 Well, good afternoon and welcome to our next edition of our agricultural market situation and outlook. My name is Dave Ripplinger. I'm an economic specialist with NDSU Extension. I want to thank you again for joining us and we'll go ahead and just hop right in. Just a few notes as we move forward. We will help you with this if you forget, but please have your microphone and camera off. And then use chat for questions. So if you have any questions as we go, feel free to write them in as they come to you and we'll make sure that we work through all of them. As we move to that that Q&A period. So again, use the use the chat and when you're done if you'd be willing to we have a few questions we'd like for you to answer, including what else you might want to hear about in future editions of this webinar series. So with that I'm going to hand it over to Brian Parman who's our egg finance specialist. Yeah, thanks Dave. So we're back again I believe this is our fifth one and I'm going to cover some macro stuff here, which kind of dictates what's going on with the economy talking a little bit about something what's going on in the financial institutions and credit and finishing up with a little bit of policy. So the last four weeks in terms of new unemployment filings has been the worst ever. In fact, it's, we've, we've managed to increase unemployment to levels that it took the financial crisis, literally months and almost a year to accomplish and they didn't even reach the levels that are being seen today. So yesterday's report came out at 5.24 million, which is less than the week ending March 28 or April 4, but still looking at it historically is still just astronomically high we've on the next slide I actually have the numbers broken down and see so March 21 we had 3.28 million, March 28, which was the high so far at about 6.9, then April 4 at 6.6 and then April 11 at 5.25 million. Now if you take a labor participation force of 164.5 million, some say 162, some say 164, and you add those numbers to the 5.8 million that were already unemployed at the time. That gives us about a 16.5% unemployment rate up from three and a half. Now if you look going back to looking at it historically the height of the financial crisis we almost hit 10%, 9.9, and then 1982 was the last time we were over 10% at almost 11. And then of course the depression, the height of the depression and 33 was 25. The difference between today, again I'll say this, the difference between right now in those periods was those were very long term in terms of months and years, very long term periods of high unemployment that lasted quite a long time as I said many years. Right now we were at 16.5% or so and we've done it in a matter of about a month. So this is pretty unprecedented the level that we're achieving and of course the big question is going to be how fast and if a lot of these jobs are going to return. You hear things coming out of the press that say one in five of these businesses will never return and some say even higher. So that remains to be seen and Ron's going to talk a little bit about the small business loans that are program that's been put in place to try to help mitigate that some but that's really the big question is how many of these businesses are going to return and how many of these jobs are going to return because if not we could be looking at longer term unemployment a whole lot higher than that 3.5% we were at before we got wound up in this mess. So the next slide shows some of what's being going what's going on and this is a topic that's picking up traction this week and that's credit tightening. For instance, JP Morgan Chase has increased or tightened their requirement for a new home loan you have to have a credit score of above 700 and you have to be able to put 20% down. Otherwise it's pretty much a non starter on a conventional loan and across the country the amount of conventional loans has dropped almost 25 dropped almost 25% in March we don't have April's data yet. I expect it's going to be a whole lot worse jumbo loans dropping you know almost 37% and then government like VH VA FHA and USDA loans falling almost 7%. And I would expect that those are going to fall even further into April so remember this is backward looking in this hit about mid March. It's going to be a probably a full month of this and and and the fallout from it so I expect that that's going to be much worse so then if you look at the next slide I have a chart showing mortgage credit availability index it's just an index of the ability for folks to get mortgages. This is the biggest single period drop since this has been tracked. It's not credit is not as tight as it was say in 2011 and 12, immediately following the credit the financial crisis and I trust me I know I bought a house in 2013 and they needed a blood test and all kinds of stuff in order for you to qualify for one of these credited loosened up quite a bit over the years but this is just for that last period in March and I expect that once this April is factored in. It's going to drop even further, which that has a long term ripple effect on housing prices going forward a fewer people are able to get loans then you got fewer people in the market for buying a new home which impacts housing prices down the road and for the foreseeable future so it's it's not looking terribly optimistic for the value of homes or housing prices in the in the next in the next quarter of the next few months. So then the next slide shows you know the fallout from these financial institutions earnings were reported this last week I believe on Wednesday. I think it was Wednesday for a lot of these and and earnings were down considerably off of a year ago and part of that also is that these financial institutions are taking measures to the in anticipation of bad debt. Okay, Goldman Sachs is setting aside $20 billion to for bad debt for defaulted mortgages for defaults on credit. Bank of America set aside an almost $5 billion for bad debt credit cards that don't get paid back things like that. City is set and they have a little bit more credit cards and B of a they're setting aside $7 billion City is a big issue or credit cards and their big concern is that credit cards are not going to be or credit payments are not going to be made. And there may be some default on credit cards. Now this is these are things that are going to happen down the road. So right now what's going on obviously is we're worried about unemployment and incomes and people being able to pay rent. These being able to make these credit payments and things that's going to hit these institutions hard probably in the coming weeks. Okay, so the last thing I want to talk about just real quick is you guys have probably heard about this direct payments to farmers. And there isn't a lot of detail on it. It's been said that some detail may come out today. If it does, you know, I encourage you to go in and look for it, but we don't have the details right now. What we do know is what the what Secretary Perdue has said and what's been in print and that's $16 billion and they want this $16 billion to be in the form of direct payments to farmers, ranchers, you know, folks raising specialty crops, commodities, livestock. The whole, the whole thing that's been impacted by this including two to three billion and milk and other