 Good afternoon everybody, thanks for joining us for this month's agricultural market situation outlook. Continuing on our series of monthly webinars about what's going on in the markets, especially as they pertain to North Dakota agriculture, following our traditional framework where we're going to have a series of presentations followed with question and answer at the end. We're using the Zoom webinar license so there's limited interaction but we do ask that you ask questions preferably using that Q&A tool and if by chance that's new to you you can also use chat as well but we do save all those questions for the end. Just to get things going because we do have a full docket we'll move on to Professor Brian Parman. Hey thanks Dave. Okay so today's presentation that I'm going to give is kind of on this well pretty much entirely on this USDA report that comes out every about this time of year February early early February and it's the sort of the it's two forecasts really it shows the data from in this case 2019 but then it shows what they expect from what we saw to be the end result of 2020 and then looking forward into 2021 for basically a national and then some state stuff on the financial situation and 2020 is not really over yet simply because there's lots of producers who still have commodities raised in 2020 that are not sold yet so that won't be reconciled until later on this year when everything gets finalized but they have a pretty good idea based on current prices and insurance indemnities and those kind of things of what it looks like so the biggest unknown then becomes 2021 so my first slide of the presentation is what they show for North Dakota so they do a state by state sort of ranking and snapshot of what's going on in each state and you'll notice it's 2019 because again 2020 is still still a forecast but 2019 North Dakota ranked 22nd in net farm income in 2019 and you can see in the little slide there the chart on the right that says net farm income right around 1.73 billion dollars okay and then in the table in the top it shows it with just in 2019 over a billion dollars in government payments 39,000 acres of farmland and that includes I believe pasture land in this case so it's including both crop and pasture for that with 26,000 individual farms and the top five production expenses for our state in 2019 capital consumption was just a bit above fertilizer lime and soil and that's in the bottom right table and then on the bottom left table you'll see the the largest cash crops that we raised as a state in 2019 with soybeans just edging out by about 100 million wheat and then followed by corn now this isn't acres this isn't cash receipts and then so after soybeans wheat then corn we had cattle and calves and then and then canola so that's just a snapshot of what we looked like in 2019 and where we ranked in net farm income in the country so my next slide then is the February of this year's USDA net farm income forecast and what it shows there if you look to the right you'll see there's a spike there for 2020 okay and a lot of that has to do with the CFAP payments so we did obviously have the big commodity prices rally in the fall but when you go back and break down the numbers a big share of that increase over 2019 is the expectation of the higher commodity prices in the CFAP payments and then you see the projection for this year 2021 is that it will be considerably lower than last year and the logic there is that there won't be a CFAP or an MFP and so it won't be dramatically lower in fact it's projected to be higher than 2019 even with MFP higher than 2019 due to price prices being expected to be much better but but less than last year due to the loss of either MFP type at basically the loss of ad hoc programs the expectation is this year there just won't be any more so my next slide is just a table real quick and what I wanted to show before in this I'm showing this before I show the next two slides because if you look at the middle column 2020 F and F basically means its forecast you'll see direct government payments the gray row is 46.2 billion dollars okay in 2020 and direct government payments in 2021 are projected to be about 25 billion similar to 2019 part of that's going to be CFAP perhaps overlap other farm programs those kind of things are all going to be are included in this number here but you can see the 2021's direct government payments are going to be a little bit more than half of what they were in 2020 and so that's the big explanation for why the projection for net farm incomes being down because because any kind of income whether it's direct government payments sales from crops or livestock or whatever the case may be that all gets lumped into that net farm income number so my next slide then shows nominal cash receipts for selected crops and the big one on the left is corn for them and this is national the expectation is is that there's going to be a lot more money in the sale of corn in 2021 relative to the last few years you can see corn quite a bit higher same for soybeans which is the next group that dark blue column that's taller than the rest that's 2021's projection so the cash receipts for soybeans are projected to be quite a bit higher and then over on the right as it pertains to North Dakota wheat 2021 they're expecting it to look a lot like 2020 now this doesn't mean necessarily that prices are going to go down or be worse a lot worse for wheat this is just saying that the sales receipts are going to be higher so that can be a combination of better prices as well as more acres planted okay that could that could be a part of the explanation for this so one of the thoughts might be with the rallying corn and soybeans it might come at the expense of some wheat acres and obviously frame can talk talk to that point a lot better than I can but that I just want to make that clear that it's not necessarily always just because of better prices you could have more acres and then wind up with a higher cash receipts for those crops so my next slide then shows the same thing cash receipts but this is for a livestock production and cattle and calves cash receipts in 2021 are expected to be better than 2020 and I think in this case the biggest reason for that is the the expectation that throughout the course of the year you're going to have better prices for for beef cattle producers than you had in 2020 certainly the first part of 2021 will be will be more profitable now I know that something in early part of this year the price of 800 850 weight calves has been depressed due to higher feed prices and costs but but overall like at the feeder calf market has been fairly strong and Tim will talk a lot more about that but that's that's basically what this is saying and then you know hogs broilers the only group really that's looking to have a worse year this year in terms of cash not not government payments just sale of their commodity is the dairy industry all right so my next slide shows the projection for farm production expenses nationally and if you look you can see basically that 2021 is kind of projected to be along the same vein as 2020 maybe slightly higher and it's right there to the right the production expenses are expected to be about the same slightly higher in heading into this year and I've given talks about this quite a bit and a big reason for that is the the price of fertilizer that's increased pretty dramatically as well as feed