Evening Report | March 11, 2024
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Please fill out our acreage survey... You should have received our annual spring acreage survey via e-mail last week. Please fill out the survey with your current planting intentions for this year. We’ll cover results and our acreage forecasts ahead of USDA’s March 28 Prospective Plantings Report. Click here to fill out the survey if you haven’t already responded. Please complete the survey only once.
Canadian wheat planting intentions higher than expected... Canadian farmers intend to plant 27.045 million acres to wheat this year, according to Statistics Canada, up 0.1% from last year and higher than the 26.7 million acres analysts expected. Spring wheat area is expected to decrease 1.2% to 19.2 million acres, while area seeded to winter wheat is expected to decline 3.6% to 1.5 million acres. Durum wheat area is anticipated to rise 5.1% to 6.3 million acres.
Canadian farmers intend to plant 21.394 million acres to canola, down 3.1% from last year but roughly in line with the five-year average. Analysts expected planted area of 22.1 million acres.
Mike Jubinville with MarketsFarm said, “These StatCan numbers are based on a survey taken back in the Dec. 14, 2023 to Jan. 22, 2024 timeframe. There’s going to be debate on data and how the numbers may have changed since the survey was taken. But that said, the StatCan numbers are actually pretty in line with MarketsFarm thinking. Nonetheless, grain markets have changed since the period the survey was taken. Unfortunately, prices of most major crops have declined since that time, and that in itself may have shifted some grower seeding intentions for 2024. I suspect a few more acres may be going to lentils and peas, but that’s scratching at the margins. Still a concern today as much as it was back then, dryness worries continue to linger across a notable swath of the Canadian Prairies.”
Brazil’s biggest growing sector: agriculture. A Financial Times article explored the rapid transformation and economic boom experienced by Brazil's central-west region, particularly in towns like Boa Esperança do Norte, fueled by the agribusiness sector. This boom is characterized by significant growth in agriculture, with soybean production being a major driver, buoyed by global demand, especially from China. The region’s economy has witnessed remarkable expansion, leading to newfound wealth and prosperity, evident in rising GDP and conspicuous consumption.
However, the article also highlighted the looming threat posed by climate change, as evidenced by extreme weather events impacting agricultural productivity. Last year’s record-breaking heatwave and drought significantly affected crop yields, signaling potential challenges ahead for Brazil’s “agro” boom. Despite assurances from some locals attributing these issues to cyclical weather patterns like El Niño, there’s a growing recognition among experts and larger producers of the need to adapt to a changing climate. Investments in technologies like genetically modified seeds and soil management techniques are being considered to mitigate these risks.
Moreover, concerns linger regarding increased competition from other regions and countries, as well as shifting patterns in global demand, particularly from China. While optimism remains high among locals and officials, there’s acknowledgment of uncertainties and the need for resilience in the face of evolving market dynamics and environmental challenges.
NPPC’s Formica raises concerns over EPA’s WOTUS rule for farmers... During a recent public hearing on the implementation of the Waters of the United States (WOTUS) rule by the Army Corps of Engineers and the U.S. Environmental Protection Agency (EPA), NPPC chief legal strategist Michael Formica expressed ongoing worries about the rule's impact on producers.
Under previous administrations, efforts were made to expand the rule’s authority, potentially subjecting farmers to permits for routine activities near water features. However, a 2023 Supreme Court ruling limited this authority to geographical features like streams and adjacent wetlands.
Despite this, Formica highlighted ongoing issues with EPA’s rule and its implementation. He emphasized the lack of clarity and consistency, making it impractical for farmers to seek guidance on the legality of everyday activities. Additionally, he raised concerns about EPA’s use of internal guidance not shared with the public, calling it “outrageous.”
Reports from farmers indicate EPA continues to assert jurisdiction over streams far from navigable waters, even those not covered under previous rules, prompting ongoing uncertainty and frustration among agricultural communities.
USDA announces final ‘Product of USA’ rule…Virginia Cattlemen’s Association (VCA) commends USDA for taking “decisive action and adding integrity back into our national labeling standards. USDA’s final “Product of USA” rule allows the voluntary “Product of USA” or “Made in the USA” label claim to be used on meat, poultry and egg products only when they are derived from animals born, raised, slaughtered and processed in the United States. The rule will prohibit misleading U.S. origin labeling in the market and help ensure that the information that consumers receive about where their food comes from is truthful.”
“Establishments voluntarily using a claim subject to the final rule will need to comply with the new regulatory requirements by Jan. 1, 2026, and are encouraged to do so as soon as practicable after the publication of this final rule.”
The final rule nearly mirrors the proposed rule with a few technical changes. Cattle groups say this much needed change will allow consumers to accurately exercise their freedom of speech through financially supporting voluntary labels that have integrity and support American cow/calf producers.
Final rule can be found here.
Congress is set to do a Continuing Resolution (CR)…in September, kicking the final decisions on next year’s spending bills until after the Nov. 5 elections. As for what happens after elections…it depends on who wins.
European farmers’ unconventional protests threaten EU policies... Farmers across Europe have been protesting in unconventional ways, such as showering authorities with liquid manure and eggs outside the European Union headquarters in Brussels. This surge of agrarian protests poses a threat to key aspects of EU environmental and foreign policies and could potentially bolster far-right parties in the upcoming European Parliament elections, according to a Barron’s article.
The EU’s Green Deal, championed by European Commission President Ursula von der Leyen, aimed at revolutionizing farming practices to address pollution and climate change. However, challenges such as Russia’s natural gas cutoff, soaring energy and fertilizer prices, and high-interest rates have strained farmers’ financial resources, prompting them to push back against stringent environmental regulations.
Von der Leyen, eyeing a second term, has made concessions in response to farmers’ grievances, proposing to freeze pesticide reduction plans and offering exemptions to fallow land requirements. This retreat from ambitious environmental goals has drawn criticism from environmental advocates.
Farmers’ concerns also extend to cheap imports, with the EU’s free trade deal with South America’s Mercosur bloc and the influx of Ukrainian agricultural products raising alarms. These issues have sparked complex political debates and delicate diplomatic maneuvers.
Malanga: Fed’s dilemma in a mixed economic environment... Dr. Vince Malanga, president of LaSalle Economics, notes the potential economic scenario where economic growth stabilizes between 1.5% and 2% while inflation remains persistently between 2.5% and 3%. He says that raises the question of whether this situation constitutes a hard or soft landing, or possibly stagflation, with the interpretation likely influenced by political affiliations.
Fed Chair Jerome Powell’s recent testimony suggests a commitment to maintaining a steady policy course, with hints of potential rate cuts in the future. However, Malanga argues the Fed might be missing an opportunity for a more favorable outcome. The window for declining inflation could close soon, he believes, while risks from the commercial property sector are rising. Delayed action may exacerbate these conditions and invite criticism from both ends of the political spectrum, he predicts.
While there are factors mitigating inflation, such as the productivity boomlet and China’s deflationary impact, Malanga adds that recent data shows a rise in core PCE deflator and other inflation indicators. The fiscal stimulus is significant, he reasons, and expected to continue, primarily driven by government spending initiatives, which could further complicate the economic picture.
Private sector activity showed signs of decline in January, with job growth slowing and wage growth decelerating in February. While some indicators, like ISM new orders, suggest strong future production, Malanga points out that weaknesses in the commercial property market and overall economic uncertainty pose risks.
Malanga questions whether the Federal Reserve is willing to take the risk of maintaining current policy settings in an election year. Delaying policy adjustments could invite criticism from both sides of the political spectrum, he says, adding that initiating rate cuts early might be the preferred course of action to navigate the complex economic landscape.