protein purchases we've all seen the stories now this week probably have milk being dumped. They want to send that to food banks or, you know, pork or beef that's in excess, send that to food banks, and then specific mention to cattle and pork and specialty crops in these commodities hurt by the COVID-19 crisis we're dealing with right now. Again, that plans to be submitted. It's, I've heard that maybe it was already submitted, but again, the details coming out of it have, we haven't seen them yet. And the other thing the Secretary said on this is that this may not be the only program to come out of this that there might be a reevaluation, or there will be a reevaluation in the months to come to see if that $16 billion and however it shakes out if that's going to be enough to get our producers by. This, this year. And part of that is the availability of funding and getting getting folks to agree on exactly what it's going to look like so. A little bit light on details there is a program coming. As far as we know I would expect that it's going to happen. What it's going to look like exactly how many dollars per person or per animal or per acre we don't know those details yet but I believe the details of that will be coming in the next few days if not today. So with that I'll go ahead and turn it over to our next presenter. All right, let me get my video going here and we should be set. So good afternoon. My name is Frank Nelson. I'm the crop economist and marketing specialist with NDSU Extension. Today I'm going to try and talk a little bit about some questions I've been getting on on marketing plans and how do we prepare for the future and in particular questions related to basis. So far most of the market response the negative market response we've seen has been at the futures market level. We haven't seen a lot of changes yet in the basis levels but I do want to talk about what might be happening what might be coming some things to look for. And just give everybody heads up and because this can have an impact on structurally how you how you operate and how you plan for the future and your marketing plans. So without diving into gory detail I just wanted to remind everybody about basis. Mathematically it's the cash minus the futures market. So it's your local cash price minus the futures market price. It's that price differential and again we're really talking about two markets. The cash market at your local level as well as the futures market then that is the public market. I really want to talk today more about the operational definition which is the gold one on the bottom. The way I like to try and explain it basis is really your local market trying to regulate the flow of grain over time and space. So when when is the grain need delivered and where does it need to be delivered to. So if we think about basis in that context this this presentation will make a lot more sense. On the next slide I pulled some basis information this would be local spot market basis. So this would be for grain delivered today. These are the basis levels offered I picked one elevator kind of an East Central North Dakota. I won't tell you which one it is it really doesn't matter. I'm just using this as a reference point and I pulled that information to put together in a seasonal basis pattern. So we're looking from September 1 starting September 1 2015 through yesterday and I broke it down by crop marketing year. The highlighted red one is where we are today. So if we compare today's corn basis level for this particular elevator relative to the basis levels we've seen in the past. We're kind of right in the middle of the range so seasonally we're at a very typical basis corn basis level today for a spot market or old old old crop corn. Now one of the things again the basis levels trying to regulate the flow of grain so it's the inflow of grain relative to the outflow of grain. So I just want to point to the purple line on the far right hand side if you notice that would be 2016-17. As we got into the summer month summer and early fall of 2016-17 as the basis falls with that signaling is that the inflow of grain is coming faster than the outflow of grain. So the local market is trying to reduce that supply flow and trying to regulate what's going on. In vice versa for 2018-19 which is the blue line we had a pop or kind of a spike in mid to late July and what that really shows is that the inflow relative to the outflow was too slow. So again the local market trying to raise the local basis level to get a bit more grain to flow into the system. On the next slide what I tried to do is provide an overview of where does our grain go and we don't have a really good read on that. I mean it's not perfect but the closest thing we have is a report by the Upper Great Plains Transportation Institute. They do a survey of elevators across the state and say where did you ship your grain and every year they put together these summary reports. I just pulled the one from 2018-19 as a reference point. So this would be where does the grain where is the outbound flow of grain. When the elevator buys it where do they ship it to and you can see based on last year's numbers about 57% of our corn went into the PNW at least the corn that went through the elevator system. About 13% was transferred internally which is that blue that dark blue slice about 13% was transferred internally within the state. Now most of that is going to flow either to an ethanol plant or to the corn sweetener plant then on Wappen. Now this does not track direct farmer deliveries into the ethanol system or into the corn sweetener plant. So this would be just elevator deliveries or re-deliveries. So if we think about all of our grain supply all of our corn supply in North Dakota you know rough estimate I'd say maybe about half about 50% of our corn gets on a train and leaves the, leaves the, leaves the. State to the PNW. The other half is either used locally or stays domestic within the U.S. marketplace. So when we think about the impact of COVID-19 or the coronavirus on grain movements and and who's buying grain. Our product here or at least our corn in North Dakota is a bit more sensitive to what happens in the international market versus like the national average because unnationally we export about 15% of our corn in this region is closer to 50%. That hits one of the export terminals. So our prices are a little bit more equally balanced. So when we think about what would happen to our local supplies, the two big issues we need to think about for outbound flow of grain and thus impacting local basis levels would be the shipments out to PNW or our export pace into the Asian markets for corn. And the second would be the local demand base for ethanol and the corn sweetener plant. And I know there's some concerns now and David Rippling will talk about this a little bit more about the, you know, the longevity or at least the concerns short term concerns about profitability and operation of some of the ethanol plants nationally. I do know that Hankinson Renewable has stopped receiving grain. So they're, they're still as my understanding is they're still manufacturing, but they're not receiving any new grain. My also my understanding what I haven't had a chance to talk to a lot of folks is that the other ethanol plants are receiving grain, but