Lucy Craymer reported earlier this week at The Wall Street Journal Online that, “Global dairy prices have risen nearly 17% in four weeks, an encouraging sign for a sector beleaguered globally by low prices and growing stockpiles of cheese and milk powder.

“After hovering at historically low levels for much of 2016, prices have finally started to rally as farmers have culled herds to save money, reducing the available milk.

“The GlobalDairyTrade Price Index, which covers a variety of products and contract periods in the auction, rose 12.7% from the previous auction on Aug. 2. The index is now at its highest level since Oct. 20, 2015.”

Ms. Craymer pointed out that, “Production has fallen as farmers, many of whom have been operating below the cost of production, have been forced to send cows to the slaughterhouse to raise revenue and reduce spending rather than continuing to milk them. Furthermore, supplementary feeding, which increases milk yield but isn’t necessary, has been reduced to cut costs.”

More broadly with respect the agricultural economy, Steven Russolillo reported in today’s Wall Street Journal that, “Farm-equipment makers can’t catch a break.

“Lower prices for corn, soybeans and other commodities have squeezed farmers’ incomes across the globe, prompting them to cut back significantly on equipment spending. That has upended companies such as Deere & Co., the world’s largest seller of tractors and harvesting combines. Its sales and profits have dropped for nine consecutive quarters.”

Today’s article added that, “Falling incomes have prompted many farmers to cut their investment spending. And now, many of Deere’s customers prefer to lease machinery rather than purchase it.”

And, a Reuters update from today contained the following projections from Deere & Co.:

” * 2016/17 projection for U.S. commodity prices for corn $3.15 per bushel.

” * Sees FY 2016 total U.S. farm cash receipts of $373.4 billion versus previous forecast of $375.1 billion.

” * 2016/17 projection for u.s. Commodity prices for soybeans $9.30 per bushel.”

Nonetheless, Bloomberg writer Mario Parker reported today that, “Deere & Co., the world’s largest agricultural equipment maker, raised its full-year profit forecast after cutting production and costs to adapt to weaker demand for tractors and combines.

“Full-year net income will be $1.35 billion in the year through October, Moline, Illinois-based Deere said Friday in a statement, compared with the $1.2 billion it projected in May. The company also reported better-than-expected fiscal third-quarter net income and a 16 percent reduction in its cost of sales. The shares jumped as much as 5.2 percent.”

The Bloomberg article noted that, “‘People ask that question, how much more can’ it cut? Stephen Volkmann, a New York-based analyst at Jefferies LLC, said by phone. ‘When you look at what’s happening in the agricultural community, it’s tough to argue that things are going to get better.’

“Deere has shed thousands of jobs and cut capacity since 2013, most recently last month at an Illinois operation. Tractor inventories in the U.S. are at a seasonal record high and credit availability is tight with farm incomes projected to fall for a third straight year amid bumper crops and lower commodity prices, signaling that Deere may have to make further cost cuts.”

DTN writer Todd Neeley reported yesterday that, “The waters of the United States, or WOTUS, rule legal battle will be allowed to play out in the U.S. Court of Appeals for the Sixth Circuit in Cincinnati. This is after the U.S. Court of Appeals for the 11th Circuit in Atlanta ordered a stay of a legal challenge in that court Monday.

“The Sixth Circuit previously ruled it had jurisdiction to hear numerous legal challenges to the rule. More than 30 states as well as many industries, including agriculture, believe the rule represents an unconstitutional expansion of U.S. Environmental Protection Agency jurisdiction.”

Mr. Neeley explained that, “The court in Atlanta held oral arguments in July in an 11-state lawsuit challenging the rule. Georgia, Kentucky, Kansas, West Virginia, South Carolina, Alabama, Wisconsin, Utah, Indiana, North Carolina and Florida asked the court to overturn the Sixth Circuit on the question of jurisdiction.

“The Sixth Circuit in Cincinnati stayed the WOTUS rule nationally in October 2015, pending its review. The Sixth Circuit already is moving forward with consolidating numerous cases into a single case, likely to play out in 2017.

“In its ruling issued Monday, the 11th Circuit in Atlanta said it had no reason to continue to hear the 11-state lawsuit.”

Jacob Bunge reported in yesterday’s Wall Street Journal that, “Monsanto Co. is broadening its bet on computerized farming services, hoping to attract farmers looking for an edge in boosting crops and managing their land amid a slumping agricultural economy.

“The biotech seed giant said it plans to expand its Climate Corp. subsidiary, which delivers weather and planting advice based on computer models, to develop an online network similar to Amazon.com Inc. Monsanto aims to build an online bazaar allowing farmers to shop for services and share data with Monsanto and other companies.

“The decision comes despite Monsanto’s limited returns from its digital farming services so far. Monsanto built the division through more than $1 billion in acquisitions over the past four years, saying it could transform agriculture by using Silicon Valley-style data-crunching techniques to formulate advice that can boost farmers’ productivity and shave unnecessary costs.”

Mr. Bunge pointed out that, “DuPont Co., Cargill Inc. and Deere & Co., are also investing in the business, along with a host of startups;” and added that, “Monsanto so far has focused on recruiting as many farmers as possible to the Climate platform. Farmers representing about 92 million acres of U.S. farmland—nearly as many acres as were planted with corn this year in the U.S.—have signed on. About 14 million of those acres are enrolled in paid services, according to Mike Stern, who earlier this year took over as chief executive of the Climate division. Mr. Stern said 25 million paid acres are estimated in 2017.

