Evening Report | March 25, 2024

Evening Report
Evening Report
(Pro Farmer)

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Mystery dairy cow disease tied to HPAI... USDA says a small number of dairy herds in Texas and Kansas tested positive for a strain of highly pathogenic avian influenza (HPAI). To date, three dairies in Texas and one in Kansas have tested positive. Federal and state agencies are moving quickly to conduct additional testing for HPAI, as well as viral genome sequencing, so that we can better understand the situation, including characterization of the HPAI strain or strains associated with these detections.

USDA’s Animal and Plant Health Inspection Service (APHIS) says the virus is carried by wild waterfowl, which experts think is how the illness is spreading. Even with the diagnosis, USDA is still not recommending herd depopulation or movement restrictions of animals.

USDA noted, “At this stage, there is no concern about the safety of the commercial milk supply or that this circumstance poses a risk to consumer health. Dairies are required to send only milk from healthy animals into processing for human consumption; milk from impacted animals is being diverted or destroyed so that it does not enter the food supply. In addition, pasteurization has continually proven to inactivate bacteria and viruses, like influenza, in milk. Pasteurization is required for any milk entering interstate commerce.”

Federal agencies are also working with state and industry partners to encourage farmers and veterinarians to report cattle illnesses quickly so that we can monitor potential additional cases and minimize the impact to farmers, consumers and other animals.

On March 16, the Texas Animal Health Commission (TAHC) issued a letter saying it is “aware of an animal health situation affecting dairy cattle” and is “working closely” with USDA “to further monitor and evaluate reported cases.” The letter stated, “Clinical signs include decreased herd level milk production; acute sudden drop in production with some severely impacted cows experiencing thicker, concentrated, colostrum like milk; decrease in feed consumption with a simultaneous drop in rumen motility; abnormal tacky or loose feces and some fever. Impacted herds have reported older cows in mid-lactation may be more likely to be severely impacted than younger cows and fresh cows or heifers. Dry cows and heifers do not appear to be affected. In addition, some herds have reported pneumonia and clinical mastitis cases as secondary sequelae.”

 

USDA trims food price inflation outlook... After a sharp increase in the food price outlook last month, USDA trimmed its forecast this month. USDA now expects all food prices to rise 2.5% in 2024, down from a projected 2.9% increase last month and well below the 5.8% jump last year. Food at home (grocery store) prices are forecast to increase 1.6%, the same as last month and down sharply from the 5.0% jump in 2023. USDA projects food away from home (restaurant) prices will increase 4.1%, down from the 5.0% forecast last month and well below last year’s 7.1% surge.

USDA forecasts beef prices will increase 2.7%, while pork prices are expected to drop 1.6%. Poultry prices are anticipated to inch up 0.5% this year. Egg prices are predicted to increase 4.8% in 2024.

 

Cold Storage Report: February stocks signal strong meat demand... USDA’s Cold Storage Report showed frozen pork stocks declined contra-seasonally during February, while beef inventories fell more than average. The data suggests meat demand, especially for pork, remained strong.

Beef inventories at the end of February totaled 442.8 million lbs., down 28.5 million lbs. from January. The five-year average was a 12.9-million-lb. decline during the month. Beef inventories dropped 58.0 million lbs. (11.6%) from year-ago and were 59.8 million lbs. (11.9%) less than the five-year average.

Pork stocks dropped 6.8 million lbs. during February to 456.5 million lbs., whereas the five-year average was a 29.7-million-lb. increase for the month. Pork inventories fell 65.1 million lbs. (12.5%) from February 2023 and were 93.0 million lbs. (16.9%) less than the five-year average.

Total poultry stocks declined 12.4 million lbs. from January to 1.121 billion lbs. and were 64.7 million lbs. (5.5%) below the five-year average. Chicken breast meat inventories dropped 1.9 million lbs. during February and 11.2 million lbs. (4.6%) from last year’s record to 233.5 million pounds.

 

Large area of EU winter crops in so-so condition... Winter grain crops are in mediocre condition in large parts of the European Union, EU crop monitoring service MARS said. “Since autumn, large parts of western, northern and eastern Europe experienced excessively wet conditions, which negatively affected the sowing, emergence and development of winter crops,” MARS said in a monthly report. In northern and eastern Europe, additional damage to crops was caused by severe frost. Some of the worst fields are likely to be reseeded to spring or summer crops.

In its first yield forecasts for 2024, mostly based on historical trends, MARS projected the average soft wheat yield at 5.91 metric tons per hectare (t/ha), up 2% from 2023, while the durum wheat yield was forecast to jump 5% to 3.44 t/ha.

 

Malanga comments on market expectations, fed actions and potential concerns... Dr. Vince Malanga, president of LaSalle Economics, commented on the Federal Open Market Committee’s (FOMC) stance on interest rates and inflation last week. He notes that initially, market expectations predicted six rate cuts for this year due to weakening economic growth, but this was revised down to three as the economy displayed resilience and inflation remained high. The FOMC maintained its forecast for three rate cuts despite upgrading projections for economic growth and inflation. Malanga said the Fed hinted at slowing its balance sheet reduction program at its recent meeting but kept rates steady. He suggests the Fed could have avoided bias by initiating an interest rate cut sooner, citing potential softening in labor markets and concerns about rising inflation. He again warns of potential stagflation, where rising unemployment coincides with slow growth and high inflation.

Malanga predicts consumer confidence may suffer from rising gasoline prices and flight delays, potentially leading to political pressure on the Fed from both the left and right. He suggests the Fed’s actions should align with its forecast for rate cuts, which could lead to a steepening yield curve.

Additionally, Malanga highlights concerns about tepid demand for Treasury auctions and suggests the Fed’s decision to taper its balance sheet reduction program may be due to the risk of a failed Treasury auction, like one experienced in the UK last year.    

 

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