Evening Report | November 27, 2023

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Winter wheat conditions improve more than expected... As of Sunday, USDA rated 50% of the U.S. winter wheat crop as “good” to “excellent,” up two percentage points from the previous week. Traders expected a one-point increase. The amount of crop rated “poor” to “very poor” declined two points to 15%. This marked USDA’s final national crop ratings until April 1, 2024.

Winter wheat emergence stood at 91%, two points ahead of the five-year average.

Corn harvest 96% done, cotton 83% picked... USDA reported 96% of the corn crop was harvested, one percentage point ahead of average. Cotton harvest advanced to 83%, four points ahead of normal for the end of November.

PARP and tax deadline... We are getting questions from farmers and accountants wondering if Pandemic Assistance Revenue Program (PARP) payments are still going to be made in 2023. Many are tidying up taxes for 2023, so they’re getting antsy.

A USDA official told us: “You are correct, the end of year always becomes sensitive with FSA issuing program payments due to the potential tax burden and providing producers the opportunity to prepare, not to mention the burden on staff that are trying to use leave during the holidays. We are currently waiting for the Secretary’s office to give us the green light to process. I would say that if we don’t get the green light this week to process those payments by next week, there is a chance that these payments will wait until after the first of the year.”

China’s ASF epidemic leaves lasting global pork market impact... China, the world’s top producer and consumer of pork, faced a significant outbreak of African swine fever (ASF) among its pig herds that lasted for three years until late 2021. Despite its recovery, the domestic pork market in China remains volatile, posing potential uncertainties for pork exporters worldwide. The epidemic had lasting impacts on the global pork market, as outlined in a report by three USDA economists:

• Pork output impact: During the 30 months of the epidemic, China’s pork production dropped by an average of 18% below normal levels.
• Consumer price surge: Pork prices for consumers doubled for 14 months, ending in January 2021, and only returned to pre-epidemic levels by September 2021.
• Limited imports: Although record amounts of pork were imported during the outbreak, they could only replace a fraction of the lost production.
• Hog farming consolidation: The epidemic led to the consolidation of hog farming into larger-scale operations.
• Higher production costs: China incurred higher production costs due to the construction of new, larger hog farms and stricter biosecurity practices.
• Sustained demand for imported pork: Rising pork prices in China, reflecting increased production costs, may continue to support the demand for imported pork, despite China’s expansion of pork production capacity.
• Global pork market: China remained the world’s largest pork importer in 2022, though its share of the global market was less than one-third of its peak during the epidemic.

Bottom line: The recovery and ongoing dynamics in China’s pork industry have implications for both domestic and international markets, highlighting the complexities of the global pork trade.

White House allocates millions of dollars to address methane emissions from California’s dairy cows... Two grants from the Biden administration totaling $44.2 million have been awarded, with $21.4 million going to California Dairies and $22.8 million to the Dairy Farmers of America (DFA). These funds are intended for the development of feed additives aimed at reducing methane emissions produced by cow belches. Additionally, carbon credits are being offered to incentivize farmers to adopt climate-focused changes.

California has set a target to reduce methane emissions in the dairy industry by 40% from 2013 levels by 2030. Dairy cooperatives in California have been collaborating with state and federal authorities on various projects to reduce emissions through manure and methane capture.

Lawmakers focused on providing funding for Ukraine and Israel... There are plans to introduce a national security supplemental bill as early as next week, according to Senate Majority Leader Chuck Schumer (D-N.Y.). However, there are challenges and differing priorities within Congress.

In the Senate, some Republicans are pushing to include border-related provisions favored by conservatives but unpopular with Democrats as part of any further aid for Ukraine. Meanwhile, opposition to such aid is growing among House Republicans.

The funding for Israel is currently in a state of uncertainty, as Senate Democrats oppose a House-passed measure that links the aid to cuts in IRS funding.

House Speaker Mike Johnson (R-La.) could potentially secure bipartisan support for aid to both Ukraine and Israel, but he risks alienating the right-wing faction of his party that previously blocked progress on a Commerce-Justice-Sciences spending bill to protest stopgap funding before the recent recess.

Congressional leaders face a series of challenges before the next holiday recess... They include:

• Section 702 of the Foreign Intelligence Surveillance Act: There is disagreement among lawmakers on how to reauthorize Section 702, particularly regarding the provision that allows surveillance of U.S. citizens with connections to foreign individuals.
• National Defense Authorization Act (NDAA): Negotiations over the NDAA, which typically receives broad support, could be stalled due to Democratic opposition to an abortion provision in the House version. Senator Schumer plans to seek a vote on a resolution that would enable the Senate to process military promotions in groups to circumvent Senator Tommy Tuberville’s protest against the Pentagon’s abortion policy.
• Expected Vote on Expelling Rep. George Santos (R-N.Y.): Following the release of an ethics report containing accusations of theft and other crimes, there is an expected vote on whether to expel Rep. George Santos. Members from both parties who previously opposed expulsion are now considering removing the freshman lawmaker, although there is some disagreement on whether a committee-led investigation provides enough evidence.
• Impact on Legislative Math: If Santos is expelled, House Speaker Mike Johnson (R-La.) could face even greater challenges in getting bills passed with only Republican support. After a special election in Utah, Republicans hold 222 seats, and Democrats hold 213.