Hog Prices-Markets

No Trade Agreement Can Boast the Success of USMCA, The Meat Institute Says

Tue, 04 Nov 2025 14:48:28 GMT

The Meat Institute is calling on the Trump administration to renew the U.S.-Mexico-Canada Agreement (USMCA) for its benefits to American meat and poultry companies and the entire U.S. animal protein value chain.

“USMCA has been a boon for the American meat, livestock and poultry sector, along with the broader American food and agriculture economy and ancillary industries,” said Julie Anna Potts, The Meat Institute president and CEO, in a news release. “It has provided steady income to American farmers, ranchers, and meat and poultry exporters; it has created jobs for American truck drivers, ports, and transportation companies; it has strengthened American food retail and food service establishments; and it has accomplished all of this through transparent rules that allow American businesses to proactively plan supply chains and develop durable customer relationships.”

USMCA entered into force on July 1, 2020, substituting the North America Free Trade Agreement (NAFTA) to create more balanced, reciprocal trade supporting high-paying jobs for Americans and grow the North American economy, according to the Office of the United States Trade Representative (USTR) .

“The domestic U.S. meat and poultry industry’s long-term economic viability, though, depends on robust international trade, particularly as domestic per capita consumption of meat and poultry remains stable, and 95% of consumers live outside the U.S,” The Meat Institute wrote in comments submitted to the USTR on Nov. 3. “International trade is, therefore, vital to the long-term strength of the U.S. meat and poultry industry, the American workers it supports, and the rural and farm communities it sustains.”

In 2024, U.S. meat and poultry exports exceeded $24.6 billion. Meat and poultry product exports to Canada and Mexico accounted for $7.5 billion of that total. Annually, approximately 14% of U.S. beef production, 15% of U.S. poultry production and 25% of U.S. pork production are exported, the organization noted. As well, exports add value to every animal produced, and in turn, increase demand for U.S. corn and soybeans.

“The Trump Administration’s America First Trade Policy Agenda has reinvigorated American trade policy and has reasserted American leadership to advance U.S. meat, poultry, food, and agriculture trade in a manner that revitalizes our farm communities and supports broad-based economic growth. President Trump’s negotiation of the USMCA during his first term resulted in the world’s gold-standard trade agreement,” the letter said. “Thanks to President Trump’s leadership, USMCA has bolstered U.S. meat, poultry, and livestock trade, has led to increased market integration in North America, and must be preserved without significant changes that would disrupt the U.S. meat and poultry industry’s substantial access to the Canadian and Mexican markets.”

The Meat Institute says it’s clear USMCA’s access terms – zero tariffs on most meat, poultry and livestock trade – have underpinned American economic and job growth, particularly in rural and farm communities across the U.S.

“No other trade agreement can boast the same success,” Potts said. “President Trump deserves enormous credit for this extraordinary achievement.”

See The Meat Institute’s full comments in response to the U.S. Trade Representative’s (USTR) “Request for Comments on the Operation of the Agreement Between the United States of America, the United Mexican States, and Canada.”

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

Mon, 10 Feb 2025 20:46:32 GMT

U.S. pork exports reached new highs for both volume and value in 2024. Export value totaled $8.63 billion, up 6% from the previous record set in 2023. The full-year volume came in at 3.03 million metric tons, up 4% from a year ago and topping the previous high (2.98 million metric tons) reached in 2020.

U.S. Meat Export Federation (USMEF) President and CEO Dan Halstrom says the increases were driven by diversification of export markets and delivered a value of $66 per head slaughtered on pork.

“We’ve actually had a few months this year where we were over $70 so I think we’re going to continue to look to increase that payback going forward in 2025,” Halstrom says.

December pork exports totaled 267,132 metric tons, slightly below last year’s large volume, while value increased 1% to $771.8 million, according to year-end data released by USDA and compiled by USMEF.

“Market diversification has been a key goal of the U.S. pork industry for many years, and the resulting broad-based growth has never been more evident than in 2024,” Halstrom says. “While exports to Mexico were record-large for the fourth consecutive year, U.S. pork’s footprint expanded greatly in the Western Hemisphere and made gains in the Asia-Pacific, which bolstered global export totals and pushed export value per head slaughtered to a new high of more than $66.”

Pork exports achieved annual volume and value records in Central America, Colombia, New Zealand, Malaysia and several Caribbean markets. Value records were reached in South Korea, Australia and the Dominican Republic.

“I think we’re well positioned, on the pork side, to see continued growth in 2025,” Halstrom adds. “And like I said, it’s not just Latin America, but it’s a combination of Southeast Asia, Asia and Latin America. So very good spot for us on the pork side.”

Your Next Read: What Are Ohio Pork Producers Doing to Defy the Winter Slump?

Has Prop 12 Created a Crisis in California?

Fri, 10 Jan 2025 21:00:01 GMT

Proposition 12 is exacerbating food insecurity in California – especially in the Asian and Latino communities who rely on pork as their primary protein, say representatives of the Latino Restaurant Association and the Latin Business Association.

“The impacts of Proposition 12 are devastating our Latino businesses and families across California,” says Ruben Guerra, chairman of the Latin Business Association. “With pork prices soaring up to 41% higher than the rest of the country and more than one in three Latino adults already living in food-insecure households, this misguided law is creating unintended food insecurity in our communities.”

Pork is a staple protein in Latino cuisine and culture, yet Guerra says they are seeing California’s pork consumption plummet as families struggle to afford these drastically higher prices.

“This isn’t just about numbers, this is about real families having to choose between putting food on the table and paying their bills,” he says. “Our small businesses, particularly Latino-owned restaurants and markets, are caught in the middle as they try to maintain affordable prices while absorbing these massive cost increases.”

Prop 12 hasn’t made life better for anyone, says Lilly Rocha, executive director of the Latino Restaurant Association.

“It would be one thing if the regulations imposed on pork producers were based on data and scientific research,” Rocha says. “But it’s not. We’ve had a great pork industry forever. Why do we need to change a good thing all of a sudden? It makes no sense. It seems to be regulation stemming from a social agenda, not a scientific one.”

Out-of-Control Prices
The Latino Restaurant Association is based in Houston, Texas, Los Angeles, California and New York and serves about 1,400 members across the nation. As a representative of Latino restaurant owners, Rocha says they are concerned about how Prop 12 has affected their industry in a negative way.

“Latinos are the No. 1 consumers of pork in the United States – that means our menus have a lot of pork products,” Rocha explains. “Pork has generally been the affordable protein. Now, beef and pork are the same, so the profit margin is going down on both of the proteins. It’s going to be more of a struggle to even make a profit within the menu since prices are up, resulting in an increase in overall pricing.”

She points out that the Latino community is not the most affluent of the minority groups, so the higher prices are impacting them in a big way.

“Here in California, it’s not the easiest place to run a business, especially a restaurant. We are seeing out-of-control pricing already,” Rocha says.

Pork is a staple protein in the Latino population.

(Latino Restaurant Association)

Although she doesn’t know if there is a direct correlation between higher pork prices and restaurant closures, she says there’s no question about it that closures are continuing to happen.

“I think Prop 12 is just one more regulation on top of other regulations, and all together, that’s what’s making our folks shut their doors,” she says. “Prop 12 absolutely adds to that in a very negative way.”

Rocha and Guerra are leading voices in the Food Equity Alliance, a coalition working to address rising food costs and their impact on California families, especially within the Latino community. Of course, they don’t want prices to go back down, but realize that probably won’t happen. She says they’d like to see prices not go up. Most importantly, they don’t want Prop 12 to propagate in other places.

“Latinos love pork, and we will try to find ways to be able to afford pork,” Rocha says. “We’re always going to be supportive of the pork industry and want them to know we are an ally. We are willing to do anything we can do to help or team up to educate others on what’s really going on in the industry.”

Your Next Read: Converting to Prop 12: What Have We Learned a Year Later?

China’s Tipping Point: What Looming Crisis Means for U.S. Pork in 2025

Tue, 07 Jan 2025 15:03:17 GMT

There are decades where nothing happens, and there are weeks where decades happen.” This quote from Vladimir Lenin is particularly relevant as globalism, the dominant economic system of the past several decades, faces radical transformation entering 2025.

At the forefront of this transformation is China, the “workshop of the world” and a major destination for agricultural exports. However, China is now grappling with a host of existential threats. The question is not if but when we will witness a total system collapse, and this year appears to mark the beginning of the end, as recession looms overhead.

The challenges facing China could fill volumes, but three key factors make its problems insurmountable.

1. Population Collapse
As shown in Chart 1, China’s population structure is dire. Even a dramatic increase in birth rates would be too late to reverse the trend. Conservative estimates suggest China’s population could shrink to 500 million to 700 million within 75 years. This demographic decline would devastate any economy, but it hits China’s industrial economy particularly hard.

Population Forecast for China

(UN Population Prospects 2024)

2. Economic Model Missteps
As labor costs rise with the decline in population, China’s competitive advantage in the industrial sector will erode. This makes transitioning to a service-based economy critical. While China had begun this shift over the past decade, the process was abruptly reversed during COVID-19, when Beijing funneled stimulus investment into industry. The result? Depressed returns and mounting debt, with little progress toward a viable economic model.

3. Leadership Challenges
President Xi Jinping’s consolidation of power through the systematic purging of opposition has undermined China’s ability to make well-informed policy decisions, precisely what a country facing crisis needs most. As sole decision-maker, China’s ability to manage crisis rests entirely on President Xi, outside of him, China’s policy-making apparatus would need to be reforged from the ground up.

