Markets - General

Is the U.S. Corn and Soybean Crop Getting Smaller?

Fri, 29 Aug 2025 16:48:46 GMT

From disease to drought, this 2025 crop has been thrown a curve ball late in the season. It’s also pushing the crop to maturity quicker. And with USDA projecting currently projecting a record yield and crop, many analysts say the U.S. crop is likely going backwards in terms of yield, but that doesn’t necessarily mean USDA will cut yield projections next month.

USDA’s August crop production report showed a record-high 2025/26 U.S. corn yield projection of 188.8 bu. per acre and a record-high soybean yield estimate at 53.6 bushels per acre.

But as AgWeb reported earlier this week , southern rust could take a big bite out of the U.S. corn crop this year. The disease is causing turmoil for farmers who have a large crop in the making. In some cases, a Hail Mary fungicide application at R4 up to early dent (R5) might make sense this season, say agronomists. But in severe cases, the disease can wipe out 45% of the yield potential in a field, according to the Crop Protection Network (CPN) .

A map of counties where Southern Rust has been confirmed or reported in 2025.

(CPN )

Add to that fresh concerns about drought, as the latest U.S. Drought Monitor shows drought is now covering 33% of the country. When it comes to agriculture, 5% of the corn crop is now considered in drought, 11% of the soybean crop and 30% of the cotton crop.

USDA meteorologist Brad Rippey authored the Monitor this week, saying the drought picture has drastically changed over the past month.

“We’re seeing rapid expansion flash drought across the mid-south, lower Midwest into the Northeast,” Rippey says. “All of this drought has come on in just the last few weeks. At the end of July, we were virtually drought free in the Midwest, so to see these yellows and tans starting to light up, that is reflective of the overall dryness. Of course, it’s a different story in the West where we’ve got drought really deeply entrenched. But from the big picture here, a lot of focus on those developing drought areas from the mid-South into the northeast.”

The latest U.S. Drought Monitor shows how the dry August is impacting the drought picture across the country.

(U.S. Drought Monitor )

Rippey says as the taps turned off for some areas, some portions of the Eastern Corn Belt are seeing their driest August on record. He says that dryness is extending westward into parts of the southern and eastern Corn Belt.

“Agriculturally, all eyes are on the Northern Mississippi Delta into the Ohio Valley and the southern Corn Belt. A lot of those areas are receiving less than half of the normal rainfall during the month of August. A few areas have less than 25% of normal,” Rippey says. “And with those taps turning off, that is depleting topsoil moisture. We’re going to have to wait and see with crop production in September to see how the crops have handled this late dryness.”

The map showing the percent of normal precipitation proves areas of the Corn Belt, West and Northeast have turned off dry to end the summer.

(Brad Rippey, USDA)

Rippey says, on a positive note, temperatures have remained mild. So, even though the moisture has been sparse or absent, at least temperatures didn’t amplify the situation. But a dry August is still a concern.

Impact on Yield
Peter Meyer, who helped lead Pro Farmer Crop Tour in the east last week, says with the amount of dryness that’s entered the picture —and the fact that disease has exploded in many Midwest fields over the past week — he thinks the crop is getting smaller, not bigger. But that’s something that likely won’t show up until USDA factors in test weight, which will be the October report.

“I think the crop has gone backward since [Pro Farmer] Crop Tour,” Meyer says. “When I start to look at some of these numbers for the month of August, it was extremely dry in many, many areas. We’re talking the top 10 or 15 dry years out of the last 150, 160 years. So, that’s why the crop ran out of gas. It had a lot of moisture. The heat was there. It pushed a crop further and faster. I think we have an issue.”

Meyer says based on those factors, he’s dropped his yield estimate from the 183 bu. per acre he personally projected during Crop Tour last week.

“But I’m still not below 180 [bu. per acre]. I think we’re going to have an early harvest, and I think we’re going to have an earlier harvest in beans, too. That’s represents a problem here as far as the market is concerned.”

“It definitely feels like it’s going backward,” said Jim McCormick with AgMarket.net on U.S. Farm Report. “When we talk to our clients, which we have some all across the country, they are really concerned about it. Probably a little bit more in the east and the west where we’ve seen some of the driest conditions in 130 years in parts of Ohio. Is it a disaster? No, but it’s definitely taking the top end off the crop.”

Dan Basse, who’s AgResource Company’s president and founder, agrees the U.S. corn and soybean crops could be losing yield, but he warns that it may not be a dramatic cut.

“I think its going backward, but maybe not to the degree that the farmer would like,” Basse said on U.S. Farm Report. “We dropped our yield estimate from 189.2 to 187.1 [bu. per acre]. So, we’re down a skosh from USDA, but this is still a big crop. And some of the early deal data we’re getting out of Kentucky, Missouri and Kansas is above what expectations were. When you think about this crop, southern rust is a bad disease if you get it into blister or early milk stage. But when it happens at dent, you’re looking at yield losses of zero to 4%. So, let’s hope that farmers applied one application of fungicide and that kept them until the crop got in the dent. I’m hoping that’s going to limit yield losses going forward.”

USDA’s next yield revision could come Sept. 12. That’s when the agency is slated to release its latest crop production report. But if you look at USDA’s methodology in September, which is to factor in ear counts and pod counts, Basse thinks USDA could potentially raise its yield estimate next month.

“I think, in general, they tend to grow a little bit bigger,” McCormick says of USDA’s historical pattern of yield estimates from August to September. “I mean, look at last year’s analog year. The crop was big in August, it got bigger in September, then again in October before they started revising it down. It would not be a surprise that they will go bigger, but there’s gonna be a lot of pushback, like Dan said, from the disease pressure. There’s going to be a wide range on the estimate for the September WASDE when it’s all said.”

Basse adds: “I wouldn’t be surprised if USDA raises yield next month. Even on the Pro Farmer Crop Tour, it showed us record ear counts and record pod counts. Those are the two most important ingredients for the September report. Now, in October, we’ll have more to know about pod weights and ear weights. But for September, I’m kind of expecting USDA is going to be a few bushels, if you will, from the August estimate. It’s the October report that will determine how big is big.”

Sharp Drop in Beef and Pork Exports to China Causes April Meat Exports to Take a Hit

Fri, 06 Jun 2025 17:51:08 GMT

The ongoing trade dispute with China reportedly made progress this week. In what marked the first call since the trade conflict began in February, President Donald Trump posted on Truth Social that he held an hour-and-a-half conversation with President Xi Jinping, saying the conversation “resulted in a very positive conclusion for both countries”.

An in-person meeting between trade and economic leaders of both countries is on the calendar next. But as the negotiations play out, export demand is starting to take a hit, especially when tariffs hit their peak in April.

U.S. Meat Export Federation (USMEF) says due in part to a sharp decline in shipments to China, April exports of U.S. beef and pork came in lower than a year ago. USMEF says a major headwind that showed up in the April numbers is China’s retaliatory duties on both beef and pork from the U.S.

But that’s not the only hurdle. Beef exports into China are also waiting for China to renew establishment registrations for U.S. beef plants and cold storage facilities, the majority of which expired in mid-March. This is a non-tariff trade barrier that is hurting beef exports.

According to USDA data, USMEF says April beef exports were 10% lower than April 2024. Value also fell, down 8% to $824.5 million. The biggest decline, by far, is China. Beef exports to China dropped 70% — that makes sense when you consider China’s total duties on U.S. beef peaked at 147% in April. At the same time, the fact that China hasn’t re-established U.S. plant registrations also caused exports to fall.

Overall, beef exports to Mexico also came in lower. However, USMEF says that was partially offset by larger exports to South Korea, Japan and Central and South America.

(USDA)

Pork exports fell 15% compared to a year prior, which is the lowest in 10 months. The value fell to 675.3 million, representing a 13% decline. USMEF says exports to China, which are mainly pork variety meats, dropped 35% during that time. Pork also faced a high tariff during April, peaking at 172%. But pork exports also slipped to Mexico, Japan and Canada — with exports to Canada down 45%.

The bright spots for U.S. pork exports in April were Colombia and Central Mexico — which are hitting a record pace.

U.S. Farm Report spoke to USMEF Dan Halstrom just hours after President Trump posted a more optimistic view of the relationship with China on social media. He says resolving issues with China will only fuel the strong start to the year.

(USDA)

“There’s no doubt outside of China, the rest of the business during the first part of this year and coming off records from last year is fantastic — record breaking in terms of demand,” Halstrom says. “China’s been the X factor. And through the first three months of this year before the disruption, things look pretty good. The April meat export stats just came out, and what’s down is China. We knew that would happen in April. So, this news couldn’t be more timely. We have to get people to the table. This was a necessary first step. And it’s great news the A-Team is going to get engaged and hopefully bring this back around to get some stability back into the market.”

The “A-team” Halstrom is referring to is key members from Trump’s cabinet. That includes treasury secretary Scott Bessent, commerce secretary Howard Lutnick and U.S. trade representative Jamieson Greer.

“We need some sort of an agreement because there’s so many things going on. It’s not only tariff related,” Halstrom says. “In fact, on the beef side, it’s not tariff related. It’s non-tariff trade issues. We have approximately 400 beef establishments that have not been relisted in the China cipher system. So, it doesn’t matter what your duty is if your plants aren’t registered. This is at the top of the list on the beef side. On the pork side, the plants are listed, which is great news, but we still have a pretty hefty tariff. Uncertainty and instability in the market right now caused around China is a real headwind we have to get beyond.”

Halstrom says USMEF’s outlook for the remainder for 2025 is for exports to return to a strong pace, which was a theme during the first quarter of the year.

“For the pork side, our forecast, which assumes the current situation or something improved, shows we’re basically steady with a year ago — which was a record a year,” Halstrom says. “So, the demand is still very, very strong. Now, the caveat is what happens with China going forward on pork, and definitely on beef. On the beef side, our forecast is down 6% — but that’s with no beef plants relisted for China. Outside of China, beef demand is, in our opinion, fantastic — even at higher prices. Despite the uncertainty, we’re well positioned.”

Looking back at 2024, beef export value climbed 5% from 2023 despite a slight decrease in volume. Part of that was due to historically tight cattle supplies creating less meat for exports.

Pork exports to Mexico in 2024 totaled 1.15 million metric tons in 2024, up 5% from the enormous total exported in 2023. Export value climbed 10% in 2024 to $2.58 billion – more than doubling since 2020.

Commodity Brokers Call CFTC's Proposal to Expand Ag Futures Trading to 24/7 a 'Nightmare'

Fri, 23 May 2025 16:23:06 GMT

The Commodity Futures Trading Commission (CFTC) is proposing to expand agricultural futures trading hours to a 24/7 schedule. CFTC says the change would make the market more vibrant, while brokers and commercial hedgers say it would lead to more volatility and more costs.

CFTC says the proposal is one that better reflects the changing dynamics of the markets.

“As I have long said, the CFTC must take a forward-looking approach to shifts in market structure to ensure our markets remain vibrant and resilient while protecting all participants,” says acting Chairman Caroline D. Pham. “One evolving trend is the move to 24/7, 24/6 or 24/5 trading hours. I look forward to the public comments on this market innovation.”

According to the National Grain and Feed Association (NGFA), who opposes the change, the move to expand trading hours would increase costs and spur more volatility.

“Our members have been clear — expanding trading hours to 24/7 would disrupt current risk management practices, increase operational costs, and create unnecessary exposure,” says Mike Seyfert, president and CEO of NGFA, an organization with commercial hedgers as part of its membership base. “We hope the CFTC will recognize that longer trading hours do not equal stronger markets.”

The proposal is currently in a comment period. In NGFA’s feedback and formal letter, the organization listed five reasons why it is against the proposal, including:

Spreading liquidity across a wider trading time frame would create unnecessary volatility, potentially widen bid/ask spreads and expand potential for market manipulation.
The underlying cash market does not trade 24/7, thus having futures markets open for more hours while cash markets are closed would create additional exposure and risk for our members.
Its members perform their daily reconciliation functions when markets are closed. This function is critical in managing risk and exposure in cash markets.
A pause in trading in futures markets is essential for physical deliveries. This pause allows those involved in physical deliveries to assess what is changing in cash markets as well as in futures markets and ultimately their delivery economics. NGFA says that actions in the delivery market are what lead to convergence, and convergence is a critical function of the agricultural futures contracts that benefits it members.
Staffing costs for its members would unnecessarily increase to add monitoring of futures markets during the expanded weekday hours and weekends.

Market Analysts Weigh In

Brian Splitt of AgMarket.net agrees with NGFA’s analysis, saying expanded trading hours has been tested before in livestock, and it led to more volatility.

“It sounds like a nightmare to me,” Splitt said on U.S. Farm Report. “There’s a reason that the exchange tightened the trading hours for livestock. We used to trade livestock overnight, similar to what we do with the grains, and the volatility was just ridiculous. It didn’t take a lot of contracts to make the market move quite a bit. And so, I think the market just needs a rest period. I don’t see a reason why the market needs to trade 24 hours a day.”

Splitt argues the markets need some type of pause, especially with fewer traders who participate in the overnight markets. And with fewer traders, it takes fewer individuals to influence the market, which Splitt argues is dangerous.

“I agree with Brian, I think it’d be horrible,” says DuWayne Bosse, a farmer who also is the founder of Bolt Marketing. “I think the trading hours are actually too long right now. We have this kind of long pauses in between market news that the market just gets pushed and shoved by algos and volume traders, and that makes what I would call kind of wrong technical pictures on the chart. So, I think it would be a mistake.”

Comments on the proposal, which could be submitted electronically through the CFTC Comments online process , were accepted through May 21.

United States Eases Port Fees On China-Built Ships After Industry Backlash

Fri, 18 Apr 2025 16:04:10 GMT

The Trump administration shielded on Thursday domestic exporters and vessel owners servicing the Great Lakes, the Caribbean and U.S. territories from port fees to be levied on China-built vessels, aiming to revive U.S. shipbuilding .

The Federal Register notice posted by the U.S. Trade Representative was watered down from a February proposal for fees on China-built ship s of up to $1.5 million per port call that sent a chill through the global shipping industry.

Ocean shipping transports about 80% of global trade — from food and furniture to cement and coal. Industry executives feared virtually every cargo carrier could face steep, stacking fees that would make U.S. export prices unattractive and foist annual import costs of $30 billion on American consumers.

“Ships and shipping are vital to American economic security and the free flow of commerce,” U.S. Trade Representative Jamieson Greer said in a statement. “The Trump administration’s actions will begin to reverse Chinese dominance, address threats to the U.S. supply chain, and send a demand signal for U.S.-built ships.”

Still, the fees on Chinese-built ships add another irritant to swiftly rising trade tensions between the world’s two largest economies as President Donald Trump seeks to draw China into talks on his new tariffs of 145% on many of its goods.

The revisions tackle major concerns voiced in a tsunami of opposition from the global maritime industry, including domestic port and vessel operators as well as U.S. shippers of everything from coal and corn to bananas and cement.

They grant some requested carve-outs, while phasing in fees that reflect the fact U.S. shipbuilders, which turn out about five vessels annually, will need years to compete with China’s output of more than 1,700 a year.

The USTR exempted ships that ferry goods between domestic ports as well as from those ports to Caribbean islands and U.S. territories. Both American and Canadian vessels that call at Great Lakes ports have also won a reprieve.

As a result, companies such as U.S.-based carriers Matson and Seaboard Marine would dodge the fees. Also exempt are empty ships arriving at U.S. ports to load up with exports such as wheat and soybeans.

