This monthly feature from SSGA’s Agronomy Action Team highlights growing conditions for Identity Preserved crops from different regions around the country. Thanks to the states/regions that contributed this month. If you would like to contribute, please get in touch with David Kee or Shane Frederick. You can also follow David Kee on Twitter for some of the latest, most-interesting information on agronomy and research that affect IP and other farmers.

Illinois

It’s been a pretty slow start to spring across most of Illinois. We have had a couple of one- or two-day windows of field activity with some anhydrous being applied and a few guys setting planters in the field. This time one year ago we had quite a bit in the ground, and with the 10-day forecast calling for significant rain, it looks like it will be after Easter before things really get moving.

The wheat crop, working south to north, has started growing and overall looks pretty good. There are some thinner stands on late seedings, but with most of the spring fertilizer applications made and even most herbicide applications made, the crop is off to a good spring start. Likely, it will not be the overall great crop we had in 2021, but it can still be a very good crop.

Corn acres are still holding for now, but if we get delayed through April, there will likely be a switch to beans, especially on the marginal acres.

Chemical supplies remain tight with glyphosate starting to loosen up some, but most other products remain scarce and expensive.

Michigan

The 2022 growing season has started with some green up of the winter wheat crop. Cool temperatures, along with consistent rainfall, has not allowed for field work in most places. At this date, this is not a significant issue for Michigan soybeans, but the sugar beet and wheat growers would like to be getting a stronger start to field operations.

The USDA planting intentions report has indicated that Michigan growers plan to plant about 9% more soybeans in 2022 than in 2021. Expected corn acres are about the same as the previous year. So additional soybean acres will come from winter wheat that was not able to be planted last fall and some minor crops.

Contracts for specialty soybeans, including non-GMO and food grade soybeans, are reduced compared to a year ago. Some reasons that I have heard for this change are planning for weed control challenges such as herbicide resistant weeds and potential profit of commodity soybeans. It is likely that attractive contracts for dry edible beans have also taken some acres away from specialty soybeans.

Optimism for the 2022 season remains high as commodity markets continue to offer profit opportunities.

Minnesota

Minnesota conditions are variable; 52% of the state is rated abnormally dry (D0) to moderate drought (D1). Drought appears more severe in eastern Minnesota compared to the west side of the state. The dry conditions are allowing some growers time to finish manure applications and complete tillage operations. In the wetter areas of western Minnesota, tillage and other field preparation activities are limited.

Winter’s grip is slowly fading; Lakes and rivers are flowing, tree and shrub buds are starting to swell. Soil temperatures (4-inch depth) are increasing, slowly, with highs ranging in the mid-30s to the mid-40s at Lamberton and Waseca. In the next week, rain and snow is in the forecast for much of the state. Farmers are still cautiously optimistic for an early planting season; however, few have started planting.

Missouri

We have been experiencing roller coaster weather with several days of wet conditions and few good days, with not much field work being done at this time. Work within the winter wheat crop is taking place, but it is dependent upon the wet conditions with fertilizer being the major focus right now and some weed control for winter annuals. Wheat progress and condition varies greatly around the state with only 1% of the wheat is headed, per USDA’s April 4 update. On the same USDA report, 50% of the Missouri winter wheat acres falling in the “good” category.

Missouri farmers planted a significant acreage in cover crops, approximately 1.1 million acres, the vast majority of that is cereal rye and planned for soybean planting. Work continues to promote cover crop usage after soybean to protect the residue ahead of corn planting.

North Dakota

According to the USDA’s National Agricultural Statistics Service for the week ending April 3, there were 1.5 days suitable for fieldwork so far in North Dakota. Reports indicated that, on average, producers intend to begin fieldwork on April 14. Topsoil moisture supplies rated 23% very short, 23% short, 51% adequate and 3% surplus. Subsoil moisture supplies rated 26% very short, 32% short, 40% adequate and 2% surplus.

The soybean acreage estimate for North Dakota is down 3%. Corn acreage is down about 12% in North Dakota declined 12%. Rising input costs likely contributed to the bigger than expected decline in corn planting intentions. North Dakota remains the largest spring wheat producing state with the planted area forecast at 5.2 million acres. That’s down 5% from 2021.

More than 72% of North Dakota is classified as being in moderate to extreme drought, according to the U.S. Drought Monitor. That’s a 6% increase in the past week. Extreme drought conditions persist in the northwestern part of the state with the entire western half of North Dakota experiencing at least some form of moderate to severe drought. The drought conditions extend into western and central South Dakota.

The USDA released their much-anticipated Prospective Plantings report on March 31. U.S. soybean acres are up 4% to a total of 91.0 million acres; in contrast, U.S. corn acres are down 4% to a total of 89.5 million acres. Most major soybean growing states predict modest % increases from 2021.

