Evening Report | May 10, 2022

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Major uncertainties heading into May crop reports... USDA’s May 12 Supply & Demand Report will be the first official release of balance sheets for 2022-23, which will incorporate March planting intentions. The big question with corn is whether USDA lowers its yield from trendline to reflect the slow planting pace as of early May — a rare occurrence in the past. Globally, focus will be on how much more “Ukraine factor” is added to the old-crop grain and oilseed balance sheets and the new-crop assumptions for both Ukraine and Russia. The major uncertainty shows up in pre-report range of estimates, many of which are wide. The following estimates are from a Reuters survey (aside from cotton, which is from Bloomberg.

There are also major uncertainties with what USDA will do with harvested acres and yield in its first U.S. winter wheat crop estimate. The following estimates are based on a Reuters survey.

‘Prevent-plant rules work’... In response to the item we ran in “First Thing Today” about USDA Secretary Tom Vilsack’s ideas on how to boost U.S. acreage, including potential changes to the prevent-plant rules, one policy analyst told us: “The Prevent Plant rules work. They protect the integrity of the program and by doing so keep premiums down for all growers. Undoing those protections would undermine program integrity. If you want to do something on crop insurance, you might extend the final plant date to help producers who cannot get into the field due to wet conditions but USDA would need to hold companies harmless. That would help, though they would have to be reset at dates that do not result in freeze damage in the fall. A better option still is for the Secretary to propose permanent changes to strengthen the safety net under the Farm Bill and under crop insurance or announce CCC payments using existing authority to address tight margins due to increased production costs. Most, though not all, farmers feel higher prices this year will allow them to navigate higher input costs but they worry about next year and the year after when their prices soften but inputs stay high. Finding a way to meaningfully address that concern will go a long way to address impending food shortages. This year, commodity prices for most crops will be the incentive needed to plant and harvest.”

Vilsack: USDA to announce WHIP+ process soon... Vilsack told the Senate Ag Appropriations Subcommittee USDA will announce in the “next couple of weeks” the structure and framework of applying for WHIP+ for 2020 and 2021 crops so payments can “potentially start in June.” He said, “We are in the process of finalizing the work that will allow us to pre-fill the application” so farmers need to fill in just a few details instead of the roughly 250 questions that would be required otherwise. WHIP+ payments for crops will come in two tranches, the same as previously announced aid for livestock producers.

Vilsack also said a smaller second round of payments is planned for livestock producers for those not covered under USDA’s Livestock Forage Disaster Program. Sen. John Hoeven (R-N.D.) told Vilsack the payment rate for calves under 250 lbs. is too low and not reflective of costs under the Livestock Indemnity Program. Hoeven also said some coverage is needed for animals that get sick and die later – delayed losses. Vilsack told him, “We’re focusing on those two issues” – timeliness and “taking a look at payment rates.” Vilsack says it’s “challenging” because USDA needs to tie livestock aid with what is done for crops. His agency is also looking at ways to “potentially provide for more production information” for “better understanding of how to value livestock at various times depending on the disaster, depending on the weight.”

Vilsack also noted he is traveling to Germany and Poland on Thursday to assess the situation in Ukraine and its impacts.

A topic that wasn’t addressed at the hearing but should have been – Farmers are confused when USDA sends them a check because they are unclear what it is for and how it was calculated. USDA should clearly identify what the payment is for and how it was calculated.  Someone who farms crops and raises livestock can’t know for sure whether they received a payment for livestock losses or crop losses. And they can’t know if the calculation is right because it currently doesn’t indicate anywhere.

Democrats toss $500 million ag-related package linked to Ukraine aid... There was very little Democratic support for President Joe Biden’s $500 million ag aid proposal as part of the bigger Ukraine aid package. Reason: It didn’t make much sense. Recall this was the package of much higher loan rates for some commodities and other schemes to woo more 2023 plantings for wheat and soybeans. But Biden’s proposed $20 million in funding for the Bill Emerson Humanitarian Trust for global food aid made it into the final bill.

Now what? USDA is looking at “administrative changes” it can make without congressional approval.

Gasoline prices hit record-high... The national average price for regular gasoline climbed more than 4 cents today to $4.37 a gallon, a new record high, according to AAA. That topped the prior record of $4.33 set on March 11. The gas spike — prices are up 17 cents in the past week alone — will only add to inflationary pressures that have raised recession fears, rocked financial markets and soured Americans’ views on the economy.

West coast ports labor-contract talks start... Talks to negotiate new labor contracts for 22,000 dockworkers at 29 West Coast ports in the U.S. started today, two days ahead of schedule. Negotiations between the International Longshore and Warehouse Union and about 70 employers represented by the Pacific Maritime Association are taking place in San Francisco, the union and the PMA said. Talks are scheduled to continue on a daily basis until an agreement is reached, it said. The current contract expires July 1.

SEC extends deadline for public comments re: climate change proposal... The Securities and Exchange Commission (SEC) extended how long the public will have to weigh in on a proposal that would require companies to reveal their vulnerabilities and contributions to climate change. In a Monday press release, the SEC said people will now have until June 17 (from May 20) to comment on the proposal, which would require publicly traded companies to tell investors how climate-related risks like severe weather and efforts to limit their fossil fuel use may impact their business. It would also require publicly traded companies to disclose their own contributions to climate change, by making them reveal information about how much their activities directly add to climate-warming emissions. If it is deemed “material” to investors, companies would also have to disclose emissions they indirectly cause, such as those that come from using their products.

SEC Chair Gary Gensler said in a statement it would extend the proposal’s comment period due to “significant interest” from investors and others. “Commenters with diverse views have noted that they would benefit from additional time,” he said. “I’m pleased that the public will have additional time to provide thoughtful feedback.”

Glauber to be interim head of AMIS... Joseph Glauber will serve as interim Secretary of the Agricultural Market Information System (AMIS) following the retirement of Abdolreza Abbassian in January. Glauber is currently a Senior Research Fellow at the International Food Policy Research Institute (IFPRI) in Washington. Prior to joining IFPRI in 2015, Glauber spent over 30 years at USDA,  including as Chief Economist from 2008 to 2014.

AMIS is an inter-agency platform to enhance food market transparency and policy response for food security. It was launched in 2011 by the G20 Ministers of Agriculture following the global food price hikes in 2007-08 and 2010. Bringing together the principal trading countries of agricultural commodities, AMIS assesses global food supplies (focusing on wheat, corn, rice and soybeans) and provides a platform to coordinate policy action in times of market uncertainty. AMIS is composed of G20 members plus Spain and seven additional major exporting and importing countries of agricultural commodities.