Foreign roll-on/roll-off auto carriers, known as ro-ros, are eligible for refunds of fees if they order or take delivery of a U.S.-built vessel of equivalent capacity in the next three years.

The USTR set a long timeline for liquefied natural gas (LNG) carriers. They are required to move 1% of U.S. LNG exports on U.S.-built, operated and flagged vessels within four years. That percentage would rise to 4% by 2035 and to 15% by 2047.

The agency, which will implement the levies in 180 days, also declined to impose fees based on the percentage of Chinese-built ships in a fleet or on prospective orders of Chinese ships, as originally proposed.

The fees will be applied once each voyage on affected ships a maximum of six times a year.

Executives of global container ship operators, such as MSC and Maersk MAERSKb.CO, which visit multiple ports during each sailing to the United States, had warned the fees would quickly pile up.

Instead of a flat individual fee on large vessels, the USTR instead opted to levy fees based on net tonnage or each container unloaded, as was called for by operators of small ships and transporters of heavy commodities such as iron ore.

From October 14, Chinese-built and owned ships will be charged $50 a net ton, a rate that will increase by $30 a year over the next three years.

That will apply if the fee is higher than an alternative calculation method that charges $120 for each container discharged, rising to $250 after three years.

Chinese-built ships owned by non-Chinese firms will be charged $18 a net ton, with annual fee increases of $5 over the same period.

It was not immediately clear how high the maximum fees would run for large container vessels, but the new rules give non-Chinese shipping companies a clear edge over operators such as China’s COSCO 600428.SS.

The notice comes on the one-year anniversary of the launch of the USTR’s investigation into China’s maritime activities.

In January, the agency concluded that China uses unfair policies and practices to dominate global shipping.

The actions by both the Biden and Trump administrations reflect rare bipartisan consensus on the need to revive U.S. shipbuilding and strengthen naval readiness.

Leaders of the United Steelworkers and the International Association of Machinists and Aerospace Workers, two of five unions that called for the investigation that led to Thursday’s announcement, applauded the plan and said they were ready to work with the USTR and Congress to reinvigorate domestic shipbuilding and create high-quality jobs.

The American Apparel & Footwear Association reiterated its opposition, saying port fees and proposed tariffs equipment will reduce trade and lead to higher prices for shoppers.

At a May 19 hearing, the USTR will discuss proposed tariffs on ship-to-shore cranes, chassis that carry containers and chassis parts. China dominates the manufacture of port cranes, which the USTR plans to hit with a tariff of 100%.

The Federal Register did not say if the funds raised by the fees and proposed crane and container tariffs would be dedicated to fund a revival of U.S. shipbuilding.

(Reporting by Lisa Baertlein in Los Angeles, David Lawder and Andrea Shalal in Washington and Jonathan Saul in London; Editing by Jamie Freed, Clarence Fernandez and Gerry Doyle)

Pork Producers Could See Quickest Turnaround in Profitability on Record, But Some Still Aren’t Seeing Green

Wed, 19 Mar 2025 15:32:11 GMT

2023 is a year that will be forever etched in producers’ minds, marking the worst year for profitability on record. Economists say 2023 proved to be even more severe than 1998, a year that caused many pork producers to go out of business.

“What hasn’t changed is 2023 was the worst year ever for profitability for our pork producers,” says Lee Schulz, chief economist for Ever.Ag. “Now, what has changed is 2024 was better than forecast, so you can call it roughly breakeven. And 2025 is looking to be a modest level of profitability in that $9 to $10 per head range as market currently sets today.”

2024 produced a slightly better picture, but even then, pork producers across the U.S. are still recovering from a painful 2023.

“There’s a lot of financial healing needing to be done before we really even talk about any meaningful expansion in the industry,” Schulz says.

Even with what Schulz sees as modest profitability for producers today, that improvement is helping paint a better picture — and outlook — for the pork industry in 2025.

“I think this could be the quickest turnaround in pork producer profitability ever, but that also speaks more to what 2023 was and how bad it was than it does about current and future profits,” Schulz says.

Still in Recovery Mode
The Ever.Ag chief economist’s forecast points to another tough reality: Producers won’t get back to break-even levels on their balance sheets until August of this year, a testament to just how steep losses were in 2023.

“There were a lot of losses that need to be covered before we actually start seeing profit,” Craig Andersen, a pork producer located in Centerville, S.D., told Farm Journal’s Michelle Rook. “The pigs are profitable right now, but to make up for the losses, it’s going to take a while to recover from some of that.”

The pork industry is in a recovery phase, but pork producer Terry Wolters told Rook at least it’s improving, as profitability is at least on the horizon this year.

“I think without question, lower grain inputs are a significant help to the livestock producer right now,” Wolters says. “You see the board is trading higher, cutouts have been good, pork demand in general has been good and exports have been good. So, a lot of positive things on the meat side of the industry.”

Another Bright Spot: Robust Pork Exports
U.S. pork exports have been nothing short of impressive. The final 2024 export data from USDA shows U.S pork exports hit record levels last year.

“Not only did we break export volume records, but we broke export value records,” Schulz says. “If you think about it, one way that we know we had an increase in demand was our customers worldwide ate more pork, and they paid higher prices for it.”

U.S. Meat Export Federation says 2024 pork exports reached a record 3.03 metric tons, beating out the previous record set in 2023 of 2.98 metric tons. Today, that historic growth isn’t driven by just one country , and that’s something Halstrom likes to see.

“Broad based growth is the name of the game there,” he says. “It’s really almost the entire world that exports are growing, led by Mexico, Central America, South America, places like Colombia are booming.”

Related Story: U.S. Pork Exports Break Records at $8.63 Billion in Value for 2024

Halstrom says even places like Korea are seeing vigorous pork exports, a trend he forecasts will continue in 2025.

“It’s a pretty good story on pork and going into 2025,” Schulz says. “It’s a much different supply situation on pork versus beef with a lot of potential to grow and set a new record, and we’re forecasting another new record in 2025 for pork.”

Shulz is also optimistic on pork exports in 2025.

“Why also I remain very bullish on U.S. pork exports is 2024 was the first time that the U.S. had surpassed the European Union since 2014 on pork exports,” Schulz says.

Tariff and Trade Concerns
But the one concern — and caveat — is what happens with tariffs.

“They’re not going to stop trade,” Schulz says. “They have the potential to slow trade. When you think about it from a short run impact, there’s reasons why we’ve developed the relationships and we have the product flow that we have. So it’s very difficult in the short run to move and build those relationships to a wide volume. What will happen, however, is pork will become more expensive for those customers, and that’s going to impact trade. But the impact is longer term, I think, in the worry of how long those tariffs last.”

The tariffs are injecting uncertainty into outlooks, but that’s not the only piece that has the pork industry on edge.

“I think the other one that continues to add to the uncertainty is just about the impact of disease out there and how large, widespread an impact that’s having on production,” Schulz says.

Little to No Expansion in the Pork Herd
He says prices have not incentivized any expansion in the pork sector, but the disease piece of the puzzle is one that could sway production estimates in future USDA reports.

“That’s why, I think if you look at USDA estimates and Hog and Pig reports and the need to make some revisions, that’s come because there’s a lot of uncertainty just about the impact of disease and what that’s having on our hog numbers and pipeline supplies,” Schulz says.

Litter rates and carcass weights actually created an increase in pork production over the past year, Schulz points out. But the breeding herd remains flat.

“Another thing is our sow numbers were down in the U.S.; there’s a little bit of retraction in the sow herd,” Adam Annegers of JBS told Farm Journal’s PORK editor and brand lead Jennifer Shike on a recent episode of “The Pork Podcast.” “But if you look at overall production and wean pigs produced, we produced more pigs with fewer sows. There were several health challenges through some months in there, but the genetics that we’re working with have the potential to produce more pigs year over year, even with less sows out there. I’m excited about 2025. Pig markets are looking really good. It’ll be fun to see we can do this year.”

A Year of Stabilization
There’s excitement for 2025, as producers have worked to not outpace current demand, but there’s also caution of what lies ahead for trade and turbulence in the current tariff spats happening around the globe.

“I look at 2025 as stabilizing and maybe the start of a pivot to starting to see some moderate expansion in the industry going forward that we may start to realize in 2026 and 2027,” Schulz says.

As optimism continues to dominate conversations to start this year, it’s a reminder that pork producers find a way to persevere.

“One thing about our producers is they’re so resilient,” says Glenn Muller, executive director of South Dakota Pork Producers Council. “They’re going to come back. They’re going to find a way to survive in the meantime, and this is going to give them some opportunity to backfill some of those holes created due to the poor economy.”

EXCLUSIVE: Ag Secretary Brooke Rollins Provides Timing Update on $10 Billion in Emergency Relief Payments

Thu, 27 Feb 2025 16:36:22 GMT

Time is running out for USDA to issue the nearly $10 billion of economic relief payments to farmers . Congress approved a 90-day window to release those payments, and in an exclusive interview with U.S. Secretary of Agriculture Brooke Rollins Thursday morning, we asked when exactly those payments will be released. Rollins confirmed to Farm Journal that those payments will be released before the current deadline.

“Congress gave us until March 21, that is the ideal deadline,” Rollins said. “It looks like we’re going to be able to beat that, so it should be just around the corner.”

As USDA works to release those payments within the next few weeks, according to some sources, producers are banking on the payments, even making business decisions based on projected payment calculations.

Pro Farmer Washington policy analyst Jim Wiesemeyer says the only issue that could impact that timing is a possible government shutdown. If the government shuts down beginning March 15, and those payments haven’t been released yet, that could impact the March 21 deadline.

Wiesemeyer also reports based on history, the initial payment will likely be around 85% of the projected total, with a supplemental payment likely coming in the summer. Most expect the per acre payment rates to be in line with what staffers on the House Ag Committee released last year, which are:

Corn: $43.80
Soybeans: $30.61
Wheat: $31.80
Cotton: $84.70
Rice: $71.37

Payment Cap
Like other recent disaster programs, the payment limit for farmers will depend on how much of a farmer’s income is derived from agriculture. However, this program is based on average gross income rather than adjusted gross income (AGI).

The payment cap will be:

If < 75% of average gross income from 2020 to 2022 is from agriculture, then the limit is $125,000
If 75% or more of average gross income from 2020 to 2022 is from agriculture, then the limit is $250,000
USDA says standard FSA “actively engaged in farming” requirements apply

While USDA will determine the finalized per acre payments, these are the estimated American Relief Act payments for farmers.

(Lindsey Pound )

Update on Timing of $1 Billion to Combat Avian Flu
Led by Rollins, USDA announced on Wednesday plans to invest up to $1 billion in new funding to combat impacts of highly pathogenic avian influenza (HPAI) and soaring egg prices.

“The important piece is not just this immediate short-term goal of getting the cost of eggs down and repopulating our layers and locking our barns down,” Rollins told Farm Journal on Thursday. “But much more importantly, perhaps, is figuring this out for the long term, so we’re not having the same conversation over and over and over again.”

The avian flu plan, which USDA rolled out on Wednesday, includes five major points:

Dedicate up to $500 million to help U.S. poultry producers implement “gold-standard” biosecurity measures. USDA has developed a successful pilot program, called Wildlife Biosecurity Assessments, to identify and implement more safety measures. USDA will pay up to 75% of the cost to address any identified biosecurity vulnerabilities at poultry farms.
Make up to $400 million of increased financial relief available to farmers whose flocks are affected by avian flu, and USDA will assist farmers in receiving faster approval to begin safe operations again after an outbreak.
USDA is exploring the use of vaccines and therapeutics for laying chickens. While vaccines aren’t a stand-alone solution, they will provide up to $100 million in research and development of vaccines and therapeutics, to improve their efficacy and efficiency. This should help reduce the need to depopulate flocks, which means killing chickens on a farm where there’s an outbreak. Note: USDA hasn’t yet authorized the use of a vaccine. Before making a determination, USDA will consult state leaders, poultry and dairy farmers, and public-health professionals. The agency will also work with trading partners to minimize potential negative trade effects for U.S. producers and to assess public-health concerns.
USDA will take other actions to lower the price of eggs. For starters, it will remove unnecessary regulatory burdens on egg producers where possible. This will include examining the best way to protect farmers from overly prescriptive state laws, such as California’s Proposition 12, which established minimum space requirements for egg-laying hens.
USDA will consider temporary import options to reduce egg costs in the short term. They will proceed with imports only if the eggs meet stringent U.S. safety standards and if they determine that doing so won’t jeopardize American farmers’ access to markets in the future.

As for the $500 million that will go toward beefing up biosecurity efforts, Rollins says that will happen immediately.

“The team is putting together right now the guardrails for that, but I think they’re almost finished, and that money should be moving out very quickly,” Rollins told Farm Journal. “That biosecurity money is based on a pilot program where 150 different egg laying farms were piloted on specific biosecurity measures. Of those 150, only one has seen the avian flu. Once they implemented, there’s a massive audit that USDA comes in. They help audit. We’re hiring a whole bunch of new folks to come on board to do that — and new epidemiologists to help us work through all of the science on this, and hopefully you see that immediately.”

Where is the $1 Billion Coming From?
At a time when the Trump administration is looking to save money, not spend, we asked Rollins where exactly is the $1 billion of funds going to be sourced.

“We’ve repurposed funds from other programs within USDA, so this is not spending new money,” Rollins said. “Clearly, we’re in an era where President Trump’s vision is to really streamline government, but this is not that. This is outside that lane. This is a really, really important issue. You know, it’s affecting every single American, not just our poultry producers. And so there’s short-term and long-term fixes here now.”

Some of that money, however, is coming from savings from the Department of Government Efficiency (DOGE).

“We are pulling it from multiple different pots. But yes, there’s no doubt that we’ve been able to find some serious savings in DOGE,” Rollins said. “We’ve canceled almost a thousand DEI trainings that were across USDA.... All of it adds up, and we’ve really pulled a lot of that money back. And now putting it where we think it really helps farmers and ranchers.”

What Will It Take for the Ag Economy to Recover

Rollins is set to give the keynote address at USDA’s Ag Outlook Forum on Friday. Rollins told Farm Journal there are a lot of farmers hurting in this economy, saying “it’s one of the worst for that industry that we’ve seen in decades.”

Considering 64% of ag economists think the row crop sector of agriculture is in a recession , we asked Rollins what it will take for the ag economy to recover.

“There’s no doubt, to your point, a lot of our producers in the different lanes are really hurting. Listen, we’ve got to get the cost of input down. We have got to get our export markets opened up around the world. I mean, we’re facing this year a $45 billion trade deficit,” said Rollins.

Rollins says when President Trump left the White House in 2020, there wasn’t a trade deficit. And she says the growign trade deficit is something President Trump wants to address.

“Just think about the amount of ag production that we were once moving out across the world that was keeping our farmers whole and making sure that they could make some kind of a profit,” said Rollins. “That’s not there anymore. Obviously, inflation, the cost of energy has absolutely decimated our producers. The input cost is up 30%. So when you’ve got all of these different factors that are basically piling on at one time, it’s it’s no surprise that sorghum, cotton and so many others are really hurting right now. And we’ve got to do something about that.”

As input prices remain elevated, and commodity prices are below break-even for some, Rollins says she and President Trump are aligned in what needs to happen to bring relief to farmers.

“My perspective, and the president’s perspective, is how do we achieve this through broader access to markets, broader access to capital, making sure that that the cost of inputs goes down. Hopefully with our energy plan, we see that happening almost immediately. And I think that will move into a different era for prosperity for ag, but there’s no doubt it is a dire, dire forecast right now without significant change.”

