Cattle Pricing News

Why Can't Soybeans Bottom With China Purchases? Are They Buying Corn?

Fri, 19 Dec 2025 19:39:25 GMT

Corn and wheat ended higher Tuesday with soybeans lower. Livestock futures saw a down day in cattle but higher in hogs.

Corn Rallies on China Buying?
Corn futures were up for a second day after seeing technical buying and with some talk of China buying corn out of the Pacific Northwest. Ted Seifried with Zaner Ag Hedge says rumors of China purchases circulate nearly every time the corn market rallies. However, he is not seeing evidence of those purchases and doubts China needs corn. “I don’t know why China would buy U.S. corn. It wasn’t part of the agreement, which is yet to be signed. So unless it was politically motivated, I would think China would want to go to Brazil. They have this new relationship with Brazil. When it comes to their corn, I think they want to protect their relationships with Brazil,” he says.

He admits port values in the PNW did kind of spike and so did basis. However, he doesn’t think that necessarily means China. “It could be one of our normal customers, like Japan, for example,” he says.

Corn Sees Short Covering
So Seifried thinks the bounce was technically inspired buying after the March contract bounced off the 100-day moving average support area on Wednesday. However, corn has been trading sideways between that support and overhead resistance up at the 200-day moving average. He says if corn could finally close above that level for more than a day, it could take out the $4.50 area and stage a bit of a breakout.

“We saved a breakdown below the neckline of what could potentially be a head and shoulders topping formation in corn. Now, if we were able to get up and over that 200-day moving average for the fourth time, close above it and then not break down the very next day like we have the previous three times. We could potentially break out to the upside and really negate this potential head and shoulders formation,” Seifried explains.

Corn Needs a Catalyst
However, corn will need a catalyst to get above that chart resistance because farmer selling picks up when corn gets to the top side of the trading range. The catalyst could come in the January WASDE if USDA would lower yield. It would take a sizable cut to get the bulls excited and get below 2 billion bu. carryout he says. “I do think if you cut two or three bushel an acre off of corn, we’ll get below a 2 billion bu. carryover, but I don’t know about significantly below 2 billion bushel because it will be offset by USDA lowering feed and residual,” he explains.

Wheat Follows Corn
Wheat futures got spillover support from the corn market but Seifried says soft red winter wheat also saw technical buying to relieve its oversold condition. “Chicago wheat hit new contract lows Tuesday and Wednesday so it was due for a correction,” he says. However, wheat will have a tough time rallying due to the big global production. “USDA has had to continue to raise the world production number. I think we’re, what, 30 MMT off of the original number they had a few months ago,” he states. China canceling two cargoes of white wheat from the U.S. was also bearish for the market. “Anytime China cancels anything, that really does not help the market psychology.”

Why Do Soybeans Continue Lower Despite China Purchases?
The soybean market continues to slide despite the confirmation of export sales and China soybean purchases. USDA reported another 4.2 million bu. flash sale of soybeans to unknown destinations on Thursday morning and adds to the string of recent purchases that have included China. Seifried says however, that business has not been enough to support the market because it’s half the soybean purchases China made last year.

“The problem is, is that I think the markets realized that 12 million metric tons probably isn’t enough to get us to the USDA full marketing year expectations for our exports, and that they’ll probably have to cut exports again if China doesn’t buy above and beyond that 12 million metric tons. And while the buying is good, the pace does not suggest necessarily that they’re going to outperform on that one,” he explains.

Seifried says South American weather is also favorable and soybean prices in Brazil are cheaper than the U.S. and so there’s no reason for China or any other countries to buy soybeans if it isn’t politically motivated.

Funds also got near record long in mid-November while the government was shut down and they are exiting those positions. “The analyst guesses were, were so far off they weren’t even half of what the funds actually accumulated as far as their long position. And the funds have just simply lost interest in the story. And so they’re getting out of that position,” he adds.

Soybeans Make New Lows for the Move
Soybean futures made new lows for the move on additional technical selling and fund liquidation. Seifried says the market confirmed the head and shoulders top, fell to fill the chart gap areas and then closed below that level which is bearish. Funds got near record long in soybeans in mid-November and then started to bail on those positions and take profits and they are still liquidating.

Profit Taking in Cattle
Live and feeder cattle futures were down for a second day with the market consolidating after several attempts to take out chart resistance areas. Seifried says in live cattle the market has been capped by the 100-day moving average. So, cattle are at a pivotal point and need to fill gap areas on the chart to keep moving higher.

“I mean, the good news there is that both cattle and feeders did close well off their lows. So, you know, we didn’t completely fall apart after running into the one hundred day moving average, major moving average pretty much five days in a row. Not being able to to to break through it and break out to the upside and fill the gap above us. The market finally just gave in a bit.” he says.

Cash trade will also be a key. Thursday some light trade developed in the North at mostly $358 dressed, up $4, with a range of $355 to $363 and live sales prices at $228.

Lean Hogs Finish Higher
Lean hog futures were higher on short covering and fund buying after a lower day on Wednesday. Seifried says the hog market is also getting support from a possible seasonal bottom in cash and cutouts.

Optimism Reigns Despite Volatility in U.S. Red Meat Industry

Thu, 13 Nov 2025 17:39:12 GMT

Demand for U.S. red meat remains robust in key destinations where customers crave the quality and consistency of U.S. pork, beef and lamb, despite significant obstacles in the international marketplace, explained U.S. Meat Export Federation (USMEF) president and CEO Dan Halstrom at the USMEF Strategic Planning Conference in Indianapolis.

Pork exports are modestly below last year’s record pace, but he says the gap stems mostly from a period early in 2025 when China’s retaliatory tariffs increased and the U.S. industry faced uncertainty about plant eligibility.

“Although export data is only available through July due to the government shutdown, pork shipments are on record pace to leading market Mexico, as well as to Central America and Colombia,” USMEF reports.

Halstrom says beef exports have been hit harder by barriers in China, where U.S. beef not only faces retaliatory tariffs, but also unwarranted plant delistings and China’s failure to renew registrations for the vast majority of U.S. beef plants and cold storage facilities. Fully reopening the world’s largest beef import market to U.S. beef will require several actions on China’s part, and the lockout could extend into 2026.

“This is obviously a political card that’s being held by the China side,” Halstrom says. “One thing I’m very confident in is that [the Office of the U.S. Trade Representative] is well aware of our position, well aware of what’s involved, and very well-informed. I do think they’ll get it worked out eventually, I just can’t tell you when – no one can.”

Free Trade Agreements are Key
Protecting and defending existing free trade agreements is an urgent priority, Halstrom says. He is optimistic that ongoing negotiations with several trading partners may lead to new opportunities for U.S. red meat, especially in Southeast Asia.

Over the past decade, red meat exports to free trade agreement partner countries have expanded by more than 30%, and exports to these destinations now account for 76% of total shipments, he says.

Invoking the Paul Harvey quote, “In times like these, it helps to recall that there have always been times like these,” Halstrom reminds USMEF members that the industry has endured tremendous trade setbacks in the past, including widespread market closures due to bovine spongiform encephalopathy (BSE) and plunging consumer confidence and buying power in the wake of the 2008 financial crisis.

“Remember that we overcame all those obstacles,” Halstrom says. “I believe that with the knowledge in this room, and with continued cooperation and collaboration, we can overcome anything.”

A Complicated Relationship
Keynote speaker Jan Lambregts, head of RaboResearch Global Economics & Markets, discussed the complexities of the U.S.-China trade relationship.

“I’m not quite sure if you will like this news, but I don’t think there will be a comprehensive deal coming soon between China and the U.S.,” Lambregts shares. “What the U.S. is demanding is access to Chinese markets. What China will never give is access to the Chinese market because that’s not how they’ve been winning in trade during the past 30 to 40 years.”

Both countries are playing for time, he says. China has been cut off from high-end semiconductors and needs time to develop its own semiconductor sector. Similarly, the U.S. needs time to build its rare earths capacity, including development of extraction and processing capabilities.

“In the meantime, the U.S. is basically sending all its allies the same message: What was previously free defense now must be paid for, because we (the U.S.) need to be compensated. And by the way, if you want to trade with China, there are conditions now,” Lambregts says.

Hogs Ease After Big Rally, Cattle Hit Record Highs and Soybeans Gain After Trump/Xi Call

Fri, 06 Jun 2025 13:20:39 GMT

Hogs ended mostly lower on Thursday, with all-time highs in cattle and grains mostly higher as well.

Lean Hogs Consolidate Thursday After Recent Rally

Jeff Hoogendoorn, with Professional Ag Marketing, says lean hogs ended mixed to lower on Thursday with August seeing some profit taking after making new highs for the move early in the session. August hogs have been on a big rally gaining nearly $7 in seven sessions.

The consolidation came despite a positive call between President Trump and Chinese President Xi earlier in the day and decent weekly pork exports at 36,400 MT, with a sale of 12,700 MT to China.

Hoogendoorn was at World Pork Expo and says there is optimism about the hog market with the recent rally which has been pushed by higher cash and cutouts.

The CME lean hog index is up another 82 cents to $97.57 as of June 4. Pork cutout firmed $1.50 to $108.12 on Thursday. Both are trading at their highest levels since August 2023.

