Markets - General

Experts Say Strong Cattle Prices Could Continue Through the End of the Decade

Mon, 17 Nov 2025 14:43:23 GMT

Despite political rhetoric surrounding cattle and beef prices, a panel of leading cattle market experts says the fundamentals remain firmly supportive of historically strong cattle prices for years to come.

During a discussion at the Missouri Governor’s Conference on Agriculture, Derrell Peel, Extension livestock specialist at Oklahoma State University; Lance Zimmerman, senior animal protein analyst with Rabo AgriFinance; and Bryon Wiegand, director of animal science at the University of Missouri, offered a united outlook: The tightest cattle supplies are still ahead, and demand remains exceptionally strong.

Are Cattle Prices “Too High”? Experts Say No

Recent comments from Washington suggest cattle and beef prices are “too high,” but Peel says the current price levels make sense when viewed in context.

“There’s always a speculative element to these markets,” Peel says. “That means there’s always an opportunity to push prices a little high, and we can certainly see temporary corrections because of that. But fundamentally, I don’t think we were too high. This market has very strong underlying foundations for why we’re where we are right now.”

Zimmerman adds that per capita beef supplies haven’t changed enough to justify blaming supply alone.

“We want to talk about tighter supplies, and yes, the cow herd has been in decline since 2019,” Zimmerman says. “But per capita beef supplies, which really influence market prices, have essentially been steady. We’ve been between 58 lb. and 59 lb. per person for the last six years. So when we talk about record-high beef prices, most of that increase is actually coming from demand. Based on our models, this is the strongest beef demand we’ve seen since 1983.”

The Tightest Cattle Supplies Haven’t Even Arrived Yet

Even after several years of liquidation, Peel says the cattle industry hasn’t reached the tightest point of this cycle.

“We’ve tightened feeder supplies significantly,” he says. “We’ve masked some of that tightness at the feedlot level, but the feeder cattle supply out in the country is extremely tight, and we still don’t have any fundamental data that shows we’re retaining enough heifers to start rebuilding the herd. So from that standpoint, the tightest supplies are still ahead of us.”

Peel says that means beef production will move lower and per capita supplies will tighten further over the next several years.

Zimmerman notes the market still hasn’t fully absorbed the impact of fewer Mexican feeder imports.

“I think the market priced some of that in on the feeder side, but it’s not fully reflected in fed cattle slaughter yet,” Zimmerman says. “Those double-digit declines in Mexican cattle imports are worth another 800,000 to 1 million head decline in slaughter, all else equal. That’s going to show up in this fourth quarter and especially next year.”

Elevated Prices Could Persist for Much of the Decade

With supplies tightening further, Peel says elevated cattle prices could stick around well into the decade.

“I think we could see elevated cattle prices for much of the rest of the decade,” he says. “History tells us that we tend to put in a peak about a year to a year and a half after we know we’re saving heifers for rebuilding. And I’ll say this, people worry about a sharp drop like we saw about a decade ago, but this is a very different situation. A decade ago was the fastest rebuild in history. This time, we’re on the slowest rebuild in history. It’s a completely different model.”

Speculative Money Pulls Back, but Cash Markets Stay Strong

Political statements earlier this year triggered fund liquidation in cattle futures, but Zimmerman says cash fundamentals remain intact.

“We had almost a record-long speculative position in both live cattle and feeder cattle futures,” he says. “Then, a statement comes out from the White House , and those funds start heading for the exits. But here’s the thing, futures markets are paper markets, and they ultimately have to come back to the cash fundamentals that drive them. Right now the market is basically telling the cattle sector, ‘Prove it to us. Show us these valuations are justified.’ And so far, the cash market is doing exactly that.”

Zimmerman believes futures can rebound as supplies tighten and demand remains historically strong.

“As we go forward, it’s going to come down to supply and demand proving those price levels,” he says. “I do think the picture is favorable enough that we get back to those earlier highs and even exceed them over the next year or two.”

Consumers Still Willing to Pay for Beef

When asked whether beef prices have reached a level consumers reject, Peel says the marketplace shows no signs of that.

“The market is telling us beef prices are not too high,” Peel says. “Consumers are willing to pay what they’re paying. There are plenty of alternative proteins they can turn to, and they’re not turning away from beef. It’s easy to pick out beef as a target when inflation is getting a lot of attention, but consumers will turn away naturally when they feel they need to, and we aren’t seeing that.”

Packers Stay in the Red, but Consolidation Isn’t Imminent

Wiegand says packers are facing substantial financial pressure.

“We have some packers that are eight quarters in the red,” he says. “Right now the margin sits with the feeder. Corn prices are low, cattle are worth a lot and packer margins aren’t just tight — they’re upside down. And the big question is how long they can weather that.”

However, Peel says packers will hold on as long as possible.

“They knew this was coming, and they prepared as well as they could,” he says. “Packers are diversified across other proteins and global markets, so that gives them time. But there is a limit. None of them want to give up market share in a sector this concentrated, so they’ll hang on as long as possible.”

Read more about Peel’s comments regarding the industry chaos today: Beef Industry Chaos: Tight Supplies, Strong Consumer Demand and Political Interference

States Look to Expand Small Processing Capacity

Missouri is investing in smaller processors, and Wiegand says those efforts are helping at the local level.

“We’ve created incentives for small and very small processors, especially around cold storage and upgraded equipment,” he says. “A lot of these businesses are squeezed on labor, and many aren’t full-service slaughter operations, but they are finding success in value-added products. They make a difference locally, but in the national picture, they’re still just a blip because 95% of the market sits with about four companies.”

He adds that “buy local” momentum remains strong since COVID-19 and continues to support these smaller processors.

It All Boils Down to This

All three experts agree the U.S. cattle market remains supported by historically strong fundamentals. Supplies are tightening, demand remains robust and herd rebuilding is expected to be slow, setting the stage for strong cattle prices potentially through the end of the decade.

Your Next Read: Did the President’s Plan to Lower Beef Prices Wreck the Bull Run in the Cattle Market?

U.S. Ag Trade Deficit Hits Record High In First Four Months Of 2025

Mon, 23 Jun 2025 21:00:00 GMT

Three years and counting – that’s how long U.S. agriculture has been in an agricultural trade deficit – reports Faith Parum, American Farm Bureau Federation (AFBF) economist.

“From January through April, the United States imported $78.2 billion in agricultural products while exporting just $58.5 billion. This $19.7 billion deficit is the largest ever recorded for the first four months of a year and signals that the 2025 deficit could surpass previous records,” Parum says in a new AFBF report .

(AFBF Calculations; USDA FAS)

In early June, the USDA raised its forecast of the U.S. agriculture trade deficit for fiscal-year 2025 to $49.5 billion, from the $49 billion it previously forecast in February.

Imports of high-value food items, such as fruits and vegetables, have driven the growing deficit, according to Parum, who says they represent the largest trade deficit category.

Have The Deficit Numbers Already Peaked?

While the forecast is concerning, Stephen Nicholson, Rabo AgriFinance global sector strategist for grains and oilseeds, says he is hopeful the agricultural trade deficit for 2025 has already reached its peak.

“My expectation is that we should see that trade deficit in agriculture come back a little because we have all this product, food, in our warehouses now, ready for consumers,” Nicholson told Farm Journal.

(USDA FAS GATS, USDA ERS Outlook for U.S. Agricultural Trade: May 2025)

Essentially, Nicholson says, many buyers made and imported larger food purchases than usual this spring to get those products into the U.S. ahead of potential trade tariffs the Trump administration announced would be imposed on Liberation Day, April 2.