During the the first Cabinet meeting in President Trump’s second-term, which was held Wednesday, President Trump floated 25% tariffs on the European Union.

“Obviously, tariffs always come up. I’m always saying, ‘let’s be very, very careful and intentional how we move here,’” Rollins said about the first Cabinet meeting. “The border came up, immigration deportations came up. So all the things that the ag community is concerned about that came up, course, I’m at the table. My job is to ensure that that our community’s voice is heard, but also to help effectuate the president’s vision. And we’re moving forward on all fronts.”

You can listen to the complete interview with Secretary Rollins below.

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EXCLUSIVE: As DOGE Works to Stop ‘Wasteful Spending,’ Ag Secretary Rollins Says Vital Farm Programs Aren’t at Risk

USDA's Rollins: 'Let's Go Barnstorm The World And Find New Partners' For Trade

Tue, 18 Feb 2025 18:50:09 GMT

On Brooke Rollins’ first full week on the job as Secretary of Agriculture, she addressed the 600 farmers, ranchers and industry leaders in Kansas City for the 2025 Top Producer Summit.

High on Rollins’ list of priorities was the topic of trade and President Donald Trump’s vision for U.S. agriculture moving forward.

While Rollins did not shy away from addressing the administration’s decision to implement trade tariffs, noting “farmer and rancher concerns are legitimate,” she focused on what she sees as her role ahead.

“My job is to ensure that as President Trump and our trade representatives are making their decisions that I am in the room and advocating on behalf of our people, on behalf of all of you,” she told Top Producer Summit attendees.

One of her key objectives, she says, is to find and expand market access for U.S. agricultural products domestically and abroad.

“Let’s go barnstorm the world, and let’s go find some more trade partners and access [to market opportunities],” she says.

Rollins says her goals for trade are a reflection of Trump’s vision and his determination to make agriculture part of the “golden age” he sees ahead for the U.S.

Trump is the consummate deal maker, Rollins notes, able to side-step bureaucracy and red tape in the process to work with world leaders.

“I don’t know that in the last 250 years, we’ve had anyone in office like President Trump,” she says. “He is a very unusual, remarkable and fearless man, and he wants to make a deal, and in the best way, and put America first.”

Agriculture Secretary Brooke Rollins spoke to a crowd of 600 farmers, ranchers and industry leaders at the 2025 Top Producer Summit.

(Jim Barcus)

Making Headway With Trade
Sen. Roger Marshall of Kansas, who moderated the conversation with Rollins, highlighted Trump’s work to build trade during his first term.

“He redid USMCA, and now that’s our largest ag partnership, with Mexico and Canada,” Marshall says. “He gave us South Korea and Japan, which has been so important to Kansas and our cattle industry, as well as trade 1.0 with China.”

Marshall then mentioned the headway he believes Trump and team have made with India.

“I see India replacing China as our major trade partner, as well that China is growing right now,” Marshall says. “I think there’s huge opportunities in India.”

U.S. ethanol, cotton and tree nuts are three of the top agricultural exports to India, a country that has in the past impeded agricultural trade with tariffs and non-tariff barriers alike. Trump called out the barriers to trade following recent conversations with India’s Prime Minster Modi.

A joint statement after the Trump-Modi meeting said Washington welcomed New Delhi’s recent steps to lower tariffs on select U.S. products and increase market access to U.S. farm products, while seeking to negotiate the initial segments of a trade deal by the fall of 2025.

Rollins says the progress underway with India was just one step forward to address what she described as a trade crisis for the U.S.

“Our exports are down $37 billion this year and likely to be down $42 billion in the months to come. This is a crisis, and this is something that I understand inherently,” Rollins says.

“We have a tremendous amount of work to do,” she adds. “But my promise to you is this, and my commitment will never waver, that every minute of every day for the next four years, I will do everything within my power with hopefully God’s hand on all of us and our work to ensure that we are not just entering the golden age for America, as my boss, President Trump, likes to say, but that we are entering the golden age for agriculture.”

Secretary Rollins joined Chip Flory on AgriTalk. Listen to their discussion about trade policy and tariffs; avian flu; and disaster and economic aid.

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Ag Groups Express Thanks That Potential Strike Was Averted

Fri, 10 Jan 2025 19:31:31 GMT

Various ag groups are breathing a sigh of relief on Friday as the potential strike at East and Gulf Coast ports appears to have been averted, AgDay-TV reports.

The International Longshoremen’s Association union and the U.S. Maritime Alliance of ports and shipping companies announced yesterday they had reached a verbal agreement for a six-year contract.

The good news for agriculture is that the agreement was finalized ahead of the Jan. 15 deadline, averting a potential strike that could have disrupted major U.S. ports and cost U.S. farmers and ranchers an estimated $1.4 billion a week.

Among the organizations expressing their appreciation for the decision was the U.S. Meat Export Federation (USMEF).

“(We’re) very appreciative that the two sides were able to come together on a full contract and very appreciative of the of the fact that there will be no disruption and that we can continue to focus on the business,” said Dan Halstrom, president and CEO of USMEF. “As we all know, the business has been growing, and it has a lot of potential growth in the future.”

Soybean Industry Also Faced Potential Losses

A strike would likely have also impacted soybeans, soybean meal and other ag product exports. For example, in 2023 about 5.8 million metric tons of soybeans were shipped via containers, and half of it was through those ports.

Mike Steenhoek, executive director of the Soy Transportation Coalition, said while bulk exports would not have been impacted by a strike, containerized exports of soybeans and other agricultural products would have been.

“About 5% to 6% of total U.S. soybean exports occur via containers from those potentially impacted ports along the East Coast and along the Gulf Coast,” Steenhoek said.

The verbal agreement between the two sides must still be ratified by employers and the members of the International Longshoremen’s Association. Get the full details on this and other ag news today from AgDay.

Your next read: What Do Corn and Soybeans Need in USDA’s Reports to Keep Prices Moving Higher?

China 2025: 5 Predictions to Watch in the New Year

Thu, 02 Jan 2025 16:36:15 GMT

China was plagued with challenges in 2024. From economic headwinds and an erosion of trust to a deteriorating political environment, those struggles in 2024 aren’t expected to be resolved anytime soon.

James Palmer’s analysis in Foreign Policy’s China Brief described 2024 as a “ relatively quiet if depressing year for China .” But Palmer pointed out 2025 could be a lot stormier, especially when it comes to clashes with the U.S.

Palmer outlined five significant trends shaping China in the coming year:

A harsh trade war: With Donald Trump’s second term, his tariff-heavy policy could escalate economic tensions, intensifying China’s manufacturing struggles while leveraging its global supply chain strength.
Brooding public discontent: Amid record youth unemployment and lingering effects of the pandemic, social disillusionment is growing. U.S.-imposed tariffs could become a scapegoat for economic grievances.
Grassroots government crisis: Local governments face crippling debt and revenue shortfalls, leading to withheld wages and corruption. This financial strain could spark unpredictable public protests.
Global opportunities: As the U.S. withdraws from international organizations under Trump, China positions itself as a stable global leader, particularly in U.N. forums.
The PLA on a leash: Military reforms and anti-corruption drives are curbing the PLA’s capacity for adventurism, with a focus on resolving internal issues rather than engaging in conflict.

Bottom line:
Palmer’s insights underscore both the challenges and opportunities facing China in 2025, painting a complex picture of its domestic and international dynamics.

China’s Manufacturing Slowdown in December
China’s manufacturing sector shows slower expansion in December. China’s private Caixin manufacturing purchasing managers index (PMI) indicated continued expansion for the third consecutive month in December, standing at 50.5, down from 51.5 in November. The slower pace highlights the stabilizing effect of Beijing’s recent economic stimulus measures.

While supply and demand improved, the pace of growth in output and new orders decelerated, and export demand remained weak amid global uncertainties. Employment contracted for the fourth straight month, and business optimism waned due to concerns over economic recovery and U.S./China trade tensions.

Experts suggest policies should focus on boosting household income and supporting disadvantaged groups to enhance economic resilience.

Xi Jinping Acknowledges Economic Challenges in New Year’s Address
In a rare deviation from his usual celebratory tone, Chinese President Xi Jinping acknowledged the challenges facing China’s faltering economy during his New Year’s address. Speaking on state broadcaster CCTV, Xi noted uncertainties in the external environment and the difficulty of transitioning economic drivers but urged confidence, asserting, “These can be overcome through hard work.”

The acknowledgment comes as China grapples with a sluggish post-pandemic recovery, marred by a struggling real estate sector and deflationary pressures. Recent government efforts include increased public borrowing, spending, and interest rate cuts aimed at stimulating weak consumer demand.

Xi confirmed that China’s economy grew “about 5%” in 2024, meeting the government’s target, though analysts question the validity of the figures. The Rhodium Group estimated growth closer to 2.4–2.8%, citing the government’s aggressive economic measures as inconsistent with moderate growth claims. The group projects 3–4.5% growth for 2025, contingent on favorable conditions.

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What a Government Shutdown Would Mean for Upcoming USDA Reports

Fri, 20 Dec 2024 19:08:30 GMT

Lawmakers were working Friday to to keep the government funded past the Dec. 20 midnight ET lapse of the current funding measure.

Reports signaled the House will vote on three bills: a continuing resolution until March; a disaster relief package, including economic aid for farmers; and an extension of the farm bill.

If the funding measure fails, USDA has a contingency plan in place for essential workers and services. The plan would retain a small number of administrative employees to oversee activities including disaster response and cybersecurity should funding lapse.

Impacts on Upcoming USDA Reports

We asked Lance Honig, Director of Methodology Division and Chair of the Agricultural Statistics Board at USDA-National Agricultural Statistics Service (NASS), what impact a potential shutdown would have on upcoming USDA reports.

“For all of our end-of-season crop and December stocks data, we are finished collecting the data, so the only issue would be with timing,” Honig told Farm Journal. “In other words, we have all of the data we need to work with, just need time to analyze & compile it. So if there were a shutdown, it would just depend on how long it was in determining when the reports could be published (if any delay were necessary). So not a question of if we could publish, just maybe when.”

Honig says the Hogs & Pigs report is scheduled to publish January, so that is another report that will hinge on timing.

“The one I would be watching more closely is the January Cattle report. We will collect that data in January, so IF we were shut down then, it gets a little more complicated. Not saying we couldn’t do it — just that the overall timeline/process would have to be re-worked,” said Honig.

Economists React

Economists began detailing the fallout of a potential shutdown. GDP growth would fall by 0.15 percentage points “for each week it lasted,” Alec Phillips, an economist for Goldman Sachs, wrote this week in a client note. The disruption shouldn’t hinder the federal government’s ability to borrow in the near term, he added.

Chances of a Strike at East Coast and West Coast Ports are Growing; Here's How it Could Impact Farmers

Thu, 12 Dec 2024 16:21:38 GMT

A potential dock workers’ strike Oct. 1 on the East Coast and Gulf Coast would not significantly impact grain export facilities.

The contract ends on September 30, and so far, no formal negotiations have been held and none are scheduled. The strike would have limited impact on bulk grain exports, including corn and soybeans. Bulk grain export facilities would not be affected by the strike as these facilities typically operate with different labor arrangements, such as their own employees or different labor unions.

The majority of soybean and grain exports from the Gulf or East Coast would not be impacted by the negotiations between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX).

While bulk grain exports would be largely unaffected, the strike would impact containerized agricultural exports: Soybeans, soybean meal, and other agricultural products exported via containers would be affected.

In 2023, container shipments of soybeans through East and Gulf Coast ports totaled around 100 million bushels, compared to nearly 1 billion bushels of bulk soybean exports from the Gulf.

Specific containerized soybean exports that could be impacted include:
• Norfolk: 1,616,854 metric tons
• New York/New Jersey: 372,110 metric tons
• Baltimore: 324,500 metric tons
• Charleston: 217,892 metric tons
• Other ports with smaller volumes

Indirect effects on grain producers. While grain export facilities may not be directly impacted, there could be indirect effects on grain producers: The strike would significantly impact exports of chilled or frozen meat, eggs, and other livestock products, which are primarily shipped in containers. Any harm to the U.S. livestock industry would indirectly affect soybean and grain farmers, as these industries are interconnected. East and Gulf Coast ports accounted for 44% of U.S. waterborne pork exports and 29% of waterborne beef exports in the first half of this year. New York/New Jersey, Wilmington and Charleston were the largest East/Gulf ports for pork exports and Houston was largest for beef.

Of note: One industry contact emailed: “There might be some limited disruptions to bulk grain exports because of sympathy with the strikers or just general disruption at a particular location.”

Another contact emailed: “Many of the containers are going to be fulfilled by smaller to mid-size regional cooperatives and privates. Thus, the impacts will be felt more acutely, severely and quickly than in some of the larger commercials and co-ops. Also, my understanding is that around 40% of all ag containers go off east/southeast ports and 60% off west. So, we’re talking a real impact to ag.”

What could happen. The Biden administration has decided not to invoke the Taft-Hartley Act to intervene in a labor dispute, a law that allows the president to step in during serious labor conflicts when national health or safety is at risk. The Taft-Hartley Act has been invoked 37 times in the past, allowing for an 80-day “cooling off” period, but Biden officials confirmed they are not considering using it in this case. The last time it was invoked was in 2002 by President George W. Bush during a West Coast port lockout. Instead, Biden has previously opted for negotiation strategies, such as sending officials to mediate labor disputes.

Retailers are seeking some alternatives. The ports of Los Angeles and Long Beach handled a combined 966,231 loaded container imports last month, up more than 27% from a year ago and the highest volume since May 2021. West Coast ports, which lost a big share of import trade during a long stretch of congestion in the Covid pandemic, are winning back cargo. In June and July, West Coast ports handled 61% of imports from Asia, the highest share of that market since October 2021, according to transportation data firm Xeneta.

U.S. ports handle a surge of imports in August.

(Bloomberg )

Of note: The energy industry could also be affected: Gulf Coast ports are crucial for energy exports, particularly liquefied natural gas (LNG). Any disruptions could impact the flow of energy resources. These industries are particularly vulnerable due to their reliance on timely shipments, just-in-time inventory systems, and the critical nature of their products.

Bottom line: While the potential dock workers’ strike would not directly impact bulk grain export facilities, it could have significant effects on containerized agricultural exports and indirectly affect grain producers through disruptions in the livestock industry. The potential strike would affect 36 ports along the East Coast and Gulf Coast, from Maine to Texas.

Negotiations between the two parties have stalled, with several issues remaining unresolved: wage increases, limits on port automation, and use of automated technology to process trucks without union labor. The ILA has voted unanimously to support a strike if their demands are not met. As of mid-September, the two sides appear to be far apart in negotiations.

ILA President Harold Daggett has stated, “The ILA most definitely will hit the streets on October 1st if we don’t get the kind of contract we deserve.” Last-minute agreements are not uncommon in labor negotiations, so the situation could change rapidly in the coming days.

Of note: The energy industry could also be affected: Gulf Coast ports are crucial for energy exports, particularly liquefied natural gas (LNG). Any disruptions could impact the flow of energy resources. These industries are particularly vulnerable due to their reliance on timely shipments, just-in-time inventory systems, and the critical nature of their products.