In North Dakota, total principal crop area planted dropped 2% to 23.7 million acres from 24.1 million acres in 2021. Soybean acres are down 3% from 2021 to a total of 7.0 million acres (2021 had 7.25 million acres); this would place North Dakota fourth in total soybean acres (the same as 2021). Canola acres would be a record high for North Dakota

By Bruce Abbe, SSGA Strategic Adviser for Trade and Transportation

The much-awaited U.S. Senate version of the ocean shipping reform legislation was formally introduced on Thursday by Sen. Amy Klobuchar (D-Minn.) and Sen. John Thune (R-S.D.).

The legislation earned the initial support of more than 75 business trade organizations at its introduction, including the Specialty Soya and Grains Alliance, as part of a wide cross-section of additional national and state agriculture organizations. Supporting groups also included the Agriculture Transportation Coalition, Minnesota Soybean Growers Association, Minnesota Corn Growers Association and South Dakota Soybean Association, along with a number of notable companies involved in container export shipping such as SSGA member SB&B Foods and Double River Forwarding.

The bill also had 12 bipartisan co-sponsors, including Sens. Tammy Baldwin (D-Wis.), John Hoeven (R-N.D.), Debbie Stabenow (D-Mich.), Roger Marshall (R-Kan.), Gary Peters (D-Mich.), Jerry Moran (R-Kan.), Richard Blumenthal (D-Conn.), Todd Young (R-Ind.), Mark Kelly (D-Ariz.), Marsha Blackburn (R-Tenn.), Cory Booker (D-N.J.) and Joni Ernst (R-Iowa).

The Senate legislation would:

• Require ocean carriers to certify that late fees —known in maritime parlance as detention and demurrage charges — comply with federal regulations or face penalties.
• Shift burden of proof regarding the reasonableness of detention or demurrage charges from the invoiced party to the ocean carrier.
• Prohibit ocean carriers from unreasonably declining shipping opportunities for U.S. exports, as determined by the Federal Maritime Commission (FMC) in new required rulemaking.
• Require ocean common carriers to report to the FMC each calendar quarter on total import/export tonnage and 20-foot equivalent units (loaded/empty) per vessel that makes port in the United States.
• Authorize the FMC to self-initiate investigations of ocean common carriers’ business practices and apply enforcement measures, as appropriate.
• Establish new authority for the FMC to register shipping vessel-sharing alliance exchanges.

It’s been noted that the Senate version of the bill differs slightly from the House version of the legislation, introduced by Rep. John Garamendi (D-Calif.) and Rep. Dusty Johnson (R-S.D.), which passed the with overwhelming support in December.

Both bills require that ocean carriers certify that any detention and demurrage fees they charge shippers, forwarders or truckers comply with federal guidelines on such penalties before automatically billing them and forcing shippers to file information proving the bills are incorrect.

Stronger guarantees of carrier handling of U.S. exports is also the aim of both bills. However, while the House bill would prohibit carriers from rejecting export bookings if the cargo can be “loaded safely and timely” on vessels destined to the destination, the Senate bill would leave it up to the FMC to develop rules and procedures to strengthen ocean carriers’ common carrier responsibilities to handle exports.

“Congestion at ports and increased shipping costs pose unique challenges for U.S. exporters, who have seen the price of shipping containers increase four-fold in just two years. Meanwhile, ocean carriers have reported record profits,” Klobuchar said in a news release. “This legislation will help level the playing field for American exporters so they can get their goods to market in a timely manner for a fair price. As we work to improve our supply chains, I’ll keep fighting to establish trade opportunities for the U.S.”

In a statement, Thune said: “South Dakota producers expect that ocean carriers operate under fair and transparent rules. Unfortunately, that is not always the case and producers across America are paying the price.”

For more details, read coverage in Freightwaves, Journal of Commerce and AgriPulse.

 

Klobuchar, Booker also address carrier alliances

Separately Klobuchar, a senior member of the Senate Commerce Committee and chair of the Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights, introduced legislation together with Booker aimed to address shipper concerns over ocean carrier alliance practices.

The ocean container carrier industry has gone through much consolidation over that past eight years, and today the 10 largest global steamship lines operate in just three container vessel-sharing alliances.

Klobuchar’s statement noted: “While alliances are intended to benefit the global shipping industry, only three alliances dominate the global shipping industry, creating imbalance of market power.”

The “Ocean Shipping Competition Reform Act” (S. 3586), according to the Klobuchar news release, would allow for third parties to participate in legal cases brought by the FMC against ocean carriers for anticompetitive harm and let successful third parties in those legal cases receive money damages, with additional financial penalties designed to deter anticompetitive conduct.