Packers cut kills the last few weeks he says and cutouts responded moving above $107, but at the same time there’s not an excess supply of hogs.

The deferred lean hog contracts just made new contract highs with disease concerns in production areas like Iowa, mostly due to PEDV.

Hoogendoorn says these prices are offering some profitable levels for hog producers all the way down the futures board.

Cattle Futures Explode To All-Time Highs

Cattle futures made all time highs in both live and feeder cattle offerings.

Funds stepped back in to buy with the steep futures discount to more record cash cattle trade.

Cash broke in the South already Wednesday at $225 to $228, up $3 to $6 from last week and there were some trades at $230 in Kansas before the close on Thursday.

Later in the afternoon light cash cattle trade developed in Texas at $232, up $10 from last week’s weighted average.

Light trade was also reported in Nebraska with dressed sales at $380, up $13 from last week’s weighted averages. Live deals at $240, up $5.

Soybeans React to Positive Trump/Xi Call

Soybeans saw gains Thursday, supported by positive news that Trump and Xi’s conversation went well.

President Trump posted on Truth Social that he and President Xi had a “very good” phone call and “resulted in a very positive conclusion for both countries.” Next steps involve a meeting between the countries respective teams with Secretary of the Treasury Bessent leading the U.S. team.

The market also saw additional fund and technical buying but was stopped short running into resistance with several moving averages layered overhead on the charts.

Corn Bounces After July Hits New Lows

Corn was higher as well with spillover from higher soybeans and still adding some weather premium.

However, July made a new low for the move and hit a level not seen since October of 2024, before bouncing.

Bear spreading continued to be a feature in the corn market with December gaining on July.

Despite a tight 1.4 billion bu. carryover, Hoogendoorn says the market is telling farmers there is no concern about running out of corn.

He says some of that pressure is coming from the big crop and much lower corn prices in South America.

A Repeating Cycle: Sell Off, Recovery and Volatility in the Livestock Markets

Tue, 03 Jun 2025 19:08:49 GMT

Every cattle cycle looks a little bit different, but they all have peaks and troughs related to inventories and prices — and all the volatility that goes along with it, according to Lee Schulz, ag economist with Ever.Ag.

Schulz recently joined “AgriTalk” to discuss current trends in the cattle and hog markets with host Chip Flory. He says the supply side of the cattle equation is essentially unchanged.

“We’ve continued to put off expansion and to really continue to contract,” says Schulz, who thinks some supply reductions have been mitigated by higher carcass weights.

He also argues profitability drives, and the level of risk producers have faced over the last several years has pushed off that expansion.

“We’ve needed higher profitability levels to incentivize that expansion,” Schulz explains. “That is on the short-term horizon here. But if you would have asked me a couple of years ago what this expansion cycle would have looked like, I would have said it would have been a little bit smoother.”

One factor contributing to contraction in the market is that heifers are still worth more in the feedlot than on pasture. Record wholesale cattle values continue to incentivize the industry to market more beef.

“It’s really the short-term versus the long-term play here,” says Schulz, who is starting to see a transition.

Analyzing USDA’s long-term forecast from October 2024, Schulz notes the prediction for an increase in the beef cow herd Jan. 1, 2027.

“That would give us our highs in prices in 2026 with beef production finally increasing in 2028,” he says. “So far, that’s how it’s playing out. As we look at some of the fundamentals, obviously things could change. But that gives you a bit of a timeline for where things are at.”

With previous forecasts, there was the expectation to start expansion in 2024. The industry has continued to push that off.

“With cattle, you have the biologics of the industry,” Schulz says. “It takes a very long time to turn this ship. I think we can make some adjustments, but ultimately, once that expansion is dictated, it’s going to take a while.”

Demand has remained high in 2025 as consumers continue to eat more beef at higher prices. But is there a limit?

“As supplies are going to tighten, we’re going to eat less beef — but it’s at what price that beef is going to be at,” Schulz says. “Will you continue to see higher prices offset some of that reduction in quantity? So far, consumers have been willing and able to pay those higher prices. But that’s why we monitor things like consumer income and consumer sentiment. That’s going to drive beef demand here going forward.”

When it comes to the futures market and feeder cattle, Schulz thinks tight supplies are still in front of us and demand has to hold — so we may not have seen the highs yet. While he’s confident we’re not going at an increasing rate, he thinks the markets will plateau.

“As we get into summer and fall, that’s really going to dictate if have we put in the highs,” he says.

With cattle prices where they are, every animal in a feedlot, in transit or on pasture is at risk. Schulz recommends cattle producers go on the offense and look at ways to manage risk.

“You have to look at how do we manage the downside to this market potentially just due to the sheer cost of those placements,” he says. “Interest costs are three times as high as they used to be if you look back at the last decade. It’s not just feed costs either. It’s a lot of those costs we need to look at how to manage.”

Pork Markets Remain Steady
When it comes to the pork industry, Schulz sees the hog market dialed in. Supplies are similar to a year ago.

“When you look at it from a production standpoint, yes, slaughter’s down a little bit. But as we adjust for weights, we’re seeing a bit higher production,” Schulz explains. “Historically, we’re still pretty strong for demand, but I think we need to see further strength in demand if we continue to push these higher prices. The export situation remains critical for the hog market as we think about the ability to send our products to the highest valued market — and that continues to be a real crux for this industry.”

Listen to the entire conversation:

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Why Did the Ag Markets Fade China Trade Talk News?

Thu, 08 May 2025 15:02:00 GMT

Grain and livestock futures closed mostly lower on Friday.

It was a disappointing close considering the news that top trade officials from the U.S. and China were meeting in Geneva this weekend to de-escalate the trade war.

Dave Chatterton, Strategic Farm Marketing, says the markets faded the news as the realization set in that no major breakthroughs in the trade talks are expected and a long term trade deal with China could take quite some time.

President Donald Trump also said Wednesday he’s unwilling to preemptively lower tariffs on China in order to unlock more substantive negotiations with Beijing on trade.

Weather was also a headwind for the corn and soybean markets with fast planting pace and more rain in the forecast for dry areas of the hard red winter wheat belt.

The market is also positioning ahead of the May WASDE and USDA Chief Economist Seth Meyer has confirmed they will start to consider the impact of tariffs in the new crop balance sheets.

“That could make these early estimates look a bit too friendly,” says Chatterton.

July corn made new lows for the move hitting chart resistance, failing and then testing triple bottom support on the charts at $4.51.

“It was a big outside day lower,” explains Chatterton, “And so tomorrow’s action will be important to see if there is further technical breakdown.”

Wheat has been an anchor for the corn market with improving crop conditions tied to recent rain.

Lower prices relative to corn are pushing wheat into the feed ration.

The higher dollar and lower crude oil markets were also bearish for the grain complex.

The FOMC meeting concluded with the Fed holding interest rates steady at 4.25% to 4.50%, as widely expected.

However, Chatterton says Fed Chair Jerome Powell said the labor market was solid and inflation was still somewhat elevated, but the uncertainty in the economic outlook moving forward tied to tariffs.

Cattle futures saw a correction off of Tuesday’s new contract highs, despite higher cash trade.

So far business in the South, has ranged from $218 to $220, steady to $2 higher, with $219 paid on Wednesday.

So is this divergence a concern?

Chatterton calls it a healthy correction in a bull market that continues to be supported by cash and consumer demand with Choice beef values at two year highs.

Lean hogs also had a disappointing day, also fading at least slight progress on trade with China.

Tariff Delay Rallies Ag and Outside Markets, Trumps China Trade War

Wed, 09 Apr 2025 20:36:40 GMT

Grain, livestock and especially outside markets soared on Wednesday.

Arlan Suderman, StoneX Chief Commodities Economist says the markets reacted positively to the 90-day delay on reciprocal tariffs for countries that reached out to negotiate with the U.S. and did not retaliate.

A 10% universal tariff is still in place but over 75 countries have reached out to avert tariffs and were rewarded.

It was an unprecedented day in the stock market which reversed and surged in reaction.

“Its a smart move by the Trump Administration because it buys them time to negotiate deals with these 75 countries and the markets have time to absorb that news and calm down,” he explains.

Suderman says this also puts to rest the talk of global recession, which had tanked the stock market, the energy sector and even cattle futures.

“I think the market took it as a positive step forward. Now it’s up to the Trump administration to actually come through and turn those negotiations into something positive, meaning lower tariffs for everybody. And if they can do that, we can actually result to see greater global economic growth and greater demand for commodities,” he adds.

The grain and livestock futures also posted a relief rally despite the escalation of the trade war with China.

China announced retaliatory tariffs of 50% which drew a negative response from President Trump as he slapped another 125% tariff on Beijing.

Suderman says, “Ultimately containing China is one of Trump’s top goals and since they
led the way in retaliation, that’s another reason he said that if any country retaliates, we will keep adding to it. Since that’s what they’ve done, he doesn’t want to give any signal of rewarding that type of behavior,”

He says it took Trump three years to get a trade deal out of China in his first term and he is trying to get a quicker response this time around.

“With a weaker economy, he felt like he could do that. Now, I don’t know if we’re any closer to a trade agreement with China, Because right now they feel like they’re being bullied, so their pride is hurt, and so they’re backing off and they’re fighting.”

The Chinese are trying to buy time according to Suderman.