“You know, when we saw that chart (from President Trump on the planned tariffs), I think a lot of us were pretty taken back by some of the eye-popping numbers we saw there. And then, of course, we came back a week later and they were cut in half.”

No One Knows ‘The Rules Of The Road’

Nicholson says the lack of certainty on tariffs, and other factors – ranging from conflict in the Middle East to high input costs and interest rates – has created challenges for all agricultural industries and farmers, including livestock producers.

“No one knows the rules of the road today,” he says. “Right now, no one wants to plan or invest or expend capital for plants, for expansion, because we don’t know what the economic environment is going to look like as we go six months to a year down the road.”

At the core of the problem is a rapidly evolving global marketplace that the U.S. appears increasingly ill-equipped to navigate, according to an article by Pro Farmer editors .

From shifting supply chains to aggressive trade strategies by key competitors like Brazil, Australia, and the EU, the landscape for ag exports is changing fast — and the U.S. is falling behind, they contend.

“We have no plan — none — to deal with this growing trade gap,” one senior industry executive says. “It’s not just bad policy; it’s no policy at all.”

Trade Deals Could Help The Situation

Farm groups continue to urge the White House to prioritize new trade deals that open markets for ag products.

But some industry insiders say the administration is too focused on broad tariff threats and “reciprocal tariffs,” while neglecting granular trade promotion and technical access issues that matter most for ag commodities, Pro Farmer reports.

At the grassroots level, Nicholson encourages corn and soybean to stay focused on market opportunities that could come up in the next week, given the weather conditions across the U.S.

“We’re in this very hot weather across the Corn Belt right now. If this forecast doesn’t quite pan out for the rest of the week, and more hot weather, and more rain or no rain, the market may react. Be prepared for those rallies in the market, and reward those rallies,” he encourages.

Your next read: Lift the Fog: 4 Drivers of Farm Profitability To Watch in 2025

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

Fri, 06 Jun 2025 17:51:07 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 16:04:08 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)

Follow These 3 Rules To Manage Commodity Market Uncertainty

Mon, 14 Apr 2025 18:01:27 GMT

Tariff action and trade tiffs have dominated the Trump administration’s first three months, creating one of the greatest periods of market uncertainty many of us have ever had to manage. It’s true what they say: Markets don’t like uncertainty.

For markets, certainty equals confidence. If participants are confident in the market’s trend, professional trading funds, for example, pile onto one side of the market with high certainty it’s the right decision.

When there’s uncertainty, or low confidence, traders and fund managers are less committed to positions. They are into a new position at the start of a session and out before the closing bell.

In times of uncertainty, it’s best to go back to the basics of risk management. Effective risk management has little room for mistakes, but that doesn’t mean it has to be perfect. It just means you follow the basic rules in selecting the right marketing tool to use at the right time.

Rule #1: Basis Matters

When basis is above the three-year-average, use marketing strategies that capture that basis strength with a cash sale for immediate or forward delivery. That includes a basis contract that sets basis but leaves price open.
When basis is below the three-year average, use marketing strategies that leave basis open. Those options range from doing nothing to a short position in futures as a hedge against downside price risk.

Rule #2: Price Matters

If you anticipate higher futures prices ahead, use strategies that leave price open.
If you anticipate lower futures prices ahead, use strategies that capture price.

Rule #3: Now Put Basis and Price Together

When basis is strong and you’re bearish on prices, capture basis and price. That’s a cash sale for immediate delivery. If you don’t have the bushels to move that’s a forward-cash contract for future delivery.
When basis is strong and you’re bullish on prices, capture basis and leave price open. A basis contract can work great in a scenario like this — so does a minimum price contract with cash sale covered by a long call option. Remember, the premium on a call option generally appreciates as futures prices rise.
When basis is weak and you’re bearish on prices, capture price but leave basis open. A short futures position against your grain in the bin or in the field captures price. When basis returns to normal or strong levels, make the cash sale and exit the short futures to capture basis. A put option will provide similar protection. The premium on a put option generally appreciates as futures prices fall.
When basis is weak and you’re bullish on prices, choose a strategy that leaves basis and price open. Simply put: do nothing, but make sure the decision to do nothing is reasonable.

Click here to stay up-to-date with commodity markets, prices and futures.

Tariff Uncertainty: Challenges and Opportunities Ahead for Agriculture

Fri, 04 Apr 2025 13:43:21 GMT

The exclusion of products compliant with the United States-Mexico-Canada Agreement (USMCA) helps soften the blow of the sweeping reciprocal tariffs President Donald Trump announced on Wednesday , but reaction has been mixed.

The nation’s soybean farmers are concerned about the Trump administration’s tariff plan and possible retaliation from China, their largest customer, says Caleb Ragland, a Kentucky farmer and president of the American Soybean Association (ASA),

“Exports are right at 50% of our markets, so we use half of the soybeans produced in the United States domestically, and the other half are exported,” he says.

Soybean producers are still dealing with the fallout from the trade war in 2018, and they say tariffs make them less competitive, causing customers to shift to other sources.

“We were exporting one third of the U.S. soybean crop to China before the previous trade war,” Ragland says. “Last marketing year, we exported about 24% of our production.”

Soybeans prices are down 40% from three years ago and the cost of production is high, he adds, so farmers can’t withstand another trade war.

Like soybeans, market access and exports are important to the corn sector, with 15% of U.S. corn exported overseas, says Kenneth Hartman Jr., president of the National Corn Growers Association and an Illinois farmer.

“Trump is a negotiator. We’re hoping the President, through this process, can come out where we can actually see more products going into exports, and hopefully that will drive higher prices,” he says.

Referencing USMCA, Hartman says the agreement, negotiated by Trump during his first term as president, has been beneficial for corn growers because Mexico is now the No. 1 market for U.S. corn and Canada is the No. 1 market for ethanol.

“We have some great trade partners, and we want to keep them,” he adds. “We’re hoping under these negotiations, everybody takes that into consideration.”

The National Cattlemen’s Beef Association (NCBA) welcomes President Trump’s move as a way to slow beef imports and level the playing field in world markets, citing Vietnam’s 30% tariff on U.S. beef, Thailand’s 50% tariff and even Australia’s $29 billion in beef sales to the U.S.

“They have played games, they have stonewalled and they have come up with endless non-science-based reasons to not reciprocate access for our producers into their market,” says Ethan Lane, senior vice president of government affairs for NCBA.

Creek’s up this morning!

As an American rancher I’m pleased we can start to see fair trade! We raise a quality product and the people of America deserve to know where their beef comes from!
Let’s get Country of Origin Labels on our product now that we’re getting tariffs fixed🇺🇸 pic.twitter.com/79Mz0PA1OD
— Cattleman🪓 (@cattleguy92) April 3, 2025

Lane, who attended the Rose Garden announcement, says they’re in the camp of short-term pain for long-term gain with tariffs a negotiating tool for better trade deals.

“While we’re not a big fan of tariffs, generally, we do think what the president is trying to do using this tool could achieve some real benefits for U.S. cattle producers as far as being treated more fairly in those foreign markets,” Lane says.

Will Farmers Receive Aid to Offset Tariff Impact?

One question that remains: Will farmers be compensated if tariffs impact their bottom line?

Agriculture Secretary Brooke Rollins said on Fox News on Thursday the Trump administration is “months away” from deciding to make payments to farmers to offset any impact from tariffs.

