Lower Demand For Commodities Discouraging Farmers From Buying Machinery

(Dow Jones) – Deere & Co. provided fresh evidence of weakening conditions in the U.S. manufacturing sector, saying lower demand for U.S. farm commodities is discouraging farmers from buying its machinery.
The Moline, Ill.-based maker of tractors and construction machinery, which reported lower sales for the third quarter, trimmed its forecast for the year. It has struggled to increase sales amid lower commodity prices in recent years that have pulled down farmers’ incomes. Now, U.S. farmers are scaling back their purchases as a result of a yearlong trade dispute with China.
“Concerns about export-market access, near-term demand for commodities and overall crop conditions have caused many farmers to postpone major equipment purchases,” said Deere CEO and Chairman Samuel Allen.
The manufacturing sector is showing signs of weakness overall. Output has fallen more than 1.5% since December, according to the Federal Reserve.
China, one of the largest importers of U.S. soybeans and pork over the past decade, said earlier this month it would suspend all imports of U.S. agricultural products in retaliation for the Trump administration’s plan to expand U.S. tariffs on goods made in China starting last year. The move canceled the purchase of nearly 500,000 metric tons of U.S.-grown soybeans, the U.S. Department of Agriculture said.
Over the first six months of this year, China’s agricultural imports from the U.S. were down 20% from the same period in 2018. China’s purchases of U.S. farm products last year dropped by more than half from 2017, according to the Department of Agriculture. Deere said it expects equipment sales in Brazil to strengthen in the coming months as farmers there respond to higher demand for commodities from China to replace U.S. exports.
Deere’s quarterly sales of tractors, harvesting combines and other farm equipment fell 6% from a year earlier, as profit from the farm equipment business dropped by 24%, the company said. Beside trade uncertainty, Deere said rainy weather that delayed spring planting of crops and weakening equipment sales in Canada also contributed to falling equipment sales in the quarter. An outbreak of African swine fever in China that decimated hog herds and reduced demand for feed affected sales, too, the company said.
“In the United States, 2019 has been a volatile year for farmers, particularly through the Corn Belt,” Deere Chief Economist Luke Chandler said during a call with analysts.
Deere expects about $3.2 billion in profit and a 4% increase in equipment sales this year, which includes its construction-equipment line, down from previous estimates for $3.3 billion in profit and a 5% rise in equipment sales in 2019. It is the second straight quarter that Deere has pared its outlook.
The company cut production of farm equipment this spring to lower inventories at its dealerships. Deere said it would initiate additional cost reductions to improve the efficiency of its operations. The company said factory production of high-horsepower models of tractors would be about 5% below retail sales volumes for the rest of the year.
In Deere’s third quarter ended July 28, profit declined to $899 million or $2.81 a share, from $910 million, or $2.78 a share, last year. Excluding one-time items, the company made $2.71 a share.
Net sales of equipment fell 3% to $8.96 billion. Analysts were expecting $2.83 a share from sales of $9.4 billion.