they're trying to fulfill the contracts that are already in place. And so they're obviously slowing production trying to manage their inventories. So as we think forward as we look forward in time, again for corn basis levels might might impact your local corn basis level. Number one would be export pace in particular into the Asian markets. And then the second of course would be the profitability and the purchasing by the local ethanol plants. On the next slide, I did the same thing for soybean basis levels. And again, the red bar is the current marketing year. You can see same thing in the green line in 2017-18 on the far right hand side. That was when the, the trade war started kicking in and China's basically stopped their purchases of US soybeans. Obviously the outflow was zero and therefore the basis had the inflow really needed to be zero as well. So the basis was pushed much, much lower to try and prevent or restrict the inflow of grain. If you look at the gold, gold bar on the far right hand side of that darker brown one 2015-16 we had the opposite happen as we got into harvest or closer to the harvest pressure. The outflow of grain became larger than the inflow. And so again, then basis levels were started to increase. If we compare today's soybean basis levels with the last four years, at least for this time period, we're, you know, about typical maybe even a little bit stronger than normal. And I think some of that is because we have seen some shipment of soybeans out to the PNW. So on the next slide, how do we use up or where does the green, where are the soybeans in North Dakota go? Now, again, this is 2018-19 levels, so our total soybean outflow from the state was much lower than it has been historically. But that proportion, the percentage of where we sent it really didn't change much. And typically we send approximately 70% of our soybeans out to the PNW. Last year, 2018-19 was closer to 63%. We do use or have some transmits a little bit internally. I know the Enderland plant does process some soybeans. Again, this does not reflect the direct farmer delivery to a processing plant. So when we look at this and we look at soybean, we're much more dependent upon the export market, so I'm surprised about, you know, a third, maybe a little bit more than a third of our soybeans stay within the US. So when we're looking at the profitability of the domestic crushing industry, that's important to the overall futures market of soybeans, but not necessarily have a huge impact on your local basis levels. It's going to be much more tied to or linked to export sales and export deliveries. The next slide, I did the same thing for hard red spring wheat. Again, you can see the real seasonal pattern we have in basis levels for spring wheat in today's world. Actually, when you look at today's spring wheat basis levels relative to what we've seen the last four years, they're a little bit stronger than we typically see. But again, it's following that same basic basis pattern. And so as we move into the harvest time period, traditionally we have either flat or slightly decreasing basis levels. We get close to harvest again as farmers start cleaning their bins out, getting ready for the fall season. On the next slide, it's again the same thing. Where do the elevators ship the grain that they have purchased? About 35% goes to the PNW. About 75% stays domestic within the United States. Please notice that, again, that dark blue sliver for North Dakota at 6%, that would primarily be the state mill and elevator in Grand Forks. And of course, they also do some direct farmer receiving. So when we look at all of the wheat within the region, it's going to be a little bit higher for domestic usage. So let's say roughly two-thirds of our wheat stays in the domestic market. About one-third is exported from this region again, primarily the PNW. So what happens domestically with wheat consumption will have a slightly larger impact on your basis levels than what happens internationally. Now, both of them are going to be important. I don't want to downplay that, but it is something that we need to be watching. So again, as we turn to the COVID-19 issues, we need to be concerned about supply chain disruptions, whether they be through the railroad system or through local processing. My expectation is that as we move into fall, as long as we can keep the supply chains full, that I don't expect the local basis levels for corn, soybeans and wheat to be that different from typical seasonal patterns. So what I'm suggesting is, again, unless there's something we don't expect on the ethanol side, most of the price increase we're going to see if there is one later on is going to come from the futures market and it'll be a futures market play. So that may have an impact on what marketing tools you use and the structure you have moving forward. So with that, I'll hand things over to Tim. Okay. Good afternoon, everybody. Tim, Petrie, Extension Lifestyle Marketing Economist. We go to my first slide where I just want to follow up on some of the things that Brian mentioned. I know there's a lot of interest in how much for livestock producers, how much money am I going to get and the wants are very high. And so what I've done here is I'm not showing favoritism or anything to any particular commodity group, but I just have some different commodity groups and what their losses that they have submitted to USDA are. And, you know, the bottom line is that their losses are way, way more. Brian mentioned the 16 billion, but originally 19.5 was to go to livestock and produce and direct marketing people and now some has been added and I think the addition is going to be like you said, for buying commodities, buying pork and milk and so on. But anyway, starting off the NCBA estimate for the cattle industry, 13.6 billion. The national pork producers estimated 5 billion. Again, I'm not selecting any particular group here. There are a lot of state organizations and other national organizations that have sent their information to USDA too and some of them are higher on the cattle and hog side as well, up 15 billion for cattle and all kinds of different ones. And these are just to show you some amounts that add up to way more than even the 16 that recently came out to American sheep industry and this association says over 300 million, you know, the dairy industry, maybe 5.7 billion. Again, their estimates higher and lower and this the fresh produce 5 billion. The National Chicken Council did not submit an actual number, but estimates have been flowing around four billion stuff. If you add all those up, it's $34 billion and, you know, at the most we're going to have 16 and spread across a lot of things. You know, the question I keep getting is, are there going to be others? And Ryan mentioned this, there may well be and and Ron is going to talk about some programs running out of money and they're trying to get more into that. So there are absolutely a lot of wishes here. And so don't just because your commodity group submitted something, think that I'm going to get that much. I also getting some questions on the seafood is seafood a livestock. And so at the bottom, I've just addressed that. The the the act, the appropriation of money actually had 300 million for the seafood industry over and above are different from that 9.5. And