costs for livestock producers but the big one for the crop producers isn't that big spike in fertilizer prices especially phosphorus all right so my next slide shows direct payments 2015 to 2021 and this just graphically puts into perspective how big that direct government payment ad hoc type mfpc fab type payment chunk has been and you see this that's the red area so the ad hoc programs would be the red and if you look at the 2020 portion just above you'll see the year on the bottom going across the bottom in 2020 you go straight up from that that's the peak and that's reflective of some carryover of mfp2 that went into 2020 and then you had CFAP in 2020 so you it's CFAP 1 and 2 for that matter so that's why that area is so big and then you look at 2021 and it's a lot smaller I mean even in 2019 uh market facilitation there is in that is in the orange I'm sorry I misspoke there but market facilitations in the orange and how much smaller that is than than the CFAP percentage and it's projected to go away so 2019 we thought we we had a big ad hoc program payment 2020 showed us that 2019 was you know small compared to what what's possible and then there's 2021 with part of the any any type of ad hoc programs going into it as well so just to put this into perspective that uh the biggest reason for the change in projected net farm incomes headed into the next year is is is because of the loss of these program uh the payments that may or may not happen but they're projecting that they want so my next slide is just the solvency farm financial solvency projection for 2021 and it's basically around the same as it was last year with the debt to asset ratio at about 13.9 and debt to equity at 16 and while this has increased this debt to asset ratio has come up some it's still pretty low by historical standards we're roughly around where we were in the in the 90s the 90s we're closer to 15 we're at 14 so still that debt to asset ratio remains relatively low but one thing to consider always when you look at these USDA numbers is they take total debt and total assets do the ratio and then you wind up here a lot of farmland is not a lot of the producers who farm do not own the land they rent it so if some of these landlords who own the land outright aren't in the business of farming and it's a long kind of a long conversation to go into but the amount of rented land relative to the size of farming operations has grown dramatically since the 90s so this debt to asset ratio being the same as the 90s in terms of this particular chart here I think is a bit misleading that debt to asset ratio oftentimes for actual producers is close to 30 or 40 or even 50 percent or higher sometimes because there's a lot more rented ground but overall this is this is kind of where we sit as a nation now talking about my next slide goes into direct government farm program payments by state in 2018 and you can see in 2018 the darker the purple states are the the more mfp that they raised or received or the more direct government payments were doled out in those areas and you can see the bulk of it went to the the mid you know that central us north dakota down to texas and then from Nebraska east to around indiana and Ohio and so that's what it's showing here is who received most of these direct government farm program payments in 2018 in the low left it shows kind of a box and i was the the upper left corner then you if you go across you'll see south dakota kansas north dakota receiving quite a bit but not as much as iowa and obviously that was because that first mfp was highly directed at soybeans where iowa and illinois raised a lot of them as well as minnesota so they received the most in that first year now if you look at the next slide that's 2019 and it's a similar story really direct government farm program payments by state again highly you know it was given by acre if you'll recall for mfp2 but soybeans played a big role in calculating those per acre mfp payments and we can see that that was again heavily given to the central us north dakota south to texas the brass get east to ohio all right then my next slide there shows the regional changes in net cash farm income headed into 2021 so this is going to be their projection into this year without those ad hoc farm program payments of mfp1 two and the cfap one and two and the heartland area is going to they're expecting a nine percent increase actually due to the higher commodity prices and if we look at the northern plains us really not much of a change projecting minus one percent so similar for in our case 2021 being similar to 2020 in the big reason the big rally in corn and soybean prices which as you saw from the table i showed before the chart that those are our two biggest commodities and then and then followed by wheat and cattle so with a better cattle prices with better uh much better corn and soybean prices uh not a big drop off is the expectation for our region but other regions like the fruit rim the mississippi delta area the southeast those areas that are heavily cotton and and those and some of those other crops peanuts as well expected to see a big drop off in terms of net farm incomes and so the drop from 2020 headed into 2021 uh it's not uniform across the country and that's kind of what this chart's illustrating so then my next slide and this is my final chart i promise i don't want to chart you guys to death but i just want to show the 2020 versus the 2021 forecast okay so same time last year that's the that's the top chart and it showed 2020 being worse than 2019 so what a difference a year makes but i just want to illustrate that these forecasts are obviously subject to great change and especially when you have a pandemic hit or you're coming out of a pandemic we're not entirely sure what it's going to look like but it's still the best guess that we have for planning purposes in any way i just wanted to show that 2020 was expected to be worse than 2019 and now 2020 turns out that it was considerably better than 2019 again commodity price rally and CFAP payments but then 2021 expected to be better than 19 not quite as good as 2020 but as i showed in the last chart a lot of that's regional in terms of who's going to be the most negatively impacted and and some area at least one area expected to be better off so just my final slide and some general takeaways from the uh from what i was trying to show here you know farm program payments will be a key are a key factor in the the higher uh 2020 numbers versus this year and even with better than expected crop and livestock prices in the fall left over left over mfp2 and cfap make up a large share that that big discrepancy despite the higher prices and then the loss of any ad hoc program payments will likely affect the northern plains less than some areas because you know we weren't while while those programs definitely benefited us and yes we received a fairly high cfap payment in our area we also are going to be the beneficiaries of the higher the big commodity prices rally and potentially better cash prices than we would typically see because a lot of this is being sold abroad and shipped out of the pacific northwest and we're the best game in town to to deliver those those those commodities out that portal to uh to asia so and that's kind of what the what the report shows that's the projection from the from the usda headed into next year is that you know and i would say in a nutshell things are