In the case of any economic loss from tariffs, Rollins has said the administration would consider making payments to farmers , which occurred during Trump’s first term as president when he compensated farmers to offset losses from a trade war with China.

From fertilizer to machinery, everything I, as a farmer, need to stay afloat will now be more expensive.......we can expect the same retaliation we saw during the last trade war—foreign tariffs aimed squarely at the United States' soft underbelly - which is American farmers and… pic.twitter.com/mb1VQwOG2I
— Christopher Gibbs (@ChrisRGibbs) April 2, 2025

Are They Really Reciprocal Tariffs?

Meanwhile, market analysts say the announced tariffs are not by definition reciprocal.

“It turns out what they’ve really done is taken the gap in goods, the amount of traded goods we get from a country and the amount of goods that country gets from us, and when there’s a deficit, they do some math and come up with the tariff rate,” says Kent Beadle, DTN market analyst. “So it’s certainly not reciprocal.

On Thursday, most ag markets had a negative reaction on fear of retaliation, leaving many to wonder how long it will take for markets to stabilize?

“I think if we continue to see strong export sales … a lot of this might start to fade away a little bit,” Beadle adds.

A silver lining is a lower U.S. dollar index can offset some of the blow of tariffs, he says.

How Will U.S. Trading Partners React?

Based on history, Dan Basse, AgResource Company president, says if tariffs are in effect longer than a quarter or two — three to six months — they tend to stick around.

“Look back to 2018 and what Trump put on China, it’s still in place today and stayed through the Biden administration,” Basse says. “The message is, if you’re an importing country, try to get [the tariff] off as fast as you can. Negotiate your way out of it, because once the United States starts to enjoy the income flow, it’s hard to get them off of that position. That’s why I say, I think we’ll know in the next three to six months where this all goes and if Trump really is the negotiator and deal maker we hope he is. If it’s longer than six months, I’m afraid these tariffs are going to be with us for quite a while, and that’s probably not good for industry or agriculture.”

Here’s a list of several U.S. trading partners and how Basse thinks the tariffs might affect trade going forward.

Canada: “They just put 25% tariffs on U.S. auto, which was expected. I don’t think there’ll be any additions based on what happened [Wednesday]. We kind of had Mexico and Canada get a free pass for a while. For agriculture, I think this was a really big deal, and the reason the corn and wheat markets didn’t sell off. China’s out there, and that’s a bean story, which is why beans fell hard. The grains held together, though, and I think it’s because of Trump’s willingness to look at USMCA and say, OK, for now, we’re going to keep it where we’re at.

“I really do think [Canada] should take it as a win. I was just up there in Edmonton doing meetings, and I know the hostility toward America at the moment, but I still believe with the new prime minister and the direction Trump gave us yesterday, it was a win, and there’s still ability to work together.”

Europe: “I think Europe is going to come out with guns blaring. I believe they’re angry. I believe the countries have come together a little bit like Canada, on a nationalistic standpoint against the United States, so look for some hostility toward us. The EU has shipped most of its corn, so we’re happy about that. But going forward, I don’t see the EU market as being important again, unless there can be some negotiation, some solution going forward.”

Brazil: “I think the Brazilians biggest concern is the value of the real. The real sank [on Thursday] to 560, which is down a bunch. As the dollar continues to weaken and the real rallies, that’s a win for U.S. agriculture. I believe the dollar is the key going forward, so as I’m watching it, if indeed the tariffs produce a liquidation of dollar holdings, that’s not bad for American agriculture, and it could really slow the expansion down in Brazil.”

Australia: “We get roughly 32% of our grind [hamburger] from Australia. The fast-food chains love Australian beef because of its lower fat content. With the tariffs, I think we’re going to be paying more for our lean beef grind.

“The restaurant chains I’ve been talking to are concerned about trying to source such lean hamburger in the United States.

“I think [tariffs] are a win for the U.S. cattle industry in general. What is concerning is the economic impact and what U.S. consumers will do. I do believe recession chances have doubled since the tariff announcements, and we are going to see firms laying people off and trying to understand margins going forward. That’s not helpful. But how we balance trade and domestic demand will be key for the beef market and the cattle market over the next couple of months.”

Russia: “I think [President Vladimir Putin] is going to keep marching with the war. He’s going to be difficult to deal with. The ruble is strengthening, giving them a little more fortitude. I imagine the Russian farmers are not happy about [the reciprocal tariffs], and maybe they won’t plant as much grain going forward. But other than that, I think it will be status quo, and [Putin] is kind of teaming up, if you will, with China and that BRIC alliance to somehow show their strength against the United States.”

Vietnam: “They’re an important importer of world corn. My question is, will the Trump administration use tariffs to somehow boost U.S. export of grains to Vietnam, or is this really just a tactic to raise revenue? I think that’s key in the next three or four months. Is there some negotiating position such that it benefits U.S. agriculture?

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

Fri, 28 Feb 2025 20:17:12 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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USDA's Rollins: 'Let's Go Barnstorm The World And Find New Partners' For Trade

Tue, 18 Feb 2025 18:48:49 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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Buckle Up: Here's Why Cattle Prices Are Setting Up for Another Wild Ride in 2025

Fri, 07 Feb 2025 21:19:50 GMT

The cattle markets hit historic highs again to start 2025, and as USDA’s latest Cattle Inventory report showed U.S. beef cattle inventory fell to the lowest level in 64 years , tight supplies and strong demand could push cattle prices to even higher highs in 2025.

USDA’s annual Cattle Inventory Report released Friday shows the U.S. total cattle inventory shrunk another 1% over the past year, with the number of beef cows also down 1%.

Those numbers, along with questions around just how much higher these markets can go, were major topics surrounding the 2025 CattleCon in San Antonio, Texas, (the annual cattle industry convention) this past week.

Signs of a Slowdown?
Economists and market analysts knew the cattle herd was still shrinking, even before the report was released last week. But economists say there are some signs starting to signal that is slowing down.

“We certainly got smaller in 2024. That was actually kind of obvious about a year ago when you looked at heifer numbers,” said Derrell Peel, Oklahoma State University Extension livestock specialist. “If you look at the heifer numbers in this report, we don’t have a lot. And so we’re going to be challenged going forward to stop this liquidation. I think we might stabilize numbers this year, but I think growth is pretty much a long shot at this point.”

“I think we’re getting close to the bottom, as Darrell referenced,” said Don Close, senior animal protein analyst for Terrain, during the U.S. Farm Report live taping at NCBA’s annual convention. “I think the challenge is retaining enough heifers out of the supply that we have to provide the fuel for the build back.”

Calf Crop Was a Big Surprise
Casey Mabry, with Blue Reef Agri-Marketing, said there actually was a surprise in the latest cattle inventory report, and that wasn’t with heifer numbers.

“The biggest surprise to me was really looking at the total calf crop report, because we’re looking at the total cow inventory numbers. I think that probably caught some people off guard, having the calf crop a little bit bigger than what most people’s expectations were,” said Mabry.

Incentives Drive Outcome
With cash cattle hitting records to start 2025 a question on almost everyone’s mind is, can it continue? Mabry said it really depends on if demand can remain steady, since the supply side will remain tight.