Meatpacking Plant Owners Knowingly Used Ineligible Workers

Jackson, Miss. (AP) – Six of seven Mississippi chicken processing plants raided August 7 were “willfully and unlawfully” employing people who lacked authorization to work in the United States, including workers wearing electronic monitoring bracelets at work for previous immigration violations, according to unsealed court documents.
Federal investigators behind the biggest immigration raid in a decade relied on confidential informants inside the plants in addition to data from the monitoring bracelets to help make their case, according to the documents.
The sworn statements supported the search warrants that led a judge to authorize August 7’s raids, and aren’t official charges, but give the first detailed look at the evidence involved in what Immigration and Customs Enforcement officials have described as a yearlong investigation.
Officials arrested 680 people during the operation. Three Democratic congressmen demanded that the Department of Homeland Security and the Department of Justice produce information. They want to know the cost of the raids, whether employers face criminal charges, whether any U.S. citizens were detained, how many parents were separated from children and whether any still remain separated.
The statements unsealed allege that managers at two processing plants owned by the same Chinese man actively participated in fraud. They also show that supervisors at other plants at least turned a blind eye to evidence strongly suggesting job applicants were using fraudulent documents and bogus Social Security numbers.
The documents say electronic monitoring bracelet data shows people previously arrested for immigration violations and not allowed to work in the U.S. were working at all seven plants raided.
There have historically been few criminal convictions for hiring people without documents because prosecutors must prove employers knowingly hired someone without legal work authorization. Employers often say they were fooled by fraudulent documents.
From October 2018 to May there were eight new prosecutions for hiring people working illegally and four new convictions nationwide. Among those who have been sentenced to prison are the owner of an Iowa meatpacking plant raided in 2008 and owner of a Tennessee meatpacking plant raided last year.
Companies can also face administrative fines based on audits of I-9 forms, which employees fill out when they’re hired, presenting documents to prove they can work legally work.
Investigators allege the most brazen fraud took place at two smaller chicken processing plants – PH Food Inc. in Morton and A&B Inc. in Pelahatchie. Sworn statements identify Huo You Liang of California, known to Mississippi employees as Victor, as owner of both.
A PH Food employee, acting as a confidential informant, told Homeland Security investigators that the vast majority of the 240 employees at PH’s plant in Morton and the 80 employees at A&B’s plant in Pelahatchie didn’t have proper work documents, including many Guatemalans.
The informant said employees used their real names and made-up Social Security numbers to apply for jobs at PH and A&B. “The payroll companies, as well as PH Food Inc. and A&B Inc. do not verify the authenticity of their documents,” the informant told investigators. Mississippi state law requires employers to check documents using E-Verify, an otherwise voluntary online federal system.
Calls to A&B and PH Food on August 9 went unanswered.
The evidence also included a video and audio conversation involving secretary Heather Carrillo and the informant, recorded May 14 at PH in Morton. A summary says, “Carrillo said that she was looking for some ‘papers’ for ‘Iris,’ but ‘Iris wasn’t going anywhere because she was working with Victor (Huo You Liang) for a good time (duration of employment).’” It says Carrillo said A&B manager Salvador Delgado didn’t want it reported because Carrillo knew which of his employees were real and which were fraudulent.
The agent notes investigators believe Delgado was embezzling money from A&B by adding fraudulent names and Social Security numbers to the payroll and keeping the proceeds.
The warrants state PH Food uses Personnel Management Inc. of Shreveport, Louisiana, to process payroll and perform some human resource functions, and that investigators believed Liang and Carrillo tried to use the contractor to minimize responsibility for illegally employing workers.
Officials earlier stated that in addition to the chicken plants, they executed a search warrant in Louisiana. ICE spokesman Bryan Cox declined to confirm that Personnel Management had been searched. The company didn’t respond to a phone message and email.
Search warrants for some other poultry plants also indicate red flags about employees’ status.
One woman told agents that a Spanish-speaking human resources employee at Koch Foods in Morton looked at two different IDs in three weeks. Ana Santizo-Tapia of Guatemala also told agents that a Koch supervisor asked if she had an ankle bracelet. Told yes, “he said it was okay, but she needed to keep it charged,” according to the warrant. The supervisor “stated that he knew ‘they’ were poor and came to the United States to work.”
Another Koch employee said she worked at one plant in Morton for 11 months under a false name, and then got a job at the town’s second Koch plant under her real name after receiving valid U.S. documents.
Koch said in a statement that the Illinois company has a “strict and thorough employment verification policy” and knows of no managers or supervisors arrested.
A human resources employee at Peco Foods plant in Bay Springs plant talked to an ICE informant about people hired twice under different names, according to the warrant application. The human resources employee stated that “Peco Foods management does not care.”
A statement from Peco said the company relies on E-Verify and “adheres strongly to all local, state and federal laws.”

Tyson To Rebuild Kansas Plant

By DTN Staff

Omaha (DTN) – Tyson Foods said its beef plant in Holcomb, Kansas, will be shut down indefinitely after a weekend fire, but the company will rebuild and employees will be paid until production resumes.
A spokeswoman for Tyson said about 3,800 people work at the plant.
The plant is located in Holcomb, Kansas, but is often referred to as the Garden City plant, which is nearby. About 1,200 workers had to be evacuated from the plant August 9 when the fire broke out about 8:30 p.m. CDT. No injuries were reported from the fire.
“This is a difficult time for our team members and their families, and we want to ensure they’re taken care of,” said Steve Stouffer, group president of Tyson Fresh Meats. “Today, we will notify our full-time, active team members that they’ll be paid weekly until production resumes.”
The Wall Street Journal reported the Holcomb facility processes up to 6,000 cattle a day, which accounts for about 5% of U.S. cattle slaughter.
Stouffer said the team members may be called on to work during this time to help with clean-up and other projects, but regardless of the hours worked, all full-time active employees are guaranteed pay.
Tyson Foods operates six plants in Kansas, and Stouffer said the company is taking steps to move production to alternative sites. “Tyson Foods has built in some redundancy to handle situations like these and we will use other plants within our network to help keep our supply chain full,” Stouffer said.

