Evening Report | October 14, 2022

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Your Pro Farmer newsletter is now available... USDA’s October crop reports featured some surprises, as the soybean crop was unexpectedly cut, which kept 2022-23 ending stocks unchanged. Wheat ending stocks were reduced, but not as much as traders anticipated. The report data was mildly negative for corn compared to pre-report expectations as neither the crop estimate nor carryover were lowered as much as expected. With USDA zeroing in on corn and soybean crop size, some of the focus will turn to demand, which remains a concern given transportation issues amid low water levels on the Mississippi River and the strong U.S. dollar. USDA cut U.S. 2022-23 exports by 125 million bu. for corn, 40 million bu. for soybeans and 50 million bu. for wheat. China is reportedly looking to import Brazilian corn as soon as December amid U.S. supply uncertainty and as it diversifies its suppliers. On the economic front, U.S. inflation continues to run strong, as it does around the world. Amid pressures from surging inflation, the war in Ukraine and China’s ongoing struggles with Covid, the International Monetary Fund cut its global growth forecasts for next year. The U.S. Supreme Court heard opening arguments in the ag industry’s case against California’s Proposition 12 law on animal housing. We cover all these items and much more in this week’s newsletter, which you can access here. 

Putin: Close grain corridor if used for ‘acts of terror’... Russian President Vladimir Putin said on Friday the humanitarian corridors for Ukrainian grain shipments should be closed if it emerged they were being used for what he called “acts of terror” in reference to the explosion on the bridge to Crimea. Putin said, “The FSB [Russia’s Federal Security Service] stated that, most likely, this so-called cargo, explosives, was carried by sea from Odessa, but it has not been definitively established whether this was done with the help of grain trucks or not – that’s the question. There is no answer yet." Russia has been increasingly critical of the deal it signed in July to unblock food exports from Ukraine’s Black Sea ports.

Putin also said Turkish President Recep Tayyip Erdogan proposed during their talks Thursday to structure grain shipments from Ukraine so it goes only to the world’s poorest countries.

Russian raises wheat export tax for first time in 10 weeks... Russia’s wheat export tax for Oct. 19-25 will be 2,934.3 rubles ($47.20) per metric ton based on an indicative price of $308.30. That’s up from a rate of 1,926.8 rubles per metric ton the previous week and the first increase in 10 weeks.

Key questions for China’s five-yearly congress and the new Politburo... Following are some topics Trivium China is noting ahead of China’s week-long Communist Party Congress that starts Sunday:

• How powerful will Xi Jinping emerge from the 20th Party Congress? It is all but certain that Xi will stay on for an unprecedented third term as Party General Secretary. But will he get everything he wants?
• Will Xi take on new positions or titles — like “Party Chairman,” “People’s leader,” or “Great Helmsman”?
• Will any candidates to succeed Xi be identified?
• Will current Premier Li Keqiang retire — or move to another role?
• Who will be designated to take over as the premier if Li retires or moves on?
• Who will be designated to take over as the new vice premier in charge of finance?
• Will the Party Congress report suggest a tactical or strategic shift in China’s foreign policy, as competition with the West intensifies?
• Will the Party Congress herald a shift in the mainland’s Taiwan policy. Trivium says the “most significant would be for Beijing to put forward a concrete timeline for reunification, which would represent a huge geopolitical gamble, implying the strong possibility of military action against Taiwan. Alternately, the Party Congress may simply reaffirm Beijing’s commitment to the cross-strait status quo (most likely) or extend an olive branch to Taipei (rather less likely).”

Farm Bureau seeks ‘unified’ farm bill of ag and nutrition aid... The American Farm Bureau Federation (AFBP) released its general new farm bill recommendations. “It makes perfect sense” to combine commodity supports and SNAP (food stamps) in the same piece of legislation, said president Zippy Duvall in announcing the group’s farm bill priorities. AFBF called for higher reference rates and loan rates, at a still-to-be-determined level and cost, and more emphasis on stewardship on working lands rather than long-term idling of cropland. “We believe that because of the higher cost of production, it justifies the increase in the reference prices for Title I commodities to ensure farmers remain economically viable,” said Duvall. Farm Bureau knows fully well not to be too specific ahead of its January annual confab.

First on AFBF’s agenda: “protect farm bill program spending,” followed by “maintain a unified farm bill that keeps nutrition programs and farm programs together.” They also want a robust federally subsidized crop insurance system and “adequate” staffing and funding of the USDA’s technical assistance programs for farmers and ranchers. The AFBF suggested three minor changes to public nutrition programs, including one to allow food banks to buy fruits, vegetables, and other specialty crops directly from farmers. Farm Bureau also said more milk should be eligible for the Dairy Margin Coverage subsidy program.

The enrollment cap for the Conservation Reserve Program (CRP) should be lowered from its current 25.5 million acres, Farm Bureau said, and landowners should be encouraged to return prime cropland now in the reserve to production. “We believe that the right way to do it is through working land projects,” he said. Land set-asides limit the land available for new and beginning farmers and constrict crop production in a hungry world, said Duvall.

Comments: Around 85% of all farm bill spending is on food and nutrition programs, primarily food stamps. So, there is usually a concerted battle by various groups and lawmakers over the remaining 15%. That process has begun. Therefore, total funding beyond food and nutrition spending should be increased for adequate farm policy support. One of the ways but by no means the only way to do that is via a large boost in maximum spending for the Commodity Credit Corporation (CCC).

HPAI update... USDA’s Animal and Plant Health Inspection Service (APHIS) this week confirmed additional cases of highly pathogenic avian influenza (HPAI) in commercial poultry operations, including in Beadle County, South Dakota (71,400 commercial turkey meat birds) and Utah (47,200 commercial turkey meat birds). There have now been 240 commercial flocks confirmed with HPAI during the current outbreak.

The discovery of HPAI in a flock of 56,000 commercial broiler breeder pullets in Madison County, Arkansas, has prompted fresh trade restrictions from some countries, with New Zealand, India, Jordan, Mexico and Qatar blocking imports from the county, and Singapore blocking them from an area within the county (includes small portions of Washington and Benton counties).

USDA requests comments on financial aid to those discriminated in gov’t farm lending programs... The aid comes via provisions in the Inflation Reduction Act (IRA), which earmarked $2.2 billion for the effort for those affected by prior to Jan. 1, 2021. The aid is limited to not more than $500,000 per recipient. In the Federal Register notice, USDA said while IRA provisions provide financial assistance to those affected, the effort is “more fundamentally about providing USDA the tools to rebuild that trust by directly acknowledging the wrongs that have been committed and taking concrete actions to offset those wrongs.”

USDA seeks input on how to identify those who experienced discrimination and what kind of evidence should be submitted to back up the claims, factors that should be considered relative to the aid including whether only economic loss should be considered, whether previous payments for discrimination should be considered, and where there are non-monetary ways to provide relief.

USDA is also seeking feedback on using third-party entities in determining delivery of the financial assistance and on how USDA should use other programs in conjunction with the financial assistance to those who have been discriminated against in USDA loan programs.

Comments are due by Nov. 14. USDA has also set three public listening sessions on implementing the aid on Oct. 20, Oct. 26 and Nov. 1.