Evening Report | April 17, 2024

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

Exchange: Argentina’s corn crop ‘likely’ faces more cuts.... Argentina’s corn production, already cut sharply due a stunt disease spread by leafhopper insects, was “likely” to be cut further, the Rosario Grain Exchange said. “Corn is very affected and this is something we fear and that worries us," Cristian Russo, head of agricultural estimates at the exchange, told Reuters. “It is likely that this will be a factor in further losses, which will not be minor losses.”

Russo said that in the worst-hit northern provinces such as Chaco, Santiago del Estero and Tucumán, the losses caused by the disease ranged between 40% and 50%, when normally the figure only reach 5% at worst. He added that severe cases of leafhoppers, which thrive in humid and warm conditions, were also being seen in regions where they usually did not appear, a reflection of the unusual nature of this year’s damaging outbreak.

“It has reached areas where it never reached before. It took the technicians by surprise. It hit the center and north of (the province of) Santa Fe and (the province of) Córdoba very hard and reached the (agricultural) core region,” Russo said.

Beige Book: Economic activity expanded slightly... The Fed’s Beige Book noted 10 out of 12 districts experienced slight or moderate economic growth since late February, while the other two reported no change in activity. The Fed noted, “The economic outlook among contacts was cautiously optimistic, on balance.” Specific to agriculture, districts reported:

Atlanta: Agricultural conditions showed modest improvement in recent weeks. The cattle market saw continued resilience as limited supply kept prices high. Record inventories of milk depressed prices, but demand for dairy was strong and growing. Some increase in demand for poultry led to more optimism in the market, but many producers struggled as significant export restrictions remained in place. There was a modest increase in demand for lumber, and expectations are for steady sales going forward. Florida growers reported high demand for citrus, but some softness in the row crop market.

Chicago: Prospects for 2024 farm income were little changed overall for crop and livestock producers with contacts continuing to expect incomes in 2024 to fall below 2023 levels. Field work in preparation for planting was well ahead of the usual pace given warmer-than-usual temperatures. Precipitation across the District improved water levels, though some areas remained in drought. Corn and soybean prices increased slightly amid expectations that farmers would plant fewer of these crops than earlier anticipated. Wheat prices were generally lower. Egg prices fell, most dairy prices were down, and hog prices were higher. Cattle prices rose despite a decline toward the end of the period after news of an avian flu outbreak in cattle raised concerns that beef demand would weaken.

St. Louis: District agriculture conditions have remained unchanged since our previous report. Total acres planted as of the end of March are about the same as this time last year. However, contacts in Arkansas said they're closely watching weather over the next few weeks; if conditions remain wet, that will limit future plantings and may force producers to plant later than is ideal. The distribution of crops is expected to shift: The number of acres of corn planted decreased, especially in Arkansas and Mississippi, while plantings of cotton, rice, and soy increased. For corn and cotton, this marks a return to 2022 acreage. Several District contacts reported feeling price pressures due to higher travel costs of bringing in H2A visa labor. Contacts also noted difficulties accessing farming equipment due to high costs and delays, particularly for repairs.

Minneapolis: District agricultural conditions were stable at low levels. Contacts expected decreased farm incomes in the region for the 2024 growing season. Warm weather along with widespread mild drought conditions led to a mixed outlook heading into spring planting.

Kansas City: Agricultural economic conditions in the Tenth District continued to moderate through the end of March. Agricultural bankers reported a mild deterioration in farm borrower liquidity and a gradual softening in farm loan repayment rates. Crop prices were subdued, and some contacts reported slightly higher instances of carryover debt than a year ago. Cattle prices remained strong, however, and provided ongoing support to the sector. Elevated production expenses and high financing costs remained ongoing concerns for all types of operations. Drought was also cited as an issue in some areas of the region. Farm real estate values increased at a slower pace compared to recent months, but valuations were strong despite the moderation in the farm economy.

Dallas: Drought conditions remained prevalent in West Texas and southern New Mexico, while the rest of the District received ample rainfall over the reporting period. Texas experienced the largest wildfire in state history, burning over a million acres in the Texas Panhandle in late February and early March. Several thousand cattle were lost, and the fire destroyed infrastructure and pastures used for grazing. An illness recently identified as avian influenza has been afflicting chickens and dairy cows in the Texas Panhandle, leading to lower milk production. The extent of the impact to dairy product supply, if any, is unknown at this point, but contacts noted that there is not a food safety issue. More cotton acres are expected this year as prices are relatively strong compared with corn and sorghum prices, which are at three-year lows. Contacts were optimistic about crop production prospects this year. On the livestock side, cattle prices pushed to record highs and beef demand has held up well.

San Francisco: Conditions in the agriculture and resource-related sectors were mixed, similar to the previous reporting period. Logging activity rose slightly on account of stronger domestic demand and more limited supply from international producers of lumber and plywood. Seafood stocks and yield crops, such as those of nuts and apples, remained high and exceeded domestic demand, leading producers to export excess supply. Retail and food service demand for agricultural products was flat to down. Transportation and packaging costs were stable to down, and growers noted that recent rainfall, while providing much-needed water for crops, caused flooding and damage. One contact in the Pacific Northwest noted that more growers have utilized temporary foreign worker programs to address domestic labor shortages in hiring for this year's harvest season.

