Evening Report | August 18, 2023

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

Your Pro Farmer newsletter is now available... The Pro Farmer Crop Tour is Aug. 21-24, our 31st year. Because USDA no longer collects objective yield samples in August, this will be the industry’s first broad look at field data from across the Corn Belt. The objective of Crop Tour is to find a representative sample of yield potential across the seven Corn Belt states from the more than 1,600 samples each of corn and soybeans. Follow along with the results throughout the week and compare this year’s data to years past. You can also scout your own fields using the Pro Farmer formulas. Extreme heat, along with at least a week of dryness is forecast across the Corn Belt, which will stress crops as they are trying to fill. While much of the focus is on yields, FSA issued its first batch of certified acreage, which suggests corn acres will be higher than NASS estimated in June. We cover all of this and much more in this week’s newsletter, which you can access here.

Central U.S. has no chance of missing extreme heat... A “massive” high pressure ridge is setting up in the central U.S. and will remain in place through next week. World Weather Inc. says the ridge “is likely to be very near a record-setting intensity with its center located over the common borders of Kansas, Missouri, Iowa and Nebraska.” The bottom line according to the weather forecaster: “Even though the weather pattern over the next seven to 10 days looks to be a little extreme, and it probably is, there is not much reason to expect the forecast to fail in verifying. Not only will this outlook hold up well over the weekend and early next week, but there is a good chance that when the weather pattern finally begins to weaken... the high pressure ridge will still provide enough strength to maintain some dryness in the Midwest where the center of high pressure will remain for quite a while.”

Cattle on Feed Report: Mildly friendly compared to expectations... USDA estimated there were 11.03 million head of cattle in large feedlots (1,000-plus head) as of Aug. 1, down 259,000 head (2.3%) from last year and 140,000 head less than the average pre-report estimate implied. The marked the 11^th consecutive month of year-over-year declines in feedlot inventories – a trend that will continue. Placements fell 8.3% from year-ago levels in July, while Marketings dropped 5.3%. The placements figure was lower than anticipated after consecutive months when that category topped expectations.

Placements declined sharply versus year-earlier levels in all categories except heavyweights (1,000-plus lbs.), which were unchanged, but only totaled 75,000 head. Placements fell 8.8% in lightweights (under 600 lbs.), 10.7% in 6-weights, 8.6% in 7-weights, 8.8% in 8-weights and 5.1% in 9-weights. Placements fell 40,000 head in Colorado, 35,000 head in Kansas, 20,000 head in both Nebraska and Texas, and 31,000 head in “other states.”

While the report data is just mildly friendly compared to the average pre-report estimates, the underly figures are fully bullish, as feedlot supplies will continue to tighten.

FarmDoc puts out report on reference prices and base acres... These are clearly the biggest topics relative to the Title I safety net discussion in this version of the farm bill. The latest FarmDoc report is, according to its author, Jonathan Coppess, “yet another perspective on the reference price and base acre discussion, using a sample farm thought experiment to dissect policy design differences and issues. Much of the background having been discussed in previous articles….”

According to the report: “The thought experiment discussed in this article is, in part, a reminder that on the other end of all public policies are people. Using a sample farm for each state that is of equal size in the program (1,000 total base acres) is an attempt to compare the differential impacts of political decisions in policy design; it is the rare farmer who produces only a single crop, the rare farm with only one type of base acre. When viewed through a state-level sample farm, the policy design inequities are clear and straightforward. High statutory reference prices for peanut and rice base acres result in large payments for farmers and farms with base acres in those crops. Not all base acres were created equal. Only the smallest factional interests reap the most benefits. This reality raises many difficult questions about farm policy and politics; whether Congress perpetuates, reduces, or magnifies the imbalances is among the pressing questions for a 2023 Farm Bill.”

Says one veteran farm policy analyst: “Some observers wear blinders and tend to focus on that which divides rather than unites producers. In contrast, in the case of peanut and rice producers, they do not have the benefit of biofuels incentives, for example, but they rightly support biofuels just the same because it is good for other producers. Similarly, coverage levels and participation in crop insurance for some crops lag compared to insurance for other crops but those for whom coverage lags do not seek to tear down the system for those for whom it does work. Rather, they work to try to improve what they have. These gestures of good will are not without consequence. There is competition for acreage in any area so a crop that is disadvantaged by the whole suite of farm policies, inside and outside of the commodity title and even a farm bill, can suffer. In the case of crops that depend on a unique infrastructure, such as rice or peanuts, this can be especially true. Farmers have much more in common than they have divisions, and that commonality should be nurtured and promoted. Magnanimity is called for in the development and maintenance of farm policy. One thing that could unite producers is to raise reference prices for all crops, narrow deductibles farmers pay for insurance, and RMA using the tools it already has to zealously meet the risk management needs of specialty crop farmers. That is a unifying message all farmers can get behind.”

Major changes for Argentine ag/trade policy?... The shock front-runner in Argentina’s presidential election, libertarian Javier Milei, would strip out state intervention from the giant farming industry to unleash an export boom. Free-market devotee Milei vowed to quickly dismantle policies that have held back agricultural investments this century. He would unify foreign exchange rates, scrap export taxes and quotas and remove direct meddling in food prices. “It’s part of our deregulation program,” Milei said in an interview at Bloomberg’s Buenos Aires offices. “Those are all regulations we have to get rid of as quickly as possible.”

Awaited: EPA announcement of final rule on revised definition of WOTUS... The Office of Management and Budget (OMB) has concluded its review of the EPA's proposed amendments to the "Revised Definition of Waters of the United States" (WOTUS). Throughout this process, EPA engaged in 14 meetings with various stakeholders to discuss the final rule. The latest of these meetings occurred on Aug. 14. The forthcoming focus will revolve around the specifics of the modifications EPA intends to implement in response to a U.S. Supreme Court decision earlier this year, which impacted certain aspects of the original rule finalized by EPA in early 2023. It is expected the new final rule will likely encounter legal challenges once the specifics of the plan are made public.

One Washington insider told us, “EPA is going to flaunt the law. It will trigger another round of litigation and a high court rebuke.”