Evening Report | December 29, 2023

Evening Report
Evening Report
(Pro Farmer)

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

 

 

Happy New Year from Pro Farmer... All markets and government offices are closed on Monday, Jan. 1 for New Year’s Day, so there will be no Pro Farmer reports that day. Grain and livestock markets resume trading at 8:30 a.m. CT on Tuesday, Jan. 2. Pro Farmer wishes you a happy New Year and prosperous 2024!

 

 

Each year is unique, presenting a new set of circumstances that shape agriculture and our lives…As 2023 comes to a close, it’s time to look back on the events, stories and people that were most influential over the past year.   

 

Pro Farmer ag story of the year: Biofuels resurgence…There was a lot of debate over the ag story of the year amongst the Pro Farmer staff, with many strong candidates for this designation. The deciding factor for choosing the resurgence of biofuels as our story of the year was the amount of “tentacles” it has with far-reaching impacts across the agriculture sector.

 

While traditional corn-based ethanol production seems to have plateaued in the low 5-billion-bu. range, soybean oil consumption for biofuels took off in 2023. Renewable diesel and sustainable aviation fuel (SAF) became standard names not only in the ag sector but in mainstream media as the push for carbon reductions intensified.

 

The ag sector announced new soy processing facilities and/or expansion of existing plants to ramp up production of soybean oil to meet the increased demand. Soy processors traditionally crushed soybeans for the meal content. That’s no longer the case, with soyoil now the desired by-product.

 

Much of the soy processing expansion has come in non-traditional areas, positively impacting local basis. The expansion led to a record soybean crush of 2.212 billion bu. in the 2022-23 marketing year, with the forecast for 2023-24 currently at 2.300 billion bushels. Soybean oil use for biofuels surged to a record 12.491 billion lbs. in 2022-23 and is projected to reach 12.800 billion lbs. in the current marketing year.

 

With Brazil ramping up its soybean production and continuing to take export share away from U.S. soybeans, this new source of demand is crucial for the industry. SAF may also help corn-based ethanol rebrand partially away from the Renewable Fuel Standard (RFS) as miles driven limits the growth of ethanol for that sector — if ethanol will indeed qualify as an SAF feedstock.

 

The current renewable diesel/SAF impact on the soybean market reminds us of ethanol’s effect on corn, starting in 2005. During the early years of ethanol expansion, we repeatedly said no one knew exactly the levels corn-based ethanol would rise to, just that it was constantly an upward moving target. This story is just beginning.

 

Pro Farmer ag event of the year: La Niña to El Niño…The shift from La Niña to El Niño had dramatic impacts on agriculture. La Niña helped produce record soybean and corn crops in Brazil in 2022-23, despite drought in far southern areas — and record exports. Argentina endured a historic drought, which slashed its soybean production, driving more soymeal and soyoil demand to the U.S., which helped offset soybean export demand lost to Brazil.

 

The transition to El Niño didn’t come quickly enough to support U.S. corn and soybean crops, with drought pushing yields well below trendline levels. Still, the U.S. produced a record corn crop, due to a sharp increase in acreage.

 

With El Niño fully intact by September, impacts have reversed for the 2023-24 South American growing season. Brazil is experiencing crop stress, while Argentina has seen much-improved growing conditions. 

 

Pro Farmer ag persons of the year: SCOTUS…Nobody had a bigger impact for agriculture in 2023 than the U.S. Supreme Court (SCOTUS), which issued two significant rulings. In May, SCOTUS upheld California’s Proposition 12 rule, which allowed Massachusetts and other states to push forward similar animal confinement legislation. Also in May, SCOTUS ruled against EPA on its waters of the U.S. (WOTUS) rule, limiting its jurisdiction and forcing the agency to reissue its final rule.

 

Honorable mentions for ag story, event and person…

 

Fed pause, pivot: Inflation peaked midyear. In December, the Fed turned dovish, suggesting rate cuts are coming.

 

Shipping/logistics woes: A variety of issues impacted shipments on the Mississippi River, Black Sea, Panama Canal, Brazil and Red Sea/Suez Canal in 2023.

 

Mexico GMO corn issue: Mexico backed down on its stance against U.S. GMO corn after Washington challenged the rule via USMCA. There’s hope this issue could be resolved in 2024 with a new Mexican president.

 

Farm bill: Lawmakers were unable to get a new farm bill done, leading to a one-year extension. 

 

Cattle highs: Cattle futures and cash prices surged to all-time highs in 2023 as the beef herd fell to a 62-year low.

 

Paul Neiffer: aka “Farm CPA.” He’s the go-to for many farmers on tax-related issues and farm payments. Also, lawmakers and their staff consult with him on tax regulations.

 

Ag trade: There was a swing from record ag exports to a record ag trade deficit in fiscal year 2023.

 

 

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