Drop in cattle placements expected... USDA’s Cattle on Feed Report on Friday afternoon is expected to show the April 1 feedlot inventory up 2.1% from year-ago at 11.856 million head, which would be the seventh straight month of year-over-year increases in feedlot numbers. After a sharp increase in the number of calves moved into feedlots during February, placements last month are expected to have declined 7.0% from last year. Marketings are expected to be down 11.9%.

Vilsack, NASS criticized for canceling key reports, especially Cattle Inventory Report... Last week, USDA’s NASS announced it was discontinuing some data/reports, including the July Cattle Inventory Report. This isn’t the first time USDA/NASS has canceled the Cattle Inventory Report, only to eventually get more funding from Congress. But this time, veteran ag stakeholders are asking questions such as:

1.    What did NASS propose as their funding level to USDA Secretary Tom Vilsack and was that funding level met or reduced and if so, by whom?

2.    Why did NASS choose to discontinue the important July Cattle Inventory Report at a critical time when more information is needed by the cattle sector?

3.    Vilsack is pushing millions of dollars into expanding meat processing but is not giving the cattle industry information it needs. What’s the logic in that?

4.    Vilsack can sometimes find billions of dollars for nutrition and so-called “climate-smart” funding but not enough for a well-established cattle survey?

During USDA’s data users meeting on Tuesday, asked if the decisions were due to funding shifted to other projects or priorities within the Biden USDA, Statistics Division Director Troy Joshua flatly rejected that possibility. “We did not shift any money around due to pressure from above, sideways or anywhere else,” he said. “We received our appropriated level, albeit halfway through the year.” Officials also stated the fiscal year (FY) 2023 budget for NASS was $211.1 million while the FY 2024 figure was $187 million. “That places us in a difficult situation,” Joshua stated. “We would love to get it in October, but when we get it in March, it is a difficult situation.” He said the agency was re-evaluating the situation for FY 2025 and “if someone is willing to fund it, we will do it.” He further said that if funding were arranged soon, the effort could be revived for 2024 crops. Officials also pointed out that USDA’s Risk Management Agency (RMA) releases county data that could serve to fill in without the NASS data being available.

Vilsack also was asked about the NASS report situation in his testimony Monday on the FY 2025 USDA budget before the Senate Appropriations Agriculture subcommittee. He echoed the sentiment that the budget approved for USDA was delayed by five or six months and contained cuts for NASS and other areas at USDA. That delay in funding means “the ability and the options available for dealing with a cut in the budget are limited,” he observed. But he did not offer any ways to address the situation other than urging lawmakers to get the funding decisions made on time, nor did lawmakers question Vilsack on whether other funding avenues could have been explored.

American Farm Bureau Federation President Zippy Duvall is also criticizing the USDA decision to cut some reports. In a letter to USDA, Duvall says the decision to cancel the July Cattle Inventory Report “runs counter to previous commitments to improve fair, competitive and transparent markets.” By discontinuing the report, “NASS cancelled one of the very tentpoles of cattle market transparency,” Duvall stressed, adding the decision could stymie Land Grant universities from conducting crop and livestock research. He urged NASS to “reconsider the decision to discontinue this critical reporting.”

The National Grain and Feed Association (NGFA) in a letter to Vilsack stressed the importance of NASS reports, particularly county estimates, in agribusiness operations. In the letter, NGFA highlighted the critical role this data plays in supply and demand estimations, which are vital for operational planning and commodity sourcing. “For example, it would become more difficult for an exporter to participate in the export sales market without an accurate knowledge of how much grain is in their draw area. Also, processors and livestock feeders would have problems making appropriate purchase decisions to keep their operations continuously supplied,” the group said. NGFA expressed concerns about the discontinuation of county estimates and emphasized the need for these data to ensure efficient supply chains. NGFA seeks to collaborate with USDA to address budgetary constraints while safeguarding the integrity of county estimates.

USDA assures minimal dairy trade disruptions amid HPAI concerns... Vilsack reassured there haven’t been significant disruptions in dairy trade despite the discovery of highly pathogenic avian influenza (HPAI) in U.S. dairy cattle. Vilsack stated that most trading partners haven’t halted imports of U.S. dairy products, with only a few expressing concerns. He emphasized proactive outreach to assure partners of safety measures and low risks associated with U.S. milk. USDA plans extensive research to understand virus transmission and potential biosecurity measures needed.

Biden mulls tripling tariffs on Chinese steel and aluminum... President Joe Biden is responding to concerns about the U.S. steel industry’s viability amid intense competition from Chinese exports. In a move reminiscent of former President Donald Trump’s trade policies, Biden is considering tripling tariffs on Chinese steel and aluminum imports under Section 301 of the Trade Expansion Act. This decision stems from worries that China’s steel production, which exceeds half of global output, floods markets with cheap products, undercutting American steel. Notably, Chinese steel production lacks the environmental regulations imposed domestically in the U.S., contributing to its lower prices. The proposed tariffs aim to level the playing field and protect American steel jobs. Despite concerns about inflation, the administration believes the tariff increase won’t exacerbate it. Biden’s administration opposes the $14.9 billion sale of U.S. Steel to a Japanese corporation, expressing worries about its impact on the industry. The move on tariffs follows Treasury Secretary Janet Yellen’s discussions with Chinese leaders, highlighting concerns about China’s economic practices. The timing and implementation of the proposed tariffs remain uncertain pending a statutory review.