“Monsanto aims to parlay its base of users into a broader platform for computer-powered farming, a move Mr. Stern said resembles Amazon.com’s evolution from an online bookstore to selling clothing and groceries while building out a separate web services division. He said the move will make Monsanto’s digital agriculture offering more central to farmers’ operations, while opening up an established base of users and technology infrastructure to other farm supply companies developing their own data-powered services.”

Jesse Newman and Jacob Bunge reported earlier this week at The Wall Street Journal Online that, “U.S. officials are expecting record corn and soybean harvests this fall, a bounty that would extend the multiyear slump in agricultural commodity prices and heap more pressure on farmer incomes.”

The Journal article added that, “The USDA estimates U.S. farm incomes will fall to $54.8 billion in 2016, the lowest level since 2002. On Thursday, Federal Reserve regional banks said farmland values continued to decline in the Farm Belt due to low crop prices and weak farm incomes. Dairy farmers on Friday pleaded with U.S. Agriculture Secretary Tom Vilsack to buy $150 million in cheese to help them through the glut. Farm-supply companies like Monsanto Co., DuPont Co. and Deere & Co. have cut thousands of jobs and curtailed research projects.”

These variables will likely have an impact on cash rental rates for farmers.

Yesterday, University of Illinois agricultural economist Gary Schnitkey pointed out at the farmdoc daily blog (“Continued Downward Pressure on 2017 Cash Rent“) that, “Given low prices, projected 2017 returns will be very low. Even after substantial decreases in non-land costs, many farms will have projected losses in 2018 on cash rent farmland. For farmland with an expected corn yield of 200 bushels per acre, cash rents would have to be below $218 per acre before farmers would be projected to have a non-negative return. A $218 per acre rent is well below current, average levels of cash rents.”

Dr. Schnitkey added that, “Even after substantial decreases in costs, more reduction in non-land costs and cash rents are needed if farmers are expected to have non-negative returns on cash rent farmland. High 2016 production leads to low prices which causing a further need to cut costs in 2017.”

In a related item this, DTN Executive Editor Marcia Taylor pointed out that, “Now, worse prospects for 2017 grain markets mean many cash renters will have little choice but to plead poverty when renewing leases this fall. What’s different this time is that farm lenders will be the referees making sure rent gets knocked down a serious notch or two, some analysts caution.

“Three consecutive years of falling farm incomes from 2014-2016 will have ‘evaporated’ working capital below acceptable credit standards for many producers, cautioned Sterling Liddell, an economist with Rabobank’s Food and Agribusiness Research group. In a new report on cash rents and land values, Liddell wants landowners to get a wake-up call when land rents are renegotiated this fall.”

Ms. Taylor explained in the DTN article that, “Some growers hesitated to have frank talks with landowners last year, for fear of losing their leases to more aggressive farmers. Others know that many elderly owners rely on rents for retirement income, so they postponed rent reductions for as long as possible. Steep property tax increases in Ohio, Nebraska and Indiana already cut into owners’ returns, souring conversations before they started. Now the multi-year farm recession has taken a toll, Liddell said.

“‘At the end of the day, the real gatekeeper on this is credit, the ability to finance. If you simply cannot finance because you don’t have [enough] working capital and value of crop isn’t strong, you won’t have the money to bid into land,’ he told DTN. Bank standards generally require liquid, working capital reserves of at least 20% of cost of production to qualify for credit, he added, and many operators risk flunking that test.”

Megan Daley reported earlier this month at the Los Angeles Times Online that, “Next time you’re looking for a tasty wine pairing, skip the reds, whites and rosés and just go for the green.

“An analysis of more than 74,000 wines found that those made with certified organic grapes got higher ratings from experts than those produced using conventional methods.”

The article stated that, “Napa Valley, Sonoma Valley and the rest of California produce 90% of the wine made in America, according to the National Assn. of American Wineries. Last year, the Golden State had 550,000 acres of vineyards. Only about 2% of them grew organic grapes, which are raised in ways that limit the use of synthetic pesticides and emphasize the importance of a healthy and sustainable ecosystem.

“In most aisles of the grocery store, ‘organic’ is seen as synonymous with ‘higher quality.’ Organic apples cost about 30% more, on average, and organic milk carries a hefty 72% markup, data from the U.S. Department of Agriculture show.”

Interestingly, Ms. Daley pointed out that, “But when it comes to wine, an ‘organic’ label is often a turn-off. In a 2015 study that asked consumers to select a wine based on its label, organic options were chosen over conventional ones only when the wines were from a region believed to produce low-quality wine. When considering wines from a high-quality region, however, consumers chose the conventional option, even if it had a higher price.”

The article added that, “But it turns out the experts see — and taste — things differently.

“[Magali Delmas, an environmental economist at UCLA’s Institute of Environment and Sustainability] and her colleagues gathered reviews from Wine Spectator, Wine Advocate and Wine Enthusiast for tens of thousands of wines produced between 1998 and 2009. The vino came from 3,842 wineries and varied by region, age and type. Only 1% of the wineries in the sample were certified organic.

“Each publication performs blind tastings and assigns a score between 1 and 100, with most falling somewhere above 80. There’s no way for taste-testers to know whether the wine they’re sampling is organic.

“When the researchers compared the scores of wines of similar vintages and varietals, they found that wines produced from certified organic grapes scored 4.1 points higher, on average, than wines made with conventional grapes.”

The L.A. Times article also noted that, “There could be a biochemical explanation for this, Delmas said. Conventional grape-growing practices use pesticides that can reduce the tiny microbes in soil. In contrast, vineyards that follow organic practices may be allowing more of the regional characteristics to get into their bottles.”