“Hoping that the consumer will turn on Trump, and therefore Congress will turn on Trump and limit his powers or ability to do this. But today’s move kind of cuts that strategy short,” he adds.

The total tariffs on U.S. pork imports into China, according to the U.S. Meat Export Federation, are at 131% and for beef at 106%.

The American Soybean Association confirmed China’s tariffs on U.S. soybeans are now at 114%.

At what point does China finally break down and negotiate?

Suderman says that’s hard to predict.

The grain markets were shrugging off the China news before the tariff delay as Chinese tariffs won’t impact the current soybean crop and the White House also said it was pausing the Section 301 fees on vessels of Chinese origin and is looking at restructuring those fees.

He thinks the markets can go back to trading their own fundamentals and in the case of the grains that includes Thursday’s WASDE.

Suderman anticipates a tightening of the balance sheets, at least for corn which is positive.

Grains Markets Absorb Tariff News, But Why Did Livestock Fail?

Tue, 08 Apr 2025 18:38:33 GMT

Grains end mostly higher on Monday, with livestock seeing triple digit losses.

Naomi Blohm, Total Farm Marketing, says old crop corn and soybeans rebound as well as the wheat market which have absorbed much of the tariff news.

Of course corn and wheat are USMCA compliant and so that leaves those commodities less impacted by tariffs than soybeans which have been hit by China retaliatory measures.

However, she says corn and wheat were also adding weather premium.

Flooding in the Ohio River Valley and mid-South will cause some replant and planting delays, which the corn market can’t afford with the push to plant 95.3 million acres.

Soft red winter wheat area also saw flooding and there was some freeze damage over the weekend in hard red winter wheat fields.

Wheat also saw some short covering as the funds are still largely short all three wheat classes.

Soybeans also saw some short covering off the lows but may still be vulnerable with possible China soybean cancellations of soybeans left unshipped.

Grains are also positioning ahead of Thursday’s WASDE Report with anticipation of lower old crop ending stocks for corn.

Blohm says demand has been strong for old crop corn and she thinks its possible the carryout could come in below the trade estimate of 1.5 billion bu., which would be bullish.

As far as South America crop adjustments, she isn’t expecting many changes by USDA in this report.

Livestock saw triple digit losses with additional fund liquidation despite a recovery off the lows in the stock market.

Blohm says cattle were due for a correction and have seen fund selling with the plunge in the stock market and recessionary fears.

So the lower close despite a recovery in financial markets off the lower was discouraging.

However, she says so far cattle futures are still holding uptrend lines on the charts.

Lean hog futures also ended lower after some early strength as President Trump renewed threats to increase Chinese tariffs another 50% if Beijing did not lower their retaliatory measures.

Cattle and Hog Markets See Opposite Impact of Tariffs

Mon, 17 Mar 2025 22:03:55 GMT

While grain and hog markets have reacted negatively to the threat of tariffs, the same can’t be said about cattle.

U.S. pork producers export well over a quarter of their product annually and are just coming off a record year of exports totaling $8.6 billion to 100 countries.

So retaliatory tariffs from any of the U.S.’s top export customers are a huge concern.

On March 12, China imposed 10% retaliatory tariffs on U.S. pork, on top of the previous 25% duties.

China’s one of the top five markets for exports but tariff tensions are also brewing with other leading buyers, including Mexico which the industry is hoping to head off.

Maria Zieba, vice president of government affairs, National Pork Producers Council, says,
“Well, we are working really hard to not only meet with the U.S. government officials at USDA and at the U.S. Trade Representatives, which are responsible for this. But we have an active line into key members of Congress and those committees on the importance of trade and market access for U.S. producers.”

The EU has also imposed 25% tariffs on U.S. pork but it’s not a big market.

Meanwhile, NPPC is negotiating to avoid retaliatory tariffs with any other customers.

Zieba says, “And so we’re working with the Mexicans, Canadians, Japanese South Koreans to to ensure that we don’t end up on those retaliatory lists for us pork products.”

China and the EU have placed the same level of tariffs on U.S. beef exports but the beef industry in not as export reliant as the pork sector.

Tariffs on U.S. beef and cattle imports have a net effect of tightening supplies and that’s price positive.

Alan Brugler, A&N Economics, LLC. of Omaha, Nebraska, says, “If we’ve got tariffs on beef imports and imports are almost as big as our beef exports, if we’re not importing all that beef, most of which goes to ground beef, where’s your 50 production coming from, you’re going to have to grind up some higher value cuts, which will tend to prop up your box beef prices. So I think that’s part of the support factor in cattle here too.”

Possible tariffs on Canada and even Mexico would likely slow sales from these top two beef importers.

Mark Knight, Farmers Keeper Financial, says “We import, call it ballpark, about 10%, and those come from Canada, Mexico, and Brazil. So, where we’re getting the negative tariff news on the grain markets, it’s actually a positive for U.S. cattle if we kind of limit our cattle supply and and make those more expensive.”

And nearly all U.S. cattle imports originate from Canada and Mexico.

Total cattle imports from Canada are at 800,000 head annually, and Mexico’s feeder cattle imports alone stand at 1.2 million a year.

Knight says, “Snd so that market obviously we have a lower lower herd numbers that have have really led to this but the tariffs have have just increased that tenfold.”

As a result, feeder cattle futures continue to make all-time highs.

Profit Tracker: Margins Remain Strong for Cattle and Hog Producers

Thu, 23 Jan 2025 21:56:26 GMT

Negotiated cash cattle remained steady the week ending Jan. 18 while feedlot margins decreased $55 per head to an industry average of $248.51 per head, according to the Sterling Beef Profit Tracker. Meanwhile, beef packers saw losses improve $11 per head to a loss of $71 per head. That puts the packer/feeder margin spread at $319 per head in favor of the feeder.

Cash cattle averaged $204.12 per cwt. the week ending Jan. 18, while Comprehensive Beef Cutout prices posted a $6.92 per cwt. increase to close at $330.37 per cwt.

Cattle marketed last week carried a total feed cost of $471.76 per head, about $77 more than feed costs for cattle sold the same week a year ago.

Cattle placed last week are calculated to have a purchase price for 750-800 lb. feeder steers at $273.16 per cwt., up $8 from a month ago.

The estimated total cost for finishing a steer last week was $2,856 per head, up from last year’s estimate of $2,368 per head.

Fed cattle slaughter totaled an estimated 494,460, up 4,283 head from the same week last year. Packing plant capacity utilization was estimated at 84.8%, up slightly from 84.1% last year.

View the full Sterling Beef Profit Tracker for the week ending Jan. 18.

Farrow-to-finish hog producers found positive margins of $28.74 per head last week, up $2.56 from the previous week, according to the Sterling Pork Profit Tracker. A year ago, those margins were at -$48.88. Lean carcass prices averaged $81.79 per cwt., up slightly from the previous week.

Hogs placed for finishing last week had a breakeven at $147.43 per head.

Pork packers saw average profits of $6.99 per head, up slightly from the previous week. Last year pork packer margins were $75. Hog slaughter was estimated at 2.569 million head, up 14,850 head from the same week last year.

Pork packer capacity utilization was estimated at 98.0% compared to 97.5% last year.

View the full Sterling Pork Profit Tracker for the week ending Jan. 18.

The Beef and Pork Profit Trackers are calculated by Sterling Marketing, Vale, Ore.

(Note: The Sterling Beef Profit Tracker calculates an average beef cutout value for the week in its estimates for feedyard and packer margins. Other prices in the weekly Profit Tracker also are calculated weekly averages. Feedyard margins are calculated on a cash basis only with no adjustment for risk management practices. The Beef and Pork Profit Trackers are intended only as a benchmark for the average cash costs of feeding cattle and hogs. Sterling Marketing is a private, independent beef and pork consulting firm not associated with any packing company or livestock feeding enterprise.)

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A Possible Recession Still Hangs Over the Ag Economy, But Positive Shifts Are Starting to Surface

Fri, 01 Nov 2024 23:21:38 GMT

In September, 75 percent of ag economists warned of an impending agricultural recession. October brought slight optimism to the Ag Economists’ Monthly Monitor, attributed to rising U.S. corn export demand and forecasts about cattle herd rebuilding. Yet, economists remain cautious about the potential impact of the upcoming election.

Harvest is winding down across the Midwest, and some farmers saw a record harvest pace in 2024. Harvest is typically the time of year the market sets harvest lows, but this year, commodities, like corn and wheat, came to life.

“I think over the last month, we’ve seen a little bit of a rebound or stabilization of prices, if you will. Some of that’s simply been fund short covering that is supported, some of it is a little better long-term picture for wheat and for corn, although for soybeans, it’s still looking somewhat bleak long-term,” said Arlan Suderman, chief commodities economist with StoneX Group.

The latest Ag Economists’ Monthly Monitor, which is a survey of nearly 70 ag economists and conducted by Farm Jounal each month, reflected that with short-term sentiments among economists seeing a slight improvement, but a bigger jump when asked to compare them to last year.

“We could have told you two to three years ago that, after a period of high prices, eventually we were going to have a recovery in production and that was going to suppress prices probably more than input costs. We knew that. I think when you take into account expectations heading into the year, has it deteriorated more than expectations? Probably not. We just know that we’re worse off today than where we were,” said Ben Brown, an agricultural economist with the University of Missouri.

