News Update

May 1, 2012

FCC Launches Connect America Fund

The National Grange commended the Federal Communications Commission's (FCC) decision to launch the "Connect America Fund" (CAF), a $300 million reserve that will be used to expand broadband Internet to more than 400,000 unserved homes and businesses in rural areas.

"This is a landmark victory for rural America," said National Grange President Edward Luttrell. Finally, rural residents will enjoy the same advantages and opportunities as their urban counterparts and be able to compete in today's global economy."

The CAF comes as a result of the FCC's recent decision to restructure the outdated Universal Service Fund and use its funds for the benefit of broadband expansion, rather than landline telephone service. This is only the first phase of funding from the CAF, and carriers have 90 days to accept the funding and begin work on these extensive build-out requirements.

Private carriers, such as AT&T and Verizon, are anticipated to supplement the CAF funding with their own private capital. The Universal Service Fund's High Cost Loop Support, or HCLS, will assist smaller rural carriers to expand broadband in their areas. HCLS provides nearly $800 million a year to small providers in an effort to offset high operating costs associated with broadband build-out. Thanks to the new reforms, approximately 500 carriers serving 2 million homes and businesses will receive more funding for broadband expansion.

— Adapted from release by The National Grange.

Rabobank Report: Cattle Prices Should Recover Again

A new report from Rabobank's Global Food & Agribusiness Research and Advisory department looks at the global beef industry, examining current trends in pricing, import and export markets, supply and demand, and the impact of both the lean, finely textured beef (LFTB) controversy in the United States and Schmallenberg virus in the EU.

In the report, Rabobank's global team of animal protein analysts says there are downside price risks in cattle/beef markets during 2012's second quarter (Q2). Rabobank expects a slightly larger global supply, led by Brazil and other countries in the Southern Hemisphere, amidst a global economy that remains relatively weak.

For the rest of the year, however, cattle prices should recover again as markets shift from the short-term supply bulge (primarily Brazil) to materially lower supplies, as the majority of the beef-producing countries go through liquidation, a retention cycle or weather-related problems.

Nevertheless, a significant rise in prices may be limited by weakness in economic growth, which may prompt shifts towards cheaper sources of protein, notably in the developing world.

Longer term, Rabobank's view is that global meat protein and especially beef supplies will continue to lag income and population growth in important emerging markets. This will support prices while raising volume and cost risks to processors, and price risks to buyers.

For more information visit www.Rabobank.com.

— Release by Rabobank

Dry, Warm Spring No Help for Southern Drought

Since late 2010, much of the southernmost United States has been suffering through drought. When conditions reached their peak last summer, the resulting impacts were devastating, shrinking water supplies for cattle and crops, and contributing to huge agricultural losses. This spring, drought continues to plague large portions of the South.

The U.S. Drought Monitor estimates that 59.4% of the contiguous United States was abnormally dry and 37.07% was in drought as of April 24, an increase from 27.4% in drought a year ago. The color-coded, drought classification map above shows severe to exceptional drought conditions in southern and western Texas, the Texas and Oklahoma panhandles, parts of Arizona, and a large swath of New Mexico.

The Southeast is experiencing the impacts of drought, as well. During the past week, light to moderate rain fell across a large portion of the Southeast. This provided some much-needed relief to crops and pastures but not enough to significantly ease the severity of drought conditions in Georgia, South Carolina, Alabama and the Florida panhandle.

According to the National Oceanic and Atmospheric Administration (NOAA) 2012 Spring Outlook, warm, dry conditions are expected to persist across most of the region, and expand in the West, northern Plains and upper Midwest throughout spring. The risk of wildfires and water stress on agriculture and livestock may intensify in upcoming months.

— Release by NOAA Climate Services.

Neogen acquires Igenity from Merial

Neogen Corp. announced May 1 that it has acquired the assets of the Igenity animal genomics business from Merial Ltd. Igenity will operate as a part of Neogen's GeneSeek subsidiary.

Igenity has been in use in the United States and several other countries for nine years. In the past, GeneSeek conducted the genetic testing of samples for Igenity, and Igenity then used that information with its bioinformatics system to identify the animal's positive or negative traits. The Igenity business will be moved to GeneSeek's operations in Lincoln, Neb. Terms of the acquisition were not disclosed.