Implications for U.S. Producers in 2025
While the exact trajectory of events remains uncertain, several outcomes seem likely if a recession hits this year:

Declining Input Costs: Prices for commodities such as oil, steel and other inputs will drop as consumption slows in China. Feed costs would also decline if Chinese producers exit the market due to poor liquidity and reduced demand for pork. However, while inputs could become cheaper, disruptions in production chains as companies relocate outside of China will cause supply shortages. This means the cost of finished goods will remain high for the foreseeable future.

Stable U.S. Pig Prices: Pork exports to China will continue downward, but growing demand in other markets, such as Mexico, which benefit from the relocation of production chains, should help stabilize exports.

The Importance of Liquidity: In a recession, liquidity will be vital. It will enable businesses overexposed to the Chinese market to pivot to new opportunities and allow others to pursue expansion at bargain prices.

This year is shaping up to be one of rapid and dramatic changes. Although challenges loom ahead, it is during challenging times that opportunities arise for those who can adapt and respond effectively.

Your Next Read: The Future of Swine Health: Insights and Preparations for 2025

10 Understated Things Economists Say Could Impact Agriculture in the New Year

Thu, 26 Dec 2024 16:29:46 GMT

This past year was definitely full of surprises, but there were also happenings in agriculture that economists warned about at the end of 2023.

The bleak outlook for commodity prices, along with elevated interest rates, created a downturn in the ag economy, which is something many economists warned would happen. It’s the speed of which margins crumbled that might have been the bigger surprise.

The latest Ag Economists’ Monthly Monitor asked economists if the U.S. was either in a recession or on the brink of one. The majority of ag economists say U.S. agriculture is ending the year in a recession.

56% of ag economists responded by saying agriculture is currently in a recession, which is up from the 53% who responded that way in October.
81% of economists surveyed said the U.S ag economy is on the brink of a recession, which is a significant jump from the 56% of economists who responded that way in the October survey.

One occurrence that wasn’t on anyone’s radar in 2023: H5N1. What was first thought to be a mystery illness impacting dairy herds in Texas was later confirmed as Highly Pathogenic Avian Flu, the first time the disease was detected in mammals.

At the end of 2024, what are economists watching in 2025? In Farm Journal’s latest Ag Economists’ Monthly Monitor, we asked economists: “What’s the one factor impacting the ag economy that’s not being talked about or covered by the media enough right now?”

From trade to deregulation plus numerous unknowns in a new administration, economists have no shortage of issues they’re watching in the new year.

Here’s What Economists Are Saying:

“The media seems consumed with the negatives of a Trump administration/Republican trifecta. It’s certainly good to be aware of the challenges with any political transition, but more forward thinking on what is positive, would be helpful: the outlook for taxes, biofuels policy, trade deals with agriculture included, deregulation all seem to be potential positives we could be talking about more.”
“Prospective tariff war is being downplayed, despite published research measuring expected range of damage.”
“Farmer attitudes toward alternative land use: CRP, solar and other forms to help diversify incomes.”
“Policy uncertainty is high right now. Will tariffs be imposed and if so, what will be the reaction of other countries? Will the new Administration take regulatory actions that favor or hurt the biofuel industry? What will be the outcome of debates over tax and budgetary policy? Will economic assistance to the farm sector be approved during the lame duck session or in early 2025? What about a new farm bill? Many people are making assumptions about how these questions will be answered, but we don’t know.”
“Farm income varies greatly by region. While we often focus on the Midwest and the financial health of that region, it is also important to notice that regions in the southern U.S. are really struggling.” It is also important to watch what production adjustments producers make to cope with today’s tighter operating margins?
“Could federal budget cuts/austerity dramatically change/reduce the federal farm income safety net?”
“Cash rent prices staying constant during a downturn in crop prices.”
“Let’s be clear — the clean fuels tax credit goes to the fuel producer, not the farmer. It enables market access into the biofuels market for the farm economy, but the ability for the farm economy to capitalize upon it is hamstrung by credit levels that have incentivized large inflows of foreign feedstocks at the expense of literally homegrown feedstocks like SBO.”
“The Brazil real is depreciating, which eventually leads to more U.S. competition.”
“China, Europe, Mexico and others know what to expect out of Trump. They’ve seen it before. Everyone is discounting the possibility that Trump’s tariff threat could result in some pre-emptive trade agreements that benefit us here in the states. The U.S. is the biggest buyer of consumer goods in the world. They can’t afford to cut us off. Note that I said consumer goods, not commodities.”

Your Next Read — Economic Loss Assistance Program Payments Passed by Congress: Here’s What Farmers Need to Know

Time is of the Essence for the Farm Bill, Vilsack Says

Mon, 28 Oct 2024 19:00:22 GMT

“Time is of the essence. We need a farm bill now,” U.S. Secretary of Agriculture Tom Vilsack said during a conversation with members of the American Farmland Trust.

He said that time is running short for Congress to come together to address the farm bill in a bipartisan way.

“Either we have a real bipartisan deal on a new farm bill, or, at a minimum, an extension of the existing farm bill,” Vilsack said.

A farm bill would at least add some certainty for farmers and their lenders, he pointed out. So far, Vilsack has been fairly general in saying just what exactly he would like to see in a farm bill, pointed out Gary Crawford, reporting for USDA.

“The farm bill needs to be one that is not leaving anyone behind, whether that be farmers concerned about losing their farms in tight times or working families struggling to get by,” Vilsack said.

Vilsack added that lawmakers need to get together in a bipartisan way to craft a realistic, practical farm bill.

“Frankly, the longer we wait, the harder it is to get this done,” Vilsack said.

Your Next Read: It is Time to Pass to Farm Bill Now, Pork Producers Say

Hope for Pork Profitability in 2024 is Fading

Tue, 04 Jun 2024 23:55:31 GMT

U.S. pork producers just came off the worst 18 months of negative profit margins in history, even 1998. There was optimism when hog futures rallied to contract highs at around $110 this spring that 2024 would be a more profitable year. However, that hope has faded.

Pork margins started off 2024 in the black, but spring and summer month hog futures have set back $15 to $17 from the contract highs set in mid-April.

Steve Meyer, senior livestock economist, Ever.Ag Insights, says cash and cutouts just stalled the last six weeks, pulling down the lean hog futures and cutting into break evens and profit levels.

“It has gotten progressively worse since March,” he says. “Back in March, the model I have - which is based on historical Iowa State University estimated costs and returns - had about $10 per head, and that’s for probably the low cost 25% of producers which I think the Iowa State model really represents. So, that was about $10 per head back in March. That model last week had minus $4, and it’s mainly been a reduction on the revenue side because of the selloff we’ve seen on the lean hog futures market.”

Meyer says the cost of production has also increased.

“We had about $85 in that cost model back in March and almost $88 now. So, the uncertainty of getting this crop planted has kind of put a little fuel on the corn and soybean markets and cost us some,” he says.

Cash and the Lean Hog Index have also stagnated as pork cutouts have been flat during April and May. Meyer says cutouts usually stage a seasonal rally of $6 to $8 in the spring. So, it’s not tied to hogs supplies but instead soft demand.

“Export demand has still been pretty good, so I don’t think that’s where it is,” Meyer explains. “If we look at the real per capita expenditures, pork real capita expenditures are down almost 5% year to date through March. That tells us that the softness we see is on the consumer side in the United States.”

He’s concerned about the slower demand with supplies ramping up into 4th quarter as weekly hog slaughter pushes over 2.7 million head and squeezes processing capacity.

This could mean additional pressure on cash and wholesale pork values ahead.

State of the Pork Industry Report: Takeaways from 2023

Tue, 21 May 2024 13:44:50 GMT

Looking back at the takeaways from 2023, what are the non-negotiables for pork producers going into the second half of 2024? In the first State of the Pork Industry Report hosted by Farm Journal’s PORK editor Jennifer Shike, four experts discuss this question and more as they compare the data to what they are seeing in the barns.

Find out what this group of industry leaders believes are the most important takeaways and how this can help your farm be more profitable now and in the future.

Experts include:

Cara Haden , DVM and veterinarian with Pipestone
Randy Kuker, director of swine production for The Equity
Adam Annegers, sow production manager at JBS
Brad Eckberg, business analyst with MetaFarms

What are the 2024 Non-Negotiables for U.S. Pork Producers?

For Kuker, the non-negotiables for 2024 are simple – people development and biosecurity matter.

“Develop your people, train them, coach them, try to influence them to do a good job every day and give them the support they need. Be present for them,” Kuker said in the report. “Then, really push biosecurity. Consider incentivizing people for doing good biosecurity and keeping those lateral transfers out of there.”

Annegers couldn’t agree more and added the pork industry doesn’t have time not to train. People are the industry’s No. 1 resource.

“Keeping our people happy and getting them trained, engaged and empowered to do a great job taking care of pigs is huge for us. That will continue to be a big driver for us as we go forward,” Annegers said. “Those people trees are just not growing anymore. So, when we get talented people who care a lot, we need to put all of our time and effort into those people. Without employees on the farms, we don’t have farms.”

For the self-proclaimed “data nerd” on the panel, Eckberg encouraged producers to utilize data to make decisions. He also reminded listeners that garbage in is garbage out.

“You’ve got to have quality, accurate data to make decisions,” Eckberg said. “Tracking the bare essentials is a great place to start that allows you to be proactive.”

Of course, health is a non-negotiable for Haden.

“It is so fun to raise healthy pigs. It’s a blast. They’re a really fun animal to work with,” she said. “But it’s not fun to raise sick pigs. Really look at your system. What can we do from a vaccination standpoint? What can we do from a flow standpoint? What can we do from a biosecurity standpoint? What can we do to try to keep our pigs healthy, so that we can enjoy our jobs and going into the barn every single day? I think that needs to be a huge focus.”