looking fairly strong uh and everyone's planning so far on any kind of mfp or cfap not being necessary and uh due to the better prices now of course droughts natural disasters those things happen uh and they're tough to tough to forecast so we'll have to be on the lookout for that and what kind of what and if any indemnities are made and i know that parts of north dakota right now are very dry folks out west are really concerned about if they do put a seed in the ground are they even going to get any kind of germination because it's just so dry out there but we'll see in the coming months uh how that all shakes out because i was on a a call earlier this week and folks were already asking about prevent plant for due to extremely dry conditions and not a very good germination scenario so with that i believe our next speaker is uh dr frane olson and i'll go ahead and turn it over to him and wait till the end for questions thank you all right thank you much brian uh so i want to do a really quick recap on what the usda report was on tuesday some of the some of the key variables there and then set us up for a little bit into the 2021 uh planting season because we got to finalize some decisions on what acres of of which crop we're going to plant so my first slide just provides a quick summary of the uh updated february version of the wasd the world agricultural supply demand estimates i guess rather than going through too much of this um let's just drop to the bottom line the bottom right hand corner that's the current usda forecast the amount of corn that we're going to have in in the system both on on farm storage as well as in commercial hands just before harvest of next year so the marketing years for corn and soybean starts on september one now the the the number we had last year in january's number was was higher than the number we got in february so usda did increase their forecast for total uh corn exports but all of the other numbers remain the same now we were expecting a lower number but it wasn't as low as what the trade had anticipated so in that little thought bubble right there with the 1.3 2 uh 3 9 billion bushels that was the average trade estimate so that was what the private forecasters and some of the traders and analysts were kind of expecting the usda number to be so the reason we came out and had kind of a negative report for corn on tuesday at least psychologically was they were we did get a cut but the cut wasn't as large as people had anticipated on the next slide it's the same thing for soybeans we were expecting the bottom line for soybeans the forecast for ending stocks to be lower and it was again once again usda did increase their forecast for total soybean exports and again this is for the full 12 month period even though we're only about five months into the marketing year they're trying to forecast the total for the 12 months the average trade gas was about 123 million bushels we actually got 120 million bushels very very close to what the trade was anticipating so kind of a neutral tone if you will for the results from from the this february wasdy moving on to wheat very quickly the bottom line for wheat really didn't change and nobody was really expecting any major adjustments in the wheat in fact all of the usage numbers the consumption numbers were left unchanged now when we think about the bottom line and the available supplies of wheat our carryover stocks and wheat are are really what everybody considers very comfortable right now and again this is all wheat classes blended together thus the reason we're seeing kind of the volatility in the price price movement in the soybean market and the corn market relative to wheat so of the three major classes soybean our stocks to use ratio on soybean is by far the tightest it it really is equal to the record low that we saw back actually technically in 2013 14 so we are at record low forecasted ending stocks numbers we're equivalent to what we saw earlier uh in in the 20 teams for corn we're we're kind of in the the low end of the normal range but we're getting tighter and because of the large corn exports into china that's what's got everybody excited right now but as i pointed out earlier we've got to be a little bit careful as as corn prices go higher it does put some pressure on the profitability of ethanol industry but for wheat again kind of a completely different story and wheat we have plenty of wheat around there there's no been no real shock value in exports yet the the the peep the countries that are buying wheat from the united states have been our very traditional customers they're buying the wheat at a very regular pace at a very regular regular rate so as we look at both old crop and now as we move into the new crop season um you know this is what we're watching very closely we've got plenty of wheat around but we're very tight on corn and beans just on another footnote i do anticipate for about the next week i do think uh the export market is going to be relatively quiet primarily because the chinese new year starts today so even though it it it runs on the calendar usually for about 16 days there's about one week of actual holiday that they go on in china and that starts on february 11th the official holiday and then it'll end on february 17th as far as workload and and people taking vacation time so just be prepared for that don't look for any major buys over this uh the chinese new year holiday on my next slide i wanted to talk a little bit about the size of the south american crop because right now that's still one of those big variables for both corn and soybeans it's kind of unknown um on the soybean side uh brazil northern brazil is just starting their harvest um and so we're getting some early yield reports their harvest has been kind of slow first because it was planted late and then now they've been getting some rain showers coming through which has again slowed some of the harvest progress but in my opinion it's still not at a critical level it's not something that's really going to have a major impact on the marketplace yet so on this table just really quick summary of both corn and soybean production in argentina as well as brazil uh the very bottom line is the numbers that we got out of usda's forecast in in in february uh basically unchanged from the previous month and uh months report in january uh in the top portion of the table it talks about the the average industry guesses what what did the what was the industry anticipating so two big takeaways from this number one the brazilian soybean crop is going to be a large crop in fact a record large production last year's production at 126 million metric ton was the previous record we're getting 133 the primary reason for that was an increase in planted acreage okay so the the yields the average yield across the country of brazil is pretty much a trend line yield it's right on average even though there's areas that are going to be below average some will be above average but as a country it's going to come out with a typical crop so the increase is because of planted acreage not necessarily because of higher yields so there's some confusion about what's going on there now argentina is a is is the different story argentina has had more production problems more issues that we have to be watching for um i think as we move forward in time we will start to see that argentine soybean numbers start to slip just a little bit once we get a