Evening Report | July 19, 2023

Check our advice monitor on ProFarmer.com for updates to our marketing plan.

Livestock producers: Extend corn-for-feed coverage... Corn futures have rocketed higher amid weather and geopolitical concerns. While these factors could be short-lived, there is risk of additional sharp upside price moves. As a result, we advise livestock producers to extend corn-for-feed coverage another two weeks in the cash market through mid-August.  

Russia declares Black Sea waters unsafe for navigation... Russia’s Defense Ministry said it would consider all ships traveling to Ukrainian ports on the Black Sea as potential carriers of military cargoes from midnight tonight forward. In a posted statement, the ministry said it was declaring southeastern and northwestern parts of the Black Sea’s international waters as unsafe for navigation, and the flag states of ships travelling to Ukrainian ports would be considered parties to the conflict.

Russian President Vladimir Putin blamed the West for the “completely distorted” Black Sea grain deal but said his country would “immediately” return to it if all of Moscow’s requests were met. Those demands include:

• Readmission of the Russian Agricultural Bank (Rosselkhozbank) to the SWIFT payment system;
• Resumption of exports of agricultural machinery and spare parts to Russia;
• Removal of restrictions on insurance and access to ports for Russian ships and cargo;
• Reinstatement of the damaged ammonia export pipeline from Russia’s Togliatti to Odesa in Ukraine;
• the unblocking of accounts and financial activities of Russian fertilizer companies.

Most ag economists think new farm bill unlikely in 2023... Some provisions of the current farm bill are set to run out at the end of September, placing policymakers in a race against time to draft a new one. Most agricultural economists predict that a fresh farm bill will not be drawn up before the deadline, as outlined in the latest Ag Economists' Monthly Monitor – a joint effort between the University of Missouri and Farm Journal. Some of these experts, however, hold out hope that a new bill could be on the table by the end of the year.

The Monthly Monitor is a new survey of nearly 50 agricultural economists from across the country. It’s the first survey of its kind, collecting insights from economists who represent both the private and public sectors. The economists represent the ag sector across a wide geography and have expertise in grains, livestock and policy. The survey is conducted anonymously to allow the highly respected agricultural economists to speak more openly about their economic and production forecasts because their responses won't be attributed to the university, company or organization they represent.

Another drop in feedlot supplies coming... USDA’s Cattle on Feed Report Friday afternoon is expected to show the feedlot inventory down 2.4% from year-ago as of July 1. That would be the 10^th straight month of year-over-year declines. June placements are expected to have declined 2.9%, while marketings are anticipated to have dropped 4.8% from year-ago levels. The following pre-report estimates are from Urner Barry.

Big cattle herd reduction expected... USDA’s Cattle Inventory Report Friday afternoon is expected to show the U.S. cattle herd 2.3% smaller than last year as of July 1 at 96.528 million head, with no signs of a reversal in the contraction phase on the horizon. In fact, traders expect all categories to come in well under year-ago levels, suggesting the contraction phase will expand into next year. The following pre-report estimates are from Urner Barry.

Administration launches new competition council... The Biden administration has initiated several measures to address competition and anticompetitive practices across various sectors, with particular focus on the agricultural, food, and meat industries. A key step is the formation of a new Competition Council, led by Hannah Garden-Monheit who has been appointed as the Director of Competition Council Policy at the National Economic Council (NEC). The council will consist of 18 members and aims to build upon efforts the administration has already instigated, such as tackling issues within the meat and ocean shipping industries, and addressing consumer junk fees.

USDA also announced a large-scale collaboration with legal representatives from 31 states along with Washington DC, aiming to reinforce competition and protect consumers in food and agricultural markets. Areas of focus will be grocery, meat and poultry processing, and other related sectors. It also plans to address potential issues involving a lack of choices for both producers and consumers, conflicts of interest, misuse of intellectual property, and other barriers to competition primarily in food and agriculture supply chains.

As part of the initiative, USDA will set up the Agriculture Competition Partnership, a project focused on anticompetitive market structures, price gouging, anti-consumer practices, and other pertinent issues. This partnership will deploy funds to back research and academic work that can be used in future cases, as well as investigations into more complex occurrences of anticompetitive behavior.

USDA’s collaboration also features the involvement of the Center for State Enforcement of Antitrust and Consumer Protection Laws and the American Antitrust Institute. Further, USDA plans to continue working on rules under the Packers and Stockyards Act regarding issues in the meat industry. 

Of note: Certain House lawmakers are opposing those rules as part of the Agriculture Appropriations measure for fiscal year (FY) 2024, and aim to block USDA from finalizing them.

USDA’s new Farmer Seed Liaison... USDA launched an initiative called the Farmer Seed Liaison, aimed at reducing confusion for growers, plant breeders, and others involved in the complex seed system. This effort was outlined in USDA’s earlier report, “More and Better Choices for Farmers: Promoting Fair Competition and Innovation in Seeds and Other Agricultural Inputs.”

To aid in this endeavor, USDA will work with academic partners to develop strategies to better link entities involved in the seed business, such as farmers, plant breeders, and seed producers.

USDA also unveiled a new online resource to simplify access to the U.S. Patent and Trademark Office’s pending docket of plant patents and plant breeding-related utility patents. This step is aimed at enhancing transparency and providing valuable information to farmers and others regarding how they could be impacted by the patent system. It represents a concerted effort by USDA to streamline and demystify the process of seed production and patent rights, leading to potentially more informed decisions by those in the industry.