Farmer Reaction to White House Plan to Boost Plantings: ‘We Need Rain, Not Higher Loan Rates’

( )

China met with domestic and foreign banks on plan if Beijing hit with Russia-style sanctions

 

                                                In Today’s Digital Newspaper

 

Today’s dispatch is an abbreviated one because I am in Kansas City for a CIPA/crop insurance agents meeting, following a well-attended RCIS crop insurance meeting in Naples late last week.

Global stock markets were mostly lower overnight. Markets in China and Hong Kong were closed for a holiday. U.S. stock indexes are pointed toward higher openings. Gold prices dropped sharply overnight, pressured by the higher U.S. dollar index, higher bond yields and lower crude oil prices. Nearly a third of the S&P 500 will report earnings this week. Investors will look to Pfizer, CVS and Starbucks for signs of supply chain disruption and how consumers are responding to price increases.

Bears took firm control of price action in the grain and soy markets overnight as traders returned from the weekend. As of 6730 a.m. ET, corn futures were trading mostly 9 to 11 cents lower, soybeans were 11 to 14 cents lower, winter wheat was 9 to 11 cents lower and spring wheat was mostly 5 to 6 cents lower. Front-month U.S. crude oil futures were around $3 lower and the U.S. dollar index about 400 points higher this morning.

More rains and planting delays. Waves of rain this week will stall planting in the Central Plains, Midwest, Delta and Southeast, according to World Weather Inc., with a short-term break late this week and into the weekend before additional rain occurs next week. The weather forecaster says West Texas will get some thunderstorms this evening, but they will be sporadic. A few amounts of moderate rain is expected, but most of the moisture will be light. A follow-up system Wednesday into Thursday might produce a little more rainfall. Rains fell on HRW wheat production areas over the weekend and more is expected in northern and eastern areas of the region early to mid-week this week and then drier late this week into next week.

Russia/Ukraine: House Speaker Nancy Pelosi (D-Calif.) and a delegation of U.S. lawmakers pledged to support Ukraine until “victory is won” against Russia after meeting with Ukraine’s leader in Kyiv. Zelenskyy asked for more security, economic and humanitarian aid from the U.S., two days after President Joe Biden asked Congress to approve another $33 billion in aid.

     The evacuation of civilians from the besieged southern Ukrainian city of Mariupol has been paused until today, the Mariupol City Council announced Sunday, citing "security reasons." Most analysts now think the war will go on for an extended time, despite Russia’s apparent new strategy to lock up the eastern and southern part of Ukraine. On Sunday, Russia said that it had struck 800 targets over the past day, including a hangar in Odesa that Russia said was storing weapons and ammunition delivered by the U.S. and Europe. In Ukrainian territory controlled by Russia, including the southern city region of Kherson and its surrounding province, the occupying forces are taking steps to erase Ukrainian identity and transition the currency to the ruble. Fighting has intensified around Kharkiv, once Ukraine’s second-largest city.

     Russia attacks Ukraine grain infrastructure. Russian attacks on Ukraine’s grain infrastructure look like attempts to reduce the competition for Russia’s export markets, German Agriculture Minister Cem Oezdemir said. “We are repeatedly receiving reports about targeted Russian attacks on grain silos, fertilizer stores, farming areas and infrastructure,” Oezdemir was quoted as telling the Redaktionsnetzwerk Deutschland. The suspicion is growing that Russian President Vladimir Putin is seeking “in the long term to remove Ukraine as a competitor”, Oezdemir said. Ukraine could lose tens of millions of metric tons of grain due to Russia’s blockade of its Black Sea ports, triggering a food crisis that will hit Europe, Asia and Africa, Ukrainian President Volodymyr Zelenskyy said.

Russia said it’s pulling out of the International Space Station, blaming sanctions imposed over its invasion of Ukraine.

The first cargo of Ukrainian corn to be exported via the Black Sea since Russia’s invasion set sail from a Romanian port. Link to details via the WSJ.

Food supply glitches growing: Ukraine has limited its exports of sunflower oil, and several supermarkets — most recently in Britain — have asked shoppers to limit their purchases. Dozens of other countries have also erected trade barriers, which experts say could worsen a global food crisis. Look for more U.S. food aid to be announced in the months ahead. Recent  aid announcements have increased cash prices and tightened basis for red wheat and sorghum.