little bit more information about harvest so the next slide is just a map of brazil i just wanted to show you very quickly kind of geographically where we always talk about for provinces or their states the big state in the north modigroso that's where the that's the largest producing region in the country simply because it's such a large state the darker the green just means there's more soybeans produced from a bushel count so we're just starting to harvest in the northern regions but there's a long way to go in in the soybean harvest in brazil that's a very large distance so just as a reference point that top region of modigroso if you were to drive from the northern parts of modigroso down to the southern tip or the southern regions of Rio Grande do Sul you'd be you'd be driving the equivalent of north dakota down to frisco texas so you know that's a very very long distance and harvest is going to take uh actually several months to complete on the next slide it's the same picture but for argentina i just want to remind everybody argentina is number one a smaller country but their growing region is very very compact and so they tend to have higher yield variability because if it's favorable weather they have really good years if they don't have favorable weather then they they have some some problems on the yield side on the next slide i just wanted to show this as a recap i pulled this from dtn profit x it's just looking forward as far as weather events what are some of the things we're going to be looking for um on the in the pink that would be some uh plentiful showers again they're they're starting to harvest in that northern region the blue is uh they'll have a window of some drier conditions hopefully be able to move into the harvest season but that purple down on there that that in argentina that's the one that that's got my eye and i'm a little bit concerned about is kind of the size of that argentine crop because the longer-term forecast is that region is still going to have some problems all right on my next slide i wanted to talk just a little bit about the corn soybean ratio as we shift into the discussion about acreage in 2021 now that we have some more information about 2020 i did want to talk about this because i know farmers are trying to kind of finalize some of their seed decisions um the key to this is just to look at that red line because if you look in the middle of the of the graphic there you'll see a red line i tried to highlight it as best i could that's uh if you take the it's the ratio of november soybean prices to december corn futures now this is all futures market prices not cash prices we're looking at uh november 2021 soybeans divided by december 2021 corn futures so that's what that red line is that's that's corn soybean ratio we you may have heard about what i also did was i went back in history so each one of those other lines that you see on this graph is the exact same ratio at a particular point in time again for that harvest delivery and i wanted to point out a couple key things now notice that we we tend to have a very tight range trading range of from year to year to year from this february and march time frame and then at the very end of march first part of april something happens and it starts to to disperse it starts to get wider and after about uh march or april may excuse me april may then all of a sudden it kind of goes off and does its own thing the reason for that is very simple on march 31 we get the planting intentions report so before march planting intentions report if you look prior to that the futures market is trying to signal very carefully to farmers what would we like you to do given the information we have today what is the futures market trying to signal the farmers between planting corn and planting soybeans and as you notice that red bar is at the very top of that range meaning where the the futures market right now with this price ratio is saying we need more soybeans and they're yelling it from the mountaintops so my concern now is as we start to figure out how many acres we're going to plant in 2021 yes you need to use that information in the in the futures market because that's the consensus view of what the future will be whether we agree with it or not but my only point is make sure that if you're going to increase your soybean plantings if you're going to plant more acres and you have historically try and be more aggressive in prepricing that as well because i would hate to see you add a bunch of acres of soybean plantings and not have those bushels covered at least partially partially covered because if we have a really big good production year we can oversupply the marketplace again just on my final slide you're going to be hearing a lot of discussions about how many acres of what crop are we going to plant i just wanted to give you some historical perspective please look at the three three major crops corn on the top which is yellow soybeans which is green and the blue the brown excuse me is is wheat we have had kind of a 50 50 blend of about 90 million acres of corner soybeans a couple years ago before the trade war started you're going to hear a lot of discussion about how many acres of corn and soybeans do we need in 2021 at the end of the day my best guess is we're going to come in very close to that 50 50 balance again the question is where are we going to get about seven million acres of soybeans we're going to have to wait to see so with that i'll i'll pause i will hand things over to mr ron haugen well good afternoon i'm here to talk about the quality loss adjustment program acronym qla um just a little background uh this is the we all know about the whip program that was for 2018 and 19 and some of you may have applied for that and gotten your 50% of your whip payment whip plus i should say and um they were always going to add quality to that program because that was just on quantity and they never the government never really got it worked out right so they came out with this separate quality adjustment uh program so you can collect on whip plus and you can still collect on this on this program people are always asking well when are we going to get the other 50% of the whip plus as far as we know at that at this point it's still on hold along with the some people call it cfap three but it's technically called cfap a and when typically when there's a new administration they put things on hold to review things we don't think things are going to change in washington it'll probably go out the way it the way it was designed but it's still under review by the new administration at this point the quality loss adjustment was already kind of in the pipeline so that program is ongoing so yesterday then we did a we did a uh a webinar with fsa fsa presented for about an hour and a half and they had all the details and at the end of my presentation i've got the uh the recording that you can uh you can link to and look at and you can also look at the slides so i'm just gonna cover the highlights of it uh kind of a quick outline of the program those of you that aren't familiar the the goal of this program was to provide assistance for quality losses because of uh uh excessive moisture floods droughts tornadoes and we seem to snow storms we seem to have all that in north dakota and it's for 18 and 19 uh sign up deadlines very close march 5th uh we're hoping that that gets extended because that's pretty short time this