“Incentives drive outcome and obviously with grain prices as cheap as they’ve been, and cattle prices as high as they’ve been, we’ve held on to some cattle. So it’s kept the front end of the market really, really tight and it’s kept packers chasing after cattle. So that ran the market $10 or $15 higher, in my opinion, than what we should have on the front end,” said Mabry. “So, it’s going to be really interesting to watch as we go through the back end of this thing. We’ve probably got to work through some stuff right here on the front end. But if the analysts continue to say we’re going to be tighter and demand stays pretty good, we’ll probably see prices exceed where we were before.”

“We’re Still Bullish”
Peel reminds producers there’s a great deal of risk in these markets. He said the markets don’t like uncertainty. With trade concerns and tariff threats, combined with a strong U.S. dollar, the combination is throwing uncertainty into the market.

“We’re very bullish and still bullish in general going forward for average prices,” said Peel. “But we also know that we’re subject to a lot of shocks right now. We’ve seen a couple already. We’re certainly vulnerable. There’s a lot of air below us since this market is so high. So producers really need to still do that risk management. Producers need to think about those marketing windows. If you got caught in a shock in one of those, it could really be devastating to you.”

Close has similar advice. He said with the development of insurance products, plus futures and options contracting, there are several ways for producers to manage risk today.

“At the price level we’re at, and just any measured retracement in the market, it could take you out of the game. At these price levels, it is absolutely imperative to have some kind of price risk management program in place,” said Close.

“I think you just need to run with what I call a keen sense of paranoia,” said Mabry. “I mean, be bullish, be excited about the market, but don’t get overly euphoric. We’ve got to remember back a short three or four years ago, we were all in the doldrums and very scared. And there’s a lot of people that were telling their kids to get into a different business. And now all of a sudden, we’re all jumping on the bandwagon of cattle and getting excited about this. So, we want to make sure that you guys are running your businesses like businesses and not gambling on cattle.”

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Ag Groups Express Thanks That Potential Strike Was Averted

Fri, 10 Jan 2025 18:50:18 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.

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Mexican Border is Expected to Open for Feeder Cattle Week of Jan. 20, Sources Say

Tue, 07 Jan 2025 20:12:02 GMT

Imports of feeder cattle from Mexico are expected to partially resume the week of Jan. 20, according to sources. Imports will be slow at first due to the need to implement and test new protocols. Live animal movements are expected to resume fully sometime after the initial reopening.

USDA’s Animal and Plant Health Inspection Service (APHIS) suspended imports of live cattle and bison from Mexico on Nov. 22, 2024, following the detection of New World screwworm (NWS) along Mexico’s southern border. This pest can have a significant negative impact on cattle health, and U.S. authorities have been working to develop protocols to screen animals coming into the country.

Several factors are influencing the timeline and pace of reopening:

Facility inspections: Both countries have agreed on protocols, but implementation requires facility inspections and approvals.
Quarantine period: A seven-day quarantine after animal checks
Port readiness: The most important port to get moving again is Santa Teresa, New Mexico.

The temporary suspension of cattle imports from Mexico has had notable effects on the U.S. cattle market:

Reduced supply: About 250,000-300,000 fewer head of cattle are estimated to have been imported due to the suspension.
Price support: The trade disruption has been supporting feeder cattle and calf prices in the U.S.

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China 2025: 5 Predictions to Watch in the New Year

Thu, 02 Jan 2025 16:36:16 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.

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

Tue, 15 Oct 2024 16:27:47 GMT

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

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

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

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

Revised Projections on Net Farm Income for 2024

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

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

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

Potential Recession in the Agricultural Sector

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

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

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

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

September Ag Economists’ Monthly Monitor

(Lindsey Pound/Farm Journal)

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

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

Poor Margins for Pork Producers

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

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

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

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

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

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

Livestock and Dairy Prices Outlook for the Next Six Months

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

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

Key Factors Affecting Crop Prices

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

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

Tariffs and Trade: A Continued Debate

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

(Lindsey Pound)

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

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

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

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

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

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

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

Do Tariffs Work?

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

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

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

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

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

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

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

Pork Export Demand ‘Back On Track’

Fri, 11 Oct 2024 14:14:30 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:

Yes, the Farmland Market is Shifting, But That Doesn’t Necessarily Mean Prices Are Falling

Tue, 01 Oct 2024 14:47:11 GMT

There’s no doubt the land market is seeing a shift. With more “no sales” flaring up across the country, it’s clear the land market is still adjusting to the current reality of lower grain prices. However, just when you think the pressure will cause land prices to fall, some eye-popping sales prove good-quality farm ground is still in high demand.

Last week, a piece of farm ground in Clinton, Iowa, sold for $18,100 per acre. In Missouri, a parcel of 696 acres in Ray County sold for $17,241 per acre.

How would you describe the current farmland market? According to Robin Reid, an Extension associate in the department of agricultural economics at Kansas State University , the focus is on land values. She says there is a slowdown taking place, but overall values have still been quite resilient.

“We are really looking a lot like we did back in 2014 to 2015, where we had lower commodity prices, but land values did hold fairly steady, even though farm income wasn’t supporting the values that we had,” Reid says.

She says the increases in cropland values over the past few years, specifically in Kansas, have been in the range of 18% to 20% for cropland. And while rates have managed to hold steady, Reid says there are signs of the start of a slowdown in the run-up in farmland values.

“USDA forecasts us to see about 8% increase this year over what we has been an 18% to 20%, but the point is we’re still going up,” Reid adds. “And I would say that’s probably going to just start slowing down, but not necessarily decreasing in the short-term.”

Farmers are still in the driver’s seat, but the direction of land values in the months and years ahead relies on one major factor: how long low profitability for row crop farmers persists.

“If we’re just in this for a couple of years, we probably won’t see a big effect on land values locally, but we’ll see more of a flattening of the market,” Reid says. “If we do experience this downturn for a number of years, I would expect we’re going to start seeing an impact on land values and definitely cash rental rates. We’re already hearing from farmers trying to negotiate those back down for next year.”

Rabail Chandio, an assistant professor of economics and Extension economist at Iowa State University (ISU) , says the land market is softening for a couple reasons.

“As we are coming out of the pandemic highs with high government payments no longer there, with high farm income no longer supporting the land value, the market began to soften in 2023,” says Chandio, who is also the lead researcher of the ISU Land Value Survey . “What we’ve already experienced is a whole year of softening and then maybe slight falling of land values in certain parts of the of the state as well.”

She’s watching to see how much softer land values end up being in 2024, and now the question is if the softening will turn into a decrease in land values or just a solid plateau.

“I expect there to be some adjustments, slight falls, kind of like what we experienced at the end of 2017 to 2019, because we had very, very high land values, which are not really sustainable. We saw percentage increases of 17% year after year. That has to balance out a little bit,” Chandio explains. “We won’t see a crash in the market, from what I expect, but we will more than likely see slight decreases that are less than 5% or less than 10%, is my expectation. And that won’t really be unusual for the land markets either.”

Pasture and Range Prices Remain Strong

Farmers who rely on crops might be feeling the pinch, but higher cattle prices are creating a different story for cow-calf producers, which, in turn, is having a different impact on the value of pasture and rangeland.

“We have very high cattle prices right now, which is good for our cow-calf producers, but it does put a little more margin squeeze on those buying stockers or buying feedlot animals,” Reid says. “The hunting pressure has really helped our pasture and rangeland prices remain strong. As a result, that’s the category that will probably be more resilient than our cropland in Kansas.”

Reid says it’s not just livestock producers on the hunt for pasture and range to buy; it’s also those outside of traditional agriculture.

“Here in Kansas, if there’s pasture land, especially with hunting potential, we’re seeing a lot of out of state or even within state hunting pressure on land values. A lot of times they are competing with what our cattle producers can pay and then also looking at the purchase as an investment,” she explains.