Each month, the Monthly Monitor asks economists to list the factors that could impact crop prices over the next six months. In the latest survey, economists said:

South American weather
U.S.-China trade relations
Election outcomes
Global geopolitical risks
Biofuel demand

The Biggest Wildcard: South America

“The biggest thing that will l impact the markets is going to be South American weather. What happens in Brazil and Argentina and what’s the size of the soybean crop they’re going to get? Right now, it is raining. The crop is being planted late. Our people on the ground in Brazil are expecting a big crop if these rains continue,” Suderman said.

While the soybean crop could see suppressed prices if Brazil grows a big crop this year, the later-planted crop could eat into the supplies of corn.

“Even where we’re at today could have an impact on that second-crop corn, given that I anticipate that we’re going to see a very robust corn export picture even without a shrinkage in that second-crop Brazilian corn. I still think there’s an upside potential for the corn market, and it’s going to be based on the size of that second-crop corn in Brazil,” said Brown.

A Recent Surge in Corn Sales

The corn export demand picture has been strong, which is thanks to a surge in sales to Mexico. T hat’s one significant factor currently fueling corn prices .

“If we didn’t have it, corn prices would be a lot lower today than where they are,” said Brown.

“When we look at the export pace that we’re on right now, it’s stronger than what we normally have at this time of year, and it’s largely been because of Mexico. Mexico has been a very aggressive buyer of U.S. corn here, at what they perceive to be the harvest lows,” Suderman said.

Outlook for Livestock and Dairy

The October Monthly Monitor asked economists to list the factors that could impact livestock and dairy prices over the next six months. Economists said:

Herd size and tight cattle supplies
Outcome of the election
Health of general economy in the U.S. and consumer demand changes
Disease issues (H5N1, etc.)
Developments in China and other major importers
Consumer demand given high meat and dairy prices
Weather in the Corn Belt and Great Plains

When Will Beef Producers Start to Rebuild Their Herds?

October Ag Economists’ Monthly Monitor

(Lindsey Pound)

The October survey also asked economists when they think producers will start to rebuild their cow herds:

50 percent said in the first half of 2026
30 percent think it’ll happen the second half of 2025
20 percent said in the first half of next year.

“We’ve seen a slowdown of cow slaughter. That’s step one, but that’s not rebuilding,” said Suderman. “It really comes down to when do we turn this weather pattern around and start getting the pasture, the feed necessary in the West in order to incentivize rebuilding the cowherd? That is the problem right now.”

Other than weather, what else is preventing producers from starting to rebuild? Economists say it’s the average age of producers, replacement costs and heifer prices.

“I also think there is this economic pull on producers of ‘how can I justify retaining these heifers when they’re bringing the prices that they are?’” said Brown.

The Inflation Factor

When you look at what could impact both livestock and row crop producers over the next six months, a major wild card is interest rates. The October survey asked economists how much farm interest rates need to fall to find economic stability for farmers, and 46% said 2%.

Ag Economists’ Monthly Monitor

(Lindsey Pound )

But even with the Fed cutting the benchmark interest rate last month, interest rates have actually gone up, not down.

“The two-year break-even inflation rate is what the market trades. It’s expectations of what inflation’s going to average over the next two years. And over the last six weeks or so, we have seen it jump a full percentage point. That is a significant short-term jump, saying that reinflation fears are coming back in a hurry,” Suderman said.

Suderman points out the Fed can influence mid- and longer-term rates, but the agency can’t control them. And it’s concerns about inflation that are pushing those rates back up again.

“That could all change over the next couple of weeks, or it could be reinvigorated. I think longer term, what I’m looking for is a return to the interest rates that we saw in the ‘90s and early 2000. But I think there’s going to be a lot of volatility in getting there,” Suderman said.

Election Impact on Ag

October Ag Economists’ Monthly Monitor

(Lindsey Pound)

Ahead of the election, the Monthly Monitor asked economists which presidential candidate will be more effective at taming inflation. Fifty-three percent said Donald Trump.

When it comes to providing more certainty on farm policy and crop insurance, 61 percent of economists said Trump will provide more certainty.

However, when looking at policies that benefit biofuels, 53 percent of economists said Kamala Harris.

Today, there is no clarity on 45Z that’s causing soybean processors like Cargill and Bunge to possibly slow or even idle production by the end of the year.

“We have industry looking to shut down production of biofuel. If we don’t get the 45Z requirements here released soon, and that doesn’t look likely, unfortunately, that’s going to hurt demand for soybean crushing for soybeans per se,” Suderman said.

“The fact that we don’t have those today, I think, is impeding investment in the sector. And people are asking for that before they spend millions of dollars to do that. And I think that has been a hiccup,” said Brown.

Role of the Federal Government

Heading into a crucial election with not just the presidential race, but also the House and Senate, the October Ag Economists’ Monthly Monitor asked, “What is the most important role of the federal government?”

Forty-six percent of economists ranked financial aid as the top priority. Nearly 43 percent said it’s passing a farm bill.

October Ag Economists’ Monthly Monitor

(Lindsey Pound)

“There’s all this discussion that the safety net is inadequate relative to commodity programs, and there’s the potential for some rather large ARC and PLC payments to come,” said Brown. “But are they too late? That’s the question. Is it too late in the cycle? Does any type of ad hoc support through a farm financial package bridge that gap?”

The October survey of economists also asked them to weigh in on the fate of the farm bill. The majority of economists think Congress will pass a new farm bill in 2025, but 21 percent think it could be 2026 before it crosses the finish line.

Farm Bill Ag Economists’ Monthly Monitor

(Lindsey Pound )

Conclusion

The October Monthly Monitor reflects cautious optimism in certain areas of agriculture, marked by export strengths and potential price recoveries. But the optimism is shadowed by long-term rebuilding challenges, weather dependencies and the impact of the upcoming election.

The Recent Boom in Livestock Profitability is Masking a Harsh Reality of the Overall Farm Economy in 2024

Tue, 15 Oct 2024 16:27:48 GMT

USDA’s revised Net Farm Income projections released in early September showed net farm income will fall $6.5 billion or 4.4%, which is a major improvement from projections released in February suggesting it would fall 26%. However, economists argue those revised figures come with some misconceptions about the health of the ag economy today, and the the recent boom in livestock profitability is hiding the reality what’s really happening on row crop farms across the U.S. right now.

The lates t Ag Economists’ Monthly Monitor from Farm Journal showed a slight rise in optimism compared to the previous month, but economists remain worried about the current state of the agricultural economy when compared to last year.

It’s clear the ag economy is dominated by two very different stories this year. The livestock sector is better than what USDA forecasted in February, but the crop sector is worse.

“The margins that farmers are facing on average are really a tough place to be in for 2022 to 2024,” says Krista Swanson, lead economist for the National Corn Growers Association (NCGA). “According to USDA, the cost to produce corn dropped 5%, but the price was down 37%. And when we look at those average numbers from USDA, looking at cost of production for corn prices and yield, that comes out to average losses of $125 per acre.”

Revised Projections on Net Farm Income for 2024

USDA’s revised Net Farm Income projections were released in early September, and the updated figures were surprising to many economists. The new numbers show net cash farm income for the 2024 calendar year will fall $12 billion, which is down about 7% from 2023, and net farm income will fall $6.5 billion or 4.4%. This is compared to projections released in February of this year which suggested net farm income would fall 26%.

The latest Ag Economists’ Monthly Monitor survey, which is an anonymous survey of nearly 70 economists, asked those economists, “What was the most interesting thing you noticed in USDA’s September Farm Income update?” Economists weren’t surprised the livestock picture improved from the February report, but they pointed out the following:

“Increase in farm asset value and equity.”
“The ‘dog that didn’t bark.’ Many people expected a more dire picture in 2024, but the drop in crop prices was only a little more severe than earlier expected, and the necessary downward correction in estimates of 2024 feed costs (the earlier estimate was unreasonably high, given what was known about feed prices at the time) helped moderate overall 2024 costs. There were also adjustments upward in receipts for crops other than grains and oilseeds that boosted the receipt and income figures.”
“The simultaneous downward revision in the net farm income estimate for 2023 paired with the upward net farm income forecast for 2024, causing the year-over year 2023-2024 decline to shrink substantially.”

Potential Recession in the Agricultural Sector

The survey also asked if agriculture is on the brink of a recession, and there was no clear consensus as economists argue the livestock sector and the row crop sector are two very different stories. Seventy-five percent said yes, agriculture is on the brink of a recession, which is up from the 56% who responded that way in the previous month’s survey. However, 54% of economists argue agriculture is already in a recession, with some economists pointing to only the crop sector seeing recession concerns.

“I think yes, and it depends on how you define a recession. I define a recession as this is one of the worst years we’ve seen in the last 20. So my short answer to the question is yes. Just looking at where the price is currently at, this is about the worst year since 2007, which was the start of the ethanol boom,” Langemeier said.