is a very complicated program compared to some of the others farmers will have to do their homework dig out their their uh their documents and and provide that so the next slide then shows the eligible crops pretty much all of the all all crops are eligible provided they were eligible for federal crop insurance um and the nap program there's a few there that are excluded i'll run through some of these slides very quick but you can you can capture them on our website if you want to look at them more in detail um the crops must have suffered a loss because of the qualifying disaster event and the the one clinker there is you must have incurred a five percent or greater quality discount so if you had just a minor discount of let's say one percent of the dollar value you you do not qualify okay this program is also for forage crops they go by the nutrient uh loss um and even for crops that have been have been fed to livestock and uh and even may be in storage and there again you need to have a lot of documentation so next then the eligible crops crops that are not grown commercially crops intended for grazing crops that are not intended for harvest um tops that crops that don't meet the double cropping provisions we don't have that here um and then volunteer crops and next the uh continued then ineligible uh crops include uh pp crops first seeding of forages uh crops that were destroyed and immature fruit okay next um here are some of the qualifying disaster events we seem to have most of them except for typhoons and volcanoes around here and so you can see the conditions that are associated with the qualifying drought and the and the snowstorm blizzard and all those various types of disaster events the next slide then which would uh qualify this even more eligible counties with a d3 or d4 drought that have a presidential emergency declaration or a secretarial declaration in 18 or 19 and you can find the listed counties at farmers.gov now if your county is not listed um you uh can if let's say you're a county uh you're in a county that's nearby one county that is listed uh you can uh check with your local fsa and your county committee possibility if you have evidence proving that you were affected you can still qualify next the uh there is some causes of loss that are ineligible um and uh so you can't uh apply if if the loss and it was not due to a qualifying disaster or if it was after harvest or if it was in storage let's say you put some grain in storage and it went and it got in bad condition it went out of condition it got uh really wrecked and uh just because that's your problem once it's in storage uh you you'd have to prove that that the the poor quality was due to the disaster and not the storage the same way if you have grain in storage that's invested by insects that's your problem also if you have some herbicide that's drifted over excuse me uh there again that's uh that's that's a whole separate situation and also if you do not follow uh proper uh farming practices and do purposely a bad job uh to get low quality that doesn't count either so next then i've got a slide here showing a simple example let's just say this producer produced uh 10 000 bushels of corn and it was uh it was very wet conditions and the and it was poor quality corn and uh and let's say it also had a hail storm on it everything is going wrong okay and just because of the excess moisture not the hail but the moisture all of those bushels qualify all 10 000 okay the next example this is the same situation except for um uh you grew 10 000 bushels but only 1000 bushels 1000 bushels were uh um poor quality because of a qualifying event then there and then the remaining bushels got hailed on hail as hail is kind of considered a normal event uh and you you can buy hail insurance for that and you have prop insurance for that so only the 1000 bushels that was affected by the qualifying disaster would count so next the uh next slide please yep there we go uh then you have the eligibility which is kind of the same eligibility requirements for most of these ad hoc programs the qla if you're a agi you're adjusted gross income exceeds 900 000 uh unless at least uh uh 75 percent of your agi is derived from farming or ranching or forestry next payment limitations excuse me pretty much the same 125 000 per person uh your your your uh your uh elimitation price applies to each of the years 18 and 19 if you have separate legal entities of course you must keep that up to date with your notification of the interest of the entity and any changes to the to the entity and the structure so next um there is a linkage then if you uh if you um qualify for a qla benefit you are required to purchase crop insurance or nap insurance in 2022 and 2023 you must at least have a 60 level coverage um it applies to all of your crops that received a payment now if you already qualified for the whip program that had the same linkage you have considered to already have met those requirements so you're already okay next quality discounts are associated with the loss uh quality discounts that are associated with a loss that could have been mitigated such as high moisture or insects are not eligible we get i've gotten a lot of questions well my corn was just wetter than wet and never dried down that's just the nature of corn and that wasn't considered here okay are you going to have to spend more for drying that's that wasn't covered fsa county committees are responsible for if there's unique situations on situations that that damage could have been mitigated or not they have the final say verifying the quality loss you need documentation so hopefully you haven't chucked a lot of your documentation from 18 and 19 um and it can be verified by an independent source uh it it would be used to substantiate it it has to be dated uh showing the final disposition be as crop specific for the commodities produced in the year so quite a few things qualify there for documentation the next slide shows the uh continues on here the uh verifiable documentation must come from tests that are done within 30 days of harvest so that kind of throws you for a loop well what if i put my grain in a bin and i didn't test it uh there you're going to have to have county committee decide but there is kind of an exception there grain drops that were sold at the time of the verifiable documentation at this time of the sale is acceptable provided you've maintained it in the bin and with proper management practices okay so next um it uh go back i think we missed one david was that next okay yeah well yeah next one there we go one there we go uh forage crops um there you go by the nutritional value there again you need to be uh uh the test of nutrition has to be done 30 days it has to with it of harvest you need to do it in a qualified laboratory a state university or anything approved by your state fsa committee uh for forages next and here's a here's a table then for crops other than forages then you have the various grading factors and basically have to calculate your total dollar value of loss for forage crops it's your nutrition value and then you need to have a history of your nutrition values for the three prior years and if you don't have that they're contacting a county committee to find out how to handle that so next non forage crops uh as as i mentioned a lot of different documentation you can have sales receipts settlement sheets uh scale tickets uh measurements from fsa