 

More transportation updates

Ocean carriers post ‘greatest quarter ever’: Preliminary results of the financial performance of the world’s ocean container carriers at the end of last year, according to transportation media outlet Freighwaves, shows the carriers are recording “history-making profits … trouncing already stratospheric expectations.” More details, including public earnings reports for several major container lines are available here.

USDA announces subsidy for California ‘pop-up’ export container staging yard: American Journal of Transportation and Freightwaves have details about a program USDA announced last week on a partnership the agency started with the Port of Oakland to support agriculture exports from a new 25-acre container staging facility. Key congressional lawmakers say more is needed.

Bulk shipping rates slide: While container ocean rates continue at high levels, bulk shipping rates reportedly are declining due largely to a slowdown in China’s steel production. That affects rates for shipping bulk agriculture commodities, according to American Journal of Transportation.  

West Coast port congestion numbers reported: According to a Northwest Seaport Alliance (NWSA) operations report, as of February 3, the number of ships waiting to berth at the Seattle and Tacoma terminals were down to just five vessels. Prince Rupert also had five ships waiting; Vancouver, B.C., had 14 waiting; and Oakland had 13 waiting. Los Angeles and Long Beach, the two largest U.S. container ports had 89 ships waiting, using a new container vessel queuing process for the California ports.

Check out a video on NWSA’s new T5 terminal: You can get a look at NWSA’s new big-ship-ready modernized T5 terminal, with the largest cranes in the world, in a video posted on YouTube. MSC is the first ocean carrier with regular scheduled service at the now open terminal.

China Experience Proves Local Producers Can Thrive as Imports Rise

By Philip Shull

A frequent refrain from frustrated exporters to tough destinations is: “This is a market of great potential. … And it always will be!”

With its huge population, rapidly growing economy, massive protein deficit, high tariffs and impossibly strict phytosanitary requirements, India has been in this category for decades. Despite promising trade missions, pressure from U.S. Department of Agriculture and U.S. Trade Representative over the years, and ready demand for our products among local processors, the India market has remained closed to U.S. Identity Preserved soy.

But this could soon change. Thanks to the initiative and strong advocacy of India’s Soy Food Promotion and Welfare Association (SFPWA, an industry group comprised of Indian processors of soy foods), access for U.S. IP soy to this long-closed market has never been closer.

Rising economic demand for protein among India’s 1.4 billion consumers has led to a sharp increase in domestic food prices. In response to this worrying development, the Indian government took the historic step in May 2021 of suspending its ban on pulse imports. This was a major development in a country where pulses are a foundational protein source and where self-sufficiency in pulses has long been a pillar of India’s agricultural policy.

Leveraging this unprecedented market opening, SFPWA wrote a letter to the Indian government requesting a 50,000-ton tariff rate quota (TRQ) for food quality soybeans. (Governments use TRQs to allow a certain amount of a given product to enter the country at a reduced tariff.)

Among other things, the letter explained that imports of IP soy would not harm Indian soy farmers because India has a large soy deficit and the characteristics and uniformity that U.S. specialty soy provides and that Indian processors need are unavailable in the domestic market.

In contrast to past market-opening efforts, SFPWA’s letter was met with an immediate and positive response from the Indian media. Dozens of articles appeared in support of the request. These media reports indicate that SFPWA’s ability to show how a TRQ could help Indian soybean farmers, as well as consumers, have led key ministries to meet with SFPWA leadership to discuss the issue. While much remains to be done and market access is not yet assured, progress toward this goal appears to be unprecedented.

SFPWA’s position is that opening the Indian market to soybeans will not harm Indian soybean farmers, and the experience of China supports this assertion. China’s decision in the 1990s to open its market to soybeans led to explosive growth in Chinese soy production, along with the historic growth in imports and consumption.

China is an especially apt case study for India because the countries share key characteristics.  Both are rapidly growing emerging markets with similar-sized populations, limited arable land and a history of strong import restrictions on soybeans. Just as importantly, both countries have experienced widespread protein deficits that harmed quality of life for their people. SFPWA believes that a TRQ for Identity Preserved soy will help improve diets throughout India. The Specialty Soya and Grains Alliance and the U.S. Soybean Export Council agree.

USDA data show that Chinese soy production rose, even as imports grew.  Today, China’s soy production (20 million tons) and imports (103 million tons) are both at or near-record levels. Meanwhile, Chinese soybean consumption rocketed from roughly 7 million tons in the 1970s to almost 120 million tons estimated in 2021 (v. 0 to 11.2 mmt for India). Consumption of soy for food rose from 6 million tons to 15 million tons during this period. This combined increase in soy consumption has contributed enormously to improvements in Chinese nutrition and quality of life during this period.

Charts linked here compare Indian and Chinese soybean imports (India, China), production (India, China), consumption (India, China), food-use consumption (India, China) and exports (India, China) over the past 50 years.