I'm not sure if now that's in the 16 billion or not. But again, their losses at 1.5 billion. But the seafood industry already had a 300 allocates. So go to the next slide. A lot of talk now about slaughter plants closing and so on. And there's a lot of list there are things happening and I'm not going to go through all those today unless there's a specific question. But you've heard in my report before in these that we've had record meat production this year, record beef record. Park record chicken production and record total meat production. And so we were going gangbusters on slaughter and slaughter capacity here at the beginning of the year that blue line is what we're doing this year and then obviously. Obviously, well the good news is right prior to the pandemic we were, you know, killing record amounts of hogs and and high amounts of cattle and chickens as well so we were running them through the system but with all the packing plant closures and slow downs and stopping for cleaning and so on you see the last couple of weeks that cattle hog and and broiler slaughter and has fallen dramatically sheep and lamb also and some other issues going on there that I just don't have time to talk about today. And so that's a concern because we've got more numbers ready out there than now are getting slaughtered in the last week or so and so that's going to back up life and particularly on a regional basis it can be quite devastating just take the hog example there. The Smithfield plant in Sioux Falls is a major market for hog producers in this area, 19, almost 20,000 head a day and they're closed down and definitely. And so there are hog producers in our area that cannot sell hogs now that you know the other packing plants like I said because of all it's available or operating at full capacity. And so there are hogs trying to find a slaughter plant that can't in this area and that's devastating and hurts prices and going to back up and so that's causing just all kinds of problems and likely to continue because more reports come in if we go to my next slide. All kinds of questions just wires, you know, sometimes supermarkets bear on some meat products when we've got record production and all this and other things and, and I've mentioned this before but you know the meat that is packaged at the wholesale level to go into the restaurant trade is a whole different ballgame than what goes to the retail store and just start off on the left hand side there when restaurants buy bacon they buy these 24 pound packs of bacon and open them up and put them on you know their breakfast or put it on hamburgers or chicken burgers or whatever might be but these are big packs now when people go into a retail store they want to buy one pound pack so in order to change that over from the meat that would you know restaurants are closed down that mean you have to do 24 packs when it used to be one we don't have the packaging material and it's kind of tough and a lot of people do not want to go into a retail store even if you diverted that 25 pound thing and and buy it so that's one of the problems that middle slide I know you and and you know necessity is is the mother of invention and so there's all kinds of things going on now at the wholesale sector trying to get that moved over the what I went to restaurants into a more of a retail channel the middle slide there is is difficult to see is kind of blurry but this is just a a chicken plant down in North Carolina where they have a lot of chicken plants obviously and they are packaging 10 pound bags of chicken breast to go into the restaurant store and again usually consumers don't want to go into the store and and buy that quantity but they just opened up in their parking lot for anybody that wanted to come through and had a $10 bill it says right on there don't get out of your car pickup drive in and we'll give you a 10 pound pack of chicken breasts for $10 that's a dollar a pound come in and and get it so there's a diversion of the wholesale that would usually go to the restaurant into a retail another kind of interesting one on the right there is briskets you know briskets are sold and family servings typically and is kind of a hot item now and fact you know I have three daughters and their husbands and families to live in town here and they all decided they wanted smoke brisket for Easter and and asked dad if he would foot the bill which I said I would and so we all had briskets but bottom and you know and you know for small briskets but a friend of mine in Denver sent me this is a brisket that would typically go wholesale into the barbecue restaurants that would buy a 16 pound brisket and and then you know they've got the bigger smokers and so on and and for all the restaurant have have that demand but this is a Costco store in Denver and so they just purchased a bunch of those briskets of what went into the retail or into the restaurant sector put it in the retail store here it is 16 pounds buy it and and you know are getting some takers so again all kinds of things going on here trying to move approximately half the meat that would have went into the restaurant so on trade back in onto the retail site so you go to my next slide is one that I've been showing you every time so I'm not giving up on it now is just the 758 late cattle sold in North Dakota and you know you have to check with your local auction markets but they're still auction markets going and there still is demand for feeder cattle you know last week I talked to you about this is the chart I showed you on the left there and and the red line then is what they've done this year and again we knew they ratchet it down but last week they came up some and then those square boxes are the futures market if we go out to the right hand side then is the one for this week we did add about on the average again and this is the time here when we start selling less and less feeder cattle because we worked through last year's cap crop and particularly get into May and so on and after after calving but we still are merchandising cattle and the market was up about $4 so there's still demand for cattle out there and on the futures market side you see the futures look very much similar this is the April May futures then August September October look very similar to last weekend so we didn't have the big volatile meeting the big volatile movement in the futures that we've had there for several weeks we talked about the $10 range from day to day and so on you know we ended up Thursday close the Thursday close on the for instance on the September future up about $1 but the May future down maybe $0.40 or something but it's really benign and that's good news that having that futures market settle down and not be so wild so go to my last slide these are just the two North Dakota market reports again on the left side for last week and then on the right side for this week and to show you that in general prices for feeder cattle and you can I'm not going to go off all through these I just kind of highlighted the $5.50 to $6 is on the top and the 78 weeks that I just got through talking about the bottom that did increase about $4 so cattle are moving there's a good demand for the lightweight cattle to go on grass yet because there's good moisture all the way up from Oklahoma up through here and so cattle are still