or rma um anything that's that's approved by the state committee is okay so next then um also acceptable records copies of receipts ledgers income statements uh invoices of custom harvester for the quantity affected okay and then um you basically break it into two categories um if you've got all the information and and you got your total value that with it of quality loss uh based on your own information and then you've got your let's say you don't have all of your information then of course uh we don't necessarily have a total value what happens there is in the situation in 2019 where there was a lot of very poor wheat in the in the in north dakota a lot of bad falling numbers then um producers uh sold at the elevator and they and they showed a price they would have gotten but then with all the discounts it shows the price they actually got some elevators just decided hey we'll just give you a feed week price uh well we're not going to even it's just going to be poor wheat we're just going to give you this price that's the only price you really have in your documentation so then uh there again that's a situation that's that's a situation that the county committee will have to decide next um here's just a simple example 10 100 000 bushels of corn was produced it the the the price was four dollars with all the discounts you only got three you've got 100 000 of quality loss so the way it's calculated on the next slide shows um it's basically that 100 000 of loss times 70 percent or $70 000 okay and now remember now this may further be reduced further if uh there isn't sufficient funds for the program it may be prorated so not nothing nobody will get paid till they find out all the uh everyone's applied so next then shows an example then where let's say you didn't have all of your information then you would get 70 percent you would use the county weighted average and get 70 percent then times 50 percent okay so next um for forage crops there again the total affected production times the price times 70 percent there again all of these may be reduced and next how to apply it's one application for your entire operation whether it be in multiple counties or multiple states all of your eligible crops uh you do apply separately for 18 and 19 and next then if you have 14 days after signing to submit your documentation and you have 60 days to get all of your other eligibility forms most of you that work with FSA have all that filled out remember march 5th is the deadline um and there again things may be prorated the last slide now shows uh our our webinar that we did yesterday it's a recording that you can watch for more details on this program also farmers dot gov so next up uh that concludes my presentation next uh tim petri is up to talk about livestock okay good afternoon everybody tim petri extension livestock marketing economist have go to my first slide uh last friday two important inventory reports came out from nas the annual cattle inventory report and sheep inventory report that gives us numbers on a state and national basis so i'm just going to give a very quick rundown here and most of you are familiar with our egg by the numbers newsletter i'll have a more detailed analysis in there but given the time here quickly go through it so two charts showing here on top of each other the top one is us beef cows and the one on the bottom is north dakota beef cows as expected the beef cow herd in the us went down for the second street year and so in two years there we lost about 500 000 beef cows and so that means we're having lower calf crops and so we'll have less calves to sell uh in 2020 and that's supportive to prices a lot of reasons for the decline weather kind of at the forefront half the cattle beef cattle herd is in an area throughout the whole western states it isn't only dry in the us but all the western states and had fewer replacement heifers and and so on so uh again that's supportive to prices we go down to the north dakota side we haven't exactly followed the us quite as close and so actually we've been rebuilding the herd here since 2012 and so we peaked out January 1st 2020 at just under a million cows and then we did go down 20 000 cows in north dakota just this past year and so on January 1st about 975 000 the same as in 2019 but interestingly enough if you go across the chart we're back up right under a million at where we were back in 2001 and 2002 so and in those 20 years I would think cows have gotten bigger and we haven't gained much in pasture although we're probably better using it with rotational grazing and so on but anyway I think we were maxed out with just about a million cows there anyway and unlike the on the top in the us where we're still below where we were back there in 2001 so my expectations are that we'll level out this year but it all depends on whether the weather not looking the best now but we'll see what happens otherwise I think we'll kind of level out both in north dakota and the us but if the drought continues and expands probably have some liquidation so go to my next slide here's just where all the cattle are not a lot of time again Texas is the biggest state and it just goes right on up to us we're number nine so go to the next slide here's the change then that occurred the top one is what occurred last year and you see there we lost 20 000 head the big loss there is the red colorado and that's where the epicenter of drought began we started the year in good shape and a lot of the us and in north dakota but they started the year dry and kept getting worse so they were the big losers Texas Kansas and Oklahoma there did increase some numbers but if you go to the bottom of the chart you see the year before they lost numbers so they just gained some back so go to the next slide here's replacement heifers on january first beef replacements and the top slide again is the us and we have the same amount of replacement beef replacement heifers as we had last year and of course the higher in the previous years when we were increasing the herd but now I've dropped down a little bit so the expectation there again would that our beef herd would probably level out of whether it's the big wild card again going down to the bottom slide though we have kept a lot of heifers in the last 15 years and it kind of been a lot of keeping a lot of replacement heifers and so uh when you when you look at uh at just this past year that was the fifth highest on record there at 204 000 head and go back to 2017 the fourth highest on record and go back to 2013 the third highest had to go way back to the 60s a couple years to to get higher numbers so we're keeping a lot of replacement heifers and and and have a lot of replacement heifers and other heifers that that we background and a very good reason for that so go to the next slide and here is one of the reasons and this was last week's market report but for instance you know heifers are always the lightweight heifers in the fall even worse than that but they're always discounted a lot compared to steers just last week those 400 to 425 heifers you know steers 197 and heifers 162 so a huge discount but go down then get up to those 750 weight steers and heifers if you have replacement quality heifers they actually brought more than their steer counterparts and even higher than the top end of those 758 weight steers that were 141 50 so a kind of a good reason why we keep heifers and we do have a lot on hand and they all