In the Agri-food Executive Briefing for the week, key thoughts include:
- 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.
- Last month’s increase in U.S. GDP for 3Q was meaningful. An alternative view of current matters is that a mild recession happened already in 2022 (recall there were two quarters of negative GDP growth.)
- Looking at the sectors I monitor, Grains, Oilseeds and Biofuel, I think it is noteworthy to mention that soybeans rallied during 4Q beating out corn and wheat.
- Perhaps the market is finally realizing that the shortage of soybeans and other oilseeds, for use in renewable diesel fuel production, is as sharp as we wrote about several months ago.
- Finally, stepping back, Geopolitics, Energy Volatility and Economic Uncertainty (specifically in Europe and China) are what I am most concerned with.
Numbers of Interest
+13.4% % increase in spot Soybean prices during 4Q 2022, compared to declines of -7.7% for Corn and -11.7%for HRW
-9% % drop in the U.S. Dollar Index (DXY) from Sept 27th (peak) to December 30th
+3.2% Revised 3Q 2022 GDP,up from previous estimate of +2.9%
$18.6 Billion Amount the U.S. has committed in security assistance for Ukraine since the Russian invasion on February 24, 2022.
$123.70 / $80.26 The respective 52-week high price and 2022 year-ending price for WTI Crude Oil
+57.6% Price change for the Energy Select Sector SPDR (Ticker: XLE) during 2022
6 Things on “The Watch List”
AgTech: What new interesting tractor technology will be announced at this week’s Consumer Electronic Show in Las Vegas, NV?
Weather: 2/3 of the USA experienced “dangerous” temperatures of up to 30 degrees below normal during late December. What’s next? (Source: Everstream.ai)
China: What will the reopening mean for agriculture commodity and energy demand?
Hogs & Pigs Report: December breeding inventory up slightly -first increase in 2 1/2 years, farrowing intentions up. Could mean more pork production later in 2023. (Source: The Juday Group)
WASDE: USDA’s first WASDE report expected January 12th
4Q GDP: Preliminary figures expected on January 26th
As a macro snapshot from The Fed:
The following are the five Key Economic Indicators that the Federal Reserve’s Federal Open Market Committee (FOMC) typically highlights in its projection materials. From the St. Louis Federal Reserve:
- Real GDP Growth: 3.2%, Q3 2022
- Unemployment Rate: 3.7%, November 2022
- PCE Inflation: 5.5%, November 2022
- Core PCE Inflation: 4.7%, November 2022
- Federal Funds Rate: 4.3%, December 29, 2022
Special thanks to my CoBank research partners, Dan Kowalski, Rob Fox, Tanner Ehmke, Brian Ernest, and industry friends, Dave Juday, Brett Sciotto, Mark Purdy, Scott Caine, Gregg Dodd, Ken Gilliam, for their contributions and perspectives.
Kenneth Scott Zuckerberg is Lead Industry Analyst, Grains, Farm Supply & Biofuels, CoBank.
