Evening Report | January 12, 2024

Evening Report
Evening Report
(Pro Farmer)

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

 

Your Pro Farmer newsletter is now available... The second major winter storm of the week blasted the central U.S. Friday with blizzard conditions and artic temps. But that wasn’t the only “storm,” as USDA released a barrage of report data, most of which was bearish. Tensions in the Middle East also escalated as the U.S. and Britain carried out air and sea strikes on Houthi military targets in Yemen. The Houthis said the attacks “will not go unanswered and unpunished. Meanwhile, the Jan. 19 deadline to fund some government programs, including USDA, and avoid a partial government shutdown looms. We cover all these items and much more in this week’s newsletter, which you can access here.

 

Markets, gov’t offices closed Monday for MLK Jr. Day... All markets and government offices are closed on Monday, Jan. 15, for Martin Luther King Jr. Day, so there will be no Pro Farmer updates. Grain markets will reopen with the overnight session at 7:00 p.m. CT on Monday, Jan. 15, while livestock markets will resume trading at 8:30 a.m. CT on Tuesday, Jan. 16.

 

Not much bullish news in USDA’s January crop reports... USDA raised its corn and soybean crop estimates, which pushed ending stocks higher than anticipated. USDA also increased its global ending stocks forecasts for corn, soybeans and wheat. And Dec. 1 stocks for corn, soybeans and wheat came in higher than anticipated. About the only friendly data was winter wheat seedings and U.S. wheat ending stocks dropped more than anticipated. Click here for full report details.

 

Mato Grosso soy production to plunge 21%... Soybean production in Brazil’s leading production state Mato Grosso is expected to fall 9.56 MMT (21.1%) from last year’s record to 35.75 MMT, state farmer group Aprosoja-MT said. Earlier this week, Brazil’s crop estimating agency Conab forecast Mato Grosso’s soybean production at 40.2 MMT. Aprosoja-MT said Mato Grosso’s soy yields are expected to fall to 50.2 bags per hectare from 63.74 bags last season.

 

U.S. producer prices fall for a third straight month... U.S. producer prices unexpectedly fell in December amid a decline in the cost of goods, while prices for services were unchanged. The producer price index for final demand dipped 0.1% last month, the third straight monthly decline. But on an annualized basis, producer prices firmed 1.0%, up from 0.8% in November.

While producer prices came in lower than expected, Thursday’s consumer inflation data was stronger than anticipated.

 

Hurdles and uncertainty surround passing $1.5 trillion farm bill in 2024... Major challenges, including negotiations over government spending bills and the complexity of moving substantial legislation during an election year, are looming as obstacles to passing a five-year, $1.5 trillion farm bill in 2024. Industry groups like the American Farm Bureau Federation are urging House and Senate Ag panels to focus on the farm bill once government-wide spending disputes are hopefully resolved. The timing depends on congressional leadership making floor time available for reauthorization, which is likely to follow committee actions closely. While passing significant legislation during an election year is more challenging, lawmakers often aim for legislative achievements to tout to voters before elections. Even with a short calendar due to the election, securing a five-year bill remains a priority. The potential for partisan conflicts are also starting to impact the bill’s outcome.

 

Johnson’s leadership tested by spending deal... House Speaker Mike Johnson (R-La.) is navigating a complex situation regarding a spending deal, with divisions within the Republican party and the need for bipartisan cooperation to pass funding bills. The length of the stopgap measure and Johnson’s final decision remain uncertain. Coming out of a meeting Thursday, Johnson told reporters he’s been having “thoughtful conversations” but has made “no commitments” — and that “if you hear otherwise, it’s just simply not true.” Updates:

  • Initial spending deal: Johnson reached a deal with Senate Majority Leader Chuck Schumer (D-N.Y.) to fund spending for fiscal year (FY) 2024 at levels similar to the Fiscal Responsibility Act. The deal included $16 billion in additional cuts and rescissions added by Democrats to allow Johnson to claim some victories.
  • Initial support and backlash: Johnson initially promoted the deal as a win for Republicans, claiming “hard-fought concessions.” By Thursday, Johnson faced opposition from hardline House Republicans who urged him to abandon the spending deal.
  • Changing stance: While Johnson initially stated he had made no commitment to walk away from the deal with Schumer, others say he was at least open to hearing alternatives. This caused anger among Democrats and highlighted divisions within the Republican party, with moderates supporting the spending agreement.
  • Year-long CR proposal shot down: During the meeting, Johnson mentioned that his preference was to pass a clean year-long Continuing Resolution (CR), which would represent walking away from the deal. But he indicated he lacked the votes to make this happen. House Armed Services Committee members, led by Chair Mike Rogers (R-Ala.), expressed opposition to a yearlong CR, particularly because it freezes defense spending. Rogers made it clear that such an option was not viable.
  • Short-term CR: Schumer filed cloture on a legislative vehicle for a short-term CR. It is expected to last until March 1 or March 15. Johnson had not made a final decision on which option he preferred.
  • Bipartisanship needed: Senate Minority Whip John Thune (R-S.D.) emphasized the need for bipartisanship to get things done. He suggested that Johnson needs to work across the aisle to pass funding bills if he wants to advance GOP policy priorities.
 

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