Direct Receipts

Direct Receipts: 27,900

Texas 16,700. 76 over 600 lbs. 47 pct heifers. Steers: Medium and Large 1 Current FOB 600-650 lbs 142.00; 700-750 lbs 139.00-142.00; 750-800 lbs 133.75-142.30; 800-850 lbs 134.00-136.50; Current Del 700-750 lbs 138.00; 750-800 lbs 136.00-142.00; 800-850 lbs 134.00-142.00; Sept FOB 550-600 lbs 144.00; 750-800 lbs 139.50; Sept Del 700-750 lbs 145.00-147.00; 750-800 lbs 143.00; 800-850 lbs 133.00; Oct Del 600-650 lbs 153.00; 800-850 lbs 133.00-133.65; Nov Del 750-800 lbs 129.00. Medium and Large 1-2 Current FOB 550-600 lbs 153.89; 700-750 lbs 131.00-138.15; 800-850 lbs 139.50; Current Del 550-600 lbs 156.00; 600-650 lbs 137.00 Mex; 650-700 lbs 137.00-141.61; 800-850 lbs 138.00; Sept FOB 700-750 lbs 136.52; 800-850 lbs 133.38; Sept Del 550-600 lbs 161.75; 650-700 lbs 151.60; Sept-Oct Del 600-650 lbs 159.45. Heifers: Medium and Large 1 Current FOB 600-650 lbs 139.73; 650-700 lbs 126.50; 700-750 lbs 120.00-128.55; 750-800 lbs 129.50; Current Del 650-700 lbs 135.50; 700-750 lbs 132.00; 750-800 lbs 130.00-131.00; Sept FOB 500-550 lbs 144.00; Nov FOB 650-700 lbs 134.95; 700-750 lbs 122.30; Sept Del 600-650 lbs 141.00; 750-800 lbs 126.50; Oct Del 600-650 lbs 143.00; 700-750 lbs 123.00; 750-800 lbs 126.50; Nov Del 700-750 lbs 123.82; 750-800 lbs 126.50. Medium and Large 1-2 Current FOB 500-550 lbs 143.89; 700-750 lbs 132.50; 750-800 lbs 124.15; Current Del 550-600 lbs 140.00-141.38; Sept FOB 750-800 lbs 127.38; Sept Del 550-600 lbs 150.35-150.60; 600-650 lbs 147.00-148.40; 650-700 lbs 141.00; 700-750 lbs 136.50; Sept-Oct Del 550-600 lbs 149.10; Oct Del 700-750 lbs 135.35; 750-800 lbs 135.10.

Oklahoma 600. 100 over 600 lbs. 58 pct heifers. Steers: Medium and Large 1 Aug FOB 750-800 lbs 139.50-140.50. Heifers: Medium and Large 1 Aug FOB 750-800 lbs 129.50.

New Mexico 3500. 88 over 600 lbs. 61 pct heifers. Steers: Medium and Large 1 Sept FOB 800-850 lbs 132.00; Oct FOB 800-850 lbs 132.00; Nov FOB 750-800 lbs 128.00. Medium and Large 1-2 Current FOB 600-650 lbs 133.00 Mexican; 650-700 lbs 135.38. Heifers: Medium and Large 1 Current FOB 700-750 lbs 131.00; Sept FOB 750-800 lbs 125.50; Oct FOB 750-800 lbs 125.50; Nov FOB 750-800 lbs 125.50. Medium and Large 1-2 Current FOB 550-600 lbs 121.00-122.00 Mexican.

Kansas 200. 62 over 600 lbs. 71 pct heifers. Steers: Medium and Large 1 Sept Del 700-750 lbs 141.00. Heifers: Medium and Large 1 Current FOB 600-650 lbs 141.50.

