Evening Report | Aug. 31, 2021

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SovEcon cuts its Russian wheat crop estimate… The ag markets research firm made another cut to its Russian wheat crop estimate, dropping it from 76.2 MMT to 75.4 MMT, citing low spring wheat yields. Crops in the Urals and Volga Valley were held back by hot, dry weather during the summer. Losses there were only partially offset by higher estimates for the Center, the South and Siberia. Earlier this month, USDA estimated the Russian wheat crop at 72.5 MMT, excluding Crimea.

Argentina extends limits on beef exports another two months… Argentina’s government has extended its restrictions on beef exports until the end of October, a politically charged move that’s likely to anger the country’s meat producers. The government in June limited exports of some beef cuts until the end of the year and capped beef exports at 50% of the previous year’s level until the end of August. That followed a brief ban on exports of beef.

President Alberto Fernandez’s move comes ahead of midterm elections this fall, with the government hoping to curb any price rises for beef that might cost his party more votes. A decree published in the official gazette says, “In the short term, the tool of limiting sales abroad is essential to guarantee Argentines access to beef in the face of the sharp increase in prices for consumers.”

Miguel Schiariti, head of Argentina’s meat industry chamber CICCRA, told Reuters the sector had lost around $100 million in exports during July due to the restrictions, adding that the limits could push prices even higher.

Attaché: Covid-19 to have lingering impact on Brazil’s livestock sector… A USDA attaché in Brazil “anticipates that challenges faced by the Brazilian bovine and swine sectors since the onset of the Covid-19 pandemic crisis should remain until 2022. The outlook for production, trade, and sector expansion in 2022 is similar to that of 2021.”

The post expects Brazil’s cattle herd to climb around 1% in 2021 and for the herd size to remain stable in 2022. Rising prices for both corn and soymeal have driven production costs higher and they are expected to remain elevated in 2022. Beef consumption is also expected to slide 8% in 2021 and then rise just 1% in 2022 due to high meat prices and lower disposable income for families. Consequently, the attaché expects Brazil’s beef production to fall around 6% in 2021 to 9.5 MMT carcass weight equivalent and then rise 2% in 2022 thanks mainly to improving foreign demand. Strong global demand and a devalued domestic currency should lift exports of beef. The post expects Brazil’s beef exports to climb 2.5% in 2021 and 2.0% in 2022.

The swine sector faces similar challenges as the bovine sector, though production costs should be more stable the latter half of 2021 and domestic consumption of pork is expected to climb slightly. The attaché expects Brazilian hog production to climb 2.8% this year and 1.8% in 2022, thanks to high export demand, especially from Asia, some leveling of production costs from mid-2021 onward and “growing substitution of beef protein for pork meat in Brazil.” The post expects Brazilian pork exports to climb 12.1% in 2021 and 6.8% in 2022.

The post lays out some uncertainties for the animal protein sector in 2022, including an “unstable political scenario, together with the presidential election; unpredictable crop harvests, due to climatic instability and farmers’ shift from livestock to crop production; and potential reduction in China’s demand for both pork and bovine meat.”

Hours of service waiver extended for livestock haulers… The Federal Motor Carrier Safety Administration has extended its hours of service (HOS) exemption for haulers of livestock and livestock feed across the 50 U.S. states and the District of Columbia. The declaration that was initially issued mid-March in response to the Covid-19 pandemic and the latest extension will waive HOS regulations through Nov. 30, 2021.

Current HOS rules allow for 11 hours of drive time, 14 hours of on-duty time, and then require 10 consecutive hours of rest.

The National Cattlemen’s Beef Association applauded the move and said it will continue to work toward additional, more permanent flexibility under the HOS.

Lengthy to-do list when lawmakers return… When lawmakers return in September, they will have to deal with the following.

• Fiscal 2022 funding for government agencies (fiscal year 2021 ends Sept. 30).
• The debt ceiling that the Congressional Budget Office estimates could be reached in October or November.
• The expiration of several programs responding to the Covid-19 pandemic.
• Additional unemployment benefits, paid leave credits and a prior SNAP/food stamp increase, all of which expire in September.
• Centers for Disease Control and Prevention’s eviction moratorium that extended through Oct. 3.
•  The Senate-passed bipartisan infrastructure package; the House will take that up by Sept. 27.
• The $3.5-trillion reconciliation process to bypass a GOP filibuster and clear the “human infrastructure” package. 

Pfizer board member: ‘natural immunity’ against Covid-19 needs to be included in policy discussions… Former Food and Drug Administration Commissioner Scott Gottlieb, who is also a Pfizer board member, noted that “natural immunity” gained from a prior Covid-19 infection needs to be included in discussions about virus-related policies and mandates. “The balance of the evidence demonstrates that natural immunity confers a durable protection,” Gottlieb said during an Aug. 30 interview, referring to a landmark new preprint Israeli study that found that prior Covid-19 infection confers more protection against the virus than any of the vaccines. “It’s fair to conclude that.”

Although Gottlieb said he would “be careful” about concluding whether natural immunity provides better protection against transmitting the virus, officials “should start assimilating that into our policy discussions.” “Natural infection confers robust and durable immunity,” he said, citing the Israeli study and others. However, whether natural immunity or vaccines are better than one another “isn’t that material” when it comes to policy discussions, Gottlieb said.

Vilsack will be a guest on Farm Journal’s Farm Country Update on Thursday… Secretary of Agriculture Tom Vilsack will join Clinton Griffiths, host of AgDay TV and editor of Farm Journal magazine, for a town-hall-style conversation around the most critical topics in agriculture during Farm Journal’s next Farm Country Update. The free webinar titled “American Ag Policy: A Conversation with the Secretary of Agriculture” is set for Sept. 2, 2021, at 2 p.m. CDT. Audience participants will be able to submit questions during the event. Register now for this free online event at www.farmjournal.com/farm-country-updates/.