Who’s Buying All This Farmland?

Navigating the land market is an ever-evolving job, and Reid has done extensive research on who owns land across Kansas and who’s buying.

“When my research started in 2015, 84.5% of all of our ag ground in the state was still owned by people here in Kansas,” Reid says. “If we fast forward seven years, the last time I was able to look at these data, we did see about a 2.5% uptick in the amount of land that’s moving out of state.”

She says some of that can be attributed to farm sales, but she’s also noticing a surge in the number of Baby Boomer landowners who are retiring or transitioning that land to the next generation, many of whom don’t necessarily still live in the state.

“There’s going to be a lot of heirs that just want to sell their parcel, so I do anticipate a lot of land being on the market,” Reid explains. “If we don’t have the farm income to support those purchases, we do have other sources of people who are willing to buy ground that will hopefully help stabilize our ag economy and the land market.”

Who owns the land and who’s buying is one of the biggest questions Reid consistently fields, especially with the growing conversation about foreign-owned farmland. Contrary to headlines, she says it’s still farmers.

With a surge in solar and wind leases across the state, it looks like more foreign investors are gobbling up farmland, but Reid says that’s actually not true.

“When the Agricultural Foreign Investment Disclosure Act was put into place back in the 1970s, nobody thought about wind and solar leases,” Reid says. “As you look at the report, it can be a little alarming the amount of area in our state that is foreign held. As I dove into that data itself, it’s actually a very small percentage, less than 0.25% of all of our public land here in the state is foreign held at the moment.”

Your Next Read: Changes To Expect In The Farmland Market This Fall

CAB Insider: Market Update Sept. 25

Thu, 26 Sep 2024 22:53:02 GMT

Last week fed cattle prices extended the two-week upward turnaround from the short-term low of $181.07/cwt. the first week of September. At the hands of a jittery equity market correction, the early September bottom ended the month-long August slide that pulled cash fed cattle down by $12.43/cwt.

Prices Week of Sept. 25

(CAB Insider)

Harvested fed steer and heifer head counts outpaced the same weeks in 2023, with 501K and 492K in the past two weeks. Packers ramped up production on the heels of two very small weeks, including that of Labor Day.

Partial motivation for increased production came from estimated packer profitability on cash cattle and cutout values–a rare feature this year, but present in the market for a handful of recent weeks. Some analyst estimates place packer margins back in the red this week as fed cattle and cutout values worked against each other in last week’s USDA data.

The Sept. 1 Cattle on Feed report created little directional change in this week’s market as industry expectations for marketings, placements and cattle-on-feed head counts were aligned with the report’s outcomes. The number of cattle on feed, a statistic generating some concern among cattlemen, was last reported at 11.2 M head, or 101% of a year ago.

Carcass weights took a big leap upward in the last report with steer weights up to 941 lb., just one pound below the record set last December. Given the continued financial incentive to to add pounds in the feedlot, there is reason for concern about potential for this fall’s heaviest weights to be extreme. If steer weights were to retain today’s 24-lb. year-over-year increase into November/December, this will signal a very uncurrent front-end fed cattle supply. Not only does that have price implications for fed cattle, but it would have a dramatic effect on the acceptance of carcasses into the Certified Angus Beef® brand.

Dashboard Highlights Premiums and Discounts
In early August, USDA turned on a new internet dashboard tool providing user-friendly access to more detailed fed cattle pricing information. Using data already captured by the agency through Livestock Mandatory Reporting (LMR), the dashboard takes a big step in improving user access and utility of the data.

Premiums and Discounts

(CAB Insider)

As one would suspect, the dashboard is most applicable to cattle feeders given it’s specificity to the fed cattle segment. The feature of interest to those selling cattle with high carcass quality, is the focus the dashboard brings to premiums and discounts. For many years USDA has published two weekly reports (LM_CT169 and LM_CT155) focused on national and 5-Area premium and discount values. However, the LMR dashboard is an interactive site that illustrates further detail with each of the five regions segregated for easy comparison to the others. Comprehensive price by region is a feature, as well as premiums and discounts by region.

Users can toggle between quality grade, yield grade, carcass weight and “other” premium/discount categories revealing actual average prices paid for each, and on how many head. Confidentiality limits the data to regional information, rather than packing firm comparisons.

The page focusing on net price distribution for each of three marketing formats includes formula, forward contract and negotiated grid. Prices are reported in a bar chart for each of these three marketing types, with the volume of cattle achieving premiums and discounts in $2/cwt. increments, up and down, as net price changes deviate from zero.

While reviewing the site it’s helpful if users understand two factors. First, the premium and discount values reported are a result of both the carcass quality of the cattle within the reported data and the premium or discount prices within each region. Second, there are both average premiums and average discounts reported in the data. Each carcass typically is only subject to one or the other, or neither, depending on grading and weight outcomes.

The national average data in the table, adapted from the site, shows that carcass quality premiums in the last six weeks have been more than four times larger than yield grade premiums paid. On the other hand, carcass quality discounts have only been 25% larger than yield grade discounts actually realized. Premiums for cattle in “Other” categories, were in specified management programs for label claims such as Natural, NHTC, GAP. These had an average premium just 30% larger than the average quality premiums. These “other” programs generally come with a sacrifice of feed conversion and average daily gain, and management costs. This suggests that quality-based premiums should be a primary consideration in value-based carcass pricing.

Cattlemen in each sector of the supply chain can stand to learn something from the LMR Live Cattle dashboard. Knowledge of the possibilities and most common results when selling cattle on a carcass value basis are key decision tools. The USDA LMR Live Cattle dashboard can be accessed here.

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

Wed, 18 Sep 2024 00:11:59 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

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

The Reasons Fewer Farmers Are Now Responding to USDA's NASS Surveys — And the Impact of Waning Participation

Fri, 12 Jul 2024 14:48:59 GMT

U.S. taxpayer-funded government reports on the economy and agriculture have generated comments from stakeholders and others, especially since the Internet has made it easier for anyone to comment.

We decided to check in on response rates for USDA’s National Agricultural Statistics Service (NASS) reports after a new study by the American Statistical Association warned the reliability of U.S. economic data is at risk due to shrinking budgets, declining survey response rates and potential political interference (this is not the case with NASS reports). Currently, government statistics remain dependable, but the study, authored by statisticians from various institutions including George Mason University and the Urban Institute, likens the statistical system to infrastructure that is often neglected until a crisis occurs. (The New York Times addressed the matter in this article .)

Note: We contacted several current and former USDA officials and asked them to comment about the numbers and some of the responses in this special report. These individuals include Lance Honig, Director of Methodology Division, Chair, Agricultural Statistics Board, USDA-National Agricultural Statistics Service; current top USDA economist Dr. Seth Meyer; and Dr. Joe Glauber, former top USDA economist.

Here’s a breakdown of response rates for USDA’s NASS reports:

Response rates have been declining over time:

• In the early 1990s, response rates for NASS crop surveys were 80% to 85%.

• By the late 2010s, response rates had fallen below 60% in some cases.

Recent response rates for specific NASS surveys:

• The 2022 Census of Agriculture had a response rate of 61%.

• The 2017 Census of Agriculture had a response rate of 71.5%.

• For monthly NASS surveys, response rates are around 75%.

• For quarterly or annual NASS surveys, response rates are around 50% to 60%.

