface rights -- pads and roads

I guess about the only thing we're waiting on: solar farms. 

Williston's Wal-Mart May Lead Company In Annual Fundraising Campaign -- October 3, 2016

The Williston Herald data points:

• Williston Wal-Mart is leading the company's fundraising campaign for Children's Miracle Network hospitals
• spokesman predicts that Williston Wal-Mart will be the top contributor to Wal-Mart's national fundraising campaign
• at height of oil boom in Williston, Wal-Mart "hardly" reached $40,000 during the annual campaign
• for 2016, Williston Wal-Mart set ambitious goal: $50,000

When I was out in Williston last week, I stopped by Wal-Mart. Some observations:

• the road was under construction (again) to make it wider for all the traffic
• the lot was not overflowing, but it was full
• there were no RVs or evidence of folks living in the parking lot
• a sign upon entering Wal-Mart: hiring; starting wage: $15/hour
• the store was in incredibly good shape; clean; well-stocked; very, very friendly staff

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The Williston Tunnel

Extending the growing season in North Dakota. From The Williston Herald.

Northern Lights Honey, Fresh Palate, Main Street, Williston, North Dakota -- October 1, 2016

Okay, this is really, really cool.

I just got back from five days in the Bakken. I drove up from Grapevine, TX, to Williston, ND, last week, leaving on a Tuesday morning and arriving there Wednesday evening, exactly 1,400 miles.

I arrived in Grand Island, NE, at 23:45 p.m. Central Time (in fact all times will be reported in Central Time), on Tuesday night, September 20, and then drove a bit farther east, sleeping under the stars in/near Thetford, NE, near Broken Bow, NE. I woke up about 5:15 a.m. and pressed on.  (Shortly after getting to sleep, a very, very nice Nebraska state trooper stopped by and asked if I was doing okay. I was and he suggested a better location for sleeping under the stars -- he thought my location between the railroad tracks and the highway was a bit dangerous. He was not worried about trains de-railing; he was concerned about all the cattle trucks that were on the road in the middle of the night. And there were a lot; it must be easier to haul cattle during the night than during the day. I don't know.)

It was an incredible trip and over the next few days I will post some photo-essays on the trip. Our younger daughter, Laura, Amtrak'd in from Portland, Oregon, and spent four days with me in the Bakken.

Main Street, Williston, is quite incredible. I had trouble finding a parking spot on Main Street and the side streets immediately off Main Street on Sunday when Laura and I window-shopped. A few stores were open. We went back during the week and stopped at many downtown stores. Lots of fun.

High on the list was the organic grocery store, Fresh Palate, on the 2nd floor of the building that also has the pharmacy across from JC Penney. That building has many boutique stores and a very interesting, high-end Italian restaurant open only for dinner. There were signs that they would soon be serving lunch.

It should be noted -- and I had forgotten this -- that in that part of the world, the main meal is at noon and is called dinner. The evening meal is called supper. It's been so long since I last lived there that I had forgotten. For me, it's breakfast, lunch, and dinner, in that order. Or break, mid-morning snack, lunch, later afternoon Scotch and herring, dinner, and then several dessert options before going to bed.

But I digress.

At Fresh Palate, I noted North Dakota honey offered by Northern Lights, aka Vanessa Huelsman. I have never met her but Chuck Wilder at Books on Broadway knew her. Ms Huelsman had just dropped off a new batch of honey that morning -- the bottles of honey I got could not have been more fresh. Chuck says Ms Huelsman / Northern Lights has corporate headquarters in Wildrose, ND. 

Regular readers know that North Dakota is ranked #1 in honey production. In the back country north and west of Tioga we saw a lot of bee hives -- I assume many (most?) of them belonged to Ms Huelsman.

Both Northern Lights and Fresh Palate have a facebook page, and they both have other sites to visit if googled.

Northern Lights facebook page. 

Fresh Palate facebook page.

I had toast and honey with Drambuie (Scotch and honey) as soon as I got back home to Grapevine (yesterday afternoon, at exactly 2:00 p.m.).

Corn, Wheat Crops At Record Production Levels -- Nothing Like A Bit Of Additional CO2 To Help -- September 6, 2016

Whether or not you agree with or appreciate the "tone" of this linked article, the fact is that a) clement weather for the past ten years; and, b) growing atmospheric CO2 concentrations -- minimal as they are -- crop yields are growing (almost) exponentially in the US.

From American Interest quoting Financial Times:

Extensive planting and benign weather have forced analysts to repeatedly raise crop outlooks. The International Grains Council last week increased its global wheat production forecast to a record 743m tonnes, up 1 per cent from last year. […]

The recent US winter wheat harvest was 45m tonnes, up 21 per cent from 2015, according to the US Department of Agriculture. 

Merchants who have run out of room in silos are piling wheat outdoors. 

Storage concerns are also growing in Russia, which is this year set to become the largest wheat exporter after hauling in more than 70m tonnes. In Canada, the government anticipates the second-largest wheat crop in 25 years, of 30.5m tonnes. Australia’s imminent wheat harvest is forecast at 26.5m tonnes, the most in five years.

From an earlier post:

Speaking of blended gasoline, did you all read the WSJ article today that said there's a glut of US corn, and prices are falling fast. By the way, did you see one of the reasons why there are record crops this year?

Clement weather this summer has fueled expectations that U.S. farmers will harvest the largest U.S. corn and soybean crops in history. The USDA earlier this month projected that the nation’s corn crop will reach about 15.2 billion bushels, and the soybean crop about 4.1 billion bushels.

So much for "extreme weather" destroying US crops. And, oh, by the way, that little bit of CO2 is doing great things for corn crops. Both "upstream" and "downstream." 

In addition to clement weather, minimally higher atmospheric CO2, my hunch is technology and government policies have driven a lot of this increase in production.

This will be an interesting story to follow, and thus the new tag, "Agriculture_2016."

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NAWG On Wheat

Linked here, the September 1, 2016, newsletter:

Record yields across the U.S. and favorable conditions around the world this harvest season have brought the lowest price of wheat in nearly a decade, with wheat futures down, causing a dilemma for elevator operators as an oversupply of wheat has caused over-capacity in some areas.

Affecting everyone from farmers to agriculture suppliers, these depressed prices are contributing to a general downward spiral of the farm economy, exacerbated by the threat of cut to certain programs in the Farm Bill, such as crop insurance and Title 1 programs, which protect farmers in times like this. With stagnant markets, many producers aren’t able to cover their cost of production.

Farmers in North Dakota have two "relative" advantages compared to previous years of record harvests.

• taking lessons learned from oil patch on storage
• huge railroad infrastructure buildout during Bakken boom