In addition to 2023 takeaways, the panelists dig into a variety of topics from Prop 12 to E. coli and from mortality rates and grow-finish trends. Check out the first State of the Pork Industry Report hosted by Farm Journal’s PORK on YouTube .

Read More:

A Good Start to 2024: Mortality Improves Across the Board in Latest MetaFarms Report

The Superpower the Industry Needs on Swine Farms Now

Sow Death Loss Reaches All-Time High in 2023: What Can Producers Do Now?

Keep Your Eyes Open: Ways to Reduce Wean-to-Finish Mortality

When the Data Gets Overwhelming: Key Metrics to Pay Attention to on the Swine Farm

USDA Allocates $300 Million to Diversify Export Markets for U.S. Agriculture

Tue, 21 May 2024 13:42:48 GMT

Agriculture Secretary Tom Vilsack announced on May 21 that USDA is allocating $300 million to 66 U.S. organizations, under the new Regional Agricultural Promotion Program (RAPP), to build demand for American food and farm exports in high-potential markets around the globe.

RAPP was launched by Vilsack in October 2023, authorizing $1.2 billion in Commodity Credit Corporation funding to help U.S. exporters expand their customer base beyond traditional and established markets, focusing on regions such as Africa, Latin America and the Caribbean, and South and Southeast Asia, where consumer demand and purchasing power are growing, USDA explained in a release.

“USDA and the entire Biden-Harris Administration are focused on creating more, new and better markets for U.S. producers and agribusinesses, and exports are a critical part of that effort,” Vilsack said. “By enabling U.S. exporters to expand their footprint in diverse and dynamic new markets, RAPP will help make them more competitive and resilient in an increasingly volatile global trading environment. We know the potential is out there, but it takes time and money to grow new markets. USDA is pleased to be able to provide the start-up capital to help tap into these opportunities, because if we are serious about reversing the decline of small and mid-sized farms, and building wealth that stays in rural communities, it’s crucial that we create and sustain diverse market opportunities abroad as well as at home.”

Gaining market share in diverse and dynamic markets will help U.S. exporters better weather global shocks and better compete in an increasingly volatile global marketplace, the RAPP website explained. RAPP will help recipient organizations carry out hundreds of projects encompassing a wide variety of products and markets in this initial round of funding, USDA noted. Some of the projects include:

• U.S. Meat Export Federation (USMEF) will receive $21 million and plans to expand its export efforts to new markets in the ASEAN region and throughout Africa, as well as enhance its investment in the convenience store segment in South Korea, Central America and Colombia.

• The U.S. Dairy Export Council will receive $10 million and plans to expand its presence in Africa by utilizing RAPP funding to better understand and develop dairy import regulations and regulatory frameworks in many markets.

• The Cranberry Institute will receive $1 million and plans to conduct trade education seminars and other consumer-focused activities to target export opportunities in India, Brazil, Colombia and Southeast Asia.

• The Hazelnut Marketing Board will conduct market research and trade missions to facilitate support market development in several African countries.

Other top funded organizations include the American Soybean Association ($28.5 million), Cotton Council International ($19 million), Food Export USA Northeast ($17.5 million), U.S. Grains Council ($17 million), Food Export Association of the Midwest USA ($15.5 million), U.S. Wheat Associates ($13 million), Wine Institute ($13 million), and Blue Diamond Growers/Almond Board of California ($10 million).

“USMEF is honored to participate in RAPP and we thank Secretary Vilsack and the staff at USDA for their vision and leadership in implementing this program,” USMEF President and CEO Dan Halstrom said in a statement. “The additional investment in foreign market development is very timely and will be especially helpful in expanding demand for U.S. red meat in emerging export markets. USMEF also appreciates the role Congressional leaders played in the development of RAPP. We thank them for their support of this program and for prioritizing Market Access Program (MAP) and Foreign Market Development (FMD) funding in the new Farm Bill.”

To view the complete list of organizations that received RAPP funding, please visit the following link: FY 2024 RAPP Funding Allocations .

How Many Interest Rate Cuts Will We See in 2024?

Thu, 25 Apr 2024 21:53:48 GMT

Ask Dr. Vince Malanga of LaSalle Economics how many interest rate cuts we’ll see the Federal Reserve announce in 2024, and he says one or two at the minimum.

This is one of his insights recently shared on AgriTalk Radio as he gave his thoughts on the U.S. economy and the Federal Reserve’s maneuvers.

On interest rates, his opinion is we should have already seen a cut.

“They should have taken a victory lap. We got a sharp decline in inflation. They should have seized on that,” Malanga says. “They would have assuaged the bond market and made it a little bit easier to sell this debt. We know the government has a prolific amount of debt they have to sell. They would have stabilized the commercial real estate sector without any change in the overall economy.”

Malanga reflects on the current short-term perspective of interest rates being restricted.

“They’re running somewhere between two and three percentage points over the inflation rate and so they’re moderately restricted,” he adds.

As such, there’s still economic improvements that demand attention. He points to the residential and commercial real estate markets as being pointedly troubled right now.

“The housing market is a mess. Housing is unaffordable, not only because of mortgage rates but also because of the cost of utilities and the cost of insurance–the cost of all that overhead,” he says. “The commercial real estate sector is a mess. There’s about a trillion dollars of commercial real estate debt that has to be rolled over and the values of commercial real estate have gone down.”

The weight of government debt on the economy is another focus for Malanga.

“There is not a day that goes by that the government doesn’t have to issue more debt. The government is the strongest sector of the economy, but the government is growing at the expense of the private sector,” he says. “Government spending, which has historically been running between 18% and 20% of GDP, is now running between 23% and 25% of GDP.”

He adds, “when you’re shoveling that much money into the economy, it’s like throwing a bunch of spaghetti at the wall. Some of it will stick.”
In addition to the economic concerns, Malanga says there’s possibility to have three wars simultaneously occurring.
“There’s no room for catastrophe,” he says.

As for what’s next, Malanga hopes the first steps are reducing government spending, and not increasing taxes, while being paired with economic stimulation.

“Government spending has to be brought under control. The most direct route by which the deficit has gotten to gain some control over is by stimulating the economy, stimulating the private sector of the economy. Deregulate the economy rather than over regulate the economy,” he says.

Malanga also shares insights on the Chinese economy, which you can hear in this full clip from AgriTalk.

USDA Says Trade Efforts Are Working to Build Markets Abroad

Tue, 21 Nov 2023 20:26:40 GMT

USDA announced last week it is introducing the Regional Agricultural Promotion Program (RAPP) to support continued growth of U.S. agricultural exports and to also introduce U.S. agricultural products to new markets.

The agency will invest $1.3 billion to support that market diversification effort within a public-private partnership with the agricultural sector, according to Alexis Taylor, USDA Trade and Foreign Agricultural Affairs Under Secretary.

Specifically, Taylor told AgriTalk Host, Chip Flory, that RAPP will provide assistance to eligible organizations that conduct market promotion activities, including ones to address existing or potential non-tariff barriers to trade.

Headway In India

Taylor told Flory the Biden administration has tallied numerous trade policy wins in 2023. Some of the key recent wins, she referenced, have been in India, which has been difficult to access with U.S. agricultural goods.

“They have what they would say are 800 million small-holder farmers. Imagine that – more than twice our population in the whole United States,” she said. “They increasingly are looking to develop an industrialized (society) and determine how they move away from subsistence farming to a better economic model. As they’re trying to wrap their arms around how to make that move, using tariffs has been one of the ways they’ve protected their farmers.”

Taylor said USDA has worked closely with India to reduce tariffs and has secured nine tariff reductions in 2023. To date, the agency reports India has dropped retaliatory tariffs on apples, chickpeas, lentils, almonds and walnuts. The Indian government also has reduced tariffs for turkey, duck, blueberries and cranberries.

Steady Progress Cited

Four additional export market successes Taylor and USDA cite as having achieved this year include:
1. Canada approving legislative recognition of U.S. biofuels, maintaining the largest and most dependable export market for U.S. ethanol and biodiesel;
2. Japan renegotiating beef safeguard levels under the U.S.-Japan Trade Agreement, reducing tariffs and generating growth opportunities for $150 million in beef exports;
3. Brazil agreeing not to change import certification requirements, ensuring continued exports of U.S. milk, beef, and seafood; and
4. Mexico granting market access to U.S. potatoes following more than 20 years of engagement.

Looking ahead, Taylor told Flory one of USDA’s key objectives will be increasing the export of U.S. agricultural foods and products to countries in Africa.

“By 2051, one in four people on the planet will live on the African continent, and we cannot ignore this any longer,” she said. “We’re really hopeful that the (RAPP) program will provide some resources for our food and ag sector to be able to invest in some of these areas of the world.”

Taylor’s conversation with Flory, which took place during the annual National Association of Farm Broadcasters Trade Talk program in Kansas City, is available to listen to here:

AgDay TV Markets Now: Tommy Grisafi says Soy Complex Adds Brazil Weather Premium, Corn Reluctant Follower with Wheat as Anchor

China’s Sow Herd Declines for Tenth Consecutive Month

What Will the Reference Price Be in the New Farm Bill?

More Traffic Slowdowns At The Panama Canal

Fri, 03 Nov 2023 19:08:20 GMT

Low water levels continue to plague the Panama Canal after what’s reported as its driest October on record.