It’s clear not all economists are in agreement, but when asked to expand on why, economists said:

“Financial health is weaker but still pretty strong.”
“For select crops and regions of the country farmers are facing significant financial pressure.”
“The cost-price squeeze facing the crop sector is severe and will have larger implications if it persists. Many crop producers were profitable in 2021 and especially 2022, so they had some ability to absorb a more challenging environment over the last two years. But that ability is running out, especially for producers who rent much of the land they operate or who are heavily indebted.”
“Over-production globally and exports are soft, while biofuel policy does not support consumption of surplus.”
“The farm structures across all farms does not suggest a recession. A higher portion of farms have off-farm income to support cyclical changes. Most farms have healthy balance sheets (thanks to increased land values), and there are positive returns in certain sectors of the industry supporting those that are diversified. Areas of the ag economy that will struggle are those that are highly or fully concentrated in row crops, are full-time commercial operations between 1,000 and 2,000 acres, and have a high proportion of cash-rented acres.”
“Highly-leveraged producers are feeling economic pain already. If supplies continue to remain large, lower prices may last for a longer period of time and could result in highly-leveraged producers leaving the industry.”
“The livestock sector, specifically cattle and dairy, is performing well relative to hogs and the crop sector.”

September Ag Economists’ Monthly Monitor

(Lindsey Pound/Farm Journal)

The economists were even more divided when it came to answering whether the ag economy is already in a recession. Economists said:

“The challenges faced by the crop sector are at least partially offset by a more positive story for cattle producers, in particular. For other animal sector producers, the drop in feed costs has made 2024 a little better than 2023.”
“Farmers are already feeling the pinch, and they are looking for ways to slash expenses.”
“Lenders in our state are very concerned about the outcomes for this year and the outlook for next year.”

Poor Margins for Pork Producers

Beef and dairy producers may be looking at better margins for 2024, but even with improved feed costs, pork producers are still faced with potential losses this year.

Iowa State University estimates U.S. pork producers will see an average of $13 per head loss during 2023-2025, which would be the worst three-year period for profitability in hog production in history, even worse than 1997-1999 ($12 per head loss).

The 1997-1999 time period had a dramatic impact on the hog industry and caused mass consolidation and more vertical integration.

The September Ag Economists’ Monthly Monitor asked economists: “What is the potential impact to the industry? And how is it different than what we saw in the 1990s?”

Some economists responded by saying they expect even more consolidation to take place today, but other economists say with so much consolidation already shaping the pork industry, this time period will be different.

“In the short run: not much - minimal increase in consolidation long run: some supply adjustment - depends on who has the deepest pockets.”
“Fewer hog producers.”
“The industry is already much more concentrated than it was in the late 1990s.”
“2023 was particularly difficult for the industry. The situation remains challenging, but lower feed costs have at least reduced losses. Unless demand strengthens, there will eventually need to be a contraction in supplies to generate a more “normal” rate of profitability.”
Leads to more concentration. A similar effect occurred in the 1990s

Livestock and Dairy Prices Outlook for the Next Six Months

Cattle and dairy prices are stronger than crops. The survey asked economists, “What factor(s) are you watching that you expect will impact livestock and dairy prices in the next six months?” Economists said:

The outcome of the 2024 election
Drought
Health of the ag economy
Meat demand at restaurants
Feed costs
High beef prices and the impact on beef and pork demand
If milk supplies remain weak, it will continue to lead to strong milk prices

Key Factors Affecting Crop Prices

The survey then asked economists to list the factors they’re watching that could impact crop prices over the next six months. Economists responded by saying:

Final 2024 U.S. crop production numbers
South American weather
Fall planting in South America (timing and acreage)
China’s economy/geopolitical tensions
Policy changes after the election (tariffs, impact on trade and biofuel policies)

Tariffs and Trade: A Continued Debate

The September Ag Economists Monthly Monitor, a Farm Journal survey of nearly 70 ag economists, revealed a mixed view of the presidential candidates’ impact on trade.

(Lindsey Pound)

Another area is exploring new export demand. Ag economists pointed out the outcome of the election could impact both crop and livestock prices. The September Monthly Monitor asked economists if the two presidential candidates would help or hurt trade.

55% said a Harris administration would hurt trade.
86% percent of economists said a Trump administration would hurt U.S. trade.

“Farmers are definitely concerned about trade,” says Langemeir, who helps author the Purdue University/CME Group Ag Economy Barometer and is one of the economists surveyed by Farm Journal each month. “We don’t ask specific questions related to tariffs in the Ag Economy Barometer, but one question we do ask is if they expect exports to increase, decrease or stay the same? Really, this is the most pessimistic they’ve been for about five years with regard to trade.”

Tariffs are a tool both the former Trump administration and the current Biden/Harris administration have used.

During the first presidential debate, Trump didn’t waver from his staunch stance on tariffs and trade, reiterating his plan to use tariffs to protect U.S. industries and increase revenues. Trump reinforced his plan to impose a 10% tariff on all imported goods and a 60% tariff on goods from China.

During the debate, Harris stated tariffs are essentially a “sales tax” on American households. The Biden/Harris administration recently extended the Trump-era tariffs, while also imposing its own set of tariffs in May. Biden directed the U.S. Trade Representative to “increase tariffs under Section 301 of the Trade Act of 1974 on $18 billion of imports from China to protect American workers and businesses.”

“That’s why I get really worried when both candidates start talking about tariffs. It’s really uncharted waters, if you will. There’s already the perception we’re struggling a little bit with trade. As we enter these uncertain waters, we’re going to struggle more,” Langemeier explained.

Do Tariffs Work?

The controversy over tariffs and whether they’re a good trade policy tool is long-standing. The September Ag Economists’ Monthly Monitor asked economists: “Do tariffs work in trade policy?” Economists views were mixed:

“Tariffs can work in trade policy — that’s why nations continue to use them. The complex part that extends beyond the tariff action is potential long-term repercussions that can result from trade-flow changes.”
“In limited cases, typically only if they result in a policy response in the targeted country. Much of the time, tariffs are like cutting off one’s nose to spite one’s face.”
“Tariffs provide short-term gains but have always failed relative to free trade in the long-term.”
“Absolutely, when properly applied.”
“Not over the long-term. They tend to affect who gets to supply different markets around the world.”

The September Ag Economists’ Monthly Monitor also asked: “When tariffs are used as a ‘tool’ in trade, who pays the tariff?” Not all economists were aligned on that answer either, saying sometimes it’s farmers and consumers, but it can also be the exporting countries.

“When the U.S. imposes tariffs on imports, importers in the U.S. pay taxes to the U.S. government on their purchases from abroad. When another nation imposes tariffs, importers in that nation pay import taxes to their government on their purchases from abroad. Often, when a tariff is implemented, another nation retaliates, and you end up with importers in both nations paying the price on whatever products the tariffs apply toward.”
“If an importing country places a tariff on the exporting country, producers in the exporting country and consumers in the importing country both lose (i.e., receive lower and higher prices, respectively). Conversely, producers in the importing country and consumers in the exporting country win (i.e., receive higher and lower prices, respectively).”
“In the short run, consumers who purchase goods with a tariff might see higher prices if the tariff is not absorbed elsewhere. In the long run, the tariff might result in changes to the supply chain that result in higher prices but also create other economic opportunities in America (e.g. reshoring of domestic manufacturing).”
“The correct economist answer is ‘it depends.’ Tariffs drive a wedge between prices in the exporting country and in the importing country. It depends on the circumstances of particular markets and how much is reflected in higher prices in the importing country and reduced prices in the exporting country.”
“Both the exporting nation and the importing consumer pay some portion of the tariff depending on who has more flexibility to adjust to a trade barrier. If exporting countries can easily switch to supplying other markets, they won’t have to ‘pay.’ If consumers can easily find cheap substitute goods, they won’t have to pay.

Conclusion: A Complex Road Ahead for U.S. Agriculture

As U.S. agriculture faces multiple challenges, from high input costs to volatile prices and geopolitical concerns, farmers are forced to find new ways to adapt. Economists emphasize the need for new demand sources, particularly in exports, to help stabilize prices and support the sector moving forward. With the outcome of the 2024 election and global market dynamics set to play pivotal roles, the agricultural sector will need to remain flexible to navigate these uncertain times.

Your Next Read: Presidential Poll Results: How Farmers and Economists View Candidates’ Impact on Agriculture

Trade Groups Criticize USDA’s Final P&SA Rule

Thu, 26 Sep 2024 20:18:57 GMT

Several meat industry trade groups quickly criticized USDA’s announcement on Tuesday of a final rule changing the Packers and Stockyards Act (P&SA) to give contract farmers more leverage in business with meatpackers and integrators. Trade groups argue the changes introduce unnecessary regulations and costs.

USDA claims the rule clarifies and makes more effective P&SA standards related to prohibited practices relating to discrimination, retaliation and deception in contracting. The final rule will be effective 60 days after publication in the Federal Register.

USDA is finalizing a series of rules under the Packers and Stockyards Act as part of President Biden’s historic Executive Order on Promoting Competition in America’s Economy.

“NCBA’s concern with this regulation has always been based in the rule’s unforeseen impacts to standard business practices,” NCBA Vice President of Government Affairs Ethan Lane said in a statement. “We have remained consistently opposed to any discriminatory practices in the marketplace. While we still have concerns about the unintended consequences of the rule, we are pleased that USDA has addressed most of our significant concerns between the proposed and final rules.”

Lane said NCBA urges USDA not “stray into extraneous, unrelated subject matter discussed in the proposal’s preamble.”