Per capita income in China and India was roughly equivalent at $500 in 2000. However, since China opened its market to soybeans, there has been a sharp divergence. While income in both countries grew strongly, India’s per capita income reached roughly $2,000 per capita in 2020, China’s grew to almost $10,000.

Bottom Line:  India remains a market of immense potential for U.S. specialty soya, and gaining access is a priority for SSGA. Given the similarities in the agricultural and consumer profiles between China and India, it is clear that Indian consumers and producers of poultry, dairy, aquaculture and soy-based foods could benefit greatly from greater access to imported soy without harm to India’s soybean farmers.

For years, SSGA and USSEC have worked intensively with the Indian soy food and feed industries to demonstrate how U.S. soy can improve diets and incomes throughout the country. We value this cooperation and applaud SFPWA for its historic initiative and unprecedented effort.

As President John Quincy Adams said, “Perseverance has a magical effect, before which difficulties disappear and obstacles vanish.”

Philip Shull is an SSGA Technical Adviser for South Asia. For 31 years he served in USDA’s Foreign Agricultural Service (FAS), opening markets for U.S. agricultural products.  He was stationed in China and greater China for 11 years (1987-92, 2006-2010, 2014-2016).

The big news this week on the container shipping front is the introduction of the bipartisan Ocean Shipping Reform Act of 2021, which aims to beef up the authority and oversight actions of the U.S. Federal Maritime Commission (FMC) with the intent to fix persistent problems in global container shipping that are harming U.S. exporters and importers.

Some steps are already underway:

FMC launches investigation into pricing practices of eight ocean carriers

While rates for export shipments from SSGA exporters have gone up 30-50% and more over recent months, the rates ocean carriers are charging U.S. importers of high-value products from Asia have risen to record levels. Moreover, importers complain that, while container bookings are often not available for the head haul to the U.S., the carriers are offering various surcharges and premium rates for more guaranteed service that are far above skyrocketing spot rates.

In response to complaints, the FMC last week announced it is launching an expedited investigation into the pricing practices of eight global container carriers: CMA CGM, Hapag-Lloyd, HMM, Matson, MSC, OOCL, SM Line, and Zim. Each carrier was identified as having recently implemented or announced congestion or related surcharges. FMC will examine the timing and legal sufficiency of the charges in light of rate filing requirements. More detailed coverage is available here.

Major importer files complaint to FMC alleging collusion by ocean carriers

Another new development worth watching is an action taken last week by a major U.S. home goods importing company from Pennsylvania, MCS Industries. MCS filled a formal complaint to FMC alleging that Cosco Shipping and Mediterranean Shipping Company (MSC) were colluding in ways that violate service contracts for regular service to capitalize on current record Trans-Pacific container spot rates.

MCS accused the two ocean carriers, which actually operate in two different alliances, of working in “parallel and seemingly coordinated fashion” to not honor their service contracts at rates and volumes agreed upon, only to sell the space “to the highest bidder.” Go here for more details reported by the Journal of Commerce (JOC).

Carrier MSC, in response, said it was “shocked” by the allegations and denied the charges made in the complaint, which was published by the FMC on August 3. Go here for more details of MSC’s response.

Formal complaints to the FMC are rare to nonexistent, because it’s been widely reported that shippers fear retaliation in some form. The World Shipping Council representing ocean carriers and MSC, in this case, deny that retaliation by carriers occurs. The complaint and FMC findings bear watching in terms of acceptance by international regulatory bodies of consolidation among the largest ocean carriers, who now see the 10 largest global carriers operating in just three major vessel sharing alliances.

South Korea backslide?

Meanwhile in South Korea, some lawmakers want to take steps to turn back regulations there barring collusion. The legislators reportedly want to amend the nation’s Monopoly Regulation and Fair Trade Act to exempt the shipping industry from jurisdiction by the Korea Fair Trade Commission (KFTC) as part of the effort to turn back some heavy fines leveled by the agency. KFTC imposed fines totaling $613 million on 23 ocean shipping lines. A dozen South Korean companies were fined, including ocean container lines HMM and SM Line, plus 11 foreign carriers. Go here for more detailed coverage.

Steamship line profits keep on rolling ahead

While service, reliability and congestion issues continue to plague the container shipping industry, ocean carriers continue to enjoy record profits. According to news reports out last week, Maersk, the largest ocean carrier, boosted its profit forecast for the year of 2021 by a whopping $5 billion. Go here for details.

Ocean Network Express (ONE), the big consolidated ocean container line made up of three previously independent Japanese major carriers, announced, despite congestion in the system, it cleared in excess of $2.5 billion in its first quarter fiscal year that ended June 30. Go here for details.

Compiled by Bruce Abbe, SSGA Strategic Adviser for Trade and Transportation