Daily ship transits through the Panama Canal will be cut in half this winter. Via the Wall Street Journal, Daily reservations slots will be cut to 25 this month, 22 next month, 20 in January and 18 in February. Last month the canal had 32 daily transits. On a normal day, the canal can handle 40 transits.

A prolonged period of elevated temperatures and limited rainfall had led to a significant drop in the water level of Gatun Lake, which supplies water to the canal’s locks.

Around 70% of vessels using the Panama Canal require a draft of 44 feet, which is the current limit, down from 50 feet at the beginning this year. If the draft is lowered further, most ships won’t be able to transit with full loads.

The Panama Canal handles approximately 7% of all global seaborne trade. Canal authorities say about 98 vessels are waiting to cross at both sides of the canal. It’s noted containerships that have fixed schedules and booked slots months in advance aren’t facing serious delays, but crude and gas tankers calling on short notice can be trapped for weeks.

Plant-Based Meat Alternatives Face Sharp Decline in Sales

Thu, 17 Aug 2023 20:46:24 GMT

Although U.S. consumers continue to be interested in plant-based meat alternatives, higher prices have led many prospective return consumers to taper off their purchases, says a new report from CoBank’s Knowledge Exchange.

“The price of plant-based meats is often several dollars a pound higher than for equivalent meat and poultry products. Beyond cost, lingering negative perceptions surrounding taste, value and versatility are also obstacles the category has yet to overcome,” CoBank analysts explain. “The market for plant-based meats has likely reached a tipping point as the initial period of exceptional sales growth appears to be over.”

Plant-based meat sales peaked in 2020 when consumers had more discretionary income and were curious about broadening their food spend in the wake of pandemic-era food shortages, the report points out. Today, fewer than half of Americans who tried the products at the time, repeated their purchase, according to data from consumer research firm Mintel.

“Whatever their reason for purchase, plant-based offerings appear to have fallen short of consumers’ expectations in terms of either cost or performance,” Billy Roberts, senior food and beverage economist for CoBank, says in a release. “Market participants should be able to address the cost issues with greater economies of scale and minimized supply chain expenses. However, innovation around taste, texture and mouthfeel will be essential to capture more mass-market consumers.”

Key findings from the report include:

Sales of meat alternatives have fallen steadily since 2021 and more sharply over the last year. Volume sales dropped 20.9% for the 52-week period ending July 2, 2023, according to consumer behavior research firm Circana.
Key to a higher consumer conversion rate will be a greater diversity of formats for plant-based meats, an area where the category has made some progress over the past year. Though still dominated by frozen and refrigerated options, category participants have thrown considerable investment into shelf-stable varieties, which grew by 82% in 2022. Those products include plant-based versions of tuna, ham and chicken that provide the benefit of convenience missing from some other options.
Due to the typically higher price point, plant-based consumers tend to be from higher-income households, limiting the category’s household penetration to the range of roughly 10%. Those income levels may attract certain supermarkets, but larger growth will require new products and technologies that can add diversity to category offerings and scale-up existing product lines.
Consumers have consistently cited health as a top reason for purchasing plant-based offerings. However, shoppers who initially sought plant-based meats thinking these were healthier options would later voice doubts about the healthfulness of the products, specifically as it relates to their typically complex ingredient legend. Innovation in plant-based proteins will need to focus on replacing highly processed varieties with healthier alternatives.
The environmental benefit of plant-based alternatives is another primary driver of consumer interest, particularly among younger demographics. However, while the environmental and health benefits of plant-based solutions play a role in the products’ appeal, the key to plant-based success will be speed, convenience, cost and familiarity.

“Lower price points and quality improvements in the category will resonate with a large portion of consumers interested in a more flexitarian approach to eating, whether due to environmental concerns or an interest in health,” Roberts says in a release. “These consumers will not abandon animal-based meats entirely but augment their diets with plant-based options as occasions warrant and the products can meet their needs.”

Read the report, Consumer Interest in Plant-Based Meats Fades Amid High Prices and Product Shortcomings

‘Reckless Spending’ is Putting U.S. Fiscal Health at Risk, Analyst Says

Mon, 07 Aug 2023 16:38:42 GMT

Market analyst Bob Elliott, co-founder and CEO of Unlimited Funds, addressed a less than rosy fiscal outlook for the U.S. with AgriTalk Host Chip Flory on Thursday.

Elliott told Flory the U.S. government balance sheet and financial condition have been deteriorating significantly over the last decade.

“Finally, they’re waking up to that fact, and I don’t think anyone in the markets is really looking at what they have to say,” Elliott said.

“It’s creating a renewed focus on the unsustainable path of the fiscal situation of the United States. And that, I think, is in part what is driving some of the market action we’ve seen in the last couple of days related to the bond market,” he added.

Flory told Elliott one of his concerns is that market analysts are predicting fiscal deterioration over the next three years, which will be concerning to “average” consumers who invest in the stock market and other entities.

“What’s going on?” Flory asked.

Elliott explained that the U.S. government typically borrows more in economic contractions. “It’s called counter cyclical,” he said.

However, the U.S. is in so much debt today that his concern is there will be no financial room to borrow more money if a recession – like the Great Recession in the mid-2000s – occurs again.

Elliott said one notable difference between today and 15 years ago is that the unemployment rate today is at secular lows. “The economy just put up a two and a half percent GDP growth number. You know the economy, while it may not be perfect, it’s doing pretty well,” he said.

Potential For Government Shutdown?
Congress has to pass 12 appropriation bills before the end of this fiscal year, and the clock is ticking. Flory said he’s concerned.

“They got one done, and then they left for August recess. Assuming Congress is going to get 11 more appropriation bills done by the end of September is exceedingly hopeful,” he said. “That’s going to raise the potential for a government shutdown, isn’t it?”

It looks very possible, Elliott said. “There’s some risk, but odds are there will be some last-minute agreement that pushes the issue out into the future,” he said. “Look, we’ve been down this path before and the government shutdown is a real possibility, and I think we’ll just add further focus on the fiscal unsustainability of the U.S.,” he added.

“Congress acts like the country can just go on spending,” Flory said. “Why it that?” he asked.

“They haven’t faced the consequences of spending so recklessly in a good economy,” Elliott said.

He predicted the U.S. consumer will continue to see a rise in interest rates and then “real-world” effects on households and businesses that are faced with borrowing money at those higher rates.

“And that will start to weaken the economy,” Elliott noted. “Too much fiscal stimulation creates rising interest rates, which creates a challenge for businesses and households. And eventually, people will come to realize, you know, that isn’t necessarily a good and acceptable path for their legislators to pursue.”

The conversation on AgriTalk is available here:

5 Transformations Happening in China That Will Affect Your Farm

Tue, 25 Jul 2023 14:17:49 GMT

China contains the largest population of any country in the world. All those mouths drive demand across the globe and for your farm’s products.

“Chinese domestic policies have consequences for the global market,” says Wendong Zhang , Iowa State University Extension economist.

Zhang grew up in rural northeast China (his rural county was home to more than 1 million people and more than 100 million people across the globe share his last name). To set the stage for what farmers should know about China to understand the trade war, he provides a few key facts.

Mainland China and the continental U.S. are about the same size and cover similar latitude ranges.

The U.S. is home to 329 million people, while China is home to 1.4 billion.
The U.S. has around 17% of all the arable land in the world, with 4% of global population. China has nearly 20% of the population and 11% of the world’s arable land.

During the online Top Producer Summit, Wendong Zhang presented “5 Transformations Happening in China That Will Affect Your Farm.” Learn more here .

Zhang says farmers should understand these facts and trends about China.

Transformation 1: Exports to China Are Losing Steam

While the sheer size of China’s population drives the global economy, Zhang predicts these trends will slow the country’s food demand from key trade partners, such as the U.S.

“Exports to China are very consequential; they’re actually one of the key factors why we started seeing $5 and $6 corn since the fall of 2020,” Zhang says.

China committed to purchases nearly $40 billion per year of U.S. agricultural products for the first two years (2020 and 2021) of the phase one agreement , which was signed on Jan. 15, 2020.

“Even though China has substantially increased their ag purchases they are still behind the very ambitious target of the phase one deal,” Zhang says. “The phase one deal left enough leeway to say purchases are contingent on market prices.”

Due in part to the COVID-19 pandemic and related impacts on global demand, China missed its commitment by about 30%.

In 2020, U.S. agricultural exports to China totaled $26.4 billion, up $12.6 billion from 2019. In 2021, ag exports hit a record $33 billion — up 25% from 2020.

“A lot of people would only attribute this increase to the phase one deal,” Zhang says. “But the bigger force is related to the hog recovery and rebuilding following African swine fever in China. As they were rebuilding, they needed more feed grain. So, they bought record amounts of corn from the United States. They were also having protein gaps, so they bought a lot more pork and beef, especially in the latter half of 2020 and early 2021.”

Transformation 2: China is Diversifying Its Trading Partners

Even though China has increased its business with the U.S. in terms of ag goods, the country is also building more trade linkages with competitors of the U.S., Zhang says. One key way is through tariffs.

“The average tariff on U.S. products rose from 8% in 2018 to an average of 20% today,” he says. “Likewise, U.S. tariffs on Chinese products rose from 3% in 2018 to today’s 19%.”

But, at the same time, China actually lowered tariffs for competitors of the U.S. The average tariff for other countries decreased from 8% to 6%.

Zhang says China has also shown greater interest in expanding trade deals: “In a way this is China’s way of saying it embraces free trade.”

Transformation 3: China’s Population is Aging and Growing Richer

In 2020, China’s population hit 1.41 billion, with an average annual growth rate of 0.053% since 2010 (the lowest 10-year growth rate since its first population census in 1953).