Bottom line: While the potential dock workers’ strike would not directly impact bulk grain export facilities, it could have significant effects on containerized agricultural exports and indirectly affect grain producers through disruptions in the livestock industry. The potential strike would affect 36 ports along the East Coast and Gulf Coast, from Maine to Texas. Negotiations between the two parties have stalled, with several issues remaining unresolved: wage increases, limits on port automation, and use of automated technology to process trucks without union labor. The ILA has voted unanimously to support a strike if their demands are not met. As of mid-September, the two sides appear to be far apart in negotiations. ILA President Harold Daggett has stated, “The ILA most definitely will hit the streets on October 1st if we don’t get the kind of contract we deserve.” Last-minute agreements are not uncommon in labor negotiations, so the situation could change rapidly in the coming days.

Your Next Read: Pork Strikes Will Have a Significant Impact on Meat Exports

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.

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Pork Export Demand ‘Back On Track’

Fri, 11 Oct 2024 14:04:50 GMT

While Joe Schuele describes August as not being a huge month for pork, it was strong enough that the U.S. Meat Export Federation (MEF) announced new records for volume and value for pork exports will be achieved in 2024.

“It’s a great success story, especially on the volume side,” Schuele, U.S. MEF vice president of communications, told AgriTalk Host Chip Flory on Thursday. Flory noted pork exports are “back on track.”

During the conversation, Schuele shared highlights on the August 2024 livestock numbers and trends for U.S. pork and beef products sold around the world.

“August wasn’t a huge month for pork, but we were above this same time last year,” Schuele says. “It was a good solid month of about 6% from a year ago, and the value was about 8% just over $700 million.”

Importance Of Market Diversification

Pork’s export accomplishments are being achieved, despite lower purchasing levels from China. Schuele says the U.S. realized high-volume sales to China were likely a short-term opportunity following the country’s devastation from African swine fever a couple of years ago.

As a result, the U.S. MEF and the livestock industry in general have emphasized the importance of market diversification and worked to develop additional markets, with Mexico leading the way.

“With Mexico, you run out of superlatives when you talk about the demand for U.S. pork. August was just another tremendous month there, with exports to Mexico on a record pace,” Schuele says.

New And Unexpected Opportunities

Other key countries contributing to increased U.S. pork sales are Columbia and Malaysia. The latter is a newcomer on the scene.

“We’ve gotten some additional pork plants approved for export to Malaysia,” Schuele says. “I think a lot of people are surprised at the demand for pork in what is a predominantly Muslim country, but there is a significant pork eating population there. We had a record August in Malaysia and really good performance out of markets like Central America and the Caribbean, as well.”

Flory notes that U.S. MEF and other pork supporters have been working to develop opportunities in Central America and South America, creating traction for pork in markets there.

“What’s really exciting is we’re now moving center of the plate items there, with pork as a high-end entree. That’s what’s really made the difference in these markets,” Schuele agrees.

Dollars Going To Producers’ Bottom Lines

Flory asked Schuele how pork producers’ bottom lines are benefiting from pork this year.

Schuele said the average dollar amount per head slaughtered has been about $66 for the year.

“That’s an important metric, because it gives you an idea of what the return to the producer is at a time when pork producers need those returns from exports,” Scheule told Flory.

Mexico Provides Strong Beef Demand

Much like pork, on the beef side Mexico performed very well this year for U.S. exports.

“We’re moving a wide range of muscle cuts to Mexico, and it’s also our largest volume destination for beef variety meat items like tripe and lips and hearts and livers,” Schuele says. “Mexico is really important on the upper end and on the lower end with those variety meat items.”

He adds that the U.S. attributed the strong demand early this year in Mexico to the strong peso. In recent months, the peso has weakened, but Schuele says the country’s demand for U.S. beef, and pork as well, has held up well.

As Mexico’s retail supermarket sector has become increasingly modern and sophisticated, that has allowed for the opportunity to differentiate the quality of U.S. beef and pork from other providers.

“In that modern retail sector that really gives us a better opportunity to showcase our product,” Schuele says.

Consumer Confidence In Asia Sputters

In Asia, specifically South Korea and Japan, he notes that current beef exports haven’t been as strong as perhaps in the past.

“I would say the numbers were a little bit disappointing for August. We felt like we had some momentum in Japan that perhaps lost a little steam in August, but it wasn’t a bad month,” Schuele says.

Consumer confidence in Asia hasn’t been as strong as in the past, he notes. Consumers have not been as inclined to purchase U.S. meat products as they have been.

“We’re seeing some improvement in Japan, driven by the boom in tourism, and a little bit of improvement in Korea. In China, the consumer confidence levels really continue to be sluggish,” he says.

Schuele says the one bright spot in Asia is that the U.S. is seeing good numbers out of Taiwan, especially for high-end, chilled beef.

“Through the summer months, we saw demand from Taiwan really recover. Also, it was a good month in Southeast Asia. In some of the smaller markets, like the Philippines and Singapore, we saw numbers better numbers there in in August. So little bit of a slow month in August, but certainly some bright spots.”

Hear the complete conversation on AgriTalk here:

As a Potential Strike at East Coast and Gulf Coast Ports Looms, Here's What You Need to Know

Tue, 17 Sep 2024 21:15:23 GMT

Supply chain issues continue to raise concerns, and it’s now a possible strike along East Coast and Gulf Coast ports that could cause disruptions in the weeks and months ahead.

The contract between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) is set to expire on Sept. 30. Negotiations between the two parties have stalled, raising concerns about a possible strike starting Oct. 1.

The main points of contention are wage increases and limits on port automation. Negotiations broke down in July after the ILA learned that APM Terminals and Maersk were using automated technology to process trucks without union labor.

43% of U.S. Imports at Risk

A strike would affect East Coast and Gulf Coast ports, which handle 43% of U.S. imports. It could disrupt $3.7 billion worth of trade per day. The strike would impact retailers, manufacturers, and farmers by delaying shipments and potentially shutting down production lines.

Many companies have been redirecting shipments to West Coast ports. Some businesses have brought in products earlier to frontload the peak shipping season. Air freight is being considered as an alternative for time-sensitive or high-value goods.

Outlook:
As of mid-September, the two sides appear far apart in negotiations. The ILA has voted unanimously to support a strike if their demands are not met. There are calls for both parties to return to the negotiating table to avoid disruption.

The parties could resume negotiations and potentially extend the current contract. President Biden could use his influence to encourage negotiations or appoint a federal mediator. As a last resort, the President could invoke the Taft-Hartley Act to implement an 80-day cooling-off period.

Your Next Read: Lower Mississippi River Levels to Remain Low Post-Francine

2023 And 2024 Will Go Down As The Largest Drop In Net Farm Income Ever

Thu, 12 Sep 2024 15:38:03 GMT

There’s a silent stress growing across rural America. Farmers are focused on growing this year’s crop, hoping to outyield the low commodity prices. They’re keeping their head down and trudging through the day-to-day grind, but their angst can’t be ignored. Many farmers say they have a gut feeling 2024 will go down as the worst financial year they’ve ever had.

The reality is glaring. USDA’s net farm income forecast for 2024 is a $43 billion drop from 2023 to $116.1 billion. That is a 25.5% decline in just one year. What makes it even more jarring is that follows the 2023 net farm income figure, which saw a 16% drop from 2022. If USDA’s forecast holds true, that will mark the most significant two-year farm income decline in U.S. history.

“The $90-billion drop over a two-year period is certainly the largest dollar value drop, adjusted for inflation, that we’ve seen in our history,” says Ben Brown, an agricultural economist with the University of Missouri. “It exceeds the previous record set in the mid-1970s. When it comes to percentage changes, we’ve seen larger percentage changes. But you’d have to go all the way back to the Great Depression era and the early 1930s to find bigger percentage declines.”

However, 2023 may end up being even worse than what USDA currently has projected.

As USDA showed in the June Grain Stocks report, farmers are still holding onto a lot of their 2023 crop. In fact, USDA thinks on-farm storage is the highest since the 1980s. The reason: as commodity prices fall, farmers are reluctant to sell below the cost of production. That means USDA’s 2023 net farm income forecast may be even worse than what it is today.

“The big change I think we could see in an update would be the 2023 farm income numbers revised lower even from where they were,” says Brown.

Farmers aren’t just caught trying to market the current crop growing in fields today. Many still have last year’s crop sitting in bins. And corn and soybean prices are seeing another bloodbath to close out July.

Farmers Hope to Outyield Low Prices

Wading through a sea of soybeans, Arkansas farmer Becton Bell stares at one of his best crops ever, and he’s trying to focus on that positive right now.

“We’ve had a pleasant year,” says Bell, who farms in Mississippi County, Ark. “Rains have been, for the most part, pretty timely.”

The reality for Bell and other farmers marketing 2024 crops currently is they face, potentially, deep economic losses.

“It’s been the markets, to be honest,” says Bell, when asked what his biggest challenge is this year. “There just hasn’t been a good marketing opportunity. It’s kind of like catching a falling knife, trying to market soybeans and corn. Nobody wants to catch that falling knife.”

In his area of Arkansas, farmers rely on irrigation. And even though he’s irrigated some this season, timely rains have helped reduce the need to irrigate as much as usual.

“We’ve probably irrigated half of what we normally do so, you know, it could very easily mean several hundred-thousand-dollar savings to our bottom line,” he says.

Those doses of rain and short spurts of heat in northeast Arkansas mean growing conditions there have been like a greenhouse this year.

“It’s just almost scary to say this, but rains have been almost perfect as far as our timing goes,” says Bell. “Our corn crop looks like it could be one of our best corn crops we ever had, as does our soybean crop. So, I’m optimistic about the crops.”

While input costs remain relatively high, he’s hopeful the extra bushels will help soften the blow of lower commodity prices, but nerves are still high. And that’s the case for not just Bell, but many other farmers this year.

Stress in Farm Finances Already Showing Up

Farm financial stress is already showing up in the form of liquidity. One ag banker painted that dismal picture for Congress when he testified about the state of the farm economy on Capitol Hill earlier this week.

“With rising input costs and lower commodity prices, farmers and ranchers have worked through the liquidity and working capital they built up over the past few years at a more rapid rate than anticipated. Now they’re beginning to leverage equity through refinancing debt,” says Tony Hotchkiss, chairman of the Ag and Rural Bankers Committee for the American Bankers Association. “This has made ag bankers feel like they are looking over the cliff when it comes to the farm economy.”

Ag industries are struggling as well. Just last week, Deere announced more employee layoffs, citing the severe headwinds in the ag economy. Farm Journal Washington Correspondent Jim Wiesmeyer says other agribusinesses are feeling the pain of similar costs of production and labor issues faced by farmers and ranchers, as well.

There are some silver linings, Wiesemeyer reports. He says while ADM’s earnings for the second quarter were somber, Juan Luciano, chairman of the board and CEO, expressed confidence in the company’s full-year expectations, citing anticipated improvements in crush and ethanol operations. So, despite all the obvious gloom in ag, Wiesemeyer says it’s not all doom.

China's Exports Surge Amid Weak Domestic Economy, Raising Global Concerns

Wed, 11 Sep 2024 19:43:39 GMT

China’s soybean imports reached a record high in August 2024, reflecting significant growth in the country’s demand for the oilseed, but meat imports declined.

China’s overall exports surged in the wake of a weakening domestic economy. However, the ag trade picture is mixed. While China is importing a record amount of soybeans, meat imports have seen a rapid decline.

In August, China’s exports surged by nearly 9%, reaching $309 billion, the highest since September 2022, while imports remained stagnant at 0.5%. The strong export growth provided a rare boost to China’s economy, which has been struggling with deflation and a housing slump. The trade surplus for the month was $91 billion.

Despite the positive export figures, the influx of cheaper Chinese goods has sparked concerns in the U.S., South America, and Europe, leading to tariffs on certain products like electric cars and steel. With exports to almost every market growing — particularly to the EU, India, and Brazil — questions remain about the sustainability of China’s growth strategy as global trade tensions rise. Analysts warn that China’s weak domestic demand, coupled with global economic uncertainty, poses risks to its overall economic recovery.

China’s strong export pace

(Bloomberg)

Taiwan’s exports reached a record $43.6 billion in August, driven by surging demand for semiconductor equipment fueled by the artificial intelligence boom. Exports to the U.S. rose 79% to a record $11.9 billion, surpassing shipments to China and highlighting a significant shift in Asian supply chains. Taiwan’s finance ministry expects exports to continue growing in the second half of the year, supported by the peak export season and ongoing AI-related demand.

China’s Soybean Imports Reach Record Levels

China’s soybean imports reached a record high in August 2024, reflecting significant growth in the country’s demand for the oilseed. China imported a record 12.14 million metric tons (MMT) of soybeans in August 2024. This represents a substantial increase of 29% compared to August 2023, when imports totaled 9.43 MMT.

Several factors contributed to this record-breaking import volume:

• Lower prices. Traders took advantage of lower soybean prices in the global market to stock up on supplies.
• Potential tariffs. Concerns about possible tariffs that could be implemented if former President Donald Trump wins the November election may have prompted increased imports.
• Customs clearance:.Ships that had been held up were cleared by customs, contributing to the higher import figures.

For the period of January to August 2024, China’s soybean imports reached 70.48 MMT, marking a 2.8% increase compared to the same period in the previous year.

USDA forecasts China’s soybean imports for the 2024-25 marketing year to reach 103 million metric tons. Increased soybean meal inclusion rates in animal feed, stable demand in the poultry sector, and growing demand in aquaculture are expected to support imports. But weaker demand in the swine sector due to declining production may partially offset the growth in other areas.

Chinese Meat Imports Decline

Chinese meat imports have declined significantly compared to previous years. Through the first eight months of 2024, China imported 4.40 million metric tons (MMT) of meat products, down 13.9% from the same period in 2023. In August 2024, China imported 565,000 MT of meat, which was 9.9% lower than August 2023. Beef imports have been particularly affected, with volumes down 27% year-over-year in July 2024.

Several factors are contributing to lower Chinese meat imports in 2024:

• Economic headwinds are impacting consumption of both pork and beef.
• China has ample domestic meat supplies after building up stocks in 2023.
• Pork production in China remains high, reducing import needs.
• Chinese consumers are seeking cheaper protein options due to economic slowdown.
• Import bans on some U.S. meat facilities have restricted supply.

Pork
• Pork imports may grow marginally to offset a forecasted 3% decline in domestic production.
• China’s pork output fell 0.4% year-over-year in Q1 2024, the first quarterly decline in nearly 4 years.

Beef
• Beef imports are expected to decline in 2024 due to high year-end inventory and flat demand.
• China’s share of global beef imports is forecast to be 5% below 2023 levels.

Poultry
• Poultry meat imports accounted for $282 million in July 2024, resulting in a negative trade balance.

Impact on global trade:
• The U.S. has seen a fall in meat exports as China scales back imports.
• Brazil has increased beef exports to China, up 10.2% in the first half of 2024.
• Australia has shifted more beef exports to the U.S. and Japan as Chinese demand weakens.

Bottom Line

While there have been some month-to-month fluctuations, overall Chinese meat imports remain well below 2023 levels as domestic production remains high and economic factors dampen demand. This has led to shifts in global meat trade flows, with exporters like the U.S., Brazil and Australia adjusting to changing Chinese import patterns.

More Than 50% of Ag Economists Now Think the U.S. Ag Economy is Already In a Recession

Tue, 27 Aug 2024 16:17:23 GMT

U.S. corn prices hit a four-year low as the prospect for record corn and soybean crops takes shape in the field. The eroding outlook also appeared in the August Ag Economists’ Monthly Monitor as more economists are concerned U.S. agriculture is either already in a recession or on the brink of one, but economists point out if it weren’t for strong cattle prices, the ag economic picture would look even worse.

