Evening Report: Jan. 25, 2022
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California judge delays prop 12 enforcement... California Judge James P. Arguelles ruled Tuesday that enforcement of California’s proposition 12 will be delayed until 180 days after the final rules go into effect. After the final regulations are enacted, the judge ruled the parties may return to Superior Court for Sacramento County for any appropriate adjustment to the date.
The North American Meat Institute said the California Department of Food and Agriculture is two years late finalizing the regulations for the law.
“Judge Arguelles’ decision recognizes the complexity of the pork supply chain and the burdensome and costly provisions of Prop 12,” said President and CEO of the Meat Institute, Julie Anna Potts. “To enforce the law without final regulations leaves the industry unsure of how to comply or what significant changes must be made to provide pork to this critical market.”
USDA: 2022 overall food price forecast unchanged, food away from home outlook raised... U.S. food prices increased 3.9% in 2021, according to USDA’s Economic Research Service (ERS). That included a 3.5% increase in food at home (grocery stores) and a 4.5% jump in the price of food away from home (restaurants). USDA expects overall food prices to increase 2.0 to 3.0% for 2022, unchanged from the December outlook.
USDA expects food away from home to increase 3.5 to 4.5% in 2022, up 0.5% from the previous report. Food at home prices is predicted to increase 1.5 to 2.5% in 2022, steady with December’s outlook.
Meat, poultry and fish prices were increased 0.5% from the December report to 2.5 to 3.5% for 2022. USDA expects overall meats, beef and veal and pork prices to increase 3.0 to 4.0% in 2022, up a percentage point from the previous report. USDA predicts consumer poultry prices will increase 2.0% to 3.0% in 2022, up a percentage point from last month. Consumer dairy prices are projected to increase 1.5% to 2.5% in 2022, up 2 points from the December report.
Increased rains hitting Paraguay, southern Brazil and Argentina... Dry areas of South America got some much-needed rains, according to World Weather Inc. Parts of Rio Grande do Sul benefitted most from the showers. World Weather says due to high temps, much of the moisture was quickly lost to evaporation in Paraguay and southwestern Parana.
World Weather says Paraguay and far southern Brazil will receive some needed rainfall and relief from dryness through Friday but will have more chances for rains through the first week of February. Steady rain during the next two weeks is forecast for most of the remainder of Brazil. From Feb. 2-4, rain will likely fall on most of Brazil and Paraguay, except in far southern Brazil and Bahia. For Feb. 5-7, rain chances will increase in far southern Brazil, with regular rains continuing in western and central Brazil and drier conditions in northeastern Brazil.
For Argentina, World Weather forecasts an alternating pattern of rain and sunshine through Feb. 8, with more dry days than wet days. Rains will continue today through Thursday. The country is predicted to be dry Friday to Saturday with only isolated showers. Rain chances increase Sunday into next Monday. Feb. 1-3 will likely be dry. Rains are expected Feb. 4-6, followed by drier weather Feb. 7-8.
Manitoba reporting abnormally high PEDV cases this winter... The number of porcine epidemic diarrhea virus (PEDV) cases in Manitoba’s hog population is increasing, Cam Dahl, general manager of the Manitoba Pork Council, told RealAgriculture.
The issue has been deemed a “general outbreak.” There are 60 cases with no sign of slowing down or containing the disease. Dahl explains the disease is universally fatal for young pigs and infected farrowing pigs will likely need to be euthanized. The disease is peaking in the winter when it typically has peaked in the spring or summer.
Bad weather suspends Ukraine grain exports... Due to poor weather conditions, six major Ukrainian Black Sea ports have restricted grain loading operations. The ports of Odessa, Chornomorsk, Mykolayiv, Pivdeny, Kherson and Olvia stopped loading grain exports, according to the seaport authority.
EU soft wheat exports increase... EU soft wheat exports reached 15.62 MMT as of Jan. 23, up 320,000 MT from the previous week. The European Commission, which released the trade data, reported the French export numbers were incomplete. EU barley exports had reached 4.91 MMT, compared to 4.33 MMT a year ago. EU corn imports were 8.87 MMT versus 9.75 MMT a year ago.
French E85 ethanol consumption rose 33% in 2021... E85 consumption in France rose 33% last year and is expected to continue growing this year, according to ethanol industry group SNPAA. The noted higher gas prices made ethanol more competitive.
The group noted infrastructure also helped. The number of flex-fuel kits installed in 2021 doubled from the previous year to 30,000. The number of gas stations selling E85 in France rose 18%.
For 2022, total ethanol sales are expected to rise at least 20%, boosted notably by E85.
U.S. House panel seeks meat price and profit information... Rep. Raja Krishnamoorthi, (D-Ill.), chairman of the U.S. House of Representatives subcommittee on economic and consumer policy, sent a letter on Tuesday to major U.S. meat processing companies, seeking information on rising prices and profits. He asks the companies to share why they increased their prices for beef, pork and chicken, despite rising profits. He set a Feb. 8 deadline for the information.
Rural Mainstreet Index declines but stays overall positive... The Rural Mainstreet Index (RMI) fell to 61.1 in January from December’s 66.7. However, it remained above growth-neutral for the 14th straight month, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and energy.
Bankers identified rising farm input prices as the most significant 2022 risk for farmers. Farm inputs delivery disruptions ranked second. Rising interest rates were third.
On average, bank CEOs expect the Federal Reserve to raise short-term interest rates by 0.70% (70 basis points) in 2022. Approximately 18.5% of bankers expect four or more one-quarter percentage point rate hikes in 2022.
The region’s farmland price index decreased to a still-strong 88.5 from December’s record high of 90.0. It remained above growth-neutral for the 16th straight month. The farm equipment-sales index remained above growth-neutral for the 14th consecutive month at 72.4, down from 74.1 in December.
U.S. consumer confidence dips... This month’s Conference Board consumer confidence index slipped to 113.8, down from 115.2 in December. Economists polled by Reuters had forecast the index would fall to 111.8. It is the first decline in four months but above the pandemic lows.
The Conference Board’s consumer inflation expectations survey dropped to 6.8% from 6.9% last month and a 13-year high of 7.3% in November. The labor market differential fell to a reading of 43.8 this month, compared to 44.2 in December. The labor market differential measures how easy or hard it is to get a job.
IMF cuts 2022 Latin America, Brazil, Mexico growth forecasts... The International Monetary Fund (IMF) reduced Latin America and the Caribbean’s economic growth by 0.6 percentage points to 2.4%. For the two largest economies, Mexico and Brazil, growth was cut by 1.2 percentage points each to 2.8% and 0.3%, respectively.
Reasons for the reduced growth include inflation, tighter monetary policy, reduced U.S. growth and moderation in commodity prices.
Argentina is seen growing 3.0% this year and 2.5% in 2023, both are 0.5-percentage-point increases from the October estimate.
For 2023, the IMF sees Latin America and the Caribbean growing at a 2.6% rate, with Brazil growing 1.6% and Mexico’s economy expanding 2.7%.
EU carbon price forecasts increases... Seven analysts in a Reuters survey expect EU Allowances (EUAs) to average 84.14 euros per MT in 2022 and 91.71 euros in 2023, up 27.2% and 38.5%, respectively, from the October forecasts. In their first forecast for 2024, analysts predicted prices to average 94.11 euros.
The continuation of high gas prices due to reduced supply concerns from Russia is the driving force for higher prices. Carbon prices could dip if gas prices drop and coal use dwindles.
The benchmark December 2022 contract is trading around 85 euros, up almost 150%, after Europe announced stricter climate measures and gas prices hit record highs.