National Feeder Cattle Summary

St. Joseph, MO — August 16
National feeder cattle receipts: 104,800

Steers and heifers sold $5-$10 lower. Uncertainty started the week as the news spread over the August 10 weekend of a fire that has halted slaughter at the Finney County, Kansas fed cattle operated by Tyson Foods. Some cattle auctions were either downright cancelled or saw reduced receipts as the industry took in the news. Backgrounders do like to market cattle before the Labor Day holiday in August and some may be forced to wait until the market finds footing which could be after their historical marketing time period. Cattle buyers did have bids from feedyards, however most wanted to buy at lower prices early week as they did not know when the CME Cattle Complex slide would come to an end. When the CME Cattle Complex opened on August 12, futures locked limit lower ($-3.00 on Live Cattle and $-4.50 on Feeder Cattle). Expanded limits were instituted for August 13; trading was down drastically again with Live Cattle down $4.47-4.95 and Feeder Cattle down $5.05-6.68. Traders did want to get some business done and they did have an opportunity to do it. August 14 brought expanded limits again and the more nearby Live Cattle futures were lower, while the more deferred futures were $0.60-1.97 higher on the day. Feeder Cattle futures appeared to need a correction and were $4.63-6.75 higher on the day. When the dust settled for the week, the August Live Cattle contract was down $8.58 while the next five Live contract months were down $6.05-8.70. Feeder cattle contracts were $4.33-6.08 lower on the week. The main concern that caused all the back and forth was ‘How will the industry try to absorb near 6,000 head per day for the foreseeable future?’ Even though feedyards have been pulling cattle forward, the reduction of around 6 percent of the fed cattle slaughter capacity will put a wrench into the current marketing of fed cattle supplies. On August 14, Tyson executive toured the devastated plant and vowed to get back to business in a methodical and timely fashion. A takeaway that the industry was looking for when the plant will be up and running. Company personnel were forthcoming in saying that it would be months, not weeks. As the reduction in fed slaughter happened this week, so does the meat production. Wholesalers and retailers that had been buying hand to mouth found sharply higher boxed beef values this week as the beef pipeline adjusts to the harsh reduction in production. Price jumps like this do not come along very often and will be only temporary as adjustments take place in future. For the week, the Choice cutout closed $22.32 higher at $238.69, while Select was $19.45 higher at $213.26. Processors are wanting more Choice product to sell as the Choice-Select spread now stands at $25.43. On August 13-14, the Choice Cutout rose $7.74 and $5.98 respectively, the largest single day gains since MPR data started in 2000. For reference, the harshest daily drop of $7.26 for Choice was recorded on January 31, 2014. With negotiated fed cattle trading at $105 in the Southern Plains, packer margins have skyrocketed as some analysts are estimating they have more than doubled in one week. Cattle Slaughter under federal inspection estimated at 651K for the week, 9K more than last week and 8K less than a year ago. As August 9 ended, there was some volatility in the grain markets expected as USDA was set to release a large amount of grain data and reports on August 12. The abnormal growing year has been a challenge to get acres reported correctly and many surprises have sprung up along the way with the Crop Production reports this year so far. August 12 data release was no different as corn data, which the cattle industry follows faithfully, showed a reduction in planted acres and an increase in yield which caused grain futures and cash prices to tumble. Normally lower feed cost would seem like a good thing for the cattle industry.

Texas 1500. 76 pct over 600 lbs. 34 pct heifers. Steers: Medium and Large 1 650-700 lbs (657) 149.87; 750-800 lbs (787) 131.48. Medium and Large 1-2 550-600 lbs (565) 137.76. Heifers: Medium and Large 1 500-550 lbs (522) 127.20; 600-650 lbs (640) 128.89; part load 721 lbs 129.00; pkg 785 lbs 121.50.

Oklahoma 15,300. 60 pct over 600 lbs. 40 pct heifers. Steers: Medium and Large 1 300-350 lbs (327) 170.07; 350-400 lbs (377) 172.35; 400-450 lbs (420) 160.91; 450-500 lbs (477) 157.31; 500-550 lbs (522) 153.17; 550-600 lbs (571) 147.53; 600-650 lbs (625) 142.82; 650-700 lbs (664) 137.83; 700-750 lbs (720) 137.40; 750-800 lbs (772) 137.06; 800-850 lbs (828) 132.50; 850-900 lbs (867) 129.48; 900-950 lbs (916) 124.58; 950-1000 lbs (969) 127.07. Medium and Large 1-2 300-350 lbs (317) 160.11; 350-400 lbs (381) 155.06; 400-450 lbs (433) 151.70; 450-500 lbs (471) 144.53; 500-550 lbs (526) 143.54; 550-600 lbs (582) 138.45; 600-650 lbs (635) 137.51; 650-700 lbs (686) 131.27; 700-750 lbs (717) 130.86; 750-800 lbs (768) 128.57; 800-850 lbs (828) 125.47; 850-900 lbs (878) 126.12; 900-950 lbs (931) 120.63; 950-1000 lbs (961) 117.61; pkg 1123 lbs 105.00. Dairy Steers: Large 3 pkg 894 lbs 49.50. Heifers: Medium and Large 1 300-350 lbs (326) 145.22; 350-400 lbs (384) 142.24; 400-450 lbs (424) 139.73; 450-500 lbs (474) 138.29; 500-550 lbs (527) 134.98; 550-600 lbs (572) 130.80; 600-650 lbs (627) 129.77; 650-700 lbs (675) 126.88; 700-750 lbs (718) 125.08; 750-800 lbs (778) 125.48; 800-850 lbs (827) 119.63; 850-900 lbs (866) 123.15. Medium and Large 1-2 350-400 lbs (381) 136.30; 400-450 lbs (431) 130.17; 450-500 lbs (478) 128.00; 500-550 lbs (528) 130.58; 550-600 lbs (572) 125.48; 600-650 lbs (627) 122.96; 650-700 lbs (670) 122.66; 700-750 lbs (725) 119.86; 750-800 lbs (775) 118.37; 800-850 lbs (814) 119.91.