being merchandised and with that then I'll turn it over to David to discuss some of the bioenergy stuff. Yes, I guess I next him. Good afternoon everybody. I was going to talk about the payroll protection program. So, if you look at my first slide here. The PPP was part of the CARES Act, and it was the intent was to keep it to keep people employed. And they allocated $349 billion. And that's all used up right now. So last I guess Congress isn't is in recess but I guess they must have gotten together for a little time last week, and they were discussing replenishing that for 250 billion more, but that didn't go anywhere at this time. Most experts think that Congress will replenish this program. And because there's still a lot of people that didn't get, they didn't get their money. They're in the queue they have applied and haven't gotten any money at this point. During the during the 14 day period that they were giving out these loans, they gave out 1.66 million loans by almost 5000 lenders, just quite amazing. The loan applications were very, very simple and didn't take much to to apply for a loan. So they pushed them through. According to the SBA, Small Business Administration, they gave out typically this is around 14 years of loans in 14 days. So, we've been getting different guidance and the rules change every day on this program. We did get some guidance now called the interim final rule, which doesn't seem very final to me. So that kind of means we're still going to get some more changes as we go along. But we did get some guidance on farmers and self-employed individuals. Now normally, farmers aren't eligible for SBA loans, but the act specifically says businesses qualify, including agricultural enterprises. The next slide. I'm going to talk about the eligibility of the program. You must have been in operation on February 15. That's one of the criteria. Now, as I go through these these rules, I'm assuming that this program will be replenished and so we can follow these rules forward now. Small businesses with fewer than 500 employees qualify. 501C3s, which are nonprofits, qualify. They have to have less than 500 employees. And the individual operates as a sole proprietor, which probably most farmers are. In individual operates as an independent contractor. They're also eligible. And we did get more guidance, as I mentioned, on people who were self-employed, which most farmers are. There is a few other definitions I won't get into all that, but this is the basics of the eligibility. Next, I'm going to get into some of the details. The authorization for this was through the banks and there is banks that are affiliated with SBA loans and even other banks were authorized to give out these loans. Also, the farm credit system was authorized. So that kind of tells you right there that farmers or agriculture is eligible for this. When you fill out an application, there's one thing to check and that says, is your business, does it have current economic uncertainty? Well, of course it does. I think every business has current economic uncertainty at this point. Okay, but this program, I think the spirit of the program was made to keep people working and to keep people getting paid. So there's probably people getting these loans that probably could get by without them. And there's some people that really need the loans that probably got shortchanged here. That's just my speculation. We'll see how it all works out when it all gets over with. But the maximum amount now that you can get for your loan is your normal payroll cost times 2.5. You can't get more than 10 million. And if you have an employee that makes over 100,000, you've got a cap at that. Now, how do you define payroll costs? Well, it's the salary and most of the benefits that go along with that salary are considered payroll costs. The terms of the loan, they finally agreed on that's a two-year loan, 1% interest. It is a government guarantee. You do not need any collateral and the fees are waived. I'm assuming that the banks will get reimbursed for those fees. Now, the banks now that are loaning this money, they need to be aware of their reserve requirements as they're giving these loans as well, even though they are a government guarantee, if they get defaulted, the bank is still safe. So that's something to consider on the bank end of things. The allowable uses for this loan are payroll health care benefits, as I mentioned, and mortgage interest. But that does not include principal. Only the interest also rents and utilities and also interest on debts that you acquired before February 15. February 15 seems to be that magic date. Okay. Now, we finally got guidance here on self-employed. Now, in the Treasury regulations, it talks about Schedule C, which is the business schedule. It doesn't say anything about Schedule F, farm schedule. But most of the experts, most of the attorneys, people that deal with this have just kind of interpreted that to include Schedule F as well. So I will as well. So how does a self-employed person, let's say you're self-employed and have no employees, how do you determine what your payroll is? Well, they're just saying that your net profit from your business from the Schedule C or F is your pay. Of course, you still are a subject to that $100,000 limit. They came up with this new term called the owner compensation replacement. So in lieu of a typical farmer would not necessarily give themselves a paycheck, unless they're part of a partnership or something like that. But if you're a self-employed sole proprietor, this is the way of determining what your wages would be. Next slide. When you get this loan, there is an option to have forgiveness on the loan, as most people know by now. You must spend this loan within an eight-week period after you get the loan. And in order to be, the order for forgiveness of the loan, 75% of that must have been used for payroll. So if you use most of your loan for utilities or rent, and you didn't necessarily use it all for payroll, I imagine that then the forgiveness is prorated accordingly to the payroll. Also, if you had laid off people from, and so you have less employees, your forgiveness is prorated as well. If you have laid off people and you do rehire them by June 30th, then you are not penalized on your forgiveness part. Now the question is, on these self-employed people, such as farmers, the owner compensation replacement, how do you determine for forgiveness purposes? So basically, you take your profit from your schedule F or schedule C, and it's eight weeks divided by 52. It's just a fraction there, and that's how you determine that. And one thing that was specifically stated was that these loans that you get, and if they are forgiven, are not taxable. Typically IRS rule says if you have loans that are forgiven, they need to be recorded as income. But for purposes of the PPP program, they are not. Lastly, I have a few takeaway points. You need justification for this. I mean, so almost any business can apply for this the way it looks. The justification is that you've been hurt by this problem that we're having. But I imagine that some so-called bigger small businesses have some high-priced attorneys that really got on this and got their application in right away. And because it's first come, first serve, and you may have some mom-and-pop businesses