Factors affecting response rates:

• Increasing difficulty in accessing households due to new telephone technologies.

• Rising refusal rates from respondents — “It’s mostly inability to reach people that’s increasing. Actual refusals are fairly steady,” Honig says.

• Concerns about data privacy and time constraints from farmers.

• Increased number of people requesting information from farmers.

Impact of declining response rates:

• Reduced statistical precision of estimates, especially at the county level.

• Fewer counties for which estimates can be published.

• Potential introduction of bias if non-respondents differ from respondents.

USDA NASS efforts to address declining response rates:

• Offering online response options.

• Developing shorter questionnaires.

• Adjusting sampling and weighting procedures.

• Increasing follow-up efforts through multiple contact methods.

• Increased outreach efforts to build relationships/trust and increase transparency (i.e. #StatChat, Data Users’ Meetings, Visitors to Lockup, etc.)

Importance of response rates:

• High response rates are crucial for maintaining data quality and reliability.

• Lower response rates can lead to increased costs for data collection.

• Accurate data is essential for policymaking, research and agricultural planning.

Bottom line: NASS continues to monitor response rates and implement strategies to improve participation in their surveys, recognizing the critical importance of high-quality agricultural data.

Ag industry chimes in about the relevance of NASS reports and the response rates:

• “Accurate data primarily allows transparency in the marketplace, otherwise you get misinformation on social media and conspiracy theories due to what analyst one listens to. It does not create a level playing field for all.”

• “While people complain in the U.S. that big companies have all the information, USDA’s NASS allows one point of solid information that everyone can trade off of.”

• “While there are shortcomings, NASS provides the best source of agriculture data anywhere in the world. It has allowed U.S. agriculture to thrive. Going forward, policymakers need to understand they need to fund the service to help farmers, agribusinesses and consumers.”

• “This is a topic every year on the Pro Farmer Midwest Crop Tour because it’s a debate on how accurate NASS is with their crop estimates. Farmers want to complain NASS isn’t that accurate, but they don’t want to give NASS any insights, either (the trust issue).”

Note: NASS publishes a report each year that shows the accuracy of its estimates.

• Several growers said they don’t trust the government and they aren’t giving out their data. One said: “You just wonder with all the technology on planters and combines today, as well as all the satellite info, when NASS will have to change their approach.”

Honig response: “NASS is exploring the potential of using precision ag data, but significant hurdles currently exist, primarily around ownership/availability of the data. Satellite data are currently utilized to augment the survey and administrative data.”

• “I think the response rate is way below 50%. Some of these guys are big farmers and do not want to share data. Plus, they all think NASS’ quality has declined so why give data to a failing entity?”

• “Grain stocks on farm has been a big topic amongst the elderly grain traders I keep in touch with. Most think the basis is a much better indicator than NASS. For example: Why is the cash corn basis so strong in the WCB this year, yet ECB stocks are reported by NASS to be huge. Meanwhile, Cn/Cu is trading an inverse during delivery and the delivery points are in the ECB.”

Honig response: “NASS stocks estimates represent quantities stored by location, but do not indicate whether or not those quantities are all still available to be marketed (i.e. some/all may already be contracted/committed).”

• “Why can’t crop insurance yield data be used to compare to NASS plot data? I would argue crop insurance yield data is probably the most accurate data currently available. Since crop insurance is a federally subsidized program, let us see the data.”

Honig response: “NASS can use these data for evaluation purposes, but timing is a big issue with these data. Data are only provided once for each season, and not available until late-spring/early-summer the year following harvest. NASS publishes yield forecasts throughout the growing season and provides final season estimates in early January for most major row crops (late-September for small grain crops).”

• “Social media (SM) has turned everyone into an analyst that feels they get ‘enough’ data from SM to determine crop size. Then they go on a drive and look for confirmation of what they expect to see and, of course, they find it. Now they are armed with 4 hours of research on ‘X’ and what they saw on a 200-mile round trip, and they think they have the U.S. crop figured out. When NASS reports something different than they expected, the first thing they do is get back to SM and tell everyone how wrong NASS is. When NASS reports something in line with their expectations, the first thing they do is get back to SM to tell everyone how right they were before NASS put out its guess.”

Honig response: “Agreed — and people commonly assume because NASS estimates don’t match what many expected that they are wrong. Expectations are often based on limited information.”

• “Distrust not just of USDA’s NASS but of anything to do with or organized by the government. Some refuse to respond while others (very few, but it happens) falsely respond and then complain (loudly) about how wrong NASS is.”

Honig response: “More data always leads to increased accuracy, so responding to surveys is the best way to make things better!”

• “Few take time to understand the process and how results are generated at different times of the year. If they had a better understanding they might be more willing to participate in a constructive way.”

Honig response: “NASS works hard to be transparent and provide details about our procedures. We make ourselves readily available to answer questions and address concerns.”

• “Of course, it’s not just the NASS estimates that create the distrust ... it’s the combination of the NASS estimate and the market reaction. So, the distrust is also toward ‘the markets.’ It’s the, ‘Let them figure it out on their own’ attitude. These are the same people that don’t want any crop estimates (private or public), will say ‘Let the market figure it out’ and then complain when the market doesn’t perform like they think it should.”

• “Conspiracy theorists are taking over ... due to social media. Media isn’t meant to be social. Keyboard warriors … everyone thinks they’re an expert. They hide behind cute screen names, but no recourse for putting out wild/false claims,” said one veteran industry analyst .

• “Going to be more important going forward! These new AI models scrape data and form conclusions. Without good data, the promise for AI may be limited, or even worse, misleading.”

Comments from Lance Honig, Director of Methodology Division and Chair, Agricultural Statistics Board of USDA’s NASS:

“As a Federal statistical agency, NASS has the unique ability to level the playing field by providing unbiased and accurate information to everyone involved in agriculture — free of charge and available to everyone at the same time. The work that we do is a partnership with farmers across the Nation. Every producer who receives a NASS survey has an opportunity to improve the accuracy of the results by completing it, which leads to better decisions, better policy, and increased market efficiency. That’s a win for everyone. Response to surveys has declined in recent years, but overall rates remain very strong at NASS relative to other organizations and entities conducting survey work — a tribute to the time farmers commit to this partnership. While surveys remain the backbone of our estimates, we incorporate additional information into our process, including administrative data from across USDA, geospatial information, and more. This helps to improve accuracy while reducing the volume of survey contacts we have to make, therefore reducing the burden placed on farmers. We continue to explore additional data sources as we look to the future, but remain committed to utilizing the most reliable information available today.”

Comments from USDA top economist Dr. Seth Meyer:

“There is talk about crop insurance and use of other data sources. For RMA data, the issue is timeliness and when producers are required to report information to AIPs. By that point it has very little additive value. (Note: USDA’s Honig also commented on this as noted above.) NASS also makes extensive use of FSA data; they can pull what they need, and NASS has moved up when it more fully utilizes the FSA data as the FSA data have both improved quality and timeliness. I expect we will see more of this, and it will support crop production estimates. They will use any bit of data they think can contribute to an improved estimate.

“Indeed, earth observation (EO) data and analysis are improving. 20 years ago, EO often overpromised what it can do, but the reality is starting to meet the hype. We use EO extensively in the WASDE report, in particular this is helpful in countries which lack a strong statistical service or where data collection are challenging. However, I’m not yet willing to trade my NASS data for it and I’m going to want a couple of decades of overlapping data before I’d agree.