“When you look at, what we said for both, relative to last month or last year, some of the most pessimistic readings we’ve had, since we’ve been surveying here on 2024,” said Scott Brown, interim director, Rural and Farm Finance Policy Analysis Center (RaFF), University of Missouri who also helps author the Monthly Monitor each month.

August Ag Economists’ Monthly Monitor

(Lindsey Pound)

The latest Ag Economists’ Monthly Monitor tried to get a better gauge of the risk of financial stress in agriculture, and asked the more than 70 economists surveyed if agriculture is on the brink of a recession. Nearly 60% said “yes.”

“Maybe what was even more surprising to me is the responses to the question, ‘Are we already in a recession?’ More than 50% said ‘yes, we’re already in a recession.’ That’s a big change from where we were just 16 to 24 months ago, and it shows a lot of folks are worried about where we sit today.”

The Monthly Monitor also asked economists to provide more explanation of why they think the U.S. ag economy is already in a recession. Economists said:

“At least for most crop producers, the sharp drop in prices and cash receipts has resulted in lower net income and financial pressure on leveraged producers. The picture is generally less dire on the animal agriculture side of the ledger, as prices are up (cattle, milk) for some commodities and feed costs are declining.”
“I do think the U.S. ag economy is in a recession. The projection for 2023 and 2024 farm incomes in real dollars are the two largest declines in history. Costs exceed prices for most commodities. And the outlook doesn’t provide indication of improvement soon.”
“Farm incomes are down. Ag manufacturers are laying people off. Suppliers for those manufacturers are laying people off. What are the bright spots? Cattle, depending on the segment? Trade with Mexico? After that, the list gets pretty thin.”
“We aren’t in one yet, but we are on the brink of one.”
I think we’ll enter into a recession after the election.”

Cattle Are Helping the Overall Ag Economic Picture
As the concerns about the ag economy pour in, Brown points out the net farm income situation would look even worse if it weren’t for more positive prices in livestock.

“Cattle prices, I think, have been helpful in pulling it up. At the same time, we see corn and soybean prices continue to move lower,” Brown says. “We know crop receipts are going to be lower than what they would have said back at the start of the year, cattle probably higher, hogs probably higher and dairy probably higher. But economists also expect production expenses to not go up from where they were originally during the first part of the year.”

Net Farm Income Could Fall Further
U.S. Department of Agriculture’s (USDA) Economic Research Service (ERS) gave its first glimpse at 2024 Net Farm Income in February with the Farm Sector Income & Finances: Farm Sector Income Forecast. At that time, USDA ERS’ forecast showed net farm income to fall after reaching record highs in 2022.

USDA ERS’ forecasts showed:

· Net farm income, which is a broad measure of profits, reached $185.5 billion in calendar year 2022 in nominal dollars.
· After decreasing by $29.7 billion (16.0%) from 2022 to a forecast $155.9 billion in 2023, net farm income in 2024 is forecast to decrease further from the 2023 level by $39.8 billion (25.5%) to $116.1 billion .
· Net cash farm income reached $202.3 billion in 2022. After decreasing by $41.8 billion (20.7%) from 2022 to a forecast $160.4 billion in 2023, net cash farm income is forecast to decrease by $38.7 billion (24.1%) to $121.7 billion in 2024.

USDA is set to revise its 2024 Net Farm Income forecast in September.

(Lindsey Pound)

ERS will provide an updated 2024 forecast in September. Even with improvements in livestock margins, the August Ag Economists’ Monthly Monitor showed the majority of ag economists expect the further deterioration in crop prices to weigh on the overall net farm income picture and force the agency to revise their forecast lower.

· Nearly 57% expect USDA to revise its forecast
· 36% think the revision will be 5% to 10% lower
· 7% think USDA will leave its forecast unchanged from February.

What Will Impact Crop Prices Over Next 6 Months
The August Monthly Monitor also asked economists to outline what will impact crop prices over the next six months. Economists said:

Growing crop size and limited exports
Bioenergy and feed demand
South America’s weather and crop size, specifically the second crop final production numbers and plantings for the first crop
Potential for new tariffs and relations with China
Fertilizer prices and the impact on 2025 acreage.

What Will Impact Cattle Prices Over Next 6 Months
With a more bullish outlook for cattle, the August survey asked economists what will impact cattle prices over the next six months.

Weaker demand
Lower corn prices
Possibility of tighter cattle numbers

“I think the supply fundamentals are essentially unchanged since this spring. The big question is demand. If we have an economy-wide recession, what happens to beef demand,” responded one economist in the anonymous monthly survey.

What to Watch
From geopolitics to the evolving situation in supply and demand across all commodities, the Monthly Monitor asked economists to outline the factors not being covered enough in the media.

“Deterioration in liquidity.”
“Growing gap between the situation for crop and livestock producers.”
“Impact of a Trump vs. Harris win and misconceptions around who is better for the farm economy.”
“Continued high cost for many ag inputs.”
“I’m frustrated by the continued pressure on U.S. farmers to be more sustainable which often results in higher farm costs and could lead to more regulation or hoops to jump through or reduced production. At the same time, South American producers continue to rapidly expand production in a less sustainable way. I’m also concerned that this will lead to vertical integration in crop farming.”
“The cataclysmic risk of rising tariffs.”
“Will congress set in to support farm incomes at these levels? ARC/PLC are ineffective at this point. Ad hoc spending has been rampant.”
“Inflation.”
“Possible government farm program payments this fall (last year’s crop year).”
“Fund manager use of Algo computers.”

Your Next Read: The Ugly Truth: 2023 and 2024 Will Go Down As the Two Largest Declines in Net Farm Income Ever

Your PreHarvest Marketing Checklist

Thu, 13 Jun 2024 00:12:08 GMT

As harvest nears, it’s time to revisit, update and tweak your grain marketing plan. “Most of your production costs are well-known at this point, and you should have a good estimate of expected yields,” says Richard Jelinek, vice president global education at INTL FCStone Financial. Plug those production numbers into your preplanting marketing plan. Spend the next few weeks considering a variety of marketing tools that fit today’s challenges, and employ these marketing strategies.

1. MAKE A SMART STORAGE PLAN.

Determine your “must-move” bushels that are beyond your on-farm storage capabilities, says Carrie Johnson, product line leader for Cargill Ag Marketing Services. Visit with your buyers, so they have an idea of what to expect from you.

Know your post-harvest sales tools. “If you are expecting prices to rally after harvest, storage shouldn’t be the only consideration,” says INTL FCStone Financial’s Jelinek.

Estimate all of your costs of carrying grain. Then you can determine if you should store grain or use a marketing tool. “If you know you’ll need some cash flow this fall, you may want to consider selling the necessary amount of grain and then buy call options,” Jelinek says. “This alternative provides you with a gain should the market rally, just like storage, without the hassle and costs associated with storing that crop.”

For example, you sell 10,000 bu. of corn at $3.80 to your elevator at harvest, while at the same time buying a $4 March Corn Call option for 10,000 bu. for a premium of 15¢ per bushel. This locks in a floor price of $3.65 ($3.80 - 15¢ call premium). You capture any price increase above $4. If prices don’t top $4, your call will only cost the 15¢ premium, which was already paid and built into your floor price of $3.65.

2. MUFFLE THE DAILY MARKET NOISE.

With a 24/7 news cycle, grain market chatter can fill every minute of your day. Reduce some of that clutter and step away from the daily market swings, Johnson coaches.

“There’s a fine line between being aware and educated versus obsessed with it,” she says. Don’t be paralyzed by information overload. Instead, always go back to your profit margins and marketing goals.

3. ANALYZE YOUR LOCAL BASIS.

“In the grain world, the most important thing is basis, basis, basis,” Jelinek says. “You need to stay on top of how basis is reacting in your local area.”

Collect basis for your delivery locations at least once a week to create a historical record to see how current basis is behaving compared to normal levels, he says. Watch for patterns to indicate marketing opportunities.

4. KNOW YOUR RISK TOLERANCE.

“All the different strategies have different risk-reward profiles,” Johnson says. “You need to know your willingness and ability to take on risk.”

Sleepless nights because a strategy might not be profitable is a big price to pay. “You don’t want to get into a strategy you don’t fully understand,” she advises.

Your ability to take risk is mostly inhibited by your cash flow, as some marketing tools have expensive fees. Work with an advisor who can help you identify the best options for your farm.

5. MENTALLY PREPARE FOR MARKETING MISSTEPS.

Your farming team and partners will question your marketing decisions. No matter what, you will not make perfect moves every time, says Katie Hancock, a marketing consultant with Brock & Associates and Kentucky producer.

“Marketers have to be decisive and thick-skinned,” she says. “If you make peace with imperfection, you will be able to make tough choices. Without this acceptance, emotions will interfere. In my opinion, the worst decision is not making one.”

Find current market quotes, news and weekly audio analysis at AgWeb.com/markets

“Past results are not necessarily indicative of future results. The risk of loss in trading commodity interests can be substantial.”

The New GREET Model is Finally Here: An In-Depth Look at What it Means for Farmers

Fri, 03 May 2024 15:01:37 GMT

The U.S. Treasury and IRS issued updated guidance on the Sustainable Aviation Fuel (SAF) tax credit, aligning with the Inflation Reduction Act’s goal to boost SAF production by providing incentives based on lifecycle greenhouse gas (GHG) reductions. The initial guidance on the Biden Administration’s SAF subsidy program, which includes three climate-smart practices for corn-based ethanol to qualify; two qualifying practices for soy-based biodiesel and producers of SAF are eligible for a tax credit of $1.25 to $1.75 per gallon

The new guidance includes the release of the now called 40BSAF-GREET 2024 model, designed to calculate these GHG reductions more accurately, incorporating new data and methodologies including climate-smart agricultural practices for soybeans and corn as a feedstock for SAF. GREET stands for Greenhouse gases, Regulated Emissions, and Energy use in Technologies.

EPA’s new model is designed to address previously identified shortcomings in the R&D GREET model, particularly in how it calculated lifecycle greenhouse gas emissions. The lifecycle approach accounts for all emissions from the initial production stages through to the final use of the fuel.

Similarity to CORSIA Methodology

The Treasury Department notes that the methodology used by the new 40BSAF-GREET 2024 model is like that of the CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation) methodology. CORSIA also evaluates the full fuel lifecycle, which includes all stages from the production of feedstock to the end use of the finished fuel.

Both these methodologies aim to provide a comprehensive assessment of the environmental impact of aviation fuels, focusing on reducing greenhouse gas emissions throughout the entire lifecycle of the fuel. This is crucial for developing effective strategies and regulations for mitigating the aviation industry’s impact on climate change.

The SAF tax credit provides a base of $1.25 per gallon for SAF that achieves at least a 50% reduction in GHG emissions compared to traditional jet fuels, with additional incentives for greater reductions, capped at $1.75 per gallon. This move is aimed at fostering the use of domestically produced, lower-carbon fuels and enhancing the role of U.S. agriculture in sustainable fuel production.

Related Story: There’s a New Way to Cash in on Your CI Score on the Farm, Thanks to the Inflation Reduction Act

Significantly, a pilot program was introduced to credit SAF production using feedstocks grown under specific climate-smart agriculture (CSA) practices, like no-till farming and cover cropping. This pilot, part of the broader strategy to decarbonize aviation fuels, represents a shift towards recognizing and rewarding agricultural practices that contribute to carbon reduction. The release from Treasury on the credit noted that the CSA practices incorporated into the USDA CSA Pilot Program “are not a part of either the 40BSAF-GREET 2024 model or any CARB program including the LCFS program. Therefore, the Treasury Department and USDA have developed additional unrelated party certification requirements for the USDA CSA Pilot Program.”

Industry Reaction

Industry reactions have been largely positive, highlighting the progress towards integrating farming practices into carbon scoring for biofuels. However, some critiques focus on the need for less rigid frameworks to encourage broader adoption of innovative, carbon-reducing technologies and practices in agriculture and biofuel production. There is a desire for ongoing refinement of these models to ensure they are scientifically robust and economically beneficial, paving the way for significant reductions in GHG emissions from aviation fuels and strengthening the role of American agriculture in achieving these goals.

SAF production requirements:

SAF producers seeking to use the CSA reduction for producing SAF from CSA crops must contract directly with farmers enrolled in the USDA CSA Pilot Program for either CSA corn or CSA soybeans.

CSA corn production practices:

Farmers producing CSA corn for Alcohol to Jet (ATJ)-ethanol must implement three specific practices on the same acreage:

No-till farming.
Planting cover crops.
Using enhanced efficiency nitrogen fertilizer.

CSA soybean production practices:

For CSA soybeans, only two practices are required:

No-till farming.
Planting cover crops.

Added nitrogen is not required for soybean production.

USDA CSA pilot program and emissions reduction:

In partnership with the USDA, the Treasury Department allows for a SAF synthetic blending component produced from CSA corn or soybeans to be eligible for an additional proxy reduction (CSA reduction) in emissions calculation, without needing a full lifecycle analysis.

Emissions reduction example:

A synthetic blending component using CSA corn or soybeans is granted a safe harbor, with Treasury citing an example where CSA corn used in SAF production achieves a 53% emissions reduction.

Regulatory alignment and definitions:

The definitions and practice requirements outlined by the Treasury in their notice align with USDA’s Natural Resources Conservation Service (NRCS) practice standards and enhancements, with specific details provided in the notice.

Related Story: SAF IRS Guidance Released - Is it Worthless?

CSA pilot program practices:

No-till farming defined:

No-till involves limiting soil disturbance to manage the amount, orientation, and distribution of crop and plant residue on the soil surface year-round.
Residue must not be burned and should be uniformly distributed over the entire field. Removal from the seeding or transplanting area is acceptable.
In-row soil disturbance is permitted during strip tillage, planting, and when closing seed rows/furrows. Full-width soil disturbance is prohibited between crop cycles.
The Soil Tillage Intensity Rating (STIR) for the crop interval must not exceed 20. Examples include a tandem disk (STIR 19.5) and a rotary stalk chopper (STIR 31.2).

Cover crop practices:

Include grasses, legumes, and forbs for seasonal vegetative cover.
Planting must adhere to local criteria regarding species, seedbed preparation, seeding rates, dates, depths, fertility, and methods.
Cover crops should be compatible with other cropping system components and selected herbicides.
Establishment can occur during the fallow season, or as companion or relay planting.
Residue from cover crops cannot be burned, and crops must be terminated according to NRCS guidelines.
If grazed or hayed, management must not compromise soil health or organic matter.
Cover crops cannot be harvested for seed.

Enhanced Efficiency Nitrogen Fertilizer (EENF) practices for corn:

EENF is used to improve nutrient use efficiency, reduce nutrient loss risk, and lower greenhouse gas emissions.
Defined by AAPFCO as products that increase plant uptake and reduce nutrient losses compared to standard fertilizers.
For corn, strategies include using nitrification inhibitors, urease inhibitors, or slow-release fertilizers for a minimum of 50% of nitrogen applications.
This practice does not apply to soybeans as they do not require added nitrogen.

Upshot: These practices and definitions are integral to the USDA CSA Pilot Program and aim to enhance sustainability in crop production by minimizing environmental impact and improving resource efficiency.

Record Keeping Requirements for Farmers in the CSA Pilot Program

General records:

Maintain records on the type and amount of feedstock produced.
Document ownership or operational control of the enrolled land; if leased, the lessee must declare operational control.
List all CSA practices implemented as per the guidelines.
Sign a letter of intent to continue using no-till and cover crops on the same acreage, allowing periodic tillage only once every five or ten years.
Declare that the produced feedstock using CSA practices is exclusively for SAF production and affirm no sale of GHG offset credits or associated GHG benefits.
Provide all records to an unrelated third party for verification.