aren't really to go back into the North Dakota herd because they're sold into other states and so on but we just keep them here because we background and and do that so move on to the next slide here's our sheep numbers and our sheep are breeding use in the US have just been on a steady decline and have continued downward as shown there but again in the case of North Dakota on the bottom chart chart we've been bucking the trend the last couple years and actually increasing you numbers quite nicely if we go to the next slide kind of to show you the difference this is percentage change in you numbers and so it's not the absolute number it's percentage change and so you see there in North Dakota we went up about five percent and you know other states around you can look at that but we were you know a pretty good increase there but the year before on the bottom during 2019 up to January 20 we increased about 14 percent so you put those two together there where we had a 19 almost 20 percent increase in you numbers and in two years that's by far the leading increase in in the country and so go to the next slide kind of shows you probably the reason why lamb prices have been pretty good the last couple years barring this summer when the pandemic hit and and prices went down you know a lot of lamb is eating in a white tablecloth restaurants and so we struggled but by the end of the year there on top on the slaughter lambs we came back up to really good prices up there 160 70 and then you know starting off this year the blue line on the left hand side were up above last year and our expectations are for lambs to kind of be above that red seasonal line and and do very well and same thing down on the feeder lamb side we're better than than what we were last year and and outside of the mid summer there when we struggled we came back in the fall so there's the market report on the right hand side there from Bowman and so you see there it won't go through all these but you got again 80 pound lambs bringing up there you know 230 40 dollars and so pretty good property and the other big thing nice thing that's happened from a profit standpoint on the sheep industry is the bottom part of that market report that yous are really really selling well a lot better than they used to when we'd only get 20 30 dollars per head for a U uh Mexico just came in gangbusters on mutton and and it got a lot of mutton from us last year and and sparked the the U price plus we had fewer and you know fewer numbers and so our supplies are down and and and good very good demand for lamb and even for mutton to export so you see there in the bottom part of that you got call use 200 pound call use bringing a hundred dollars a hundred weight so you know all of a sudden we're getting 200 dollars a U and then with the lamb prices it's really helping the sheep producers out and stirring some interest so I believe that's my ending slide and we'll move on to Dave. Thanks Tim just have a couple of quick comments about what's going on in energy uh right now uh coming up uh at the end of our hour so you can get any questions as well uh Frank talked a bit about ethanol really right now ethanol is kind of on the receiving end of what it can get and and really that's looking at high corn prices uh looking at biodiesel at the same time we're seeing really high vegetable oil prices 40 cents a pound which is about as high as it ever gets and really squeezing those margins uh looking at what's happening in terms of production and use ethanol again is is just used primarily for blending with gasoline to provide octane and so just like gasoline we're about 90 percent of last year's numbers and again we're coming up at that uh time of year when when covid uh really came about and so we'll see uh you know exactly how we recover going forward some bigger pieces of news going forward kind of looking at what's going on and even more longer term than what I have up here is really what the the new administration is going to do with climate and carbon in terms of agriculture it's going to have significant implications and and what I'm taking now was two minutes will likely become 20 minutes or an hour later on this year as as their plants come about we are waiting for the the new administration to issue uh those numbers for blending for biofuels in terms of the renewable fuel standard so those will give some indication of what they plan on doing and then of course the the renewable fuel standard the second renewable fuel standard you know it essentially times out next year where the guidelines provided in statute uh no longer apply and so there's a little bit of discussion now of exactly what federal biofuel policy will look like as EPA has the ability to decide you know what those levels will be going forward they've actually had that type of flexibility for biodiesel for advanced biofuels for for quite some time but as corn ethanol kind of reaches that 2022 period we'll see what the plans might be also really important related to to biofuels to to transportation fuels uh crude oil prices in this country have really been on a bullish streak and now they're already in the upper 50s which puts a lot of projects a lot of rigs back into the money which has implications for the state of North Dakota I'm sure you heard in the last two weeks that there was an executive order to halt Keystone which is you know troubling for the the the petroleum industry for the fossil fuel folks and potentially having some implications for DAPL and of course Dakota Access pipeline when it came on line four years ago really had a positive impact on North Dakota light sweet prices really shrunk that spread between WTI and the prices that North Dakota oil gets big news yesterday was that there was a postponement there was a really originally supposed to be a hearing on DAPL yesterday that's been postponed the the industry the fossil fuel folks are taking that as negative news in terms of what might happen with that and of course that's in terms of the courts and the administration may take the liberty to issue an executive order which could put things to a stop quite quickly in response to that that $50 almost $60 WTI price North Dakota rig counts are rising but only slowly we're at 15 right now which is nowhere near where we were a year ago or at the peak just some quick prices in terms of what's going on in terms of the margin so right now the margin again my rule of thumb is always this 50 cents a gallon is where things are looking pretty good we're below that right now ethanol prices are higher but again they're paying a lot more for corn so that good news for the the North Dakota Dakota farmer as bad news for the the corn ethanol refiner and so right now you know using USDA's numbers from last week you know those Dakota corn ethanol refiners are paying about 525 a bushel much higher than it was you know even a few months ago and really hurting that margin there's a little bit of wiggle room in terms of ethanol prices but not much again because it really is dependent on on gasoline use you know moving up with those corn prices been distillers grains and then I already mentioned those corn oil prices those vegetable oil prices which again are squeezing you know helping in this case the corn ethanol refiners but squeezing the biodiesel folks and again just looking at that chart using weekly numbers from EIA you see that that that pink value you know definitely lagging where we