that maybe they're their own accountant, and they probably didn't get their application in or they're waiting in the queue. And so I think there might be some abuse of this program, but we'll see. And I doubt that you can audit all these loans, so there probably will be some unintended consequences. The main thing to remember is to communicate with your lender. The lender is the expert on this, because they've done a lot of these loans. And also, I've hearing from a lot of people document everything you do. It's actually recommended that you keep a separate account and just show what you're paying this loan, what expenses you are paying. One thing to remember if you apply for a loan, it's not a guarantee. They're just going to get some low-interest loan. And if you get the loan, it's not a guarantee that you will get it forgiven as well. And the last point I wanted to bring up was that if you do present false statements on this federal loan, you're in big trouble. It's up to a $250,000 fine in five years in prison. So be aware of that as well. So those are the things I have for you at this point, and we'll move on to David. Great. Thanks, Ron. Dave Rippling, our Bioenergy Economic Specialist with NDC Extension. Just giving a quick overview of what's going on on the energy side of things, ethanol specifically. This last week and a half, we've seen a continued decline in production. And basically, we've seen about a 20% reduction each of the last four weeks. The last I heard at the minimum, we have at least refineries that are closed, not operating. And at least 80 that are running at less than 50% capacity, similar to that hot idle that Frayn had mentioned earlier. Accepting corn, grinding that corn, but not any more than that. And again, if you keep in mind that there's a little over 200 corn ethanol refineries in the country, you have more than half that are closed or running at a very low rate. The good news is that we are nearing equilibrium in terms of production and weekly use. Of course, the trade on that is that we've seen this dramatic decline in production. We've also seen that margins are improving, but for the most part negative for all corn ethanol refineries. Corn prices have fallen. Ethanol prices have risen in the last week, which makes things better, but still negative. And for the most part, barely covering variable costs and not anything beyond that. On the oil side, we're seeing things move more slowly as been the case for the last few weeks, more slowly in terms of reducing production. Wells are beginning to be shut in. We heard some news here in North Dakota about thousands of wells being shut in the last few weeks. There's also discussion in Texas, especially the smaller refineries, excuse me, the smaller oil companies shutting in their wells. And there was a meeting earlier this week, Texas Rail Commission was going to decide if they were going to actually enforce or set rules regarding production decline, a mandated production decline. And then finally, probably the biggest issue on the horizon is a storage crisis that's really coming to a head, where we just basically will not have enough working room for oil primarily, but also for refined products to actually have the system operate. So just looking at oil production, just so you know, we have about 16 and a half billion gallons of capacity here in the United States. We go back four weeks ago, and you know, we were at about 95% use capacity utilization, 15 and a half billion gallons give or take. Again, that declined by about 20% within the week through the 27th declined again through the third. And now this and these numbers are weak old. So this was a production with the week through April 10th again a week ago, but we'd actually declined reduced production by almost half here in the United States again with that overall capacity of 16 and a half billion gallons now down to about 8.7 billion gallons on an annualized rate. You know, and thinking about that that's obviously half as much corn being used, half as many distillers being produced in addition to ethanol. Another way to kind of illustrate what's going on is measuring stocks in use in terms of days and storage. So if we go back to March 20, we see that for crude gasoline and ethanol in the United States we have about 25 days in storage for each of those. In the last few weeks, it's dramatically increased and now we're up to, you know, 54 days of storage for ethanol which is a dramatic increase and again, that hits both the numerator and denominator we're using less and stocks are building rapidly. So ethanol is definitely seeing the largest increase followed by gasoline and crude just a slight uptick on having four year averages there. Well, again, typically, you know, somewhere in the mid 20s is what we what we've seen for for days and storage so we're clearly at the high end at record levels especially for ethanol. Talking about the the upcoming storage crisis just looking at oil storage in the United States. It's important to recognize, you know, we have, you know, a large system of pipelines and infrastructure to transport oil to store oil to refine and then to deal with those refinery products. If we look at the US in total, you know, we actually have a lot of working storage available. The darker blue part of it that cylinder is is where we were on the 13th and just a slight increase, you know, across the United States through last Friday. And this week is actually the first time DOE has reported stocks in this way, knowing that this is an important issue. But if we look more at a specific region, especially Cushing so that's where WTI is priced the West Texas Intermediate the benchmark oil. You see how in certain locations that that these stocks are increasing dramatically as we go back to the 13th. They were about half full in terms of what they actually had. And then in the last few weeks, it basically increased the amount in storage in that that region that relatively small region by 20% and getting us, you know, much closer to that that that working storage limit that it's in kind of analogy for this is you think about if you're if you're working in the kitchen, you know, you need counter space to move stuff around and to get things done. And so it's not when you reach the maximum when you're done it's sooner than that, you know, because you cannot, you know, physically move these quantities around. And again, just looking at those those changes going from about half full and Cushing in mid March to 70% full today, really, really quick fill up. And again, the expectation is unless things change dramatically by Memorial Day, there'll be inadequate working space and then, you know, all bets are off. I've mentioned before in the last few weeks that it's completely plausible expected that we will see negative prices for certain types of oil in certain regions, as folks simply just don't have the space to to to deal with it. And again, this kind of leads back to that that idea of shutting in wells if you started to see a lot of here in North Dakota. And this kind of segues to some of the other discussions we've had regarding what are the longer term implications or what are the expectations for the recovery of the economy. And there's been a lot of a lot of conversations about what the expectations are from DOE International