Latest News From Kenneth Scott Zuckerberg

All eyes on Q3 GDP growth and Federal Reserve actions

The situation in the Middle East remains fluid and complex regarding the long-term implications for global economies in general and the energy sector in particular given Iran’s involvement.

We are closely monitoring the phosphate complex as the U.S. Department of Commerce could finalize a new 53% countervailing duty (CVD) on phosphate fertilizers from Russia by October 31, 2023.

As labor shortages persist and extreme weather drives up property insurance costs, Ken Zuckerberg encourages agribusinesses to start asking the hard questions today.

In short, the Fed’s monetary policy stance is still cognizant of the proverbial “fork in the road” which lies ahead.

Shutdown risk is back on the table for the U.S. Government on October 1, 2023.

Low water levels (again!) on the Mississippi River threaten ag exports out of the Gulf and shipments of inputs into the Midwest.

We begin this week with three items on our mind that could drive financial and commodity market volatility as we head into September.

Economic data has looked good–are we out of the woods? The answer to that question requires the “Hole” truth as is Jackson Hole, the location of the Federal Reserve’s annual confab taking place there this week.

Water levels in St. Louis and Memphis are 10 to 20 feet lower at this point in the year than in 2020 and 2019 due to lack of rain.

From this issue forward, the publication will be called The Executive Briefing which clarifies its purpose: to provide busy agribusiness and financial services executives with a “pre-flight checklist” for the week ahead

Last week was a busy one for private export reports of large flash sales of grain to China and unknown destinations.

If ag retailers fail to address a customer need, then it invites customers to take their business to someone else in the long run. Explore your options today.  

The Fed is widely expected to raise its target range for Federal funds by 25 basis points to 5.25% to 5.50% on Wednesday following its two-day FOMC meeting.

Earlier this morning, the New York Times reported that Russia has pulled out of the deal. Stay tuned.

Markets now expect that the Fed will raise rates at least “one more time” following this meeting by 25 basis points.

U.S. Secretary of State Antony Blinken is in Beijing meeting with Chinese Foreign Minister Qin Gang, in an effort to ease tensions between the two nations amidst months of escalating negative rhetoric.

Markets continue to digest / discount the shape of a recovery, which could ultimately be a “Stagflation No Landing” situation, at least during 2023.

Upon reflecting on the recent Kansas City Federal Reserve Ag Symposium (May 23rd to 24th), we conclude that “the U.S. will be a major agriculture producer as long as we can keep our edge.”

Could Stagflation, Rather Than Recession, Happen Next?

Despite reporting strong results, John Deere’s chart is telegraphing a negative message for agriculture

Uneasiness is the feeling that most describes where capital and agriculture markets are at the moment, despite ongoing positive economic news.

We are hearing that ag retailer inventories are generally full, that China has received very few new orders of glyphosate and wonder whether adverse weather in Argentina will hurt global input demand, near-term.

Two key US inflation gauges showed incremental pressure last week.

Although Treasury yields have increased over the past month (blue line in the included chart) they remain inverted, which signals “recession.”

Agribusiness business insurance programs are experiencing rate increases of 25% to 75% (and even more in certain geographies such as the Dakotas.

The only thing we know is that baseball is back…Economically speaking, 2023 has been a year of changing narrative.

There are three things on the Watchlist this week

The Fed hiked rates 25bps at last week’s FMOC meeting and indicated it will stay the course. So why are forward yields (1 year through 30 year still lower, suggesting Fed easing?)

On March 22, there will be the next Federal Interest Rate Decision; 75% probability of a quarter percentage point increase to a range of 4.75% to 5.00%

Numerous measures were announced over the weekend in response to SVB which now appear to reduce the risk of financial contagion.

We’re looking for updates on grain exports and updates on Argentina and Brazil production when the USDA releases its March 2023 report.

Incorporate good ideas into your company’s DNA today. Work to do that before the stress of the coming cycle downturn paralyzes you from investing for the future.

As the week begins, we are focused on geopolitics, U.S. farm bill discussions and the interest rate / inflation / economic growth / credit deterioration debate

Friday marks the one-year anniversary of the war in Ukraine.

Key items we are watching this week include inflation (CPI and PPI) and retail sales reports, earnings from Andersons, Deere, Mosaic and Nutrien, and USDA’s baseline forecast.

And with last week’s strong job’s report acting as an “all clear signal” for the Fed to remain hawkish, forget the “hard“ vs. “soft” landing debate, and think “long landing.”

Going forward, strategic planning should focus on three tangible activities

On the watchlist this week are the recent actions by the Fed. As well as recent and upcoming earning reports. 

Eyes are on Thursday's GDP release and public company earnings.

Ken Zuckerberg writes, "I remain intensively focused on the outlook for grain and fertilizer prices."

The drop in natural gas and fertilizer prices is very noteworthy, while equity markets have begun the year higher.

Looking ahead we see an environment of margin pressure amidst a slowing economy, rising interest rates, high labor and energy costs (namely diesel fuel), and trade uncertainty with China and possibly Mexico.

Equity markets finished 2022 in the red as fears of a U.S. and global recession have become the consensus view. Be careful. Experience tells me that when everyone decides to sit on the same side of the canoe, it can tip

In the Agri-food Executive Briefing for the week, seven items are highlighted on 'the watchlist':

In the Agri-food Executive Briefing for the week, seven items are highlighted on the watchlist.