In addition, China’s population structure is changing, Zhang says. A growing share of residents are older than 65 and the birth rate is declining.

“With an aging population and a declining fertility rate, China’s population pattern increasingly resembles developed countries,” he says. “China’s population shift and income growth will increase demand for consumer-oriented products such as meat and vegetables, dairy and wine products versus bulk and intermediate products. It’s the income, not necessarily the population, that really drives the quantity and the configuration of the exports.”

In addition, consumers in China are slowly trading up their protein choices. The transition from vegetable proteins to animal-based proteins is now including more beef , which is creating more demand and value for U.S. cattle.

“Chinese people eat on average less than 10 lb. per person per year,” Zhang says. “But when you have 1.4 billion in population, just 1 lb. more could still lead to a substantial increase in the global market.”

Transformation 4: The Focus on High-Speed Transportation

The Belt and Road Initiative was partially put on hold due to the pandemic, Zhang says. But China is still focused on creating a more efficient transportation system for the country and connecting it to its Asian neighbors.

Recently a high-speed railway was completed between Kunming and Loas. The project took around five years to complete, and it cut travel time from two days to three hours.

When Zhang left China in 2009 to attend college in the U.S., not a single mile of high-speed rail existed in country. Today China is home to15,500 miles of high-speed track — the largest high-speed railway in the world.

Zhang says China is also improving its trucking system with cold-chain technologies and equipment so they can transport meat versus live animals.

Transformation 5: U.S. and Chinese Politics Will be Key in 2022

This year China and the U.S. will hold midterm elections around the same time, Zhang says. President Xi Jinping will likely earn his third term.

“A lot of the analysts will say that it’s the president, Xi probably will be here for at least a decade, if not more,” Zhang says. “The room for collaboration probably become narrower because of the upcoming elections.”

Zhang points out Xi and President Biden had their first meeting (which was virtual) last November.

“Because U.S. and China relations are so important the first meeting typically happens within the first two or three months of when a new U.S. president in office — not almost a year later,” he says. “When you look broadly at the U.S. and Chinese political relationship, were probably expecting a bumpy relationship for the next decade.”

If you want to learn more about China, Zhang recommends these three books:

“The Beautiful Country and the Middle Kingdom” by John Pomfret
“China’s Economy” by Arthur R. Kroeber
“Invisible China: How the Urban-Rural Divide Threatens China’s Rise” by Scott Rozelle and Natalie Hell

Visit Iowa State University’s China Ag Center

Read More
Why China’s Taste for Beef Is Growing

Population Peak: How China’s Demographics Could Impact U.S. Agriculture

Eyes Wide Shut? US Agriculture Faces China Reckoning

While America Slept, China Stole the Farm

You can still register for the Online Top Producer Summit , which gives you access to content through March 31. Use the code “VIRTUAL” to take 50% off your registration fee.

Read more coverage of the Top Producer Summit .

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

Thu, 20 Jul 2023 20:01:20 GMT

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

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

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

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

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

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

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

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

Cuts to Projected U.S. Crop Yields

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

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

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

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

What Economists are Watching the Next Six Months for Crop Prices

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

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

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

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

What Livestock Economists Are Watching the Next 6 Months for Livestock

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

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

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

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

Economists More Bullish on Cattle and Hogs

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

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

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

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

Longer-Term Look at the Health of Agriculture

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

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

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

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

The Turbulent Relationship Between the U.S. and China

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

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

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

Potential Events/Factors Not Getting Enough Attention Today

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

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

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

Previous Ag Economists’ Monthly Monitor Coverage

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

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

Tentative West Coast Port Labor Contract is Tremendous News for U.S. Red Meat

Thu, 15 Jun 2023 19:01:24 GMT

The Pacific Maritime Association (PMA) and International Longshore and Warehouse Union (ILWU) announced a tentative agreement on Wednesday night on a six-year West Coast Port Labor Contract. The agreement brings an end to a year-long labor negotiation that had recently turned contentious, U.S. Meat Export Federation’s John Herath said in a USMEF Audio Report. Work stoppages have slowed cargo movement and effectively shut down some container terminals.

“Starting June 2, we’ve seen negotiations hit a new low as disruptive work actions have slowed operations,” Maria Zieba, vice president of international affairs for the National Pork Producers Council, said in a story on Monday about the port delays .

Both parties indicated that port operations are expected to return to normal. The union and port management acknowledged the agreement was brokered through the assistance of Acting Secretary of Labor Julie Su.

“This tentative agreement that’s been reached with the West Coast longshoremen is of paramount importance for us,” said USMEF President and CEO Dan Halstrom.

A large percentage of the value-added chilled business, which is pork and beef’s highest value business, goes off the West Coast to Asian markets such as Japan, Korea, Taiwan and China, he explained.

“Exporters and importers in these countries rely upon a certainty for stability in terms of their shipping logistics. Before this agreement was reached, there was a large level of uncertainty,” Halstrom pointed out.

Questions like “Will my shipment be delayed?” and “Will it be passed over and skip a week?” have been weighing heavy on the minds of exporters and importers.

“These are the sorts of things that were implied since a year ago when the contract expired. This is good news in the sense of restoring that certainty and reliability that we’re known for: 52-weeks-a-year business to these various ports in Asia,” Halstrom said.

The PMA and ILWU are not releasing any details of the agreement at this time. The agreement must still be ratified by both sides, a process that could take several weeks.

PMA President James McKenna and ILWU President Willie Adams said in a joint statement , “We are also pleased to turn our full attention back to the operation of the West Coast Ports.”

Read More:

West Coast Port Delays Cause Big Issues for U.S. Pork Exports

Crashing Dirt Bikes to Chasing Cows: Scott Irwin Releases New Book on Futures Market

Thu, 13 Apr 2023 17:43:36 GMT

Futures markets are a mystery, says Scott Irwin, author of the new book, Back to the Futures, is now available for pre-order and is scheduled to be released on April 19 on Amazon.

In Back to the Futures, agricultural economist Scott Irwin explains why it’s essential to understand futures markets, whether you’re talking about grain, cattle, or the largest market of them all—crude oil.

“Fortunes are made and lost in these markets, yet most people know little about how they work. These massive markets lie at the heart of our economy, affecting us all,” Irwin explained in a release .

His goal is to bring the world of futures trading to life, drawing readers in by sharing his “wild, life-threatening adventures with motorcycles, snowmobiles, race cars, farm equipment and renegade cows” while growing up on an Iowa farm.

Throughout the book, he explains how to reduce risk in today’s intense arena of commodity trading. This book includes perspectives from other experts such as Terry Duffy, CEO of the CME Group, and Leo Melamed, who revolutionized the market with electronic trading.

Irwin believes the book will bring clarity on why future markets are crucial for farmers and consumers, the critical role future markets play in the financial system and the role speculators play in making these markets work.

“No matter your experience or educational background, you can learn how the commodity futures market works. Not only is it possible, but it is necessary,” Irwin says. “However, there are many training tools and programs out there that complicate the process. This is why we wanted to write a book that can break down the markets for anyone. It doesn’t need to be a mystery, nor does the learning process need to be boring.”

Editor’s Note: Irwin holds the Laurence J. Norton Chair of Agricultural Marketing in the Department of Agricultural and Consumer Economics at the University of Illinois at Urbana-Champaign. He earned a bachelor’s degree in agricultural business from Iowa State University and both a master’s degree and a Ph.D. in agricultural economics from Purdue University. His research on commodity markets is widely cited by other academic researchers and is in high demand among farmers, market analysts, traders, and policymakers.

CoBank 2023 Report: 11 Sectors Effecting the Rural Economy

Thu, 15 Dec 2022 23:40:57 GMT

CoBank has released its outlook for 2023. The report includes detailed analysis on the:

global economy
U.S. economy
monetary policy
U.S. government
U.S ag economy
grain/farm supply/biofuels
animal protein
dairy
specialty crops
rural electricity
rural communications

“If we have learned anything over the past couple of years, it is that trying to predict the future is an extremely difficult business,” said Tom Halverson, CoBank President and Chief Executive Officer.

Halverson reflects that many events are leading to a new status in the global economy and globalization.

“From today’s standpoint, it is not clear what direction the world will take – what new construct will replace the integrated, liberalized global economic system that developed over the past 30 years. This is one of the great questions before us, and its answer has huge import for industries like agriculture that are deeply intertwined with global markets,” he says.

Here are topline takeaways from each of the categories. And click here for the full report.

Dan Kowalski says of the global economy: After two years defined by a strong economic rebound from the pandemic, the global economy will sputter in 2023.

Kowalski says of the U.S. economy: As financial conditions continue to tighten, we expect the U.S. economy to steadily soften through the first half of 2023, ushering in a brief, modest recession.

On U.S. monetary policy, Kowalski says: Our best gut prediction is that the Fed will pause rate hikes at 5.5% in Q2, a bit higher than consensus. But all of us are hoping the Fed’s gut is more accurate than our own.

About the direction of the U.S. government, Brain Cavey says: The 2022 midterm elections defied conventional wisdom as the party in control of the White House usually loses seats in both the House of Representatives and Senate. And the opening of the 118th Congress on Jan. 3, 2023, marks the official beginning of the farm bill reauthorization effort.

Rob Fox says of the U.S ag economy: In 2023 farm producers and related industries will begin to show financial strains from a relentless series of adversities: skyrocketing production costs, steeply higher interest rates, an elevated dollar, and weakening domestic and export demand caused by declining real incomes amidst spiraling inflation. And, in our view, none of the above headwinds are likely to reverse in the near term.

