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Gold Eagle Coop Morning Commentary

Sept corn up 3 at $4.175

Aug beans up 3 at $8.8625

The DOW is up

USD is stronger

Crude oil up $.08 at $56.28

Good morning,

Corn traders continue to heavily debate U.S. new-crop production. It feels like the majority of analyst inside the trade have an average U.S. corn yield estimate of between 156 and 166 bushels per acre. I suspect, planted and harvested acres will remain a very large wild-card for several more weeks. Keep in mind, the USDA is scheduled to release their updated and revised acreage estimates in the August 12th report, so there could be a lot of jockeying and repositioning ahead of those numbers.

Soybean  traders will be closely monitoring this weeks renewed U.S. and Chinese trade negotiations. There’s some talk inside the trade that comments from President Trump over the weekend have ruffled a few more feathers inside the Chinese government.

Pipeline Foods, the first U.S.-based supply chain solutions company focused exclusively on non-GMO, organic, and regenerative food and feed, created “Farm Profit” to assist producers in overcoming the barriers to adoption of organic practices. Producers most often cite a lack of technical expertise, high upfront costs, uncertain returns, and the three-year transition period required to achieve organic certification, as reasons for not adopting.

Americans spent over $50 billion on organic products this past year, with organic food sales totaling more than 5% of total retail food sales. Average annual growth rates are in the double-digits and most believe the organic industry is here to stay. It’s worth mentioning the number of certified organic farms and businesses also grew +13% last year as study after study shows that organic farms are more profitable than the average farm by as much as +35% or more. While it sounds good on paper, transitioning to organic is hard work and takes careful planning, a good team, and the willingness to learn a new system.

Farm Profit was rolled out last year and is based on assurances to the grower that your crops will be purchased, one of the biggest uncertainties for those transitioning. From what I understand, the program starts when a grower enrolls a set number of acres into a 10-year master agreement, where Pipeline commits to purchasing the organic crops grown. Also, you can expect the Farm Profit staff to sit down with you each winter to discuss specific planting schedules and market opportunities for the new season as well as set purchase prices for the year ahead.

Driving adoption, according to those enrolled in the program, is the partnership, which provides important structure for funding an initial land transition from conventional to organic agriculture. I should mention, for those already in this space and looking for ways to scale up, Farm Profit is there to assist with funding as well, since most conventional lenders aren’t stepping up to the plate without knowing crop sales are locked in. Bottom line, Farm Profit is helping producers avoid some of the complications and pitfalls associated with the transition to organic farming. I definitely suggest talking with the folks at Pipeline if you are kicking around the idea of diversifying into organics or wanting to expand your current organics operation.(Source: conservationfinance, Pipelinefoods)

 

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