Sorghum Notes

National Sorghum Producers
The voice of the sorghum industry
Sorghum e-Notes | February 16, 2018
NSP Update
National Sorghum Producers continued steps this week to respond to the announcement of anti-dumping and countervailing duties investigations into imports of U.S. sorghum by the Chinese government. Our partners and stakeholders across the industry are working closely together to demonstrate that U.S. sorghum is not dumped into China, it is not unfairly subsidized and is not injuring China.

Meanwhile, it is important our producers know trade with China and other countries continues. This week’s export report shows exports remaining strong with China committing to purchase 4.6 million bushels of sorghum. Japan also committed to purchase 421,239 bushels to bring the weekly total to just under 5.0 million bushels. Total commitments for the marketing year now stand at 212 million bushels, including 204 million bushels of commitments from China. Shipments were also strong with China taking delivery of 4.8 million bushels and Japan taking delivery of 303,962 bushels shipped from the Pacific Northwest. Basis has recovered from recent shocks driven by trade concerns. Here are select basis bids from around the country:

  • Ohio River: +20 for immediate delivery (compared to +6 for corn)
  • Texas Gulf Coast: +165 for March delivery (compared to +63 for corn)
  • West Texas and eastern New Mexico: -10 for new crop (compared to -10 for corn)
  • Central Oklahoma: -30 for immediate delivery (compared to -35 for corn)
  • Central Kansas: -50 for new crop (compared to -45 for corn)
  • Central South Dakota: -30 for immediate delivery (compared to -60 for corn)

Changes in Base Acres
Part of the budget fix for cotton includes changes in base acres. Any generic base acres that have not been planted to a covered commodity, including program crops and cotton, from 2009-2016 become unassigned base acres making them ineligible for any Title I farm program payments. This will certainly raise additional base questions on expected CRP acres in the upcoming farm bill debate.

Negotiations on 199A Tax Issue Continue
The final fix remains unknown as negotiations continue on the 199A tax break issued to cooperatives in the tax reform bill that passed into law in December. Administration members, federal officials and stakeholders are actively discussing objectives that would be beneficial for all of America’s farmers and ranchers. The intended purpose of Section 199A was to duplicate the tax treatment previously made that prevented competitive advantages to cooperative farmer-members. However, the final language of the bill will redirect billions of dollars in both the U.S. agricultural marketplace and the collection of future tax revenues.

Under 199A farmers who sell to co-ops would likely not owe federal income taxes. Under this assumption, the provision has potential for cost inconsistency between agriculture cooperatives and proprietary companies. Some proprietary companies have evan began preparations to restructure their business models to gain the same access to the same cooperative write offs. Making changes to the new tax bill could be hard to come by as other lawmakers prioritise their own amendments.

Trump Administration FY2019 Budget Proposal 
The Trump Administration released their FY2019 budget proposal on Monday. The proposal includes massive cuts to U.S. farm policy, totaling roughly $271.882 billion over the next 10 years, which does not include sequestration cuts. While the President’s Budget proposals are typically ignored, the proposals made will provide provisions for anti-farm policy forces that will almost assuredly offer up the proposals during farm bill consideration.The budget proposals were not received well from farm organizations and anti-hunger advocates.

Following the administration’s budget proposal, House Agriculture Committee Chairman K. Michael Conaway (TX-11) and Senate Agriculture Committee Chairman Pat Roberts (R-Kan.) issued a joint statement. The Chairmen reiterated their task to produce a farm bill that benefits the farm economy and provides a strong safety net for producers. “This budget, as with every other president’s budget before, will not prevent us from doing that job.” For more information, click here.

Corker, Farm Bureau Pushing for “Reforms” to U.S. Food Aid
This week, Senators Bob Corker (R-TN) and Chris Coons (D-DE), along with Farm Bureau President Zippy Duval, penned an op-ed pushing for a “reform” of the United States’ food aid policy. Sen. Corker is pushing for the U.S. to shift away from sending U.S. sourced food to those in need around the world and instead advocating for the U.S. to send a combination of U.S. sourced food and food from other countries. The proposal is a radical departure from orthodoxy on the topic, with most farm and ranch groups, including National Sorghum Producers, and the Agriculture Committees rightly holding that sending actual food with a U.S. flag on the packaging is better and more politically defensible than direct cash assistance to corrupt foreign governments that preside over human tragedy. Opponents also note that U.S. food aid already provides flexibility for local sourcing when local sourcing is necessary. Read Senator Corker’s op-ed here.

Treasury Secretary Mnuchin Hopes for NAFTA Renegotiation
Treasury Secretary Steven Mnuchin said he was “cautiously hopeful” that U.S. Trade Representative Robert Lighthizer is focused on renegotiating NAFTA instead of withdrawing The United States from the agreement. Mnuchin’s remarks came from the House Ways Committee budget hearing earlier today. Throughout the hearing Mnuchin reiterated that the administrations discussions on NAFTA are based on the priority to renegotiate.

NSP Joins Americans for Farmers & Families
National Sorghum Producers looks forward to working with  Americans for Farmers & Families to recognize and promote the importance of an effective NAFTA agreement. Americans for Farmers & Families is a coalition of growers, producers, suppliers, transporters, retailers and consumers dedicated to preserving NAFTA and working with President Trump to negotiate a modernized agreement fit for the 21st Century. Visit the website here.

Sorghum in the Spotlight:
A year for Grain Sorghum – Southwest Farm Press
Sorghum Market Expected to Grow – Agri News
Sorghum Producers Look into Chinese Anti-Dumping Investigation – Hoosier Ag Today
Improving Producers Sorghum Crops – KGNC
USGC Holds Advisory Team Meetings – World Grain

Upcoming Sorghum Events
Feb. 26-1    Commodity Classic – Anaheim, CA
March 13-14  Governor’s Ag Conference – Kearney, NE

For a full view of calendar events, visit the NSP website calendar.

Market News – To view this week’s Gulf export grain report, click here.

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