“Often when I’m overseas, people I meet report that they rely on USDA data more than their own government’s data. There is a level of trust that the data are unbiased, and we need to work to maintain that trust among our direct constituents in the U.S. I think important points are raised [in this report] about how to ensure that the quality of that data is maintained.

“I always try to explain to producers why responding [to surveys] is in their best interest. They might not always like the way prices move when the report is released (at least not half the time) but these reports level the playing field every 30 days. They are at a disadvantage to large grain traders able to accumulate more information; NASS reports resolve some of this information asymmetry each month.

“There is a lot of value in NASS reports, value that isn’t as flashy as a new program or initiative but lays the foundation for a lot of decision making across the country by producers and others. I think it is always important for us at USDA to make the case, and I think it is a good case, that these reports are a benefit to the sector and not only help market function but result in better policy formation in DC and in the state capitals.”

Comments from former top USDA economist Dr. Joe Glauber:

“Earth observation data and AI technologies are becoming increasingly accurate at measuring area and predicting yields. While we still ground truth a lot of those data against NASS surveys, those methodologies will become increasingly prevalent and may ultimately become the gold standard. Earth observation technologies are already the standard for evaluating crop conditions in many countries (for example, GEOGLAM’s estimation of cropland and crop conditions in occupied areas of Ukraine). But moving beyond area, yield and production, it gets more difficult. NASS is one of the few national statistical agencies that attempts to measure grain stocks. Consumption estimates are even more difficult (There is a reason the WASDE corn balance sheet includes “Feed AND RESIDUAL.”) Lastly, NASS and ERS have provided long time series on farm sector well-being and as much as I am often critical of the farm income measure, my criticism is more about how the measure is (mis)interpreted.

“USDA’s original function was providing research and development for farmers (through seed development and distribution) and providing information on prices, production, etc. These remain public goods that I would argue are still relevant today as they were in the 1860s.”

Grains Lower Except Nearby Soybeans: Cattle Trade Record Cash and Bearish COF Report

Mon, 24 Jun 2024 20:16:20 GMT

Cattle futures started mostly lower except for nearby live cattle as record high cash prices are pulling up the front end of the board verses the bearish placements number in the Cattle on Feed Report. However, feeders firmed shortly after that on lower corn and strong cash trade, plus tight numbers.

Scott Varilek, Kooima Kooima Varilek, says the record cash came even Friday afternoon after the report which is an indication of just how tight the numbers are in the country.

Cash last week in the North ranged from $306 to $315, with the dressed volume at $310-$312, up $4-$6 on the week and live sale prices were at $198-$199. Southern prices ranged from $189 to $191 live, which was up $3 to $5. So, the five-area weighted average will be another record.

“The numbers just aren’t there for the middle of June for those kinds of trades to happen is very impressive. We’re after peak demand time, you know usually we’re starting to tail off, show lists are starting to grow but we have a lot of interest in trying to sell early. So, guys are even selling some of these calves that are not ready yet,” he says.

As a result, he anticipates weights will start to drop off.

He says they aren’t sure where the 104.3% placements number came from on the USDA report, except that the record cash prices may have feedyards scrambling.

“If we look at it again and say where would all these extra placements come from, the only thing I can come up with is we do have quite a large sector of the market we’re bullish and we know how tight these numbers are, we know how long it takes to rebuild the cow herd and that’s not going to happen overnight. So, there is that anticipation that this is the best market we’ve ever had in the history of the cattle market, the highest prices. I want to be a part of it. So, you know there are empty yards and if you’re looking at an empty yard and you want some cattle in it because they’re getting very high, " he says.

Varilek adds that the higher placement numbers last fall should be starting to show up on show lists right now, but the numbers aren’t there which may indicate USDA did not get the numbers right last fall on the reports.

Hogs start mostly lower again after lower weekly closes last week and lower cash coming into the session. Varilek is not sure if the market will take a breather ahead of the end of the quarter or the Hogs and Pigs Report.

Grains are under pressure again as the markets don’t care about excessive rain in the northwestern Corn Belt and instead are focusing on the rains that fell in the Eastern Corn Belt over the weekend.

$3 Corn? That Could be the New Reality Without a Weather Problem This Year

Sat, 20 Apr 2024 19:54:55 GMT

Soybean planting has already started in 10 states, and farmers in 13 states across the U.S. have started planting corn. It’s been a slow start in the East, but considering it’s so early in the year, that hasn’t brought dramatic delays. The fact the East is seeing moisture is also fueling talk of a big crop in 2024.

As the market starts to look at the planting pace across the U.S., Brian Splitt of AgMarket.Net says it’s too early in the planting cycle to worry about potential planting delays in the eastern Corn Belt.

“Personally, I try not to overanalyze the planting progress this early in the cycle. I think back to a year like 2019, for example, when we had flooding through a large portion of the Midwest growing region. The market was extremely complacent about that for weeks until they decided all of a sudden that it mattered. We did have a sharp rally at that point,” says Splitt.

(Farm Journal)

Rains and cooler temperatures blanketed much of the Midwest this week, and some of those rains fell in areas facing drought. The most recent U.S. Drought Monitor shows 38% of the U.S. is experiencing some level of dryness, which is huge improvement from the 54% that covered the U.S. at the start of the year. This week’s rains brought some relief to areas still experiencing drought and dryness, including parts of Kansas, Missouri and Iowa.

“That little chunk of eastern Iowa seeing drought, still has red in the latest Drought Monitor, but they also had beneficial rains. So, give the Drought Monitor a little time to catch up,” says Tommy Grisafi of Advance Trading.

(Farm Journal)

Grisafi says historically, when the drought picture has been this low, it’s been all systems go for a big crop.

“I believe this crop is one-third of the way made already, and it’s not even planted. I’m just talking by the moisture profile,” says Grisafi. “Now, a lot of things can change. In the great drought of 2012, the market made a low at the very end of May, and it started rallying then and it didn’t stop. So be prepared for the market to have some volatility, but right now it looks like sideways to lower.”

Similarities Between 2024 and 2014?

If rains continue to soak the Corn Belt, the reality is corn prices could drift lower. Splitt says he’s comparing the current market environment to a decade ago.

“And just to lay that footprint, in 2010, we had a major low. In 2020, another major low, and then we went and screamed higher into the 2011 highs, 2021 highs. Ultimately culminating in 2012 with the drought, and in 2022 with the invasion of Ukraine. Then, 2013 and 2023 were both transition years from bull markets and a bear market. In 2014, we made a new set of lows all the way down to $3.18 and a quarter after trading above $5 in May of that spring,” says Splitt.

“So when you take a look at our stocks to use potential estimates of a good crop, with the amount of acres that we’re looking at planting, even that being a reduced amount, the stocks to use of 17% or higher does suggest that we should see low to mid $3s,” says Splitt.

“Without a weather problem this year, I do think it’s entirely reasonable that December corn, come October, may be down into the $3.20 to $3.50 range,” he adds.

Corn Below the Cost of Production

Grisafi points out that when you think about what that means for the cash market, producers could see prices below $3.

“I traded a lot of $2 corn in my career. I hope it’s not going to that level, but we could easily see $2.99 cash corn across many parts of America that have a poor basis,” Grisafi says.

For the past few years, strong commodity prices have been the storyline. But with corn prices down 30%, if good weather continues to pressure commodity prices in 2024, the reality is farmers may sell this upcoming crop at a loss.

