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3 Big Things Today, December 12

Soybeans Higher Overnight; Farm Bill Passes Senate Leaving Some Unhappy.

1. Soybeans Higher on Continued Optimism About China Trade

Soybeans futures were again higher in overnight trading on continued hopes that China will announce that it’s resuming purchases of U.S. supplies.

President Trump said in an interview with Reuters that China was buying a “tremendous amount” of soybeans from the U.S. after his December 1 meeting with President Xi Jinping in Buenos Aires and that the Chinese government was “back in the market.”

That gave prices a bump overnight, but so far, China hasn’t acknowledged that it purchased any U.S. soybeans. Still, the Trump administration is delaying payments from its $12 billion farmer-aid package as it expects market conditions to improve.

Also positive was the Senate passage of a new farm bill, which now moves to the House and then the president’s desk for approval.

Soybeans for January delivery rose 6½¢ to $9.21½ a bushel overnight on the Chicago Board of Trade. Soy meal gained $1.60 to $312.50 a short ton, and soy oil added 0.16¢ to 29.12¢ a pound. 

Corn futures for December delivery rose 1½¢ to $3.86¼ a bushel.

Wheat for March delivery gained 4¼¢ to $5.25¼ a bushel overnight, and Kansas City futures added 4¾¢ to $5.09½ a bushel.

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2. Senate Passes Farm Bill With Record Votes, Grassley Opposes as His Provision Removed

The U.S. Senate passed a new farm bill on Tuesday in an 87-13 vote that modestly improves farmers’ safety net, but it wasn’t without its detractors, including Iowa Senator Charles Grassley.

The $867 billion bill leaves the current Price Loss Coverage reference price at $3.70 a bushel for corn, $8.40 for beans, and $5.50 for wheat, but adds a multiplier that could add as much as 15% in the event of better market conditions.

Farmers in 2019 will be allowed to switch between Price Loss Coverage and Agriculture Risk Coverage programs on an annual basis, based on their preference, which would be binding for two seasons, then in 2021 they’ll be allowed to switch between the programs annually.

Under the new bill, the Conservation Reserve Program would expand by 3 million acres to 27 million, and funding for the Environmental Quality Incentives Program would expand, though spending on the Conservation Stewardship Program would decline.

“This legislation maintains a strong safety net for the farm economy, invests in critical agricultural research, and will promote agriculture exports through robust trade programs,” Agriculture Secretary Sonny Perdue said in a statement after the bill was released on Monday night but before it passed the Senate.

The bill now moves to the House and, if approved, will head to the president’s desk.

“As farmers prepare to make decisions about next season, I commend the leadership of the conference committee in producing a bill that can be passed before the year’s end. If Congress passes this legislation, I will encourage the president to sign it.”

Not everybody was happy with the bill.

While the 87 votes for was a record for a farm bill, according to Michigan Senator Debbie Stabenow, the ranking Democrat on the Agriculture Committee, several Republicans voted against it.

Iowa Senator Charles Grassley said in a statement one reason he voted no was because his provision limiting crop subsidies to farmers, their spouses and one manager per-farm was scrapped. The bill says nieces, nephews, and first cousins of farmers are eligible for as much as $125,000 a year in payments.

That allows larger, wealthier “family farms” to continue to grow while excluding new, younger farmers from entering the business.

“Allowing nieces and nephews to qualify as part of large farm entities merely allows large farmers to get more subsidies,” Grassley said. “They just need to hire the right lawyer to structure things in a certain way and they can receive unlimited taxpayer subsidies.

“For years, the top 10% of farmers have received over 70% of the subsidies from the government. That’s only one of the many reasons it’s so hard for young and beginning farmers to get started. I know it’s hard to believe, but I’ve never heard a single young or beginning farmer tell me that the way to help them is to give more money to the largest farmers,” Grassley said.

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3. High-Wind Watch in Effect For Southern Plains; Winter Weather Advisory in Iowa, Wisconsin

A rare “high-wind watch” is in effect for the western half of Kansas, Oklahoma, and Texas, along with parts of eastern Colorado and New Mexico, according to the National Weather Service.

In western Kansas, sustained winds of up to 45 mph are expected, with gusts of 60 mph possible in some areas, the NWS said in a report early this morning.

Travel along east-west highways will be come hazardous for large vehicles and “dangerous wind gusts can be expected around grain elevators,” the agency said. Power outages and downed electrical lines also are possible.

Blowing snow and/or dust are expected, which also could reduce visibility.

“Outdoor holiday decorations should be secured,” the NWS said.

Farther northeast, meanwhile, a winter weather advisory is in effect for parts of Iowa and Wisconsin. A wintry mix of freezing drizzle and snow will spread across the area this morning.

The weather event is expected to move to the east fairly quickly, though the freezing drizzle will create a layer of ice that will be covered by as much as an inch of snowfall. The highest snow totals are expected in central Wisconsin, the agency said.

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