Crop-specific records:

Document crop rotation and tillage practices for each crop before implementation and note any changes to ensure compliance with no-till practices.
Record planting and harvesting dates for each crop, detailing the month and year.
Document field operations and the timing of these operations.
Record total planted and harvested acreage and yield for crops produced under the no-till system and sold as SAF feedstock.
Keep records of seed purchases, seeding dates and rates, and field locations (using FSA maps or other reliable sources).
Document the amount of SAF feedstock delivered to various points such as elevators, millers, refiners, or other delivery locations.

Cover crop and fertilizer management:

Maintain similar records for cover crops as required for primary crops.
Keep management records for the use of Enhanced Efficiency Nitrogen Fertilizer (EENF) strategies.

Bottom line: These record-keeping practices are crucial for ensuring accountability and verifying compliance with the sustainable practices stipulated by the CSA Pilot Program.

SAF producer requirements

Contractual obligations:

Farmers must have a direct contract with the SAF producer.

Record keeping and compliance:

SAF producers are responsible for collecting and maintaining all records from each supplying farmer. Note that the EENF portion is not relevant for soybean production.
Maintain full supply chain traceability records as per requirements.
If a grain elevator is used as an intermediary for storing feedstock, it must also maintain appropriate records linked to those bushels.

Intermediary entities:

Any intermediary entity that takes physical possession of the feedstock, including the registered SAF producer, must comply with traceability requirements aligned with the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).

Documentation and forms:

Forms for farmers to provide their supporting information for the CSA Pilot are included in the notice covering the process, ensuring transparency and adherence to guidelines.

Impacts and Implementation

CSA pilot program requirements and participation:

All three CSA actions are required for corn, while only the first two (no-till and cover crops) are needed for soybeans.
Soybeans might qualify more easily due to the commonality of no-till, but fewer farmers use both no-till and cover crops together.

Land eligibility and coverage:

According to the Census of Agriculture, no-till is practiced on 105.2 million acres, but cover crops are much less common at 17.99 million acres.
There are 382 million acres of cropland, with 301 million acres harvested, raising questions about the universe of land eligible for the CSA Pilot.

SAF production and consumption:

SAF consumption has risen from 5 million gallons in 2021 to 24.5 million gallons in 2023.
The limited number of SAF producers in the US could pose a challenge for meeting program goals.

Periodic tillage and soil health:

Periodic tillage is crucial for some farmers using no-till to maintain soil health, requiring clarity on permissible tillage practices under the program.

Record-keeping requirements:

Farmers must maintain detailed records and provide them to third parties for verification.
Elevators used by SAF producers for storing CSA commodities also have specific record-keeping requirements.

Regulatory and financial considerations:

New domestic plants using the ATJ pathway with ethanol as feedstock are expected, though details are sparse.
Farmers selling CSA crops to SAF producers cannot earn GHG offset credits or sell associated GHG benefits, impacting participation in private carbon credit efforts.

Future developments and clarity:

The Clean Fuel Production Credit (45Z) starting in 2025 will require further modeling, data assumptions, and verification.
A new 45Z-GREET model will be developed to align with the 45Z tax credit, necessitating rapid development and expanded use of cover crops.

What is a Carbon Intensity Score (CSI) and what does it mean for farmers? We share some FAQs from farmers.

Will We See a Hard Fall or Soft Landing? It's the Million Dollar Question for the Farm Economy This Year

Sun, 07 Apr 2024 20:16:38 GMT

A reset in agriculture seems to be underway. For 10 straight months, the Ag Economists’ Monthly Monitor has tracked the health of the ag economy through the lens of ag economists. The anonymous survey is a gauge of 70 economists from across the country. In March, economists’ views on the ag economy grew weaker, but it’s the erosion in the future outlook that is sprouting fresh concerns.

“I think we just have to continue to watch the downside,” said Scott Brown, interim director of Rural and Farm Finance Policy Analysis Center (RaFF) at the University of Missouri, who also helps author the Ag Economists’ Monthly Monitor. “I think it’s certainly more negative as we look ahead, but if we plant a lot of corn and we get trend yields, I think I know the directional corn prices, and it’s perhaps even lower than where the economists have been today.”

(Farm Journal)

Economists’ views on the net farm income picture took a nosedive in February but held steady in March around $117 billion. The projection is a sharp drop from the $160 billion USDA forecast for 2023 and a 42% fall from the record set in 2022.

“We think farm income does drop very sharply in 2024, but it’s just back down to the levels we saw in 2020 and remains above the levels we saw between 2015 and 2019,” said Pat Westhoff, director of the Food and Policy Research Institute (FAPRI) at the University of Missouri.

Fallout from Falling Net Farm Income

The anonymous survey exposed several possible outcomes from a sharp drop in net farm income. One economist pointed out, for those producers who thought 2021/22 was a new normal for commodity prices, they might be overextended heading into the latest downturn. Another economist said corn farmers could face the steepest losses this year.

“It looks like corn prices will be below production costs for many producers,” one economist said. “We have not had that for a long time, especially since the ethanol boom started almost 20 years ago. The struggles this time will be for corn farmers. Producers of other crops like cotton, wheat and rice have had difficult years.”

(Farm Journal)

“Low row crop prices will depress farm incomes in the Midwest in 2024,” said another economist. “In 12 months, it will be interesting to see how much working capital erosion has taken place and how serious of a problem that becomes.”

Forecasts show margins will continue to get squeezed, but will it be a soft landing or a hard fall? It’s a debate that will continue to play out in 2024.

“I’m still in the soft-landing side of things, but I want folks to do enough risk management to hopefully prevent the hard fall,” Brown said.

“I think if things play out the way we have them currently projected, it’s a relatively soft landing in the sense it’s not a continued crash, where we see a repeat of some of the horrible times you’ve had in the past, but the risks are there” Westhoff said. “I could easily tell you stories that are much more negative, and the opposite is also true that we can have a better picture as well.”

What Factors Will Drive the Economy and Commodity Prices in the Next 6-12 Months?

The March survey asked economists to list the two most important factors driving agriculture’s economic health today and in the next 12 months. Economists said:

Declining prices for many commodities, and the mixed impact of higher cattle and hog prices
Higher cost of production, including input costs, interest rates and land rental rates
Concerns regarding exports and global economic growth, as well as regulatory and policy uncertainty.

When economists were asked what factors will impact crop prices in the next 6 months, they said:

Domestic and global weather impacts on planting and the growing season.
Planting intentions and production prospects for the U.S.
Global impacts related to export demand, competitor production, economic health and conflicts; specific mentions made of
South American crops, Hamas conflict in the Suez Canal and Chinese demand.
Domestic demand strength and general economic health.

The March survey also asked economists to outline what factors will impact livestock prices in that same time. Economists said:

Consumer confidence and demand driven by economic growth.
Supply conditions remain tight for cattle as herd rebuilding conditions.
Potential drought conditions impacting forage recovery, among other things.

Cow-Calf Producers in the Driver’s Seat

While the doom and gloom forecasts continue to haunt row crops, in 2024, the Ag Economists’ monthly Monitor continues to highlight the one bright spot in the ag economy this year.

“The outlier for me is cattle,” Brown said. “I think cattle prices, frankly, could get even higher. Whether that’s good in the long run for us, in terms of some pieces of the industry that we need, like processing capacity, we’ll have to wait and see, but cow calf producers are going to be in the driver’s seat for the next year and a half to two years.”

(Farm Journal)

The March Monthly Monitor asked economists what two factors will drive agriculture’s economic health today and in the next 12 months.

Economists say declining prices for many commodities, with a mixed impact of higher cattle and hog prices; higher production costs including inputs, interest rates and land rents; as well as concerns about global economic growth and regulatory uncertainty.

What could impact crop prices over the next six months? Economists say supply is the overriding factor for grains.

“If we have an average crop in 2024, we’ll be looking at lower prices for most of the major commodities as the most likely outcome. So that tends to push down not just farm receipts but also net farm income this year as production costs remain relatively high overall,” Westhoff said.

On the livestock side, the supply of cattle is known. With the fewest cows since 1961, and tightening supplies of beef and cattle, the supply side is creating mounting pressure toward higher prices. The biggest wild card, however, is demand.

“Will consumers continue to buy at their current rate that they did last year, with higher prices, because we’ve got record-high retail beef prices? That’s the real interesting part there,” said David Anderson, a livestock economist with Texas A&M and one of the 70 economists surveyed each month.

“From a live animal standpoint, cheaper grain leads to cheaper feed costs that boost prices,” he adds. “That’s, you know, one part of it, certainly tighter supplies and the demand for those cattle from packing plants that now are having to fight for animals. That’s part of boosting prices, too, as well as that consumer demand at every step of the chain, so to speak.”

Just how much higher can cattle prices go? This month’s monthly monitor, which was done before Highly Pathogenic Avian Influenza (HPAI) was confirmed in U.S. dairy cattle, jumped another $3 per hundredweight to $188.30. Anderson thinks that means it could be 2028 or even 2029 before we start rapidly expanding beef supplies, a sign that elevated cattle prices could be in for a long ride if demand can hold.

“Even if we started herd expansion this year, let’s say a calf that is born this spring, that calf is held back into the herd, she’s not going to have her first calf for two years. It’s another 18 months before that animal is at their finished weight and becomes beef,” Anderson explained. “That’s almost four years of higher prices if we started aggressively expanding today.”

Digging Into Demand

The strength in demand hinges on the health of the U.S. economy. Anderson thinks while there are mixed signals with the economy, fundamentally, the signals are working in favor of beef and meat demand.

“One is we have a growing economy: GDP is growing, real incomes and real wages are growing. What that means is incomes are growing faster than inflation. We also have very low unemployment,” Anderson said. “If we think about a growing economy and low unemployment, historically, those are very good. That’s a very good economic outlook for beef demand.”

“I don’t think we’re yet seeing a lot of indications of weakness in demand just yet,” Brown says. “It’s the one that I watch the most as inflation is still not back to the Federal Reserve’s target of 2%.”

In the February Monthly Monitor, economists cast doubt on not only if the Federal Reserve will make interest rate cuts in 2024, but by how much. Forty-four percent of economists said they are growing more pessimistic about rate cuts in 2024; 37% are more optimistic. The majority of ag economist are forecasting interest rates to fall zero to 1% this year.

(Farm Journal)

Turbulent Times for Pork

Hog producers are coping with a plethora of challenges. 2023 produced the worst margins on record. Now, consolidation concerns are setting in as pork processing plants have already made closure announcements, with economists expecting more on the way.

“We expect 2024 to be a better year for producers’ margins,” Brown said. “If you look at the Month Monitor’s forecasts for corn prices, back in December, we were suggesting 2024/25 price of a little more than $4.70. We’re sitting below $4.50 in the March survey, so cheaper feed costs should help on the productivity side.”

Even if 2024 is a breakeven year for producers, economists warn it might help stop the bleeding but won’t be enough to help producers dig out of the hole that was created last year.

“It’s not enough to recover from all of that because those were black record large losses,” Anderson said. “One of the interesting things on the hog side is why don’t we see a lot more cutback in production already because of those losses? We don’t really see that, but some of its productivity gains are offsetting fewer sales. It’s a pretty interesting industry to look at.”

Clarity on China

China continues to be a major question mark for grain and meat demand. The country recently announced it will sharply expand its budget to stockpile grains and edible oils to help improve food security; however, not all economists are sold on that motive. The Monthly Monitor asked economists if they think there are other motives at play.

“Yes, helping internal prices for farmers,” one economist said.

“No, I actually do think that China likes holding large stockpiles of feed grains. Now that grain prices have fallen, they are taking advantage of low prices to build stocks,” another economist responded.

“China is preparing for the possibility of increased conflict with the U.S. after changing the wording contained in its policy paper regarding Taiwan,” said another economist in the anonymous survey.

“There may be concerns about what might happen if there were to be a change in U.S. administrations in 2025,” another response stated. “Given past experience, I’d pay more attention to actual market behavior than announcements.”

Worst-Case Scenario: Why Eric Snodgrass Thinks The Heavy Rainfall In Brazil Could Do More Harm Than Good

Mon, 08 Jan 2024 15:58:14 GMT

Sinking soybean prices have been the theme to start the new year. One reason behind the price pressure is bearish news of rain returning to key growing areas in South America that had been impacted by severe drought. However, one leading ag meteorologist thinks this rain could do more harm than good at this point in the season, even impacting the planting of the safrinha corn crop.

(Farm Journal)

Eric Snodgrass, science fellow and principal atmospheric scientist with Nutrien Ag Solutions , says the wet weather is a sudden switch from the drought that plagued a vital soybean and production growing region at the end of 2023.

“For the last three months, we’ve seen incredibly dry conditions throughout the center-West region,” says Snodgrass. “We had episodes of heat pushed the late planting off quite a bit. And now we’re seeing the models really make a pretty substantial flip over to much wetter conditions.”

Join us Feb. 5 to 7 in Kansas City for Top Producer Summit . This is the leading networking and education event! Eric Snodgrass will present a general session: High Impact Weather And Production Agriculture”

Snodgrass says forecasts point to as much as 8 inches to 10 inches of rain in a span of two weeks. While the rain is needed, it could actually do more harm than good.

“To be honest with you, I think this is a worst-case scenario, compared to if it had just stayed drier,” Snodgrass says. “What I mean by that is you bring in all that rain, it’s going to impact some early harvests. But what happens if all of that moisture begins to get recycled? In other words, it sticks around and that makes things wetter for a while. Now, all of a sudden, you start pushing back the harvest time period. And that’s going to just keep pushing that crop calendar such that the safrinha corn crop goes in late.

The next 5 days across S America. Wednesday morning global output. pic.twitter.com/a8rmJ1tTrW
— Allen Motew (@QTweather) January 3, 2024

Snodgrass says El Niño reached its peak at the end of December. Now, what’s called the Madden–Julian oscillation (MJO) is riding on top of El Niño, which is pumping tropical moisture into Brazil and increasing farmers’ chances there for heavy rainfall and continued rain events.

“Basically, we opened it up finally to getting moisture into place from the tropics and, therefore, it’s going to start raining and raining pretty heavily,” says Snodgrass.

Is More Vertical Integration, Consolidation Now Ahead? Why 2023 Could Change the Entire Pork Industry

Tue, 17 Oct 2023 14:18:36 GMT

2023 will likely go down as one of the most painful years, financially, that pork producers have ever experienced. As pork producers’ potential profits continue to erode, some economists say 2023 could turn out to be worse than 1998. The grim outlook is also unearthing concerns about what it could do to the entire pork industry, including possible contraction, restructuring and vertical integration.

According to the September Ag Economists’ Monthly Monitor, pork prices aren’t producing much optimism. Of 10 major ag commodities, the nearly 60 ag economists surveyed say they are the least optimistic about dairy, but that’s followed by pork.

When asked to list the most negative aspect of the ag economic outlook, one economist noted the extreme headwinds for pork.

“Interest rates and drought, but some areas seem to have some demand problems, like dairy and pork,” said the ag economist in the latest survey.

Related News- It’s Starting: Why Recent Processing Plant, Farm Closures Signal Major Consolidation is Now Underway for Pork and Poultry

Iowa State University’s Model for Profitability, which is shows farrow to finish operators in Iowa aren’t just losing money, forecasted 2023 margins look to be record-low.