Congestion on America’s railroads is disrupting operations for farmers and agriculture companies, the WSJ reports (link), impeding crop shipments, raising transportation costs and pushing grain companies to look for alternatives. Railroad operators said they are working to fix the problems even as agriculture companies warn that the issues could seep into consumer markets through higher food prices. The rail challenges are at least in part the result of broader woes hitting supply chains from factories to export loading docks. High demand has strained both rail staffing and equipment. Shippers say the railroads themselves have undercut operations with efficiency efforts that have maximized profits at the expense of service. Government figures show weekly grain train speeds are down 6% from the same period a year ago and dwell times at terminals are up 22%.

Warren Buffett over the weekend said no one can know how much inflation will climb, and the best defense against inflation is to be skilled at what you do, saying if you provide something valuable that people are willing to pay for, “it doesn’t matter what the U.S. dollar does.”

Next farm bill: The first field hearing took place Friday in Michigan with the need for accelerated program implementation and funding the primary points made. More field hearings are ahead, with the next one being in Arkansas. As for the timing of the next farm bill, most but not all farm bill watchers expect a one- or two-year extension, but there are some Capitol Hill staffers who think a new omnibus bill can occur in 2023. An interesting development is that some Capitol Hill staffers think there could actually be additional farm bill funding made available, largely due to climate- and conservation-oriented program funding.

U.S. crops: Talks with many farmers and crop insurance personnel last week and over the weekend paint a complex picture of extended drought in the west and southwest, but too wet conditions elsewhere. Northeast South Dakota will see a big rise in prevent plant acres. We did not hear as much concern about fertilizer as we did earlier this year. Some farmers said they recently got their first appreciable rainfall in a long time.

Farm programs: More than a few farmers are waiting on USDA’s coming announcement of some details regarding the soon-to-be-renamed Whip+ program. USDA Sec. Tom Vilsack said May would bring some details of “the structure” of the program. As we noted on Sunday, the plan for eligible 2020 and 2021 crops will be undertaken in two phases.

Farmer reaction to White House plan to boost 2023 wheat and soybean acres with  much higher loan rates: The scheme will not bring rain to parched areas of the country and that current prices if they continue will be the key reason for planting intentions ahead. Some sorghum growers wondered why the White House plan did not include their crop in hoped-for double-cropping plans. Meanwhile, many wonder who actually came up with the odd plan to use a dramatic boost in loan rates to alter plantings, and if USDA personnel had much of a role in it. Some think the plan was pushed by the National Economic Council and/or the Office of Management and Budget. It will be interesting to see what if anything USDA Secretary Tom Vilsack says about the proposals but talks with some USDA officials find them pained to defend the program proposals.

Germany has called for a phased-in ban on Russian oil imports to the EU, stepping up pressure on Brussels to find a deal between divided member states ahead of a decision for the bloc’s policy on Russian energy. Jörg Kukies, one of chancellor Olaf Scholz’s closest advisers, said Berlin was in favor of an oil embargo but needed a “few months” to prepare for an end to Russian crude shipments. Germany had previously said it would need until the end of the year. Bottom line: The EU will most likely give member countries until the end of this year to ban Russian oil imports. In Ukraine, long lines are forming at gas stations as a fuel crisis looms.

EPA issues emergency action allowing summer E15 sales. EPA Friday issued its emergency waiver of rules that prevent sales of E15 fuel in the summer months in some areas of the country. The action took effect May 1 so that fuel wholesalers do not have to stop selling E15 fuel ahead of the summer driving season that starts June 1. The action is to be reviewed every 20 days, but EPA Administrator Michael Regan said the intention is to renew the action. The move is not nationwide unlike the Trump administration rule that was struck down in court.

EPA’s Regan pledges certainty on WOTUS is coming; biofuels will have a role in clean energy transition. EPA Administrator Michael Regan on Friday testified on the fiscal year (FY) 2023 budget for his agency and was questioned by lawmakers on EPA’s actions on waters of the U.S. (WOTUS) where the administration is seeking to replace the Trump administration’s Navigable Waters Protection Rule (NWPR), having already proposed to reset the definition of WOTUS back to a pre-2015 definition reflecting court actions. Regan defended undertaking the process to come up with a new WOTUS definition even as the Supreme Court later this year is expected to rule on some portions of WOTUS. “We believe we can put a strong rule in place if we finalize it in a way that will compliment and be situated to move forward after we hear from the Supreme Court,” he said. As for WOTUS, even as EPA comes with their final definition, it will most likely join prior definitions that have been challenged in court.