The North American Meat Institute claims the new P&SA rules does nothing to “encourage competition” while attempting to give USDA new power to “exert federal control over business contracts.”

“These changes are simply an attempt to assert even more federal authority to regulate the equities of industry business practices, clogging the federal courts with every contract dispute,” said Julie Anna Potts, President and CEO of the Meat Institute. “Congress never intended to give the agency such broad-ranging authority over meat industry contracts and practices, regardless of their effect on competition – and the courts have agreed.”

“While the actions described by USDA have no place in the meat industry, other federal statutes and state laws already exist to address the rare instances in which they may occur,” Potts said. “An antitrust statute is not the appropriate statute for these rules.”

National Chicken Council president Mike Brown says his group is concerned the Proposed Rule will further raise costs, expose live poultry dealers to significant legal and compliance risks and undermine the successful and mutually profitable poultry grower contracting system.

“The last thing AMS (Agricultural Marketing System) should be doing is pushing increased regulations, red tape and costs onto businesses at a time of record inflation and input costs, threatening food security and potentially raising grocery bills even further for Americans. As such, we are urging the agency to withdraw this proposal.”

Cattle Try to Recover But is an Intermediate Top In? Grains Lower Pre-WASDE

Fri, 12 Jul 2024 14:19:24 GMT

Cattle open lower and then try to recover in a week that has seen a correction with plant closure concerns, lower boxed beef values and softer cash, at least in the South.

Scott Varilek, Kooima Kooima Varilek, says if this correction is an intermediate top he doesn’t think the correction will be huge in the futures due to the big discount the futures are holding to the cash, plus the continued tight supplies.

Cash trade was still strong in the North at $198 and $312 dressed. Meanwhile, Southern cash trade has been softer this week at mostly $188, but there have been sales ranging from $185 to $191.

Varilek says the break early in the week may have been tied to the break in boxed beef values.

It was also linked to some disruptions at beef processing plants. Tyson in Dakota City, Nebraska was down on Monday due to a gas leak.

However, Varilek says, “There were some rumors that a Nebraska beef processing plant may have been closing. Even though it wasn’t confirmed that spooked the market and caused part of the the sell off in cattle,” he says.

A spokesman with Nebraska Beef confirmed that they ran full shifts every day during the week of July 8-12.

Mike Weaver, legal counsel for Nebraska Beef says, “Additionally, Nebraska Beef is not closing. Company management has been in the industry for over 60 years and has always operated the business to account for industry cyclicality, and the adverse market conditions that may occur as a result of herd adjustments. The Company is well capitalized, debt-free, and intends to be in the beef industry as long as there is an industry.”

Another negative bird flu story out of the UK was also out ahead of the open but Varilek doesn’t think the market traded it.

Lean hogs see a short covering bounce as they are oversold.

Grains are lower in anticipation of a bearish WASDE, but he says much of it is already priced in after this week’s selloff.

Ag Economists Weigh In On the Biggest Opportunities for the Ag Economy in the Months Ahead

Tue, 02 Jul 2024 13:10:31 GMT

Ag economists are growing more negative regarding the financial health of the crops sector of agriculture, but their views on livestock is becoming more positive. The latest Ag Economists’ Monthly Monitor , a survey of nearly 70 ag economists from across the U.S., shows the lack of exports, as well as the current crop prices, are eroding outlooks on the crops side. While strong beef demand and cheaper feed prices are creating more optimism in cattle.

The June Ag Economists’ Monthly Monitor, which is a joint survey between the University of Missouri and Farm Journal, continues to track the volatility in ag economists’ views of not only what’s impacting agriculture today, but what to watch on the horizon. The June survey marked the one-year anniversary for the monthly survey, and it showed the risks to agriculture remain a major concern.

Even though economists’ views on the ag economy eroded slightly in June, their projection for net farm income in 2024 actually increased to $113.9 billion, which is up from the $110 billion in projected by economists in May.

Ag economists’ project a slight increase in net farm income, compared to the previous month. The June projection rose to $113.9 billion, up from the $110 billion in May.

(Lindsey Pound)

Weighing in on the Most Negative and Positive Aspects of the Ag Economy

When asked what economists view as the most negative aspect of their outlook of the ag economy, economists said:

Crop output prices retreating more rapidly than input costs
Commodity prices below economic break-even production costs
Export outlook from the U.S., specifically the lack of Chinese demand
U.S. trade policy regardless of party affiliation with more international trade competition
Constant challenges to demand and policy that adds barriers to existing and potential new demand streams

“Some farmers made production and investment decisions assuming that earlier wider margins would persist,” noted one economist.

While the negativity seems to outweigh the positives of the ag economy right now, the June Ag Economists’’ Monthly Monitor also asked economist to weigh in on the most positive aspect regarding the outlook of U.S. agriculture. Economists said:

Over the next couple of years, cow-calf operators should have good profitability, especially in areas of the country with good forage conditions
Adverse world weather boosting U.S. exports
The possibility of good yields that will help farmers hit their financial goals
Discipline by producers to keep acreage expansion in check and U.S. prices being more competitive in the global market.
Farmers eager to make adaptations necessary to stay in business

“There are some really bright producers that are positioned for some quick growth in the next 5 to pp10 years,” said one economist in the anonymous survey. “They will be positioned to buy farmland as older producers transition.”

Ag economy outlook in the June Ag Economists’ Monthly Monitor.

(Lindsey Pound)

The outlook for the U.S. production picture is anybody’s guess right now, but Scott Brown, interim director, Rural and Farm Finance Policy Analysis Center (RaFF), University of Missouri who helps author the Monthly Monitor, says weather continues to be one of the biggest variables in what happens with commodity prices in the months ahead.

“Number one, at the top of the list of almost all of these commodities, of course, is weather,” says Brown. “I think some are seeing some demand weakness as a big factor with soybean prices in particular, and seeing some other vegetable oil substitutes entering the picture. What’s maybe even a bigger factor on the soybean side is Brazilian supplies. A strong dollar continues to be important, in terms of our ability to move product out of the United States.”

Brown says one prime example of this is with cotton where the lack of Chinese trade has had an impact on prices.

“As we look at this month’s Monitor, and when you look at the survey results that comes through with almost all of these commodities with the exception of cattle, survey respondents are saying we’re slightly more pessimistic this month than we were last month,” Brown adds.

The June Ag Economists’ Monthly Monitor showed economists think the following factors will have the biggest impact on the outlook for corn prices:

U.S. and world weather
Better precipitation across the Corn Belt compared to the previous growing season
Growing end stocks continuing to a burden on prices

As for soybeans, economists say U.S. and world weather will also play a significant role in the direction of soybean prices, but other factors that are impacting outlooks on soybean prices include:

Demand is soft and imports of cheaper vegetable oil substitutes is creating more competition
Biofuel and sustainable aviation fuel (SAF) developments will have a bigger impact on prices in the months and years ahead
Expectation for larger soybean supplies in Brazil
Strong U.S. Dollar

The bright spot in the ag economy continues to be cattle prices. According to ag economists, the outlook for prices in the months ahead really hinges on three main factors:

If record beef demand can continue
Growing crop supplies creating lower feed costs
Strong U.S. Dollar

“It‘s hard to keep suggesting higher prices when we’re already at record levels, but when you look at where we’re at in terms of cattle inventory, we’re only going to get tighter,” says Brown. “USDA’s 2025 estimate for beef production is a decline of more than 1 billion pounds. That tells me we’re not done getting tighter.”

Brown says the one wild card for beef prices is demand. So far, demand has seem unfazed, despite record prices. Export demand remains strong, but so does demand for beef within the U.S. Those are underlying factors that are also supporting cattle prices. keep saying I’m not sure we’re done with record prices. So I think all hinges on demand staying strong for us beef, especially here in the United States.

The “Why” Behind a Growing Ag Trade Deficit in the U.S.

While meat exports have been strong, other commodities continue to struggle and at the same time, the U.S. is importing more ag products and goods. USDA’s Ag Economic Research Service (ERS) now projects the agricultural trade deficit to climb once again to $32 billion in fiscal year 2024, an increase of $1.5 billion from the February projection.

What factors are most important to the increase in the trade deficit? The June Ag Economists’ Monthly Monitor asked economists that exact question. Nearly every ag economist noted the strong U.S. dollar as one reason the trade deficit continues to grow, but other factors, according to the economists, include:

Increased used cooking oil imports for renewable diesel
Increased imports of horticulture products
Softer U.S. ag exports

ERS also projects Mexico to beat out China as the top buyer, with China projected to fall to third biggest importer of U.S. ag goods at $27.7 billion. ERS expects Canada to claim the number two spot and Mexico to reach number one at $28.7 billion, an increase of $300 million.

The rise of Mexico’s imports have come in spite of the ongoing GMO corn battle between the U.S. and China. In 2023, Mexico officially banned GM corn for human consumption. That same year, Mexico also made its largest corn purchase from the U.S. of 15.3 million metric tons.

Some economists say Mexico is treating U.S. corn as a threat, and while exports are up, it’s having a big hit on GM corn demand.

