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Federal Reserve Chairman Kevin Warsh made a passing reference to pain in the agricultural economy in his highly anticipated speech at an annual monetary policy forum in Jackson Hole, Wyoming, but flagged rising commodity prices as a potential worry on the inflation-fighting front.
- “Certain sectors – like housing and agriculture – are showing strains,” Warsh said. “But, on balance, I would be hard pressed to describe broad financial conditions as restrictive”
In other words, problems in those areas aren’t acting as a drag on the overall economy. Warsh overall struck a hawkish tone, saying that while key inflation readings – the consumer price index and the personal consumptions expenditure index – have shown improvement this summer “they do not tell me that underlying trends have meaningfully improved.” Fed-funds futures traders priced in a better-than-50% probability of a quarter-point rate hike next month. The dollar strengthened against major rivals.
Warsh indicated the Fed is monitoring commodity prices alongside other price trends as it assesses the inflation outlook.
- “The recent rise in overall commodity prices also bears watching,” he said. “What we need to judge is whether trends indicate upside inflation risks.”
Weekly market recap: Corn futures kicked off the week with a rally to contract highs after our Pro Farmer crop estimates reinforced expectations USDA will further cut its production outlook. Wheat took over the leadership role, however, after Russian leader Vladimir Putin signaled a sharp escalation of attacks on Ukraine, sending Chicago futures limit up at midweek. Traders are now focused on significant supply disruptions in the Black Sea region. Continued Chinese demand buoyed soybean futures while soyoil futures were buffeted by fears the Trump administration will boost biofuel blending exemptions. Cattle futures fell to eight-month lows on the southern border reopening and tariff-free imports. Lean hog futures continued to feel pressure on weak cash and product fundamentals.
- December corn rose 3 cents to $5.36 1/2, hit a contract and three-year high and for the week was up 28 cents.
- November soybeans rose 20 cents to $12.88, hit a contract and 2.5-year high and saw a weekly rise of 48 1/2 cents.
- December SRW wheat rose 23 1/4 cents to $7.84, hit a contract and three-year high and gained 84 3/4 cents on the week.
- December cotton fell 103 points to end at 91.38 cents, but logged a weekly gain of 303 points.
- October live cattle futures fell $1.20 to $211.725, for a weekly drop of $6.20. November feeders fell $1.55 to $309.25, down $6.325 on the week.
- October lean hog futures rose $1.275 to $81.90, hitting a two-week high and logging a $1.025 weekly gain.
Diesel stocks at record seasonal low: U.S. diesel supplies are at a seasonal record low, with stocks of distillate fuel oil at 103.4 million barrels as of Aug. 21, the Energy Information Administration said this week.That’s the lowest ever seen for this time of year based on data going back to the early 1980s, Bloomberg reported. While crude oil prices have retreated in August, exports of refined fuels through the Strait of Hormuz remain constrained and Russia, a top diesel producer, has suspended exports due to Ukrainian attacks on refineries. Retail diesel prices topped $5.60 a gallon, near their highs since the start of the U.S.-Iran war.
- “Not like there’s any good time for diesel prices to go up, but potentially the worst time with farmers now looking forward to harvesting their crops in the next month or so,” Patrick De Haan, executive director of GasBuddy, told AgriTalk PM’s Michelle Rook. “Diesel prices again just an arm’s reach away from record-setting territory and that could happen.”
Trump moves to let farmers process own food: President Trump announced in a Truth Social post Friday that he would move to let U.S. farmers and ranchers process their own food, while attacking what he described as a “monopoly” held by large processors. “So, in order to break this powerful monopoly, with much of its ownership based outside of the U.S., I am authorizing legal documents to be drawn in order to allow Farmers and Ranchers to be given the right to PROCESS THEIR OWN FOOD,” he wrote. “This should move quickly.”
Trump has faced a backlash from ranchers and cattle groups as well as farm-state Republicans over a decision to allow imports of 300,000 metric tons of tariff-free ground beef over 90 days.
Russian farmers call to sow less wheat: Russian farmers and market analysts have expressed skepticism over government measures aimed at maintaining grain exports in the face of a near-standstill in the Black Sea due to intensified fighting between Russia and Ukraine, Reuters reported.
The Russian government wants to reroute some exports, suspend a grain export duty until the end of the year, buy grain for state supplies, provide railroad transport subsidies and loan extensions to producers and use excess grain as livestock feed, the report noted. The Russian Grain Union’s Arkady Zlochevsky said rerouting exports won’t save the day. “This will not compensate for the lost volumes of southern shipments,” he said. “In a good scenario, only by half.”
The People’s Farmer lobby called on the government to cut the winter sowing area this year to cope with the oversupply of wheat at a meeting with government officials, the report said. The group also asked for state compensation for such cuts.