"After working as the laboratory partner for Merial's Igenity program for the past several years, we have been very pleased to aid in the expansion and improvement of the bioinformatics models that allow cattlemen to select the right individuals for their breeding programs and cattle feeders to select the desired feedlot cattle for quality beef in the market place," said James Herbert, Neogen's CEO and chairman. "Although GeneSeek will continue its multifaceted animal genomics business, the Igenity program will allow us to carry very specific and easy-to-use information to the commercial beef producers and processors around the world."

Neogen Corp. develops and markets products dedicated to food and animal safety. For more about the company, visit www.neogen.com.

— Adapted from news release from Neogen Corp.

April Farm Prices Received Index Down 7 Points,
Prices Paid Index Unchanged

On April 30, USDA's National Agricultural Statistics Service (NASS), Agricultural Statistics Board released its Agricultural Prices Report.

The preliminary All Farm Products Index of Prices Received by Farmers in April, at 177, based on 1990-1992=100, decreased 7 points (3.8%) from March. The Crop Index is down 5 points (2.4%) and the Livestock Index decreased 7 points (4.4%). Producers received lower prices for broilers, corn, cattle and eggs and higher prices for soybeans, onions, hay and oranges. In addition to prices, the overall index is also affected by the seasonal change based on a three-year average mix of commodities producers sell. Increased monthly movement of cattle, strawberries, milk and broilers offset the decreased marketing of soybeans, corn, wheat and cotton.

The preliminary All Farm Products Index is up 1 point (0.6%) from April 2011. The Food Commodities Index, at 166, decreased 5 points (2.9%) from last month but is unchanged from April 2011.

The April Index of Prices Paid for Commodities and Services, Interest, Taxes and Farm Wage Rates (PPITW) is 21% of the 1990-1992 average. The index is unchanged from March, but 10 points above (4.9%) April 2011. Higher prices in April for complete feeds, concentrates, hay and forages, and supplements offset lower prices for feeder cattle, feeder pigs, feed grains and LP gas.

Commodity breakouts of interest from the report for prices received include:
Feed grains & hay: The April index, at 265, declined 2.2% from last month but is 0.8% higher than a year ago. The corn price, at $6.14 per bushel, is down 21¢ from last month and 22¢ below April 2011. The all hay price, at $190 per ton, is up $47.00 from March and $9.00 from last April. Sorghum grain, at $10.40 per hundredweight (cwt.), is 50¢ below March and down $1.30 from April last year.

Livestock and products: The April index, at 153, is down 4.4% from last month and 1.9% from April 2011. Compared with a year ago, prices are lower for milk, eggs and hogs. Prices for cattle, broilers, calves and turkeys are up from last year.

Meat animals: The April index, at 163, is down 1.8% from last month but 3.2% higher than last year. The April hog price, at $62.60 per cwt., is down $2.60 from March and $5.20 lower than a year ago. The April beef cattle price of $125 per cwt. is down $3.00 from last month but $6.00 higher than April 2011.

Commodity breakouts of interest from the report for prices paid include:

Feed: The April index, at 237, increased 1.3% from March and 6.3% from last April. Since March, higher prices for complete feeds, concentrates, hay and forages, and supplements more than offset lower prices for feed grains.

Livestock and poultry: The April index, at 177, decreased 3.8% from last month but increased 11% from last year. Since March, prices for feeder cattle, feeder pigs and milk cows are lower. The April feeder-cattle price, at $155.30 per cwt., is down $4.10 per cwt. from the March price. April feeder pigs averaged $166.00 per cwt., down $32.00 per cwt. from March.

Fertilizer: The April index, at 333, is unchanged from March but 2.1% above April a year ago. Since March, higher prices for nitrogen and mixed fertilizer offset lower prices for potash and phosphate.

Chemicals: The April index, at 151, decreased 0.7% from March but increased 4.9% from last April. Compared with last month, prices for herbicides, insecticides, and fungicides/other are lower.

Fuels: The April index, at 381, is down 0.3% from a month earlier but 0.3% above April 2011. Compared with last month, prices are lower for LP gas and diesel but higher for gasoline.

The March 2012 Consumer Price Index, as issued by the Bureau of Labor Statistics, for all urban consumers (CPI-U) increased 0.8% before seasonal adjustment to a level of 229.392 (1982-1984=100). The February index is 227.663. For the 12-month period ending in March, the overall index increased 2.7%.

NASS reports are available electronically, at no cost, on the NASS website, www.nass.usda.gov

— Compiled by Katie Gazda, intern, Angus Productions Inc.