     Regan also pledged that biofuels will play an important role as the administration keeps up its push to transition to electric vehicles, noting that those options will not be available for all Americans immediately. Regan said the transition that will take place in transportation will “take place over time. There is a role for agriculture in that transition, so we are focused on making sure that is properly managed.”

     Regan’s comments did not touch on the coming final Renewable Fuel Standard (RFS) levels for 2020, 2021, and 2022 that the agency has pledged to issue by June 3 and on their proposal regarding setting RFS levels in 2023 and beyond. Those details will be important relative to the program moving forward and they will be measured against Regan’s pledge that biofuels have a role to play ahead. But Regan told us on AgriTalk, “2022 will be one of the most aggressive RVO years” and “biofuels will be a part of the solution for climate change and lower prices at the pump” in 2023 and beyond. He also indicated EPA plans to reject pending small refinery exemptions and noted it is “not a guarantee” refiners will be offered any compliance relief alternatives.  (BTW: EPA has submitted its final rule on 2020, 2021 and 2022 RVO levels to OMB.)

Suit on 2023 RFS levels filed in court. Growth Energy filed suit Friday (April 29) in the U.S. District Court for the District of Columbia charging that EPA’s delay in announcing its proposed method for setting Renewable Fuel Standard (RFS) levels for 2023 and beyond has caused the industry harm. The group said EPA was to have finalized its rule establishing volumes for 2023 in November 2021, but the agency has not yet even released their proposed rule. Growth Energy said by the time EPA comes with their plan for 2023, it “may be too late for plaintiff’s members to be able to adjust their production levels,” according to the complaint. “This uncertainty and inability to plan future production directly affects plaintiff’s members’ bottom line.”

Global cases of Covid-19 are at 513,890,808 with 6,236,772 deaths, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The U.S. case count is at 81,365,218 with 993,733 deaths. The Johns Hopkins University Coronavirus Resource Center said that there have been 574,232,736 doses administered, 219,483,386 have been fully vaccinated, or 66.61% of the U.S. population.

With Covid cases accumulating in Beijing, officials over the weekend imposed a ban on dining in restaurants and will require negative test results to enter public spaces.

China’s manufacturing sector contracts more than expected in April. China’s official manufacturing purchasing managers index (PMI) fell to 47.4 in April from a reading of 49.5 the prior month. That was the second straight month of contraction in the factory sector and the steepest pace since February 2020, as widespread Covid-19 lockdowns curbed production and disrupted supply chains. China’s Caixin/Markit manufacturing PMI fell to a 26-month low of 46.0 in April, as both output and new orders fell at the second steepest pace since the survey began in early 2004, while export orders shrank at the sharpest rate in nearly two years.

Chinese officials reportedly met with domestic and foreign banks to discuss how to protect overseas assets if Beijing is hit with Russia-style sanctions, the Financial Times reports (link/paywall).

The U.S. is investigating whether Chinese companies are circumventing tariffs, causing more than 300 solar projects in the U.S. to be canceled or delayed.

Nov. 8 elections: To say that voters are upset about the ways or misdirection of Washington leaders is an understatement. This usually results in a wave election against the party in power, in this case the Democrats Former House Speaker Newt Gingrich (R-Ga.) over the weekend predicted GOP gains of 25 to 70 in the House, a huge range, and a four-seat GOP gain in the Senate. Both would mean Republican control of the House and Senate in 2023.

Looking ahead to the 2024 presidential contest, one thing is clear: Many Americans want centrist Sen. Joe Manchin (D-W.Va.) to run… on either the Republican ticket or as an independent.


 

 

Latest News

H&P Report negative compared to pre-report expectations
H&P Report negative compared to pre-report expectations

Nearly every category topped the average pre-report estimates.

After the Bell | March 28, 2024
After the Bell | March 28, 2024

After the Bell | March 28, 2024

Pro Farmer's Daily Advice Monitor
Pro Farmer's Daily Advice Monitor

Pro Farmer editors provide daily updates on advice, including if now is a good time to catch up on cash sales.

PF Report Reaction: Bullish USDA data for corn
PF Report Reaction: Bullish USDA data for corn

Corn planting intentions and March 1 stocks came in lower than expected.

Report Snapshot: USDA shows lighter-than-expected corn acres and stocks
Report Snapshot: USDA shows lighter-than-expected corn acres and stocks

USDA reported corn acres of 90.036 million acres for 2024 and March 1 stocks of 8.347 billion bu., both well below trade estimates. Soybean acres were slightly lower than expectations, while stocks were higher.