Evening Report | November 17, 2023

Evening Report
Evening Report
(Pro Farmer)

Check our advice monitor on ProFarmer.com for updates to our marketing plan.

 

Your Pro Farmer newsletter is now available... Brazil was universally projected to produce a record soybean crop at the beginning of the growing season. But after two months of extremely erratic weather, crop estimates have declined and a record crop is no longer a certainty. Despite the rough start to the growing season, analog years signal crop losses could be limited – if weather turns favorable. Central Brazil finally received some needed rains, though more will be needed. Last week’s meeting between President Joe Biden and Chinese leader Xi Jinping failed to produce any major breakthroughs, though both acknowledged their countries can co-exist and likely need the other’s support. Perhaps the most notable news from the meeting was a pledge to keep an open line of communication between the two leaders. We take an in-depth look at the U.S./China relationship in this week’s News page 4 feature. On the economic front, U.S. inflation cooled more than anticipated, which pressured the U.S. dollar and triggered a surge in the stock market. Due to Thanksgiving, your next newsletter will be dated Dec. 2. Happy Thanksgiving from Pro Farmer. Click here to access this week’s newsletter.

 

Cattle on Feed Report: Mostly neutral... USDA estimated there were 11.931 million head of cattle in large feedlots (1,000-plus head) as of Nov. 1, up 195,000 head (1.7%) from last year. That marked the second straight month of year-over-year increases in the feedlot inventory following a full year of declines. October placements topped year-ago by 3.8%, while marketings declined by 2.5%.

Cattle on Feed Report

USDA
(% of year-ago)

Average Estimate

(% of year-ago)

On Feed on Nov. 1

101.7

101.8

Placements in October

103.8

104.9

Marketings in October

97.5

97.9

Placements increased from year-ago in all weight categories except heavyweights (1,000-plus lbs.), which were equal to last year and only accounted for 3.7% of the total number of cattle moved into feedlots last month. Placements increased 2.8% for lightweights (under 600 lbs.), 2.2% for 6-weights, 4.5% for 7-weights, 5.1% for 8-weights and 7.9% for 9-weights. Placements increased 30,000 head in Kansas and 25,000 head each in Nebraska and Colorado, while Texas was unchanged and “other states” declined 1,000 head from year-ago levels.

The report data was virtually inline with expectations, which should have little impact on prices Monday. A greater focus will be on the cash cattle market as traders watch to see if prices stabilize following recent weakness.

 

Vilsack announces USDA’s plans to strengthen agricultural trade... These plans include the announcement of the 2024 USDA trade mission schedule, aimed at promoting U.S. agricultural products for export in countries like Korea, India, Canada, Colombia, Vietnam and Morocco. Ag Secretary Tom Vilsack discussed these trade missions and USDA’s trade strategies during a media event at the National Association of Farm Broadcasters convention in Kansas City.

The goal of these efforts is to diversify market opportunities for U.S. agricultural exports. Last year, U.S. agricultural exports reached a record high of $196 billion, but there was also a record ag trade deficit.

Vilsack emphasized that while trade agreements often grab the headlines, a significant amount of work happens behind the scenes to open up markets and reduce trade barriers. The nations included in these trade missions have been gradually opening up to more U.S. exports, creating new opportunities for American farmers and ranchers.

Some examples mentioned include the market opening up for U.S. grapefruit exporters in Vietnam, the reduction of retaliatory tariffs on various goods in India, Canada’s importance as an export market for U.S. ethanol and biodiesel, and Mexico granting market access to U.S. potatoes. In Japan, renegotiations of beef safeguard levels are reducing tariffs and generating growth opportunities for beef exports, and Brazil has agreed to maintain import certification requirements for U.S. milk, beef and seafood.

Vilsack also highlighted the importance of supply chain resilience, particularly considering the disruptions caused by the pandemic. USDA is considering a shift in trade strategy from a sole focus on supply chains and cost efficiency to one that emphasizes resiliency, diversification, and sustainability.

Vilsack also introduced the new Regional Agricultural Promotion Program (RAPP), which aims to diversify trade opportunities, especially in non-traditional markets, and provide resources for specialty crop exports. The program will utilize $1.3 billion from the Commodity Credit Corporation funds to expand the nation’s agricultural export opportunities. USDA will open a 30-day comment period starting today to gather input on the RAPP regulations.

 

WOTUS update... Legal challenges and disputes continue related to EPA and Army Corps of Engineers’ regulation of wetlands and waters in the United States. Some developments, according to Bloomberg:

  • Industry groups and 26 states are pursuing legal action to clarify the terms of the EPA’s Waters of the United States (WOTUS) rule and the implications of the US Supreme Court’s May ruling in Sackett v. EPA.
  • The legal actions by the states claim EPA and the Army Corps of Engineers violated the Clean Water Act and Administrative Procedure Act when updating the WOTUS rule to align with the Sackett ruling.
  • The Sackett ruling determined that only relatively permanent waters directly connected to larger navigable water bodies qualify as “waters of the U.S.”
  • The states argue that the agencies did not provide sufficient analysis or explanation of the scope of federal jurisdiction in response to the Sackett decision, leading to concerns about their commitment to following it faithfully.
  • EPA revised its WOTUS rule in August to reflect the Sackett ruling, which reduced the extent of federal wetlands protections.
  • Brenda Mallory, Chair of the Council on Environmental Quality, expressed concerns that the Sackett decision weakens environmental protections and increases the costs of water treatment.
  • The amended complaints by West Virginia and 23 other states argue that the August rule undermines state control over land management and fails to define key terms like “relatively permanent” and “continuous surface connection.”
  • Texas and Idaho argue that the rule is illegal because it oversteps state sovereignty, asserts federal authority over non-navigable waters, and did not allow for a notice-and-comment period, violating the Administrative Procedure Act.
  • EPA claims it used the “good cause” exception under the APA to quickly finalize its updated rule after the Sackett ruling, as it deemed a final WOTUS definition urgent.
  • Legal experts suggest that if West Virginia’s litigation is successful, it could force the agencies to clarify terms and demonstrate adherence to the Sackett ruling.
  • Some argue that the ongoing legal disputes may further weaken federal wetlands protections and are part of a larger political agenda by Republican attorneys general to challenge the EPA’s authority.
  • Eighteen industry groups, including mining, fossil fuels, construction, and agriculture organizations, joined the Texas lawsuit, while many other states and organizations have also become involved in the legal proceedings.

Bottom line: The legal battles are centered around the definition and regulation of wetlands and waters in the United States, with multiple states and industry groups challenging the EPA’s actions in response to the Sackett ruling. These disputes have implications for the extent of environmental protections and state sovereignty over land and water management.

 

Labor Dept. report raises concerns about fraud in foreign worker programs... The Labor Department’s Office of the Inspector General released an accountability report highlighting concerns about foreign worker programs, including the H-2A temporary agricultural visa program, being susceptible to significant fraud and abuse.

The report identifies ongoing integrity challenges in these foreign labor programs and notes that over the past decade, more than 160 criminal investigations related to fraud, including cases of human trafficking involving H-2A workers, have been conducted.

To address these issues, the report recommends the Department of Labor (DOL) take several actions, including promptly referring criminal investigations to the Office of the Inspector General, improving reporting and the application of suspensions and debarment when program abuse is detected and enhancing their statutory and regulatory authorities to address program abuse effectively.

Additionally, the report suggests DOL should expedite the processing of applications to meet workforce demands. This recommendation stems from concerns raised by H-2A employers, with nearly 80% of them attributing delays in worker arrivals to administrative delays in the application process.

 

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