Kenneth Scott Zuckerberg say of the grain/farm supply/biofuels sectors: Looking forward to 2023, 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 Mexico.

Brian Earnest says of the animal protein sector: On the supply side, the high costs of feed, labor, and construction support the prevailing cautionary mood toward expanding production. On the demand side, consumers are reeling from rapidly declining real wages – a trend likely to continue well into 2023. Add in climate uncertainties, ESG pressures, and increasing labor and energy costs and it’s likely that 2023 will be a year when major market participants pause, reflect, and guard balance sheets.

Tanner Ehmke says of the dairy industry: After a year of stronger profits that allowed producers to pay down debt, dairy farm margins will come under more pressure in 2023.

Ehmke also shares on specialty crops: Specialty crop growers and processors face a multitude of headwinds in 2023: Costs of water, labor, fertilizer and other inputs are rising while a stronger U.S. dollar and weakening global economy drag on the U.S.’s ability to sell products abroad.

Teri Viswanath says of the rural electricity industry: The current energy crisis is surfacing age-old faultlines, with upstream fuel dependencies looking unsettlingly similar to those of the last crisis.

Jeff Johnston says of rural communications: We think the bigger risk to network builds in 2023 is the much discussed tight labor market and supply chain issues.

Click here for the full CoBank report

Food Price Inflation: Not Unprecedented but Definitely Unusual

Wed, 07 Dec 2022 20:58:39 GMT

Food price inflation is outpacing inflation in the rest of the economy. The last time U.S. consumers saw food prices rise at this level was the late 1970s, Jayson Lusk, agricultural economist at Purdue University, explained during the keynote address at the Midwest Pork Conference in Lebanon, Ind., on Dec. 6.

“We aren’t in uncharted territory, but we are certainly in very unusual times in how we’re experiencing the economy,” Lusk said.

When asked if consumers are experiencing stress in their budget, Lusk said a recent survey showed almost everybody said ‘yes’ and food is at the top of the list of items in the household budget that are creating the most stress.

What’s Changed Since 2020?

“The overall rate of inflation in the economy has been about 15.2%. Food inflation has been up 22.5%. All meat inflation is up over 25%. If you think about the consumer’s experience with shopping behavior, meat has gotten much more expensive for a lot of consumers relative to food and relative to other prices in the economy,” he said.

Pork production now is also below where we were in January 2020, he added, with less pork on the market. And he expects this to be a similar story in 2023.

From a retail protein price standpoint, pork has experienced a 31.5% increase from January 2020 to October 2022. To put that in perspective, that’s from $3.84/pound to $5.05/pound.

Lusk said the three main food price drivers are macroeconomic events (money supply), demand (real income changes, relative price changes and trade) and supply (weather, war, disease, input costs).

1. Macroeconomic Events

The U.S. is experiencing general macroeconomic factors that we can’t do anything about, he explained. There’s more money in the economy post-pandemic due to stimulus checks, unemployment benefits and SNAP benefits. In short, there’s too many dollars chasing too few goods.

2. Demand

Real pork prices increased 14.2% during this time period, Lusk said. Meanwhile, pork production dropped about 4.2% in 2022 relative to 2020. In the midst of this all, consumer willingness to pay for pork increased 7.8%.

This increase in willingness to pay led to a 6.4% real retail price increase (of the 14% increase, about 6% was due to demand),” Lusk said. “People want more pork and are willing to pay for it.”

Consumers’ response to inflation may finally be changing their food purchasing behavior, Lusk noted. In January, surveys showed consumers had little or no change to purchasing behavior due to inflation. The most recent surveys show consumers are now looking for sales and discounts using coupons and/or switching to generic labels.

“I think there has been a shift in consumers’ mindsets that kind of correlate to that change in savings rates – that people are starting to be a little bit more price sensitive, starting to cut back a little bit and that might explain some of the downward pressure we’ve seen in retail pork prices in the last month or two,” Lusk said.

3. Supply

One of the reason retail prices are higher is because it’s more costly to produce pork today. Lusk estimates marginal costs have increased about 40% since January 2020. Cost increases have probably pushed up retail prices almost 8%.

Those costs won’t surprise anyone in the room, he said. Feed prices– corn, soybeans, wheat– have more than doubled at times since January 2020. Although prices have come back down in recent months, he noted it’s still pretty high compared to where the industry was a couple years ago.

“But it’s not all doom and gloom. If you look at the USDA’s forecast of net farm income, probably our best broad-based measure of farm profitability, is projected to rise again and be as high as it’s been,” Lusk said.

How Connected are Retail Prices to the Farm?

It’s important for producers to keep in the back of their mind that for every dollar a consumer spends on food, a very small share of that is because of what happened at the farm, Lusk pointed out. If you look at the price of hogs at the farm level, that’s about 25% of the retail food price. A reduction in farm-level prices does have an impact on that retail food consumer, but it’s muted.

“It gets muted by increasing energy prices or falling energy prices, changes in transportation or wage rates at the grocery sector, all those things are also going to have a big impact cumulatively more than what happens at the farm level,” Lusk said.

How much do changes in commodity prices affect retail food prices?

Farm hog price is about 25% of retail pork price
Wholesale pork price is about 44% of retail pork price

More from Farm Journal’s PORK:

The Wild Wild West of Carbon Markets: Where Do Swine Genetics Fit?

Colombia and Chile Offer Untapped Potential for U.S. Pork Industry

U.S. Diesel Crisis Lingers as Europe Prepares for Russian Oil Ban

Mon, 24 Oct 2022 18:37:48 GMT

President Biden has another fuel crisis at hand: diesel. Tapping the Strategic Petroleum Reserve (SPR) won’t help much due to the lack of refining capacity.

Global diesel and distillate fuel stocks have fallen to dangerous levels and the U.S. has been exporting a lot of diesel to Europe and Latin America, but now things are changing. U.S. buyers are snapping up diesel cargos originally planned for Europe as the crisis deepens.

Europe’s Plan B

Europe is currently buying a lot of Russian diesel to fill the gap, but this will have to stop next February as the embargo on Russian fuels kicks in. Argus reported that Europe is in for a major diesel supply shock because of low inventories and strong demand.

U.S. Export Ban Revisited

Banning U.S. exports to secure supply is one option under White House review. A ban on exports could “decrease inventory levels, reduce domestic refining capacity, put upward pressure on consumer fuel prices and alienate U.S. allies during a time of war,” wrote Mike Sommers of API and Chet to Jennifer Granholm, U.S. energy secretary.

If diesel exports are banned, it will not please Mexico, Brazil and Chile who are short of diesel. In July, the last month with available full data, U.S. diesel exports to Latin America hit a record high of 1.2 million barrels, double the amount a decade ago.

Another Option of the U.S.

Biden could, instead, force oil companies to build up stocks quickly ahead of the winter by setting a minimum inventory level, similar to what the European Union did for natural gas stockpiles. Problem again is that this would lead to surging prices in Latin America as it would force American refiners to import more or reduce their exports — or both.

Either way, prices will likely continue to surge, as they have this week.

Markets React

Wholesale diesel prices in the spot market of New York harbor, a key pricing point, surged this past week to more than $200 per barrel. Bloomberg notes that excluding a three-week period from late April into mid-May, that would be a record high.

As a result, American refiners have the best-ever diesel margins, with the profit of turning a barrel of crude into one of diesel hitting a record high of $86.5 per barrel, up about 450% from the 2000-2020 average of $15.7 per barrel.

The current level is the lowest ever recorded for this time of year. Because most food and grocery items are transported via truck, cost structures will remain troubling and limit relief for consumers as winter approaches.

Facts and Figures

Currently, the U.S. has just 106 million barrels of diesel and heating oil in commercial stocks; the last time inventories were that low in mid-October was in 1951, when Democrat Harry Truman was in the White House. Typically, inventories should be 30% higher this time of the year.

More on fuel:

This Researcher Looks to Uncover Renewable Diesel Source in Unique Place
John Phipps: It’s Now Less About the Supply of Oil, And More About Refining Capacity in the U.S.

Biden Says He Will Not Immediately Remove Phase 1 Trade Deal With China

Thu, 22 Sep 2022 02:56:41 GMT

(Reuters) - U.S. President-elect Joe Biden has said that he will not immediately act to remove the Phase 1 trade agreement, which President Donald Trump inked with China, the New York Times reported on Wednesday.

In an interview with a Times columnist, Biden said that the United States needed to get leverage back to use in negotiations with China.

“I’m not going to make any immediate moves, and the same applies to the tariffs,” Biden said. “I’m not going to prejudice my options.”

“In my view, we don’t have (leverage) yet,” he added.

The United States needs to develop a bipartisan consensus and increase government-led investments in research and development, infrastructure and education to better compete with China, according to the president-elect.

“I want to make sure we’re going to fight like hell by investing in America first,” Biden said.

Under the Phase 1 agreement signed earlier in the year, China agreed to increase purchases of American products and services by at least $200 billion over 2020 and 2021.

The deal also leaves in place 25% tariffs on a $250-billion array of Chinese industrial goods and components used by U.S. manufacturers, and China’s retaliatory tariffs on over $100 billion in U.S. goods.

Biden’s team will pursue policies targeted at China’s “abusive practices,” including “stealing intellectual property, dumping products, illegal subsidies to corporations” and forcing “tech transfers” from U.S. companies to their Chinese counterparts, according to the interview.

On Iran, Biden said he stood by his views that his administration would lift sanctions if Tehran returned to “strict compliance with the nuclear deal.”