were a year ago and again coming up on that that collapse in in production and use resulting from COVID I bring up a chart I've shown before but just let you know this is numbers are already about a year old but this is the break even price for new wells by by formation in the country and so we see Bach in a little bit to center right there in orange where the the break even price for a new well on average across all the people who responded the survey was 51 bucks we're clearly above that now which is definitely a good sign you know taking that is somewhat optimistic or bullish for what might happen in North Dakota again there's a lot of concern going forward in terms of the dapple being available heard discussion in industry that a lot of folks are really hesitant to to return like they would have otherwise knowing that it might be difficult to to get freight out of state you know if dapple is closed you know abruptly it could really disrupt things moving forward so that's what we had for questions and excuse me for our presentation ready to move on to questions I'll bring all the panelists back and we'll work through these as we can I want to thank everybody for for sticking on with us for a relatively longer presentation day but you know some good stuff so I'm just going to pull it through and I think many of these will be ending up going towards one so just with our first one any updates on CFAP 3 including the $20 per acre payment that was in the year-end relief bill yeah as I mentioned that's all that's on hold with a new administration so we don't we don't know yet and they actually I think they're calling it CFAP AA which I don't know if AA stands for Alcoholics Anonymous or what but prices are high Ron so not yeah related question about the final whip and CPAP 3 payments will they be there and of course you've already alluded to that yeah next question will the administration change yeah with with the administration change came a change in executive orders including USDA for ag reserve programs assumed to mean an increase in CRP a redirecting of farm programs to green initiatives any thoughts on the long-term impact of these executive orders on farm programs crop prices or farm revenues so Ron if you want to take a first stab at that I don't I guess I haven't given I've been just concentrating on the details somebody maybe uh Brian or Frayn or Tim could answer or you as well could answer that better than I could yeah and I just say from from the green standpoint is standby it's going to be interesting to see what they actually come out with and how but the clearly the indication is that they're going to be aggressive in using agriculture to address their concerns about the climate and exactly how they roll it out it really isn't known the general thought is that it will be in terms of incentivizing or providing payments for different activities that support or you know reduce carbon emissions as opposed to strict regulation but really we don't know much right now as I kind of mentioned I think we'll know a whole lot more in the upcoming months you know maybe by by Earth Day you know that it seems like the administration is going to have a lot of activity that day that we might have an idea what they want to do I will add though to the to the CRP thing when they reduce the rental rates for CRP in the last farm bill that kind of provided a disincentive to probably go into CRP and as far as cropland going in with the latest rally we have it's unlikely that folks are going to choose to enroll in some of these programs with a reduced rental rate actually being paid on top of a pretty strong commodity price rally this fall even if they increase enrollment or the enrollment numbers and I can't remember exactly what it was was it was it 27 million was the new target is that that may be wrong but I know they increased it a couple of million acres but then they reduced the incentive to actually put it in and then we have that at the same time that we had these commodity price rallies so I don't see a whole lot of folks running to the door to put into CRP here and then this year so that's just a plug on that because that was part of the question but anybody else has thoughts that's oh shut up if there's all the comments moving on to the next question which I think is more for Tim yeah I see I see it so I'll go ahead and take it yeah it all depends on your budgeting there but uh calf prices are still relatively high to the heavier weight so if you're buying calves now probably need to buy them at the lower part of that range but you know it's a tight situation with feed and it all depends on when you price your feed now on the other hand if you're backgrounding calves now and so you already have them in that's a sunk cost you've already given shots and everything else so now your only variable cost is really feed and then did you price it last fall or even if you have to buy it now still pays to put on weight now up to what you usually do so you know a couple of different answers there and again it's all a budgeting thing what are your feeds that you have and what do they cost so let's go on to the next one here with Ron yeah I see the next question addressed to me there about that five percent threshold on quality the way I understand it is that you it's all of your farms all of your fields put together and you don't add any any loads that don't have any quality problems you take them out and any any loads that that have even a small percentage of quality discount you take the five percent out of all of your bad stuff so if all if you have two loads that are just one percent you're out of luck but if you have let's say two equal loads and one is is 20 percent and one is one percent you're going to get over the limit or you're going to get over the five percent and that's the way I interpret it and I believe I understand that correct correctly so and just one thing to add to that so I did a backgrounding scenario seminar about a month ago and Tim followed me on that but yeah when he talked about it when I ran that and I don't know if the person who asked that question saw it that assumes you are buying and paying at the current price and like Tim said if you have those prices locked in then that budget looks a whole lot different and the big price hit was to 850 weights 800 weights relative to feeder calves and fat cattle so basically the feedlots were paying money or docking or paying money however you want to look at it to put weight on and every scenario I ran out of the five no six actually it paid to it's still paid to put on weight fast I mean that's that no matter what I did you either lost the least money or made the most money putting on the weight even with corn prices and DDGs and silage being much higher even if you budget in factor in those higher costs it's still paid to put on weight and so I just want to make sure I said that great and that's all the questions we have I give everybody one last chance if they want to share was there any comments that any of the panelists have or any thoughts they had with the other presentations if not I want to thank everybody for joining us today again the slides and a recording of this webinar will be posted to the URL on your screen that should happen the next day or two also will be back four weeks from today on Thursday March 11th with our next webinar I want to thank everybody for joining us and I hope you guys all stay warm thanks