“So, that very bushel may be the most expensive corn bushel you ever planted in your life. You may sell multiple dollars below your cost of production,” says Grisafi. “And although farmers always talk about their cost of production in that cycle, there’s a beginning, a middle and an end, and we are way past that cycle being that the crop insurance period for the 2023 bushels has ended. Many explorations of futures and options have happened. Many farmers are going to turn ‘23 bushels into ‘24 bushels, if they don’t have a plan here in the next six weeks.”

What About La Niña?

The wild card for 2024 is La Niña. USDA meteorologist Brad Rippey says just like the impacts of El Niño are still being felt four months after its peak, the claws of La Niña may not come until fall.

“Even if we make that transition into La Niña by, say, summertime, we’re likely not going to feel the impacts of La Niña until we get into the autumn of 2024,” Rippey says. “So that’s good news for the growing season.”

According to the National Oceanic Atmospheric Association (NOAA), there’s now a 60% chance that La Niña will develop between June and August. NOAA still thinks by November 2024 to January 2025, there’s an 85% chance a La Niña will be in effect. The tropical Pacific Ocean continues to trend toward a La Niña phase, coming out of one of the strongest El Niño events on record since 1950.

Related Story: Goodbye, El Niño. Hello, La Niña? The Big Transition to La Niña is Already Underway

Summer Moisture Difficult to Predict

What could the transition mean for growing conditions in the U.S.? Eric Snodgrass, science fellow and principal atmospheric scientist for Nutrien Ag Solutions, says the transition to La Niña is so hard to predict because of something atmospheric scientists call the spring forecast barrier.

“What we found is that our ability to predict well how El Niño is going to transition before you get through the month of May is pretty bad,” Snodgrass says. “Once we get into May and start to pay attention to those ocean temperature changes, we’ll be much better at predicting it, and a lot rides on it.”

Snodgrass looked back at history, and he says every time El Niño peaked at Christmas then faded until it was eventually replaced by La Niña in summer, it created a drought scenario in the Cotton Belt.

“Some of those years it was over Texas, some of those years it was in the Delta and some of those years it was in the Southeast,” Snodgrass says. “But if you keep drought down South, we tend to get ridge-riding storms over the top of it in the Corn Belt, so the Cotton Belt gets the stress and the Corn Belt tends to do better.”

While it’s hard for Snodgrass to know what the summer will bring, he says there is one thing he’s confident in. That’s the temperature outlook.

“I do think one thing about this summer, and that is I’m expecting warmer than average temperatures,” Snodgrass says. “Most of that will be coming in warmer overnight lows, though, based on what I know now. And a lot of that is predicated on the collapse of El Niño to neutral conditions and eventually into La Niña.”

Whether it turns into a hot and dry summer or a much wetter forecast than some are anticipating, Snodgrass says he was burned by weather prediction models last growing season, so he’s skeptical to rely on those again. However, he does think La Niña could open the door for a very active hurricane season this year.

It's Scary Dry in the Western Corn Belt, But a Drastically Different Story in the East This Year

Mon, 15 Apr 2024 21:21:07 GMT

The U.S. drought picture has drastically changed over the past six months, but dry conditions continue to grip the western Corn Belt. Meteorologists say there’s a stark difference in planting conditions in the west versus the east this year.

The latest U.S. Drought Monitor shows after an El Nino winter and active early spring weather pattern, drought coverage is now at its lowest level since spring of 2020. In early April, more moisture fell across the Mississippi Valley to the East Coast. A strengthening low-pressure system and trailing cold front brought 6" to 18" of snow across the Upper Midwest and northern New England. Rain also saturated soils to the south.

(Farm Journal)

Planting progress numbers for corn are starting to roll in, but USDA meteorologist Brad Rippey says there’s another crop to watch that might be a better indicator of planting progress this spring.

“I think oat planting is actually a pretty good surrogate for how fieldwork is actually going in the Midwest this time of year,” Rippey says. “You’ll notice an interesting trend on the oat planting chart — in the western part of the Corn Belt, look how fast the crop is going in.”

USDA’s second Crop Progress of the year last week showed oat planting in Iowa is 20 points ahead of normal. South Dakota is 12 points quicker than the average pace. Both are signs that dry weather is creating a rapid planting pace.

(Farm Journal)

“If you look at the numbers for Iowa and Nebraska, you’ll see almost one-third of the intended oat acreage has been planted by April 7. That’s way ahead of normal,” Rippey explains. “We see planting already taking place in South Dakota, Minnesota and even Wisconsin. Those numbers are pretty unusual for this time of year, so that indicates underlying dryness still exists in parts of the Upper Midwest, the western Corn Belt region and, of course, extending back to the Great Plains.”

In contrast, once you get east of the Mississippi River, oat planting is behind average. The planting pace in Pennsylvania was 8 points behind average last week, and that was before more rain fell across the eastern half of the country last week.

“We’ve effectively sharpened that gradient, and we’ll see those delays in the eastern Corn Belt starting to multiply. For the most part, it’s going to be planters rolling in the Upper Midwest and the Great Plains, as we have seen a deficit of rainfall the past several weeks.”

Topsoil Moisture Map Shows Severe Dryness

(Farm Journal)

Rippey says it’s also a good idea to monitor USDA’s topsoil moisture map. The topsoil moisture in New Mexico is considered nearly 80% short to very short. In Kansas, nearly 60% of the top soil moisture falls in that category as well.

If you then look at areas considered to be in surplus, all of the Northeast and parts of the eastern Corn Belt have too much moisture.

(Farm Journal)

“The big storm a couple weeks ago, bringing that big stripe of moisture across the Midwest, pushed topsoil moisture numbers to 68% surplus in Ohio, 35% in Indiana,” Rippey says.

Dry Conditions Aid Rapid Planting Pace

For areas experiencing drier conditions, planting is clipping along at an impressive pace.

“Of course that is great for keeping the planter going, but we do need moisture for winter wheat and soon for those recently planted summer crops,” Rippey says.

Farmers across the western Corn Belt are deeply concerned about just how dry it is. As dust flies this spring, some farmers even argue the Drought Monitor doesn’t accurately portray the picture, as soil is starved for moisture this year.

“There are people out there who are saying, ‘Man, we’ve not recovered what we’ve lost incrementally over the past four years.’ Until we start to see some major moisture recovery deep down in our soil, we’re going to have that concern,” says Eric Snodgrass, Principal Atmospheric Scientist for Nutrien Ag Solutions.

Last fall, Snodgrass says 40% of the lower 48 states were experiencing some form of drought. That number has been cut in half. While the recent moisture helped alleviate some concerns in Wisconsin and Minnesota, he says there are other areas, such as Missouri and Nebraska, that are still extremely dry.

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.”

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

Wed, 27 Sep 2023 19:20:17 GMT

Ag economists’ view on the ag economy is starting to erode, but out of all the commodities, economists are most bullish on the cattle industry. That’s as leading ag economists from both the public and private sectors expect cattle prices to climb even higher in 2024.

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 . THis month, they were asked to rank the 10 major ag commodities by financial outlook. Beef cattle came in at the top with dairy at the bottom.

“Cattle ranking so high was not a surprise, and dairy on the bottom, that part of the list was also not a surprise,” says Pat Westhoff, director of the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri. “Very high feed costs for dairy producers, milk prices were in the tank there this year. So, that makes very good sense. What was maybe a little bit of a surprise is that people were quite as positive about the soybean picture.”

For livestock, 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

Eroding Economic Outlook Overall

While bullish beef prices, 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. The Ag Economists’ Monthly Monitor shows lower row crop 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.”

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

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.”