“It has impacted white corn demand specifically, and the reason that when we look at overall corn demand and we still see Mexico as being a big buyer, is because white corn is such a small percentage of our total corn,” says Krista Swanson, lead economist for National Corn Growers Association (NCGA) who also participates in the Monthly Monitor survey. “So, if you look specifically at white corn exports, you do see that impact. When we talk about the total corn complex, though, Mexico’s had a drought that has reduced their production. They already consume quite a bit more than they produce, so they tend to be an importer. But this year they’ve had to import more than normal. And so that’s where we’re seeing those big buys coming in from, from Mexico and where that’s really boosted U.S. corn exports this year.”

Future of Interest Rates

Higher interest rates are impacting farmers and major equipment manufacturers. On the heels of the Federal Reserve deciding to leave interest rates unchanged during their June meeting, the June Ag Economists Monthly Monitor asked the economists how many rate cuts, if any, we will see this year. 73% said one. 18% think two rate cuts this year. And 9% say there will be no rate cuts in 2024.

73% of ag economists think the Federal Reserve will make one interest rate cut this year, according to the Ag Economists’ Monthly Monitor.

(Lindsey Pound)

With the expectation for higher-for-longer interest rates, farmers are scaling back on big-ticket item purchases, which includes buying equipment.

The May Ag Economists’ Monthly Monitor asked economists to rank where they think farmers will look to cut costs. While all economists said scaling back on equipment purchases is either most likely or somewhat likely, 65% of economists think farmers will look for lower operating interest rates and 17% think it’s most likely.

Purchase changes

(Lindsey Pound )

USDA Proposes New Rule to Clarify Unfair Practices in Livestock and Meat Industries

Tue, 25 Jun 2024 18:35:45 GMT

On June 25, 2024, the U.S. Department of Agriculture announced new action to support the Biden-Harris Administration’s plan for a fairer, more competitive, and more resilient meat and poultry supply chain. USDA’s Fair and Competitive Livestock and Poultry Markets proposed rule would tackle longstanding challenges around interpretations of unfairness and competitive injury for the livestock, meat, and poultry sectors. This will support farmers and growers, and continues President Biden’s work to lower food costs for consumers.

Secretary Vilsack made the announcement during an event at the Center for American Progress showcasing the Administration’s agenda to create more affordable and competitive agricultural markets. The event highlighted USDA’s wide-ranging progress to enhance the Department’s ability to enforce the Packers and Stockyards Act, including previous rulemaking and an enforcement partnership with the Department of Justice. The event also provided a look back at USDA’s successful Investing in America Agenda efforts to enhance independent meat and poultry and other diversified food processing capacity; expand domestic, innovative fertilizer production; create a fairer market for seeds and other agricultural inputs; and support more robust and resilient supply chains. USDA also released a fact sheet highlighting its actions under the Biden-Harris Administration to spur competition in the agriculture sector.

“Entrenched market power and the abuses that flow from it remain an obstacle to achieving lower prices for consumers and fairer practices for producers,” said Agriculture Secretary Tom Vilsack. “Today’s proposed rule stands for clear, transparent standards so that markets function fairly and competitively for consumers and producers alike. With our whole-of-government approach to competition and resiliency, the Biden-Harris Administration is fighting every day to lower costs for American families and give farmers a fairer shake.”

The proposed rule will better protect farmers, ranchers, and other covered market participants by making clearer how prohibitions on unfair practices will be enforced under the Packers and Stockyards Act. Specifically, the rule provides clearer tests and frameworks around unfair practices that harm market participants individually and unfair practices that harm markets overall. If finalized, this rule would better enable USDA’s Agricultural Marketing Service to carry out its legal obligation to ensure fair and competitive national livestock, meat, and poultry markets and ensure livestock producers and poultry growers can secure the full value for their products and services.

“Farmers, ranchers, consumers, and smaller processors all depend upon the Packers & Stockyards Act to protect them from bad actors in the marketplace,” said USDA’s Senior Advisor for Fair and Competitive Markets Andy Green. “It’s time to provide the regulatory clarity and simplicity needed to put an end to unfair conduct that harms the market or that harms market participants.”

The proposal is based on USDA’s extensive administrative case law and builds off of precedent established under other unfair practices laws. The proposal follows well-understood approaches to unfair practices and unfair methods of competition.

The proposed rule will be published in the Federal Register for public comment. Upon publication, the public can submit comments at Regulations.gov for 60 days. All comments submitted will be considered as USDA develops a final rule. The final rule will be published in the Federal Register.

The publication of this proposed rule is part of a suite of USDA regulatory actions under the Packers and Stockyards Act to enhance transparency, stop discrimination, and support market fairness in the livestock and poultry industries. Previous actions include the Poultry Grower Payment Systems and Capital Improvement Systems proposed rule and the Transparency in Poultry Grower Contracting and Tournaments and Inclusive Competition and Market Integrity under the Packers and Stockyards Act final rules.

Is The Packers and Stockyards Act from 1921 Obsolete?

Fri, 16 Jun 2023 19:31:21 GMT

Changes to The Packers and Stockyards Act may be coming, as the House Appropriations Committee recently held a full committee markup hearing regarding the Fiscal Year 2024 Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Bill.

The bill includes text stating none of the funds made available by this or any other Act thereafter may be used to implement or enforce the following:

Proposed rule entitled ‘‘Inclusive Competition and Market Integrity Under the Packers and Stockyards Act”
The rule making identified in ‘‘Unfair Practices, Undue Preferences, and Harm to Competition Under the Packers and Stockyards Act”
The proposed rule entitled ‘‘Transparency in Poultry Grower Contracting Tournaments’’
The advance notice of proposed rulemaking entitled ‘‘Poultry Growing Tournament Systems: Fairness and Related Concerns”
Or any subsequent substantially similar rulemaking effort, except that funds may be used to, and the Secretary of Agriculture shall, withdraw or rescind any such proposed rules, advance notices of proposed rulemaking, and any such rules that may have been finalized.

With these changes, industry organizations are mixed have mixed reactions.

A total of 102 organizations, including the U.S. Cattlemen’s Association and R-CALF USA, representing a variety of producers across the U.S., recently sent a letter to the U.S. House of Representatives Committee on Appropriations, specifically Chair Rep. Kay Granger (R-Texas), and Ranking Member Rep. Rosa DeLauro (D-Conn.), urging the “opposition to any appropriations policy riders to limit the rulemaking authority of the Secretary of Agriculture under the Packers and Stockyards Act,” the letter states.

Meanwhile, the National Cattlemen’s Beef Association (NCBA) “thanked members of the House Appropriations Committee for advancing the Fiscal Year 2024 Agriculture, Rural Development, Food and Drug Administration appropriations bill,” which the organization believes will provide funding for essential programs that support cattle producers while defending against overreaching regulations, says a release.

According to the USDA Agriculture Marketing Service (AMS), “as stated by Congress, the purpose of the Packers and Stockyards Act is ‘to assure fair competition and fair trade practices, to safeguard farmers and ranchers...to protect consumers...and to protect members of the livestock, meat, and poultry industries from unfair, deceptive, unjustly discriminatory and monopolistic practices....’”

Originally enacted in 1921, the letter notes how its importance is greater now with the highly concentrated and vertically integrated nature of the livestock and poultry industries with widespread consolidation over the last 50 years, while four large processors control 70% of the market for hogs, 62% for sheep and lambs and 85% for cattle.

NCBA Senior Director of Government Affairs Tanner Beymer says the organization is pleased with the committee’s support, stating the bill is “protecting producers’ ability to capture premiums by nullifying USDA’s overreaching Packers and Stockyards rules and lowering cattle producers’ cost burden in implementing animal disease traceability.”

NCBA believes the bill to be “a win for cattle producers,” which would defund the U.S. Department of Agriculture’s Packers and Stockyards rules.

Additionally, the letter explains the organizations’ disproval of the repeated use of “appropriations riders” to “derail the rulemaking process.“

The bill would also provide $10 million for the purchase of electronic identification (EID) tags and related infrastructure in support of animal disease traceability implementation, says the NCBA release, along with reports on cell-cultured meat, the Cattle Contracts Library Pilot Program, and the Asian Longhorned Tick, and funding for the National Animal Health Laboratory Network, feral swine eradication and healthy dog importation screenings.

The bill now awaits the full House of Representatives for consideration.

Grain and Livestock Futures Shake Off Election, Tariff Fears and Soaring Dollar

Grain and livestock futures closed mostly higher except for wheat.

Darren Frye, Water Street Solutions, says it was an impressive close especially for soybeans which were down 18 cents overnight in reaction to former President Trump’s election win and the possibility of increased tariffs on China and other export customers and another trade war.

However, the grains were also able to shake off a sharply higher dollar.

It may be tied to hopes export business will pick up before January 20.

“It could be the fact that we have an export window now until January until Trump takes office and there will be a lot more buying up until then. It could be that the commercials are seeing that exports aren’t going to be that bad. We kind of thought they were going to be zero if he got elected but with their economy isn’t in as good a shape as four years ago and maybe they can’t take his harassment or tariffs. Maybe they have to play nicer,. Maybe they’re going to do some business with us,” he says.

Or Frye says the market may sense that exports won’t be as bad as feared, as these low price levels have stimulated demand.

The key will be for the grain markets to see follow through buying on the strong closes.

“That’s the million dollar question. I mean the charts really look good going home Wednesday. You saw a huge range in soybeans a huge shadow on the candle stick chart. You saw corn close through some key resistance areas. Closing above the $4.24 to $4.25 areas was really important on December corn so we should get some follow through but as always time will tell,” he adds.