Last month, Iranian Foreign Minister Mohammad Javad Zarif had said Iran would fully implement its 2015 nuclear deal if Biden lifts sanctions, which Zarif said could be done swiftly through “three executive orders”.

“In consultation with our allies and partners, we’re going to engage in negotiations and follow-on agreements to tighten and lengthen Iran’s nuclear constraints, as well as address the missile program,” Biden added.

(Reporting by Aakriti Bhalla and Shubham Kalia in Bengaluru; Editing by Christian Schmollinger, Sam Holmes and Raju Gopalakrishnan)

How Will 400 Million People in China's Lockdown Affect Global Markets?

Thu, 22 Sep 2022 02:12:35 GMT

Nearly a month since China imposed travel restrictions due to COVID-19, an estimated 400 million Chinese people—roughly the size of the U.S. population—remain in lockdown.

While China grapples with choosing which production lines to reopen, the food shortage conversation looks to ramp up, according to AgriTalk Host Chip Flory.

“China is not moving food from ports into the interior for that huge number of people in lockdown, setting the stage for a food shortage conversation within the next week,” says Flory, 11-minutes into the podcast. “This could have an impact on potential decision made in D.C. going forward.”

Jim Wiesemeyer, Pro Farmer policy analyst, noted China’s production forecasts haven’t seen any big changes, despite the lockdown.

“China came out with their GDP first quarter number overnight on Monday at 4.8%, which was a little higher than the trade thought, but below their so-called ‘goal’ of 5.5%,” he says. “But I suspect their downturn is going to continue.”

Shanghai, as well as the Zhejiang and Jiangsu provinces, are suffering the biggest blow from the lockdown. Wiesemeyer says, together, they account for about a fifth of national gross domestic product.

Rippling Effects

The IMF and World Bank concluded spring meetings this week. Wiesemeyer says U.S. Treasury Secretary Janet Yellen called for a separate meeting to assess food prices and supply demand due to China’s shutdown and war in Ukraine .

“USDA will continue to increase their food price forecast as logistics concerns persist in the U.S.,” he says. “The food crisis is getting the highest levels of attentions from Yellen, and it’s not going away anytime soon.”

In a new conference following the meetings, Yellen said protectionism, or taxing imports more, was not the answer, and economic benefits from the world’s network of supply chains were not worth forming a reliance on other countries.

“Our supply chains are not secure, and they’re not resilient,” says Yellen. “And I think that’s something, in terms of long-term risk to the U.S. and to other countries, that’s a threat that needs to be addressed.”

Flory suggests trade dynamics might evolve as the U.S. considers whether to export or save products for domestic consumption. Wiesemeyer agrees, saying “it always happens,” but the odds of putting a restriction on U.S. exports is still “very low.”

“The pressure will be severe if you have U.S. corn and soybean crops below trend yield,” says Wiesemeyer. “A juncture of over $8 corn would mean we’d have to reassess, and it’s too early for those questions now that we’re getting into the seasons of crop variability and price volatility.”

The Missing Link

Bill Thayer, CEO of Fillogic told AgriTalk Host Chip Flory his company is piecing the supply chain back together in America with pop-up distribution centers. However, Thayer doesn’t feel the need for his business came about simply because of the pandemic.

America’s infrastructure had been on a “precipice” of shortcoming in ships, rail and labor that was bound to be exposed, according to Thayer. He says the faults were only identified when 10-years of E-Commerce developed in only 18months—at the onset of COVID-19 in early 2020.

“Everyone’s talking about the driver shortage, but that’s been a problem for 10 to 15 years, since the federal government instated hours of service to reduce trucking accidents by taking people off the road,” says Thayer. “The same case can be said for America’s road infrastructure being in terrible shape.”

Store shipments and shelf stocks are evolving due to scenarios like the long-clogged Port of L.A ., according to Thayer.

“Just-in-time deliveries is a concept most companies are moving away from. They want to have some sort of inventory system close to the consumer,” he says. “The U.S. is leaning into the idea that if you’re going to have something programmed to come in through the Pacific Rim, then you’ll buy that six months in advance to have it shipped one month before you actually need it on the floor.”

Thayer says stability in supply chain outlooks are everchanging, but they’ll never again be what some consider “normal.”

“What we’re looking at right now is whether a boat is hung up in a port or at the bottom of an ocean because it was sunk in war,” he says. “The answer isn’t legislation—it’s not going to be solved by states. It’s going to be solved by small businesses in the private industry.”

More on China and the war in Ukraine:
> Port of LA Backlog Issues Compound Supply Chain Concerns, Causes Exports to Sink 23%
> Ukraine-Russia Tensions: What it Could Mean for Agriculture

Food Prices Will Rise if Labor Shortage Isn't Addressed

Thu, 22 Sep 2022 00:55:10 GMT

The National Pork Producers Council (NPPC) urged Congress on Sept. 9 to include in a budget reconciliation bill language to expand the existing H-2A visa to year-round agricultural workers.

With a scheduled vote in the U.S. House set for Sept. 13, NPPC is calling on congressional lawmakers to open the current H-2A temporary and seasonal worker visa program to year-round labor, without a limit on the annual number of visas, NPPC said in a release. They also want to see legal status for agricultural workers already in the U.S.

“The U.S. pork industry is highly dependent on foreign-born workers, but current visa programs don’t provide access to enough workers to meet our labor needs on farms and in packing plants,” Jen Sorenson, NPPC president, said in a release. “We need a dedicated, year-round workforce.”

The severe labor shortage in the pork industry started before the pandemic, but has been amplified since. The tight labor market prompted the pork sector to rely on foreign-born workers, NPPC said.

“If the labor shortage is not addressed, it could lead to farms and plants shutting down, causing serious financial harm to the communities in which they operate,” Sorenson said in a release. “Pork production would become constrained, leading to higher food prices for consumers and the United States becoming an unreliable trading partner.”

Legislation approved earlier this year by the House would expand the H-2A program to year-round workers but cap the number of visas that can be issued each year.

Juan Marroquin of LB Pork in Fairmont, Minn., said, “It’s important for the sake of our animals and farmers that we can get a reliable foreign workforce.” Listen to more of his story below.

For more information on the labor issue, click here .

More from Farm Journal’s PORK:

Five Facts About the Ag Labor Shortage

Pork Industry Pleas for More Access to Foreign-Born Workers

Ag Leaders Urge Labor Reform in Historic Hearing of Judiciary Committee

No Decision From President Biden on Lifting China Tariffs...Yet

Wed, 13 Jul 2022 20:32:31 GMT

President Biden says he has not made a decision yet on whether to lift some of the $370 billion of tariffs imposed on Chinese imports by the Trump Administration. Biden has been talking about rolling those duties back for weeks as a way to curb inflation while opening a new exclusion process for firms to win additional relief. However, there are mixed opinions on whether or not the cuts will take place, whether China will reciprocate, and what the impact will be on agriculture.

Farm Journal Analyst Jim Wiesemeyer tells us he is not optimistic about tariff relief materializing. And if it does, he says it won’t have much direct effect on ag imports into China.

“On the initial ones, I don’t see much because U.S. Trade Representative Katherine Tai wants some leverage,” he says. “Although China has clearly shown that it is not going to move them. So initially I don’t see it will be part of the $10 billion.”

One caveat is some targeted duties could be dropped which would lower farmers’ costs such as the 25% tax on semiconductors and other parts that go into farm machinery. Plus, crop protection product ingredients.

Frayne Olson, NDSU crop marketing economist says, “Some of the basic chemistry we import from China, we add in the specialized ingredients here and they’re sold in the U.S. So, this reduction or potential elimination of import tariffs may have an impact on the input side, the cost of inputs coming in.”

And while tariffs on soybeans imported from China were already under some import exclusions, officials with the American Soybean Association say any further movement on the 301 and 232 tariffs will be helpful.

Steve Censky, American Soybean Association CEO says, “Even though the tariff China has right now for a lot of these state-owned enterprises has been suspended on soy imports, they’re still hanging out there and it has a bit of a chilling effect.” So, Censky is optimistic about the impact at least a partial reduction of levies will have on the ag industry.

Wiesemeyer says the tariff reduction isn’t likely to lower inflation and is an admission that tariffs don’t work. Additionally, the White House has also been weighing a new investigation into Chinese subsidies and their damage to the American economy as a way to pressure Beijing on trade.

U.S. Recession Probability Soars as Inflation Pains Worsen

Tue, 21 Jun 2022 19:07:16 GMT

Economists see interest-rate increases raising likelihood of recession to 44% in coming 12 months. Economists surveyed by the Wall Street Journal have dramatically raised the probability of recession to a level usually seen only on the brink of or during actual recessions.

Economists on average put the probability of the economy being in recession sometime in the next 12 months at 28% in the Journal’s last survey in April and at 18% in January.

The WSJ notes: “Since the Journal began asking the question in mid-2005, a 44% recession probability is seldom seen outside of an actual recession. In December 2007, the month that the 2007-to-2009 recession began, economists assigned a 38% probability. In February 2020, when the last recession began, they assigned a 26% probability.”

The latest survey’s results showed a marked increase in economists’ forecast for inflation, which they see ending the year at 7%, up from 5.5% in the April survey. The poll of 53 economists was conducted June 16 to 17, after the Fed voted to sharply raise the benchmark federal-funds rate by 0.75 percentage point to a range between 1.5% and 1.75%.

Economists expect unemployment to rise as the Fed raises rates, although they see it staying at relatively low levels by historical comparison. On average, they forecast unemployment rising from 3.6% in May to an average of 3.7% at the end of 2022 and 4.2% at the end of 2023.