New Mexico 1900. 35 pct over 600 lbs. 51 pct heifers. Steers: Medium and Large 1 750-800 lbs (768) 124.98. Medium and Large 1-2 600-650 lbs (620) 133.63; 750-800 lbs (773) 127.83. Heifers: Medium and Large 1 500-550 lbs (528) 132.31; 550600 lbs (587) 130.79. Medium and Large 1-2 450-500 lbs (468) 138.49; 550-600 lbs (577) 129.94.

Kansas 3300. 90 pct over 600 lbs. 29 pct heifers. Steers: Medium and Large 1 450-500 lbs (458) 159.42; 600-650 lbs (637) 152.61; 650-700 lbs (689) 143.66; 700-750 lbs (735) 139.47; 750-800 lbs (775) 144.37; 800-850 lbs (828) 141.79; 850-900 lbs (876) 128.46; 900-950 lbs (912) 137.63; 1000-1050 lbs (1012) 119.36. Medium and Large 1-2 600-650 lbs (637) 149.74. Heifers: Medium and Large 1 400-450 lbs (432) 155.11; 600-650 lbs (622) 136.76; 650-700 lbs (686) 132.68; 700-750 lbs (733) 129.45; 750-800 lbs (781) 130.58; 800-850 lbs (814) 127.70; 850-900 lbs (883) 117.04; 900-950 lbs (912) 127.06. Medium and Large 1-2 550-600 lbs (591) 141.05; 650-700 lbs (681) 133.25.

Missouri 11,900. 55 pct over 600 lbs. 43 pct heifers. Steers: Medium and Large 1 350-400 lbs (375) 165.25; 400-450 lbs (424) 165.42; 450-500 lbs (472) 157.38; 500-550 lbs (529) 154.15; 550-600 lbs (572) 153.81; 600-650 lbs (630) 149.51; 650-700 lbs (666) 144.24; 700-750 lbs (717) 137.65; 750-800 lbs (769) 138.94; 800-850 lbs (820) 131.33; 850-900 lbs (877) 127.49; 900-950 lbs (934) 133.00. Medium and Large 1-2 350-400 lbs (378) 156.19; 400-450 lbs (423) 154.87; 450-500 lbs (473) 148.41; 500-550 lbs (523) 146.79; 550-600 lbs (575) 140.40; 600-650 lbs (622) 140.63; 650-700 lbs (663) 137.74; 700-750 lbs (721) 134.79; 750-800 lbs (771) 131.19; 800-850 lbs (817) 131.54. Dairy Steers: Large 3 800-850 lbs (826) 81.17; pkg 914 lbs 83.00. Heifers: Medium and Large 1 400-450 lbs (429) 140.93; 450-500 lbs (471) 138.17; 500-550 lbs (524) 137.80; 550-600 lbs (575) 134.79; 600-650 lbs (626) 135.46; 650-700 lbs (663) 129.25; 700-750 lbs (719) 128.27; 750-800 lbs (774) 117.59; 800-850 lbs (815) 122.65. Medium and Large 1-2 300-350 lbs (332) 151.49; 350-400 lbs (377) 134.62; 400-450 lbs (428) 134.71; 450-500 lbs (474) 132.27; 500-550 lbs (520) 129.33; 550-600 lbs (575) 126.83; 600-650 lbs (620) 129.31; 650-700 lbs (668) 129.03; 700-750 lbs (727) 127.23; 750-800 lbs (772) 116.11.

Arkansas 3300. 17 pct over 600 lbs. 40 pct heifers. Steers: Medium and Large 1 300-350 lbs (321) 169.79; 350-400 lbs (380) 160.41; 400-450 lbs (419) 149.42; 450-500 lbs (470) 145.66; 500-550 lbs (525) 139.41; 550-600 lbs (575) 137.69; 600-650 lbs (623) 134.72; 700-750 lbs (726) 128.83. Heifers: Medium and Large 1 300-350 lbs (325) 138.79; 350-400 lbs (368) 139.48; 400-450 lbs (422) 133.00; 450-500 lbs (474) 129.68; 500-550 lbs (528) 127.66; 550-600 lbs (581) 125.30; 600-650 lbs (627) 121.63.

 

 

 

 

 

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Friday, August 23, 2019 11:36 AM