Energy Association regarding what this dip is going to look like and all of them for the most part think it's going to be a straight up V. So we're going to see that there was a slight decline in the first quarter, a big decline in quarter to and then by the end of the year will basically be back to where we were. You know, these numbers came out from from us DOE a few weeks ago, and I, I'd expect that most people think that this this is not what's going to happen. And again, Brian mentioned this a little bit alluded to this a little bit is we have those those broader economic issues that as people don't work as the economy doesn't pick up as people don't need to travel. It'll feed upon itself, you know, basically what what us DOE and other folks are expected or stated is that we'd stop for a couple months and then just get right back into our vehicles and go get right back into our trucks and move freight. And, you know, that's that's likely not going to be the case. And in fact, if you look at, and it's not these numbers, but the IEA numbers, they actually have production above consumption, that is that we'd have. And again, you see that you know you'd have you'd have use above production even here, you know, later this year, again that we would start drawing down those stocks and I'm not sure that that's plausible. So that that's led us to the end of our, our presentations and now I'll be happy to field some questions. I'll go ahead and read the questions and direct them. And then if the panelists want to respond that would be great. The first one I see is a great question. So can the PPP borrower who used funds for payroll still deduct those payroll costs for tax purposes. And so Ron, I don't know if you have an answer for that one. Yes, if there's we're still waiting for guidance on that. But for the last things that I found out was that if you just have it as a loan and that's not forgiven, then you can deduct, but if you get the loan forgiven, then you cannot deduct, but we're still waiting for the rule on that. Great. Thanks, Ron. And then I'll just read this. It's just it's just a point. So SBA came out with clarification that line 34 schedule left on the tax return. So that $100,000 cap, you generate a $20,000 loan times two and a half will get you that so there's the math there and then eight over 52 applies during the forgiveness period but not in loan determination. I can address that. Yes, I made a little mistake on my slide there that owner compensation replacement was for the forgiveness only the the the profit of schedule left divided by 12 times 2.5 that's your loan amount that's correct. I guess Jacob sent that in and and the and the 852 rule applies for the forgiveness. Great. Thanks, Ron. Thanks, Jacob. Are there any other questions from the group. Feel free to use the chat to ask your question and I'll, I'll direct them. And since there's there's nothing standing I'll just give you a few minutes. And as we're kind of coming to the end here I'll just reiterate we do have some some quick questions for you. Thank you for the feedback for this at the URL that's that's on the screen. I really appreciate that type of feedback it helps guide us an extension and to make sure that we're delivering what we can do an even better job in the future. And then as we've mentioned a few times you know we this this webinar has been recorded as have the previous ones. And you can go and check those out. Scott mentioned he'd have it posted relatively soon. I have a question about distillers grains. Will you be able to get distillers grains well prices have increased tremendously. Right now it's about $200 a ton for distillers grains here in the upper Midwest which is, you know, a dramatic increase over over the recent period. I don't know how much prices, how much higher prices will go. I'll just find it to ration office you know the distillers grains found a nice nice place in the ration and folks that were expecting it and now it's simply not available. I really don't have strong expectations other than they are high and from the ethanol refineries perspective in this week for for that South Dakota ethanol plant according to USDA distillers grains are the primary source of income so they're the they're the and ethanol is the co product. And I guess we'll just see how that goes again. The good news or the silver lining on the corn ethanol side is that they're close to equilibrium. And so even though the distillers production is falling by about half you know, in that same ratio is as the corn crush has, you know, things are kind of leveling out so I guess we'll see, you know exactly how that works out. And of course there there has been a reduction some producers will not get distillers when they did a previous unless they're willing to bid up and prices are about as high as they've ever been. Another question how we're operating loans going for growers this spring. So I don't know if there's any a panelist have any comments on that. And then any changes in land rents. So far I haven't heard anything you know a lot of that what was going to be paid headed into the 2020 growing season is negotiated and agreed upon well in advance of what happened with coronavirus and and, you know, commodity prices falling rather dramatically I mean, all this stuff is really happened in about five weeks. So as you guys know, land rents are negotiated agreed upon and often paid well before March and factored into any operating loans. So this having an impact on 2020s rents was was unlikely now going forward into 2021. You know, it's going to depend we would have thought that maybe there would have been a reduction in rents before but because of ad hoc programs like MFP and, and the farm programs that that already existed like Arkham PLC there's been a lot of government assistance in that regard as far as the operating loans goes I have not in the in the folks that I've talked to her that there's been any been any hiccup in terms of operating lines do directly to coronavirus that the you know that the ad now one thing I'll say about that though is very few community banks, or even midsize ag banks, you know, I'm for instance, for instance, I'm originally from Nebraska midsize one might be or larger one like pinnacle. Very few of them have an ag only portfolio almost none. The main ones that would be that have ag only might be like a landbank or a farm credit services but even then they may have some other sectors and so what's going to possibly what we have to think about with the effects on the banks going forward might be what happens on their commercial lending side as well. You know, it's been that commercial lending has been not commercial but commercial and, you know, individual personal loans. Those have been strong for the last several years the macro economy has been doing well low unemployment, high rates of payback and low rates of default or distress. And so what we're going to have to kind of monitor going forward is how that portfolio of our ag banks winds up affecting them because over the years they've had to take on a much larger personal banking and commercial banking portfolio to support their ag lending program. And so what's what's gone on with the high unemployment and folks concerned about the future that may that may spill in to ag lending a little bit depending on how