One Bright Spot

The WSJ says one bright spot is that economists still expect the economy to grow this year, although they slashed their growth projection in half in the most recent survey.

On average, they see inflation-adjusted gross domestic product rising 1.3% in the fourth quarter of 2022 from a year earlier, down from 2.6% in the April survey. Last year the economy grew 5.5%, the fastest since 1984, following a 2.3% drop in 2020 when the pandemic began.

The Long Road to 2%

Federal Reserve Bank of Cleveland President Loretta Mester said the risk of a recession in the U.S. economy is increasing, and that it will take several years to return to the central bank’s 2% inflation goal. Treasury Secretary Janet Yellen said Sunday that “unacceptably high” prices are likely to stick with consumers through 2022 and that she expects the U.S. economy to slow down, “But I don’t think a recession is at all inevitable.”

Meanwhile, an economic model maintained by Federal Reserve Bank of New York economists suggests the chance of achieving a “soft landing” for the U.S. economy is just 10%.

“According to the model, the probability of a soft landing — defined as four-quarter GDP growth staying positive over the next ten quarters — is only about 10%,” the economists wrote in a blog post published Friday on the bank’s website. “Conversely, the chances of a hard landing — defined to include at least one quarter in the next ten in which four-quarter GDP growth dips below -1%, as occurred during the 1990 recession — are about 80%.”

In the blog post , the New York Fed economists noted that the “model forecast is not an official New York Fed forecast, but only an input to the Research staff’s overall forecasting process.”

Is Trouble Brewing for the Farm Economy?

For the first time since September 2020, the rural economy is showing signs of weakness. That’s according to the June Rural Mainstreet Index (RMI) from Creighton University.

For June 2022, the RMI sits at 49.8. That is down from May’s 57.7. The index ranges between 0 and 100 with a reading of 50 representing growth neutral and is generated by a monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Bankers were asked their U.S. recession expectations for the next 12 months. Approximately 92.9% rate the likelihood of a U.S. recession above 50%. Only 7% rated a recession probability below 50%.

“There is an escalating likelihood of a U.S. recession as early as the second half of 2022,” says Ernie Goss, Creighton University economist. “I expect the inflation rate to cool in the third quarter of 2022. However, the year-over-year rate will remain above 7%.”

It's Never Easy Deciding When to Book Feed, This Year is Extra Challenging

Fri, 03 Jun 2022 19:53:23 GMT

Feed costs are seeing volatile swings, even as hog prices trend higher. While the markets produce major whiplash for producers, margins on the farm show costs are increasing faster than returns.

“We have folks who probably are looking at bottom lines going, ‘wait a minute, why am I not in the black given where hog prices are today?’” says Scott Brown, a livestock economist with the University of Missouri. “It’s just that input side is really tough for them.”

While fuel costs are expected to remain high, and possibly keep climbing, feed costs are still a major unknown.

“I will say, feed costs could look different by the time we get to fall,” says Brown. “It’s both sides. It’s not just that we have a really good crop, the prices could go lower, there’s a lot of demand pull on the bean side, as well, that could make for higher prices, let alone if we put a drought on top of all of this. We’ve never really seen this amount of volatility and the length of the volatility that we’re seeing today.”

The Feed Price Outlook

There are several factors that could put feed prices on either path. The slow start to planting took a turn for the better in the majority of the Corn Belt, but in North Dakota, South Dakota and Minnesota, at least 1 million acres of prevent plant is a possibility. At the same time, May planted corn in Illinois produced strong corn stands, and in turn, Farm Journal agronomist Ken Ferrie thinks record ear counts are on the table in Illinois this year.

As livestock producers weigh what to do about feed costs, Brian Splitt of AgMarket.net says he’s encouraged grain farmers to look at some strong cash sales in the $7.30 to $7.50 range, but with an options strategy.

“One of the problems for the end user that we’re seeing is that even though the board has come down substantially, if you look at those feeding cattle out West, basis gets stronger by 40 cents, and the cash price stays the same. So if a producer or if an end user has been hedged in an account in futures, they’ve experienced a loss in their account, they’re still paying the same for their cash product. So that’s where implementing options strategies to at least kind of keep a cap on things without having the price risk in the account has worked out very well for the end user,” says Splitt.

Hog Prices Tied to Demand

Hog prices have been able to hold strong, despite the loss of exports to China. U.S. Meat Export Federation’s data from March shows the biggest turbulence for pork exports is the dramatic drop in demand from China. Exports during the first quarter of 2022 fell 56% compared to the same time last year.

“On the pork side, we’ve really lost China for the most part and haven’t been able to make up that difference. And so we’re relying more heavily on the consumer now in order to get that demand and sustain that demand,” says Arlan Suderman of StoneX Group. “That’s a real concern that consumers who have the money to spend, but they’re choosing to spend it in different ways and that it’s not necessarily been helping the protein sector.”

We will be uniting together June 6-12 for PORK Week across all of our Farm Journal platforms to elevate the important role the pork industry plays in feeding the world. Share your stories and post photos on social media using #PORKWeek22 to help us honor the pork industry. From “AgDay TV” to “AgriTalk” to “U.S. Farm Report” to PorkBusiness.com and everything in between, tune in and join us as we acknowledge the most noble profession there is: feeding people.

Biden: Double Crop Because 'We Can't Take Any Chances'

Thu, 12 May 2022 02:54:31 GMT

Farm policy took center stage on Wednesday in Kankakee, Ill. President Biden visited OC Farms, owned by Jeff and Eugenia O’Connor.

During the visit, Biden—along with USDA Secretary Tom Vilsack—announced the administration’s latest efforts to alleviate rising costs on American’s pocketbooks through additional agricultural funding.

Fertilizer Makes Headlines

Purdue University-CME Group’s April Ag Economy Barometer showed producers experienced a challenge in sourcing fertilizer for 2022. The survey found 34% of producers reported trouble purchasing inputs, which is up 7% from surveys conducted in March.

To help mitigate costs, USDA says it will double-down on investments in domestic fertilizer production by increasing funding to $500 million. A portion of the funds will also be used to help farmers adopt precision agriculture methods that will reduce fertilizer use.

Inaccessible Grain Opens Door fo U.S. Exports

According to Biden, Ukraine has 20 million tons of stored grain awaiting export to various countries such as Africa, their biggest importer. He says Putin’s war, not sanctions, are impacting harvests and disrupting the movement of food by land and sea to nations in need.

“We’re going to see what actions we can take to increase fertilizer supplies globally,” says Biden. “We’re also going to see how we can work together to prevent export restrictions on food and agricultural inputs and bring more global production to market which will stabilize prices and bring more certainty to our farmers and keep people from dying of hunger.”

Double Crop to Drop Inflated Food Costs

In late April, USDA introduced a proposal to Congress , pleading for additional funding to offset costs resulting from the war in Ukraine. Part of the proposed funding included $250 million to aid U.S. producers to increase crop volumes through double cropping.

During the visit on Wednesday, Biden shared USDA will raise from $250 million to $500 million, and open the double cropping insurance floor to a total of 1,935 counties—up 681 counties from the initial announcement.

USDA says double cropping will boost production without substituting crops or cultivating new land. While the department recognizes there are risks associated with the practice, Biden says his team has a plan to overcome those risks.

“The growing season for wheat is short and if the weather conditions aren’t ideal or there are other disruptions, then the timing of everything is thrown off,” says Biden. “But it’s a risk we need to take and that’s why my administration is looking at how to extend crop insurance coverage to give financial security to farmers.”

Following the announcement, Vilsack boarded a plane to Germany for the G7 summit where, he and fellow agriculturalists will devise a plan to overcome food loses due to Russia’s invasion of Ukraine.

“Exploitation” in the Marketplace

50 years ago, ranchers received 60¢ on the dollar for harvested beef, according to Biden. He says today, they get 39¢. Similarly, he says hogs yielded 40¢-to-60¢ on the dollar for farmers 50-years ago but pens out to “about” 19¢ today, which reflects a market “distorted” by lack of competition.

“Capitalism without competition is not capitalism,” says Biden. “It’s exploitation.”

In January, the Biden administration allocated $1 billion in American Rescue Funds to expand independent meat processing capacity as part of a broader initiative to break up what it calls a meat and poultry processor monopoly. Biden says the plan will provide producers a chance “to sue companies they contract with over unfair, discriminatory or deceptive practices,” while reworking “Product of USA” label requirements.

Additionally, various Senators have introduced a bill to amend the Agricultural Marketing Act of 1946 to include a cattle contract library by way of Cattle Price Discovery and Transparency Ac t.

Gas Prices Continue to Soar

Biden recently announced the sale of year-round E15 , which he said on Wednesday has decreased pump costs by 10¢ . However, the AAA reports regular gasoline price averages were at $4.40 on Wednesday, up 29¢ from the average reported a month ago.

Biden maintains the price hike can be attributed to Russia’s invasion of Ukraine but says—along with Vilsack—the expanded E15 supply along with the USDA’s $100 million in ethanol infrastructure will ultimately bring prices down in the long run.

More on ag policy:

> 30% of Farmers Still Having Trouble Finding Essential Crop Inputs for This Year
> White House Asks Congress for Additional $33 Billion in Aid for Ukraine
> Everything You Need to Know About the Proposed $500M to Ag in Biden’s Ukraine Aid Program
> Biden Plan Directs $1 Billion To Impact Meat & Poultry Processing, Strengthen P&SA, Add New Labeling Rules
> E15 Summer Ban Suspended, USDA Commits $700M To Biofuels Producers
> DOE Announces Plan to Replenish Tapped Oil Reserves