“This is the worst annual year pork producers will ever have,” says Lee Schulz, an extension livestock economist with ISU who manages the Model for Profitability. “We always talked about 1998 as the worst year ever, but 2023, collectively, will be worse than in 1998.”

What additional changes could occur in the hog industry considering the economic challenges today? It’s a question that was asked in last month’s Monthly Monitor, and the main themes seem to be consolidation and potential fallout from Proposition 12.

The reality today is margins for hog producers could be worse than 1998, and it’s spurring what some think could be a similar situation to 1998: more consolidation in pork and poultry. Tyson Foods’ decision to shutter four poultry processing plants yet this year and into early 2024, combined with Smithfield Foods closing 35 pig farms, are strong signals consolidation is already occurring, according to ag economists.

Several economists said contraction, restructuring and vertical integration will be a direct effect caused by today’s financial woes.

“More consolidation and less opportunities for independent producers as markets for their hogs will be more difficult to find,” said one economist.

“I expect to see some reduction in the sow herd. An interesting question will be how much shrinking happens in Canada compared to the U.S.,” was another response.

Pressure from Prop 12

The other major theme was Prop 12. As the latest Monthly Monitor showed, there are severe concerns about what it will do to the marketplace.

“The hog industry possesses huge uncertainty right now,” said one economist. “Prop 12 provides an entirely new dynamic to the marketplace that’s never been seen nor experienced by any sector of the livestock industry. Moreover, it’ll have ripple effects on other industries - especially poultry and ground beef. There’ll be a shortage of pork in California and excess supplies in the other states. How will wholesalers and retailers price product - and how sharp will that influence be on hog prices? All that remains to be seen.”

What factors could impact pork prices over the next six months? That’s another question that was asked in the latest Monthly Monitor, and it all boils down to supply and demand.

“Livestock prices will largely be driven by the consumer’s economic health, determining where he/she will spend money on the meat value chain,” said one economist.

“The first thing is reduced supplies. Beef production is declining. Pork production has been equal to a year ago, so far, but the financial losses should cut production. Reduced chicken production is the likely result of low chicken prices. Tighter production sets the stage for higher prices, but consumer demand will determine if we get sharply higher prices,” another ag economist said.

For the entire livestock industry, the ag economists revealed several things that could also impact prices between now and March, including:

Reduced supplies for beef, pork and chicken should offer price support
Consolidation and reduction could be seen in early 2024
Consumer economic health and demand

Pat Westhoff, director of the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri, says it’s not just pork and dairy causing economists’ outlook to erode. The September Ag Economists’ Monthly Monitor shows lower commodity prices, concerns about demand and a negative outlook for China’s economy are all contributing to the changing views, even as the cattle herd and U.S. corn and soybean crops continue to shrink. But the most influential piece of the farm economy might be the price of corn .

“I think a lot of things are coming together to make people more pessimistic about the short-term view of things,” says Westhoff. “We’ve got lower prices for some of the major commodities, such as corn, and that’s obviously a major player in all this. Higher interest rates aren’t helping, as well. There’s just a general concern about the future of demand for U.S. agricultural products, which has probably gotten to be a more important concern this past month.”

View more results from the September Monthly Monitor .

Related News:

The One Factor That Could Make Or Break the Farm Economy Over the Next 12 Months

Out Of The 10 Biggest Ag Commodities In The U.S., Leading Ag Economists Are Most Bullish On Beef Cattle

The One Factor That Could Make Or Break the Farm Economy Over the Next 12 Months

Wed, 27 Sep 2023 20:13:04 GMT

Ag economists’ view on the ag economy is starting to erode. The September Ag Economists’ Monthly Monitor shows lower commodity prices, concerns about demand and a negative outlook for China’s economy are all contributing to the changing views, even as the cattle herd and U.S. corn and soybean crops continue to shrink. But the most influential piece of the farm economy might be the price of corn .

The Ag Economists’ Monthly Monitor is a survey of nearly 60 ag economists from across the country, conducted by the University of Missouri and Farm Journal . The biggest story revealed in the September Monthly Monitor is the falloff in the ag economy — all three categories are lower than any of the previous three surveys.

(Farm Journal)

“I think a lot of things are coming together to make people more pessimistic about the short-term view of things,” says Pat Westhoff, director of the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri. “We’ve got lower prices for some of the major commodities, such as corn, and that’s obviously a major player in all this. Higher interest rates aren’t helping as well. There’s just a general concern about the future of demand for U.S. agricultural products, which has probably gotten to be a more important concern this past month.”

Related Story: Ag Economists Turn More Bullish On Soybean Prices, Corn Prices Are a Big Red Flag

Economists say there are several factors driving agriculture’s economic health today, and will continue to do so over the next 12 months, including:

U.S. and global weather creating production challenges
Decline in many commodity prices
Below-trend yields for major crops in 2023
Strong cattle prices offset by lower prices of other livestock commodities
Generally high interest rates and input costs, despite some lower prices for fertilizer, etc., providing relief
Variable profitability across farm operations based on production challenges
Tight farm margins in some instances
Declining export demand
Uncertain international grain market factors
Increased production competition from South America

While there are several things that could impact the health of the farm economy, one economist says: “The biggest factor that will impact the health of the ag economy is the price of corn, by a long shot.”

What are the biggest drivers of row crop prices over the next six months? The September Ag Economists’ Month Monitor revealed the following:

Ongoing geopolitical tensions in China and Black Sea region
South America crop prospects for 2024, compared with new U.S. estimates of crop supplies
Export market demand changes
U.S. biofuel/energy policy, climate change policy and financial policy that could impact trade and domestic feed grain and oilseed use

For livestock, the ag economists reveal several things could also impact prices between now and March, including:

Reduced supplies for beef, pork and chicken should offer price support
Consolidation and reduction could be seen in early 2024
Consumer economic health and demand

(Farm Journal)

Economists fear higher interest rates could weigh on both livestock and row crops.

“Agriculture’s economic health is being impacted by weak demand for many commodities, which is suppressing prices. Low prices are especially challenging for farmers facing weather-related production challenges with fewer bushels or pounds to sell at those low prices. Although costs of production have come down, farm margins are tight,” says one ag economist in the anonymous survey.

Related Story: Could Cattle Prices Soar Through Next Year? That’s What Economists Think, And It Could Completely Change the Industry

Another economist says: “Building supplies of many commodities are leading to lower prices. Cattle and soybeans are the exception. Input costs, especially interest rates, remain high.”

Watch What’s Happening Around the Globe

One of the main themes that continues to surface in the Ag Economists’ Monthly Monitor is concern about global competition. As competition continues to beef up from countries such Brazil, it’s not just impacting grain exports, but also meat.

Arlan Suderman of StoneX Group says the increased competition globally is one of the main watchouts for grain prices.

“Russia is dumping record amounts of wheat on the world market and Brazil is dumping record amounts of corn on the world market, all while our livestock numbers are down which means feed usage is down,” Suderman says. “I think the positives are the biofuel issue that’s going to take some time to develop; we’re already seeing it on the soybean side. We hope to get some favorable decisions from the administration to support the corn side.”

So, what could change the outlook for lower corn prices? Suderman says there are several things, including what happens between Ukraine and Russia.

“I think the Black Sea war continues to escalate, with shipments of commodities out of Russia being curtailed. That’s a game changer if that continues to happen. The odds are very low right now, but those are slowly increasing the longer the war goes,” Suderman says. “On the other hand, tensions with China are increasing. I look for China to continue to try to diversify away from dependency on the United States for commodities, which means we needed to develop other markets domestic and abroad.”

Concerns About Deglobalization

One concern for U.S. agricultural exports as a whole, according to Don Close of Terrain Ag, is deglobalization.

“I think the slowdown we’re seeing in trade volumes, China is at the centerpiece, as well as the fallout that we could see from the Russia Ukraine situation. I have a lot of concerns about what we will see from Europe in the years to come. I think there’s a lot of stress factors there,” Close says.

The current economic meltdown in China is also a growing concern for many ag economists, according to the September Monthly Monitor.

“There are a lot of questions about what’s happening in China, and there are a lot of concerns that China’s economy has already slowed or will be slowing in the months ahead,” Westhoff says. “Since that’s a major demand driver, if that were to happen it might be a very strong negative. In this country, we’re seeing continued economic growth, but those high interest rates are indeed having an effect on household finances and will probably result in at least some slowdown in consumption over the next year.”

Big Crops Expected for 2024

In the September survey, economists were also asked to provide outlooks for 2024. As South America begins to plant next year’s crop, expectations are for Brazil’s big crops to just get bigger, at a time when costs at home are on the rise.

“The first thing is costs,” says one economist when asked to provide an outlook on the next 12 months. “Interest rates are higher and likely to increase some more, but fertilizer prices are lower. Lower feed prices are certainly providing some relief to livestock producers.”

Ag economists expect U.S. farmers to produce big yields in 2024, with the expectation for El Nino to play in producers’ favor.

The September Ag Economist’ Monthly Monitor shows a projection of trend yields for 2024:

Corn: 180.4 bu. per acre yield
Soybeans: 51.8 bu. per acre
Cotton: 837 pounds per acre

While operating costs are expected to stay high, the Monthly Monitor shows certain input costs, such as fertilizer, continue to trend lower for the 2024 corn crop.

When economists were asked to give their expectation for the 2024 corn budget versus 2023, the September survey shows economists expect the following changes:

Market revenue down 4.7%
Fertilizer costs down 21%
Fuel costs up 1.5%
Chemical costs up 3.2%
Operating interest cost up 8.4%

“We’ve seen a sharp drop in spot prices for fertilizer already, which translates to lower prices for fertilizer for next year’s crop,” Westhoff says. “That could be some significant cost savings for crop producers. Likewise, on the livestock side, the fact we’re projecting lower prices for grain and soybean meal suggests we could have lower feed costs in 2024 as well.”

Even with some relief expected on the fertilizer side, economists still think higher costs and lower commodity prices will eat into outlooks for 2024.

“Today, in areas where crop production is likely short, there is some financial deterioration between the guaranteed crop insurance levels and input costs. In areas with good production, such as Ohio and Indiana, their production will likely lead to some fairly good profitability,” says one economist. “In 12 months, lower crop prices are going to hurt 2024 crop profitability.”

It's Starting: Why Recent Processing Plant, Farm Closures Signal Major Consolidation is Now Underway for Pork and Poultry

Tue, 15 Aug 2023 19:03:18 GMT

Talk to any farmer who used to raise pigs, and they’ll more than likely tell you it all changed in 1998. That’s the year that draws memories of agony and financial pain for many. Hog margins bled red, and it spurred mass consolidation.

The reality today is margins for hog producers could be worse than 1998, and it’s spurring what some think could be a similar situation to 1998: more consolidation in pork and poultry.

Tyson Foods’ decision to shutter four poultry processing plants yet this year and into early 2024, combined with Smithfield Foods closing 35 pig farms, are strong signals consolidation is already occurring, according to ag economists.

“It has been decades since the last time we’ve seen these kinds of signs of consolidation, and that just tells you where the industry is today,” says Scott Brown, an extension livestock economist with the University of Missouri.

Of the four Tyson poultry processing sites that will soon close, two are located in Missouri. Those two plants alone result in the loss of nearly 2,200 jobs. Smithfield’s pig farm closures will cause the loss of 92 jobs.

Not only are rural communities grappling with the possible effects and job vacancies the announcements will leave, but producers are also forced to find a new home for their birds, with some poultry and livestock producers possibly forced to exit the industry all together.

“With the Tyson announcement, I think some growers will likely have their contracts will be bought out, and they’ll no longer be growing under contract for Tyson,” says Brown. “I think in other cases, and if you look at some of the information that’s the Tyson’s put out there, it seems like some growers are going to have the opportunity to be growers for other plants that are nearby to their facilities.”

Crumbling Margins for Pork and Poultry Producers

Whether it’s poultry or pork, economists say the decisions are being driven by economics today.

“If you look at recent USDA data, it would suggest margins to broiler production have fallen 60% from July of 2022, to July of 2023,” says Brown.

Pork producers are coping with similar economic headwinds, with pork margins crumbling as pork prices remain low and feed prices stay high.

Iowa State University’s Model for Profitability, which is shows farrow to finish operators in Iowa aren’t just losing money, forecasted 2023 margins look to be record-low.

“This is the worst annual year poor producers will ever have,” says Lee Shulz, an extension livestock economist with ISU who manages the Model for Profitability. “We always talked about 1998 as the worst year ever, but 2023, collectively, will be worse than in 1998.”

(Farm Journal)

Iowa State’s data shows in 1998, the last time the industry saw mass consolidation, farrow to finish operators were losing $26.88 per head. This year, projections are those losses will hit $29.95 per head, more than $3 per head worse than 1998.

“And we’re going to piggyback that with the next year, with at least what we’re forecasting, is 2024 will be well below breakeven level,” Shulz says. “So, two consecutive years of large negative profits in pork production.”

The Expectation for Accelerated Consolidation

It’s pure economics that are producing such strong signals of consolidation, and possibly why announcements from major processing companies are already taking place. Economists warn that consolidation could not only continue, but only accelerate in the coming months.

“Packer owned hogs in the U.S. is up to 40% of the U.S. herd, and that’s a number that’s continued to increase,” says Shulz. “We could see increases in packer owned hogs, and if that continues, we’ll see consolidation with farms getting larger.”

(Farm Journal)

Shulz says while last week’s announcements are a sign of consolidation, trouble started showing up in 2021 when Smithfield announced the closure of a 10,000 head a day pork processing facility in Virginia. Since then several more have closed, both in the U.S. and Canada.

“When you look at ongoing packing plant closures, both in the United States and Canada, it is a signal that we continue to see some contraction in the industry, as well as now we’re seeing some farm closures that that are obviously impacting inventory levels,” says Shulz. “And this is really potentially the start of it, as you look out the next year to 18 months, as I mentioned, with those rather negative returns in the industry.”

Lack of Labor

As structural changes accelerate, economists say labor is another pain point today for both pork and poultry.

“Lack of labor availability is not a new issue, but I think it continues to be a problem for the for the poultry industry of, ‘Do I have enough labor to run that plant as efficiently as possible?’ And I think in many cases, the answer is ‘no,’” says Brown.

Purchasing Power and Negative Impact on Demand

Labor availability is a major hurdle for processors, but so is the fact pork prices are low today.

“My data through June shows poor prices are down 5% compared to June of last year,” says Shulz. “But when we adjust for inflation, it’s even worse. Pork Prices are down 8% compared to the same time last year when you adjust for inflation.”

Even on a national level, the Bureau of Labor Statistics numbers shows retail pork and poultry prices are also lower than a year ago, a sign of inflation impacts on shoppers.

“We’ve had at least a 10% pullback in most of those categories, and particularly the chicken and the pork complex,” says Glynn Tonsor, a livestock economist with Kansas State University. “Why is that? It’s certainly not because costs of production have changed a lot. They’re still elevated, but consumer buying power has been squeezed.”

(Farm Journal)

Tonsor tracks meat demand in a Monthly Meat Demand Monitor. He says the Monitor shows consumers still want to buy protein, they’re just not able to buy as much right now.

“The Meat Demand Monitor project, that’s Beef and Pork Checkoff funded here at K-State, continues to show strong interest in keeping meat protein in your diet. So that isn’t the narrative here. Rather, I think it is an issue with purchasing power,” Tonsor explains.

