Evening Report | March 19, 2024

Evening Report
Evening Report
(Pro Farmer)

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

 

Limited wheat damage likely from overnight freeze... Hard freezes occurred in the Tennessee River Basin and northern Delta this morning as well as the lower Midwest while light freezes occurred far to the south in southern Mississippi, southern Alabama, central Georgia and the western Carolinas. Temps dropped low enough for long enough to do some damage to winter wheat, though permanent damage would be restricted to those acres booting or headed, which is a small fraction of the crop in these areas at this early stage. World Weather Inc. believes most of the damage was to vegetative growth and production potential should be largely unaffected.

 

Stabenow sticking with her stance on nutrition, conservation funding... Senate Ag Chair Debbie Stabenow (D-Mich.) remarked at an event held by Agri-Pulse that she will not agree to a farm bill that cuts nutrition programs. She also reiterated her stance against taking Inflation Reduction Act (IRA) funds earmarked for USDA conservation programs and adding those into the farm bill baseline for other purposes. That is what she has signaled for months. Stabenow at Monday’s confab also said, “We need to be strengthening all parts of the farm bill, but what we have not done in the past is take from one title and give to another.” Fact check: The last Democrat-led farm bill (2008) cut Title 1 ($671 million) and Title 12 Crop Insurance ($6.807 billion) and plussed up Title 2 (conservation) and Title 4 (nutrition).

 

FAPRI releases baseline ag projections for 2024... Baseline projections for 2024 from the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri suggest downward pressure on prices could continue throughout 2024 and beyond. Based on forecasts from S&P Global, the projections expect economic growth and inflation will slow in 2024 and interest rates will begin to decline. The baseline reflects current policies, meaning it incorporates programs that had been enacted prior to January 2024, but does not reflect any subsequent policy changes. Key highlights:

  • Grain and oilseed prices have declined in the 2023-24 marketing year from the record or near-ecord levels of the previous year. Prices could decline again in 2024-25 if growing conditions result in trendline yields.
  • U.S. corn production is projected to be record-large, in spite of less-than-ideal growing conditions. Corn prices are projected to fall to $4.39 in 2024-25 – and even lower in later years.
  • Changes in relative prices will cause an acreage shift from corn to soybeans in 2024, resulting in record U.S. soybean production. Soybean prices are projected to fall to $10.73 in 2024-25.
  • Wheat prices are projected to fall to $6.13 in 2024-25.
  • Rising production of renewable diesel increases demand for soybean oil and other fats and oils. This supports soyoil and soybean prices, but the resulting increase in crush will put downward pressure on soymeal prices.
  • Lower crop prices are partially offset by expected price cuts for fertilizer and some other farm inputs in 2024-25. Still, projected net returns to producers for major crops are seen well below recent peak levels.
  • Projected hog prices will be about the same in 2024 as in 2023, while further small declines are expected for poultry and milk prices. Lower corn and soymeal prices mean lower feed costs.
  • Cattle prices are expected to increase further in 2024 and 2025. Drought and other factors have reduced the cow herd and it will take time before beef production can increase again.
  • Lower projected prices will cause spending on the price loss coverage (PLC) and agriculture risk coverage (ARC) programs to rebound in future years, and crop insurance net outlays average more than $12 billion per year.
  • Net farm income fell by $30 billion in 2023 from the record level of 2022, and another large decline is projected for 2024. However, at $118 billion, 2024 real net farm income remains above the annual levels of 2015-2020. Projected real net farm income is projected to keep declining in 2025 and subsequent years.
  • Consumer food price inflation could slow further in 2024. The consumer price index for food increases by a projected 2.1% this year, with the food-away-from-home (restaurant) category accounting for most of the increase.

 

‘Shaken, not stirred’ U.S./Europe trade relations... The U.S. Chamber of Commerce, AmCham EU, Johns Hopkins SAIS and the Transatlantic Leadership Network released a report titled “Shaken, Not Stirred,” likening the enduring but strained U.S./Europe trading relationship to the famous James Bond catchphrase. Despite recent policy tensions between Brussels and Washington, the report emphasizes the crucial economic ties between the two regions, describing them as the most deeply integrated in the world.

In 2023, U.S./Europe goods trade reached a record $1.22 trillion, with European countries surpassing China as the largest purchasers of U.S. goods. Additionally, Europe became the leading buyer of U.S. crude oil and liquefied natural gas, while U.S. company affiliates in Europe earned $350 billion and European units in the U.S. made $190 billion.

Bottom line: The report concludes that although globalization is evolving, the relationship between the U.S. and Europe remains resilient and vital.

 

Mini gov’t shutdown or mini-CR?... Lawmakers reached an agreement to fund the Department of Homeland Security, but it may not have come in time to prevent potential partial shutdowns of various government departments, including Homeland Security, Defense, and State, just after midnight on Saturday.

The House requires 72 hours’ notice before voting on legislation, while the Senate requires 30 hours of debate, making it unlikely the bills will pass this week. Lawmakers are considering options, including a brief partial shutdown or passing a short-term stopgap bill to keep agencies operating for a few days, though no action has been taken on the latter.

 

DOE revises EV mileage rating rule... The Department of Energy (DOE) released a final rule for how it determines electric vehicles’ (EV) fuel economy. The final rule was considered a win for automakers, as the rules require lower EV mileage for car companies than originally proposed.

DOE’s so-called Petroleum Equivalency Factor (PEF) gives EV mileage as an equivalent to gas-powered vehicles’ miles per gallon. PEF currently means a battery EV is roughly equal to a gas-powered car that gets 300 mpg.

The U.S. auto industry protested an earlier DOE proposal that would have cut the equivalent fuel economy rating of a battery-powered EV by 72% in 2027. Under the final rule DOE announced, battery-powered EVs will be able to more gradually reduce their petroleum-equivalent fuel economy. It adds three years to the phase-in through 2030 and also cuts the fuel economy equivalent by a total

 

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