Evening Report | March 16, 2023

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

Spring weather outlook keeps La Niña influence... U.S. government forecasters signal La Niña has ended and ENSO-neutral conditions are expected through spring and early summer. But the extended weather forecast from the National Weather Service continues to indicate La Niña-like weather will persist through June. The 90-day forecast for the April-June period calls for above-normal temps over the Southern Plains, and nearly the entire eastern half of the country. Below-normal temps are expected across the northwestern Corn Belt, with “equal chances” for above-, below- and normal temps through the central Corn Belt. The 90-day precip forecast shows elevated odds of below-normal rainfall over the southwestern Plains, with above-normal rains likely from the eastern halves of Minnesota, Iowa and Missouri eastward across the eastern Corn Belt and Mid-South. There are “equal chances” for precip across much of the western Corn Belt and Central Plains during the 90-day period.

If the forecast verifies, it suggests drought will persist in key HRW wheat areas, while spring planting may be slowed in the Northern Plains/northwestern Corn Belt. The bulk of the Corn Belt should experience favorable planting conditions as long as rains aren’t too heavy in eastern areas.

Drought footprint continues to shrink... As of March 14, 52% of the U.S. was covered by abnormal dryness/drought, down three percentage points from the previous week. USDA estimated 53% of U.S. winter wheat areas were covered by drought, down two points from the previous week. Drought coverage for winter wheat included 15% “moderate” (D1), 11% “severe” (D2), 14% “extreme” (D3) and 13% “exceptional” (D4).

In HRW areas, dryness/drought covered 84% of Kansas (52% D3 or D4), 54% of Colorado (2% D3, virtually no D4), 66% of Oklahoma (37% D3 or D4), 78% of Texas (14% D3 or D4), 100% of Nebraska (34% D3 or D4), 100% of South Dakota (0% D3 or D4) and 84% of Montana (3% D3, no D4).

The Drought Monitor noted: “The ‘hot spot’ for drought in South remained the southern tier of the region, across northern, central, and western Oklahoma and roughly the western two-thirds of Texas. According to the U.S. Department of Agriculture, 68% of the rangeland and pastures in Texas were rated in very poor to poor condition on March 12, along with 50% of the winter wheat and 47% of the oats. Additionally, statewide topsoil moisture in Texas was rated 69% very short to short, with values ranging from 92% to 100% very short to short across the Northern and South High Plains, Trans-Pecos, Edwards Plateau, Coastal Bend, and the South region. Meanwhile in Oklahoma, statewide topsoil moisture was categorized as 49% very short to short. Rangeland and pastures in Oklahoma were rated 60% in very poor to poor condition on March 12, while 44% of the state’s winter wheat was rated very poor to poor. Notably, an extremely sharp gradient existed across eastern sections of Oklahoma and Texas between drought-free conditions to the east and moderate to exceptional drought (D1 to D4) to the west.”

The Seasonal Drought Outlook calls for drought to persist across southwestern areas of the Plains, including the western halves of Kansas, Oklahoma and Texas. Drought improvement or removal was expected in other HRW areas.

In SRW areas, dryness/drought covered 3% of Missouri, 0% of Illinois, 0% of Indiana, 0% of Ohio, 16% of Michigan, 0% of Kentucky and 0% of Tennessee. None of the drought in these SRW states is classified as D3 or D4.

Click here for additional information and related maps.

U.S. importers paid for most of China tariffs... U.S. importers bore almost the entire burden of tariffs that former President Donald Trump placed on more than $300 billion in Chinese goods during his presidency, raising costs for American companies, said a report by the independent U.S. International Trade Commission (ITC). The bipartisan entity that analyzes trade issues found an almost one-to-one increase in the price of U.S. imports following the Section 301 tariffs, it said in a report on Wednesday. The study came in response to a directive from Congress as part of a law passed last year.

Some of the report’s findings:

• Prices for imports from China across some of the most affected industries — including imports of computer equipment, semiconductors, furniture and audio and video equipment — increased as much as 25% in 2021.
• In the same year, prices of U.S.-produced goods in some industries rose 3% to 4%.
• Imports of the affected products from China declined to about $265 billion in 2021 from $311 billion in 2017, the year before the duties were imposed.
• Across all affected sectors, the duties lowered Chinese imports by 13% during 2018 to 2021, raised U.S. output by 0.4% and increased prices of US products by 0.2%.

The conclusions back assertions from many that the cost of the tariffs hurt American firms and contradict Trump’s claim China paid the ultimate cost of the duties.