Shulz says consumer demand is driven by consumer incomes, prices of other protein substitutes, as well as taste and preference. Today, he says it’s the consumer income piece that’s faltering, which may be a product of the Covid-19 pandemic and the amount of money that poured into the U.S. economy.

“We really inflated consumer incomes during the pandemic,” says Shulz. “We pumped a ton of money into the economy, money supply increased roughly 40% in two years, consumers had a lot of money to spend and they spent it on protein, including pork, and they had a lot less things to spend it on during the pandemic.”

Now that incomes have tightened with no more pandemic related relief and assistance being sent out to Americans, as well as inflation and higher interest rates pinching their pockets, it’s impacting how much protein consumers can afford to buy.

“It’s not just pork, but when we look at pork, this is the third consecutive quarter that we’ve seen pork demand below year ago levels,” says Shulz. “And so while 2022 will really stood out as a very strong pork demand year, and really helped offset a lot of the higher costs we had, we’re starting to see that that pork demand decline.”

Tyson Foods’ CEO told Yahoo Financial during an interview last week, that this current period is one of the most challenging macro environments he’s ever seen in his four decade-long career.

Tyson Foods (TSN) stock slips after reporting an earnings miss, underperforming with

In an exclusive interview, Tyson Foods CEO Donnie King told Yahoo Finance that there has never been “a more challenging time” in his 40 years in the business. “The macro environment is challenging, and it’ll continue to be challenging for a bit,” King added.

What makes today more challenging than even during the COVID pandemic? Shulz says it’s actually tied back to the pandemic.

“You can think about this as just a really long tail on to that because you got to think about all the outside forces that are impacting pork producers,” says Shulz. “You have higher interest rates still inflation well above, you know, the 2% that the federal reserve benchmarks, you have employment issues, consumer incomes are obviously being impacted health of the general economy questions on if we will enter a recession, fiscal policy, monetary policy, they’re all impacting producers’ profits.”

Ag Economists Turn More Positive Longer-Term On the Farm Economy

Thu, 20 Jul 2023 20:01:20 GMT

The July Ag Economists’ Monthly Monitor shows weather extremes and wild swings in the commodity markets are the two biggest factors impacting short-term outlooks, but the economists surveyed expressed a more favorable view longer-term. The latest survey also shows the biggest wildcard for agriculture over the next year could be geopolitical risks tied to China and the war in Ukraine.

This is the second survey of the Ag Economists’ Monthly Monitor , a joint effort between the University of Missouri and Farm Journal. The first-of-its-kind survey collects insights from ag economists across the U.S. Nearly 60 economists are asked each month to provide their forecasts and views. They represent a wide geography with expertise in grains, livestock and policy.

This month’s survey showed several key changes from June. Economists say they believe USDA’s current corn and soybean yield projections are still too high, and they anticipate a drop in forecasted corn and soybean prices. The economists in the July survey also predict cattle and hog prices could continue to climb higher this year.

“To me, the biggest thing that sticks out in the July survey is the more positive view 12 months into the future relative to where we were in June,” says Scott Brown, University of Missouri agricultural economist who helps author the survey each month. “In the very short run, the economists are a little less positive than where they were in June. I think that has a lot to do with the weather and general market moves we’ve seen over the last few weeks.”

(Farm Journal)

The longer-term optimism revealed in the survey is despite economists’ expectations for two consecutive years of declining net farm income, falling short of the record set in 2022. The July Monthly Monitor forecasts net farm income to fall to $132.8 billion in 2023, which is below the $134.7 billion in the June survey and USDA’s current net farm income estimate of $136.9 billion. That’s still a big drop from 2022, when USDA says net farm income reached $162.7 billion.

This month’s survey also tried to peel back the layers of what commodities might be aiding the more positive long-term outlook versus weighing on the overall health of the ag economy in the short-term.

“On the crop side, it’s positive to very positive,” Brown says. “There are a few in the negative category, but a majority of economists responded the crops side of the equation looks positive. Whereas, on the livestock side, we have more negatives than we have positives.”

Economists say there are several positive developments that could shape U.S. agriculture, such as continued productivity and efficiency gains; a healthy farm economy and balance sheets; projected shifts in interest rates; new and expanded opportunities for renewable fuels; and the strength of the U.S. cattle market and meat exports as a whole. Geopolitical issues could also impact global crop production and, in turn, bring some demand back to the U.S.

Cuts to Projected U.S. Crop Yields

The survey was sent to ag economists the day after USDA released its most recent yield forecast in the July WASDE report. In what was called a rare move early in the growing season, USDA cut its corn yield forecast by 2.2% to 177.5 bu. per acre, down from 181.5 bu. per acre in the June report. The July Ag Economists’ Monthly Monitor is nearly 3 bu. per acre lower than USDA, with the group of ag economists projecting a yield of 174.9 bu. per acre.

“For me, the interesting piece of this story is there’s a lot of variability in the responses from those being surveyed, which highlights how varied the weather has been as you move around the country,” Brown says. “We had yield estimates slightly below 170 bu. per acre on the low end and some above 180 bu. per acre on the high end.”

(Farm Journal)

Brown says the soybean estimate also came in lower than both USDA’s July WASDE report and the June Ag Economists’ Monthly Monitor survey. USDA estimates soybean yield at 52 bu. per acre, and the average ag economists’ estimate is 50.6 bu. per acre, a 0.5 bu. cut from the June survey.

“There was a little less variability from top to bottom on those yields, but when you look at prices, even with what was a lower corn yield, their estimate of 2023/2024 corn prices went from $4.99 in June to $4.80 in the July survey,” Brown says.

(Farm Journal)

What Economists are Watching the Next Six Months for Crop Prices

When asked what factors will impact crop prices in the next six months, economists said:

Final yields
Export demand and competition
Weather domestically and abroad
Geopolitical risk in the Black Sea and China, including developments that impact ag exports in Ukraine/Russia

“I think a couple of things stick out beyond the weather discussion, and one is export demand as well as global competition, such as what’s going to happen with South America in terms of competing with U.S. corn and soybean markets.

“The economists certainly continue to talk about the geopolitical risk in the Black Sea and China, in particular, and what that means for our ability to export corn and soybeans as we look ahead,” Brown says. “Those are really the two big ones that came out of this survey.”

What Livestock Economists Are Watching the Next 6 Months for Livestock

Ag economists think the following factors will impact prices the next six months:

Changes in feed costs and impact of corn prices
Rising milk prices
Consumer meat demand and influences from macroeconomic factors, both domestically and abroad
Placements of cattle on feed

Brown says while the majority of economists are concerned about feed costs and the impact on livestock producers, the second-biggest concern revealed in the survey is demand. Economists pointed to both domestic and international demand as possible problem areas.

“2021 and 2022 were extremely positive from a demand standpoint, and we seem to be backing up a little bit in 2023,” Brown says.

Economists More Bullish on Cattle and Hogs

The July Ag Economists’ Monthly Monitor shows economists are more positive when asked about cattle and hog prices, but they have a more negative view on dairy, which they consider the biggest weight in the livestock sector.

“When you look at where pork prices have gone over the last month, it’s gotten more positive. Now, I don’t want to suggest we’re back in black ink, but we have seen recovery in things like the pork cutout value,” Brown says. “The economists continue to worry about how the general economy will affect livestock going forward, but overall, it seems we’re seeing a more positive view from the livestock perspective in this month’s survey.”

(Farm Journal)

Based on the July monitor, economists expect average milk prices to fall back to 2021 levels, but production costs will continue to be higher in 2023 versus 2021.

“No. 1, the economists continue to worry about feed costs,” Brown says. “We continue to see fairly high feed costs affecting profitability. So even in the case of beef cattle, where we’re talking record cattle prices, we’re not talking record profitability because of the feed cost side.”

(Farm Journal)

Longer-Term Look at the Health of Agriculture

Over the next 12 months, there are several things that could shape the health of the ag economy, according to the July survey:

Crop prices and production costs, including inputs, rental rates, land values and supply chain disruptions
Subsequent impact on producer margins and the protein sector from rising interest rates and inflationary pressure
Weather considerations, including drought conditions in the short run and yield impacts in longer run
Geopolitical tensions and competitiveness of U.S. ag exports
Changes in consumer demand domestically and abroad, new markets for agricultural products, including biofuels

“One thing that came pretty strongly out of the survey is the continued increases in productivity in agriculture, which makes us more efficient,” Brown says. “The farm economy is generally healthy, and when you look at balance sheets, they are still really, really strong in many cases. That’s despite a lot of the issues we’ve talked about.”

In the July survey, economists voiced more concerns about interest rates and the impact on operating loans. One economist also mentioned the industry might be underestimating the negative impact Proposition 12 could have on the entire livestock industry.

The Turbulent Relationship Between the U.S. and China

While none of the ag economists surveyed think the U.S. will enter into a trade war with China in 2023, economists continue to remain cautious about China, which could have a direct impact on U.S. agriculture.

When asked to list the top factors shaping trade relations between the U.S. and China, economists said:

POTUS and political polarization in the U.S.
Non‐agricultural geopolitical tensions, including national security concerns, support of Taiwan and limits on technological production
Changes in China’s economic growth, including population and demographics
Russia’s invasion of Ukraine and Russia’s relationship with China
Quality, price and availability of U.S. products compared with global competitors

Potential Events/Factors Not Getting Enough Attention Today

The July survey also asked economists to outline any factors or events that currently aren’t receiving enough attention but could shape agriculture over the next 12 months. One economist brought up impacts of geopolitical risks and fallout from the war in Ukraine, but also a potential war between the U.S. and China.

Other potential events that could cause a major shakeup in agriculture include:

Weather events, domestically and abroad, warranting a broader conversation on climate
Potential for a significant recession in China
Focus on renewable diesel obscuring importance of RFS in overall biofuel use
Workforce concerns for producing, processing and transporting agricultural products domestically and abroad
Declining EU pork production and commerce implications of Proposition 12
Strikes at shipping ports in Vancouver and potential for upward pressure on potash prices with reduced production capacity at Nutrien mines in Saskatchewan

Previous Ag Economists’ Monthly Monitor Coverage

Most Ag Economists Think It’s Unlikely the 2023 Farm Bill Will Be Written in 2023

High Production Costs Could Weigh on the Ag Economy Through 2024, New Survey of Economists Finds

Profit Tracker: Feedyard Margins Rapidly Declining

Fri, 07 Jul 2023 19:17:07 GMT

Cattle feeding margins shed another $26 per head last week as cash prices declined $3 per cwt. Industry average profit margins on cattle sold last week were $91 per head, which is 50% lower than two weeks ago, according to the Sterling Beef Profit Tracker .

For the week ending May 10, cash cattle sold for an average of $120.24 per cwt., while the beef cutout closed the week at $221.13 down $6.88 from May 3. Packers saw profits of $149.56 per head last week, $19 lower than the previous week. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

A year ago cattle feeders were earning an average of $20 per head. Feeder cattle represent 72% of the cost of finishing a steer compared with 72% a year ago.

Farrow-to-finish pork producers saw their margins decline $2 per head with profits of $47. Lean carcass prices traded at $82.73 per cwt., $0.26 per cwt. lower than the previous week, and $4.86 higher than a month ago. A year ago pork producer margins were positive $9 per head. Pork packer margins averaged a loss of $3 per head last week.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2019 will average $144 per cow. That would be modestly lower compared to the $161 estimated average profit for 2018. Estimated average cow-calf margins were $164 in 2017, $176 in 2016, and $438 per cow in 2015.

For feedyards, Nalivka projects an average profit of $77 per head in 2019, which would be $53 better than the average of $24 per head in 2018. Nalivka expects packer margins to average about $156 per head in 2019, about $14 less than in 2018.

For farrow-to-finish pork producers, Nalivka projects an average loss of $14.60 per head in 2019, as compared with an average profit of $1.35 per head in 2018. Pork packers are projected to earn $21 per head in 2019, about $3 less than the $20 per head profits of 2018.

Related stories:

Feedyard Margins Decline 35%

Midwest Rains Not Enough to Break Long-Term Drought, 67% of Corn Still Rooted in Drought

Thu, 06 Jul 2023 15:02:30 GMT

Widespread rains finally swept across the Midwest over the past week, but they didn’t put much of a dent into the overall U.S. drought picture with drought percentages still resembling 2012. A slight change in the high-pressure block that’s led to increasing drought conditions this summer could start to give way to more rains in parts of the Corn Belt. However, one meteorologist warns the northern Corn Belt is forecast to see little relief over the next seven days.

The National Drought Mitigation Center now estimates 67% of the U.S. corn crop and 60% of soybeans are still considered to be in drought. That’s a slight improvement from last week , when 70% of corn and 63% of soybeans were covered by drought, but the improvements were minimal at a time when more of the corn crop is starting to tassel.

USDA Meteorologist Brad Rippey says the U.S. corn-in-drought percentage was actually a little higher on November 1, 2022, when 71% of the crop was considered to be in drought. But he points out that was after most of the crop had been harvested. Today, crop conditions are drawing comparisons to 1988, but the drought monitor is showing similarities to 2012 with a few key differences.

“The last time more corn was in drought during the heart of the growing season was, as you might expect, the summer of 2012,” says Rippey. “That year, the U.S. corn production area in drought was at or above 70% each week from July 10 through the end of the calendar year.”

Rippey says 2012 saw more of the U.S soybean crop in drought, but those impacts showed up later in the season.

“A greater percentage of U.S. soybeans were in drought several weeks in late 2022, with a peak of 71% on October 25 and November 1. Of course, this was also after many of the soybeans were harvested,” he says.

Nationally, the latest drought monitor shows minimal improvements nationwide. The amount of the country considered abnormally dry now sits at 87%, nearly a 3-point improvement. D1 (moderate drought) is still parked over 63% of the U.S., less than a point better than last week. D2 (severe drought) is virtually unchanged.

What Will it Take to Break the Drought?

With the drought building up over several months, Rippey points out it will take significantly more rain to see improvements.

“Significant rainfall deficits built up in May and June,” says Rippey. “Recent rains are helping, but normal weekly Midwestern rainfall this time of year is roughly 1 to 1 1/3 inches per week. The two-week Drought Monitor change map shows patchy areas with improvement, mainly in the southern and eastern Corn Belt.”

(Farm Journal)

The latest look at drought across the Midwest shows improvements along the Iowa/Missouri border, eastern and central Illinois, and southern Indiana. Pockets of improvement also fell across northern Texas, southwest Colorado, northern Kentucky and central Ohio.

Portions of Nebraska also saw rain, but 25% of the state is still considered to be in D3 (exceptional drought).

Other areas of the Midwest saw drought grow more severe, including across Minnesota, Wisconsin, eastern Iowa, eastern Kansas and southern Missouri.

More Rain Relief on the Way?

While extremely variable, rains are starting to fall across more of the Midwest. The change is aided by a slight change in the high-pressure block, according to Rippey.

“There have been subtle changes in the North American weather pattern. There is still a high-pressure block, but it has shifted further north and east and is currently centered between Canada and Greenland. That is allowing some cool, dry air to push southward from northern and central Canada,” he says.

(Farm Journal)

Rippey says a strong ridge of high pressure is still in place across the southern tier of the U.S., which will create a battle between cool and warm air.

“Over the next week or so, the heaviest rain will fall near the boundary between the cool Canadian air and the hot air across the nation’s southern tier,” says Rippey. “Recent forecasts are showing the most significant rain falling a bit further south than earlier expectations, which could leave parts of the Midwest – especially the northern Corn Belt – with little rain over the next seven days.”