how strong their balance the banks balance sheets are so that's that's something to look at going forward so far I haven't heard anything about operating loans or being held up specifically because of the the COVID-19 virus going on right now, unless frame has something he wants to add with that as well. No, Brian that I would have basically the same same comments that the loan application process and I think a lot of the loans have already been been taken care of there's always a few to come in a little bit later but my understanding is most of the the ag loans are the ag lenders are still following the procedures they had before they have been kind of using a standard price forecast for their for the loan applications again the hope and the expect well hope right now is that we'll see a rebound of prices by the time we get into harvest levels we'll have to wait and see about that but I my knowledge is not making a difference in the loan application process. Right and just to address Jeff Stein's comment you know that's kind of kind of what we were seeing I mean heading into 2020 was a lot like when we headed into 2019 MFP helped us out a lot things. It kept us above water and kept the ball rolling downhill. So, yeah, talk to us and headed into 2020 and 2021 and see what things look like and again reiterating. We've put out some I put out some reports not too long ago on cash rents and land values. And remember those kind of things are really backward looking. You guys are probably we're all trying to think about what the what the future holds. But a lot of the data we have is really backward looking and this came on so hard and so fast that it's right now hard to take stock of exactly what the impact is going to be when in a lot of cases we simply just do not have the data. I mean we just we don't have it for instance housing prices might be two or three months lag before we really can figure out exactly how it's affected people's wealth and everything moving forward so we're trying to adjust as best we can and come up with some strategies and and just make folks mindful of what's coming and that's why I reiterate going back to the beginning of my presentation here that this huge jump in unemployment in just four weeks is going to have ramifications many weeks and months down the road I don't see a big steep V recovery coming back in one of our older presentations I showed some scenarios and kind of gave my outlook on it but I truly believe a lot of these jobs are not coming back a lot of the jobs lost or just simply not coming back and so how long that takes for those individuals to get back on their feet what we just don't know and then that's a big thing that leads into all the consumption questions that that you guys have and that I myself actually have just going back a comment was made by Marsha regarding operating loan renewals just saying it's a little bit different with lobbies closed and a lot of new members looking to refinance with with lower interest rates and then there was another question regarding the impact of the storage crisis on the Bakken more or less impacted than other areas of production so we're clearly seeing that so I mean it's first communicated in price and we've seen a rapid decline in the price of North Dakota light sweet over the last month and the spread between that and the WTI growing a bit the Bakken is going to experience it more so than many other regions because we're distant from a lot of refiners and we've already seen some response to that with the number of well shut ins there was a change in policy by the North Dakota Industrial Commission to allow wells to be shut in but not not have to be closed within a year which used to be the old policy either have to bring a back online or permanently close them in the state change their policy on that a lot of discussion about how it's going to be managed there's a lot of interest in quickly building storage with in the region but truth be told there you just can't build enough fast enough you know we saw production decline more than and this is from Lynn Helms he gave his director's cut earlier this week you know productions declined you know 300,000 barrels you know about 20% in a few short weeks but it's still one and a half million barrels and you know folks folks are talking about well gosh I can build store you know 200,000 maybe even 300,000 barrels of storage which is a very good size tank but that's not going to make up for the half of it and Marsha saying you know this the slowing of production and the layoffs yeah absolutely in a lot of cases it came on pretty quick you know Whiting has you know declared bankruptcy the rig count has declined one of the thoughts about rig count right now it's about 30 I saw Baker Hughes had 35 for last week and I pretty sure I saw on the DMR's website that they were down to 31 the thought is you know it's going to go into the high 20s which I think is probably a given or even to the high teens in terms of rig count and that kind of remains to be seen but right now the economics are pretty tough and we did have North Dakota light suite was under 10 bucks within the last couple weeks and that's that's far below covering your variable costs and making folks have to shut in you know what it just to step back one of the nice things about North Dakota making that policy regarding not having to permanently close your wells it allows the oil companies to make decisions based on economics and the actual finances rather than making that strategic decision about possibly having to close in a year later and you know that type of approach is much appreciated by the industry and we're seeing similar things you know across North America with those types of those types of rules and it looks like we're kind of getting to any questions one of the things I do is just bring it back to the panelists is there anything that you want to mention or things that you thought about while the others were speaking Dave you want to mention your Wednesday some webinars yeah absolutely and so I don't have a link for but NDSU extension is is working with FSA to provide weekly webinars on some FSA programs we had our first one last week on conservation programs this week we're moving into farm based programs if you want to learn more I can go to the NDSU extension website or just let me know but those are 11 o'clock Wednesday morning and we do record those and post those so there's one again this Wednesday and then the Wednesday following I guess if I can jump in this is frame again I want to encourage everybody to try and provide some feedback we're doing our best to try and provide information that we think is valuable but obviously if there are issues or things that you folks have that you want us to talk about or topics that are special interest feel free to please contact us individually if you want or you can go to the feedback page and provide it there again we're trying to provide information that you find valuable so please give us your feedback when possible are there any last comments from any of the panelists if not I'd like to thank everybody for their time and you're very welcome to provide feedback via the link or to look at this recording of this and stay in tune with other webinars including FSA webinar by going to the farm management website. Thanks everybody.