Frye was surprised by the strength and new highs in the stock market in reaction to the election.

“I expected the market to be higher but not 1,500 points on the DOW and 500 on the NASDAQ. I mean everything was up small caps, large caps, mid caps. Bit coin was up over $6000 a coin,” he says.

The rally in the financial markets spilled over to help support the livestock futures as well, despite the higher dollar and the trade and tariff fears.

Trump has also talked about raising tariffs on Mexican imports if the president does not provide help with the immigration and border issues.

Mexico is a top customer for U.S. pork and especially hams and so tariffs could hurt the export dependent hog market.

The big week continues with the FOMC decision on Thursday and the WASDE on Friday.

Frye says the bond market is pricing in a .25 point cut in interest rates but the last time Jerome Powell spoke he was a bit hawkish and with the run up in the stock market that may signal inflation is going to reignite.

“So it will be interesting to see what the Fed does with that,” he says.

As far as Friday’s WASDE, Frye isn’t looking for much change in yield, production or ending stocks for corn or soybeans.

“I think they got things pretty close to the mark. Many people were wrapping up harvest, they had a lot of the plots in the October report,” he says.

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2024 Could Go Down as the Worst Financial Year for Farmers Since 2007

Farmers are seeing heightened volatility in commodity prices as harvest season progresses. The lates t Ag Economists’ Monthly Monitor from Farm Journal showed a slight rise in optimism compared to the previous month, but economists remain worried about the current state of the agricultural economy when compared to last year.

“The margins that farmers are facing on average are really a tough place to be in for 2022 to 2024,” says Krista Swanson, lead economist for the National Corn Growers Association (NCGA). “According to USDA, the cost to produce corn dropped 5%, but the price was down 37%. And when we look at those average numbers from USDA, looking at cost of production for corn prices and yield, that comes out to average losses of $125 per acre.”

“Increase in farm asset value and equity.”
“The ‘dog that didn’t bark.’ Many people expected a more dire picture in 2024, but the drop in crop prices was only a little more severe than earlier expected, and the necessary downward correction in estimates of 2024 feed costs (the earlier estimate was unreasonably high, given what was known about feed prices at the time) helped moderate overall 2024 costs. There were also adjustments upward in receipts for crops other than grains and oilseeds that boosted the receipt and income figures.”
“The simultaneous downward revision in the net farm income estimate for 2023 paired with the upward net farm income forecast for 2024, causing the year-over-year 2023-2024 decline to shrink substantially.”

Input Costs and Breakeven Challenges for Farmers

One issue in the row crop sector is the fact input costs are still a weight on balance sheets. Michael Langemeier, Purdue University agricultural economist, said that means the breakeven price for farmers is higher than the price of corn today.

“Even with the really strong yields we’re looking at this year, we’re looking at a breakeven price of $4.70. It’s that combination of a drop in prices and the fact that input costs are relatively high, that I think is just explaining why sentiment is so low.”

Michael Langemeier, Purdue University

Farmers are looking at ways to cut costs even more for the 2025 growing season. The September Ag Economists’ Monthly Monitor asked if farmers will cut back on fall fertilizer. Seventy percent of them said “yes.”

“I think a lot of farmers have already made some trims to fertilizer, where they probably can for the ’24 year. And so you run up on this situation where a lot of times fertility in the soil is supported well enough that if you’re in a high-cost year, you can trim back some and still have good yields. But you only do that for so long,” Swanson says. “That also may cause some farmers to shift to soybeans.”

The Septemeber Ag Economists’ Monthly Monitor asked if economists will cut back on fall fertilizer applications.

(Lindsey Pound/Farm Journal)

Potential Recession in the Agricultural Sector

The survey also asked if agriculture is on the brink of a recession. Seventy-five percent said yes, which is up from the 56% who responded that way in the previous month’s survey. However, 54% of economists argue agriculture is already in a recession, with some economists pointing to only the crop sector seeing recession concerns.

“I think yes, and it depends on how you define a recession. I define a recession as this is one of the worst years we’ve seen in the last 20. So my short answer to the question is yes. Just looking at where the price is currently at, this is about the worst year since 2007, which was the start of the ethanol boom.”

Michael Langemeier, Purdue University

When asked if the economy was on the brink of a recession, 25% of economists responded with “no.” It’s clear not all economists are in agreement, but when asked to expand on why, economists said:

“Financial health is weaker but still pretty strong.”
“For select crops and regions of the country farmers are facing significant financial pressure.”
“The cost-price squeeze facing the crop sector is severe and will have larger implications if it persists. Many crop producers were profitable in 2021 and especially 2022, so they had some ability to absorb a more challenging environment over the last two years. But that ability is running out, especially for producers who rent much of the land they operate or who are heavily indebted.”
“Over-production globally and exports are soft, while biofuel policy does not support consumption of surplus.”
“The farm structures across all farms does not suggest a recession. A higher portion of farms have off-farm income to support cyclical changes. Most farms have healthy balance sheets (thanks to increased land values), and there are positive returns in certain sectors of the industry supporting those that are diversified. Areas of the ag economy that will struggle are those that are highly or fully concentrated in row crops, are full-time commercial operations between 1,000 and 2,000 acres, and have a high proportion of cash-rented acres.”
“Highly-leveraged producers are feeling economic pain already. If supplies continue to remain large, lower prices may last for a longer period of time and could result in highly-leveraged producers leaving the industry.”
“The livestock sector, specifically cattle and dairy, is performing well relative to hogs and the crop sector.”

September Ag Economists’ Monthly Monitor

(Lindsey Pound/Farm Journal)

The economists were even more divided when it came to answering whether the ag economy is already in a recession. Economists said:

“The challenges faced by the crop sector are at least partially offset by a more positive story for cattle producers, in particular. For other animal sector producers, the drop in feed costs has made 2024 a little better than 2023.”
“Farmers are already feeling the pinch, and they are looking for ways to slash expenses.”
“Lenders in our state are very concerned about the outcomes for this year and the outlook for next year.”

The outcome of the 2024 election
Drought
Health of the ag economy
Meat demand at restaurants
Feed costs
High beef prices and the impact on beef and pork demand

Key Factors Affecting Crop Prices

The survey then asked economists to list the factors they’re watching that could impact crop prices over the next six months. Economists responded by saying:

Final 2024 U.S. crop production numbers
South American weather
Fall planting in South America (timing and acreage)
China’s economy/geopolitical tensions
Policy changes after the election (tariffs, impact on trade and biofuel policies)

Discovering New Corn Demand

Low prices cure low prices, and that’s the case for corn. The corn demand has picked up pace due to the U.S. price being more attractive than Brazil’s. Swanson says in order for prices to see a bigger boost, the U.S. will need to find new demand.

“I think when we talk about an immediate help, or immediate action, it’s definitely higher blends of ethanol,” Swanson says. “We are getting outrun by other nations in this. We just saw last week Brazil pass a new piece of legislation that allowed for higher blends there. They already have higher blends than us. And again, other nations are using higher blends than we are.”

Tariffs and Trade: A Continued Debate

The September Ag Economists Monthly Monitor, a Farm Journal survey of nearly 70 ag economists, revealed a mixed view of the presidential candidates’ impact on trade.

(Lindsey Pound)

55% said a Harris administration would hurt trade.
86% percent of economists said a Trump administration would hurt U.S. trade.

“Tariffs can work in trade policy — that’s why nations continue to use them. The complex part that extends beyond the tariff action is potential long-term repercussions that can result from trade-flow changes.”
“In limited cases, typically only if they result in a policy response in the targeted country. Much of the time, tariffs are like cutting off one’s nose to spite one’s face.”
“Tariffs provide short-term gains but have always failed relative to free trade in the long-term.”
“Absolutely, when properly applied.”
“Not over the long-term. They tend to affect who gets to supply different markets around the world.”

“When the U.S. imposes tariffs on imports, importers in the U.S. pay taxes to the U.S. government on their purchases from abroad. When another nation imposes tariffs, importers in that nation pay import taxes to their government on their purchases from abroad. Often, when a tariff is implemented, another nation retaliates, and you end up with importers in both nations paying the price on whatever products the tariffs apply toward.”
“If an importing country places a tariff on the exporting country, producers in the exporting country and consumers in the importing country both lose (i.e., receive lower and higher prices, respectively). Conversely, producers in the importing country and consumers in the exporting country win (i.e., receive higher and lower prices, respectively).”
“In the short run, consumers who purchase goods with a tariff might see higher prices if the tariff is not absorbed elsewhere. In the long run, the tariff might result in changes to the supply chain that result in higher prices but also create other economic opportunities in America (e.g. reshoring of domestic manufacturing).”
“The correct economist answer is ‘it depends.’ Tariffs drive a wedge between prices in the exporting country and in the importing country. It depends on the circumstances of particular markets and how much is reflected in higher prices in the importing country and reduced prices in the exporting country.”
“Both the exporting nation and the importing consumer pay some portion of the tariff depending on who has more flexibility to adjust to a trade barrier. If exporting countries can easily switch to supplying other markets, they won’t have to ‘pay.’ If consumers can easily find cheap substitute goods, they won’t have to pay.