ITC’s commissioners weren’t all on the same page about the report, with Jason E. Kearns saying it painted an incomplete picture.

President Joe Biden’s administration has kept the tariffs on imports of Chinese goods in place for more than two years and is currently undertaking a review of the duties to evaluate their effectiveness and decide if they should continue.

Firm cuts EU wheat crop, export forecasts... Consultancy Strategie Grains cut its forecasts for European Union soft wheat production and exports. The firm now expects EU soft wheat output of 129.5 MMT in 2023-24, down 200,000 MT from its prior forecast. That would still be 3.5% higher than 2022-23 output, which was revised lower to 125.1 MMT.

Strategie Grains cut its export outlook for the current marketing year by 100,000 MT to 30.0 MMT due to lower-than-expected shipments from Bulgaria and Romania. It reduced its outlook for EU soft wheat exports in 2023-24 by 300,000 MT to 30.3 MMT.

ECB hikes rates by 50 bp to fresh 14-year high... The European Central Bank (ECB) raised interest rates by 50 bps on Thursday, further pushing borrowing costs to the highest level since late 2008, to help temper the region’s stubbornly high inflation. Policymakers also said the euro area banking sector was resilient, with strong capital and liquidity positions, and that they were monitoring current market tensions closely, while they stood ready to respond as necessary to preserve price stability and maintain financial stability in the region. The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility were all increased to 3.50%, 3.75% and 3.00%, respectively.

Perspective: Christine Lagarde, the bank’s president, had all but committed to a half-percentage-point increase, traders and economists were increasingly betting that it would raise rates by only 25 basis points to avoid further hammering the value of banks’ bond holdings. They were wrong.

Farm bill listening sessions: Same things keep being repeated... During Wednesday’s session, farmers and ag industry officials raised many of the same concerns they have during other meetings on the new farm bill. They included:

• Congress needs to modernize the crop insurance program.
• Lawmakers must update Title I to reflect higher input costs and volatile commodity markets.
• “Keep the importance of access to SNAP and the adequacy of those benefits top of mind throughout farm bill discussions.” Celia Cole, chief executive of Feeding Texas, a network of 21 food banks, said SNAP should be expanded to include low-income college students. Cole also said, “Work requirements are not an effective tool to improving employment outcomes.” Conservative lawmakers are expected to seek stricter work requirements for SNAP beneficiaries this year.
• Dale Murden, president of Texas Citrus Mutual, said payment limits should be addressed along with the rules that deny subsidies to people with high incomes. If three-fourths of their income is from agriculture, there should be no barrier to eligibility, he said.
• “A permanent disaster program would be beneficial,” said Murden, because crop insurance is not available for all crops. "We need disaster assistance, better crop insurance and we all need stability with our own water resources," Murden said.
• Brett Erickson, who represented the Texas International Produce Association, the Texas Vegetable Association, and the International Fresh Produce Association, asked the lawmakers for more specialty crop insurance options.
• Jerry Moody, a poultry producer from Omaha, Texas, urged the committee to consider creating flock insurance to protect revenue for poultry growers. He said a common misconception about the poultry industry is that growers don't have any risk, a notion that he said "cannot be further from the truth… There are so many things that are out of our control, whether it be disease [or] no antibiotics anymore," Moody said.

House Ag Chairman G.T. Thompson (R-Pa.) said he wants to enact a new farm bill before the 2018 farm policy law expires for some provisions this fall.

U.S. farm, food groups urge Congress. More than 50 U.S. agriculture and food groups urged Congress on Thursday to approve new legislation that would pave the way for the United States to negotiate more free-trade agreements, arguing that without them American agriculture was falling behind global competitors. The groups, representing a wide variety of U.S. agricultural exports from corn to dairy, mean, fresh produce and other products, said that efforts by the Biden administration were not enough to overcome the growing network of free-trade deals forged by the European Union, China and other countries.

Chinese companies are shipping rifles, body armor to Russia. Customs data obtained by Politico reveals direct shipments of Chinese assault rifles, as well as drone shipments and body armor routed via Turkey and the UAE. Link for details. Chinese companies, including one connected to the government in Beijing, have sent Russian entities 1,000 assault rifles and other equipment that could be used for military purposes, including drone parts and body armor, according to trade and customs data obtained. The shipments took place between June and December 2022, according to the data provided by ImportGenius, a customs data aggregator. Russian entities also received 12 shipments of drone parts by Chinese companies and over 12 tons of Chinese body armor, routed via Turkey, in late 2022, according to the data.