Evening Report | March 8, 2024
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Please fill out our acreage survey... You should have received our annual spring acreage survey via e-mail last week. Please fill out the survey with your current planting intentions for this year. We’ll cover results and our acreage forecasts ahead of USDA’s March 28 Prospective Plantings Report. Click here to fill out the survey if you haven’t already responded. Please complete the survey only once.
Your Pro Farmer newsletter is now available... USDA made no changes to its U.S. corn and soybean ending stocks forecasts, but it cut global carryovers. While more market attention was on USDA’s Brazilian crop estimates, those figures remained well above private crop forecasters. Funds covered some of their massive combined net short position in the corn, soybean and wheat markets last week, but remain heavily short. It’s likely going to take a catalyst to trigger a strong and sustained wave of fund short-covering. With new-crop supplies available due to the quick and early harvest, Brazil’s soybean exports surged in February. Meanwhile, China imported far fewer soybeans during the first two months of this year than in 2023 due to poor crush margins, the Lunar New Year celebration and delays in customs clearance at ports. China set its annual economic targets at levels similar to last year. Beijing’s agricultural blueprint includes added funds for grain stockpiling, broader crop insurance for grain farmers and stabilization of the meat and dairy industries. China also touted its progress in the electric vehicle industry. We cover all of these items and much more in this week’s newsletter, which you can access here.
Most of USDA’s changes were to global ending stocks... USDA made no changes to its U.S. corn and soybean ending stocks forecasts this month. It raised wheat ending stocks and cut projected cotton carryover. Global ending stocks were lowered for corn, soybeans, wheat and cotton. USDA trimmed its Brazilian crop forecast 1 MMT to 155 MMT, though that’s well above most private crop forecasts, while it left the Argentine soybean crop unchanged at 50 MMT. USDA raised its Argentine corn crop estimate 1 MMT to 56 MMT but left Brazil’s corn crop at 124 MMT. Click here for full report details.
Confidence rising over quick transition to La Nina... World Weather Inc. says its confidence is rising there will be a quick climate transition to La Niña by July. In the past, when there has been a quick transition from El Niño to La Niña, there was a strong tendency for drier- and warmer-biased conditions in the Corn Belt and Plains. World Weather notes, “Spring weather will have much to say about how well crops will handle the drier and warmer conditions.”
World Weather says with dryness and drought of varying degrees across the Corn Belt, there is a need for timely rains during the second half of this month and April, ahead of corn and soybean planting.
Spending bill update... The Senate voted on Friday to advance a $460 billion package of six spending bills to fund an array of federal departments ahead of a partial government shutdown deadline at midnight. The 63-35 vote to advance the legislation sets up a vote on final passage sometime later Friday or possibly Saturday. Conservative critics of the bill could still stage a filibuster on the floor to delay it until Saturday to protest the earmarks and lack of policy riders addressing border security and their other political priorities. Some 14 Republican senators voted to advance the legislation while one Democrat voted no.
U.S. not facing sugar supply crisis... “The U.S. does not face a looming sugar supply crisis despite drought and mismanagement in Mexico,” says Rob Johansson, Director of Economics and Policy Analysis at the American Sugar Alliance. In reaction to a recent sugar outlook item, Johansson writes: “The U.S. is projected to produce a near record amount of sugar from domestically grown sugarbeets and sugarcane. Due to the short crop in Mexico, it is likely that high-tier imports will grow to record levels in 2023-24. In fact, U.S. sugar importers say they will likely resort to more high-tariff imports to compensate for Mexico’s lower production. USDA currently estimates high-tier entries at 715,000 STRV for 2023-24. Those imports have been rising over the past few years and totaled 454,706 STRV last year. Given that, the U.S. market is supplied with sugar from more than 60 countries, and the raw price in the U.S. has been tethered to the world raw price (separated by transportation costs and the high-tier tariff) for several years now. As world prices go up or down, so will U.S. prices.”
Johansson adds: “Recent projections by USDA at the Agricultural Outlook Forum in February indicate a rebound in Mexican sugar production for the upcoming year (2024-25), although not enough to offset high-tier imports, which are expected to be in the range of 400,000 STRV. That will be contingent on how USDA decides to utilize their authorities to reallocate the TRQ shortfall, to increase the TRQ (see related item above), or to allow additional access to Mexico. It is possible that U.S. sugar users may be forced to rely on additional high-tariff alternatives. It is unlikely that the level of high-tier imports would have much impact on U.S. prices, which are more determined by world raw and refined prices and transportation costs in the current economic environment.”
“It is unavoidable that the shortage in Mexican sugar production will impact U.S. imports,” Johansson reasons, “since in most years Mexico is the major supplier to the U.S. market. Given USDA anticipates a partial rebound in Mexican production in the upcoming year, it is likely that the level of high-tier imports will decline in 2024-25. Additionally, adverse weather conditions globally, such as caused by El Niño, may further strain world sugar producers, contributing to higher global prices, which would push U.S. prices up. Of course, with a record 2023-24 sugar export year in Brazil (the world’s largest exporter) and the potential for additional production in 2024-25, any projections of next year’s supply and prices remain preliminary.”
South Dakota lawmakers pass bills protecting landowners in carbon pipeline project... In South Dakota, after years of debate surrounding a proposed carbon dioxide pipeline, lawmakers passed three bills aimed at bolstering protections for landowners while maintaining a regulatory path for the project. The bills were approved by both the state House of Representatives and Senate, and are now awaiting the governor’s final approval, according to the Bismarck Tribune. Governor Kristi Noem expressed her intention to sign the bills, emphasizing the importance of providing new protections for landowners while facilitating economic growth through a transparent process.
The proposed pipeline, by Summit Carbon Solutions, aims to collect carbon dioxide from ethanol plants across several states and transport it to North Dakota for underground storage. The project is intended to take advantage of federal tax credits incentivizing carbon dioxide removal.
The bills address various issues related to the project, including surveying, easement agreements, compensation for landowners and liability for damages caused by the pipeline. They also outline new landowner benefits and protections, including restrictions on easement durations and requirements for pipeline burial depth.
While some lawmakers and outside groups have raised concerns about the project’s environmental impact and potential tax burdens, others have praised the legislation for providing regulatory certainty and protections for landowners and businesses.
Bottom line: Overall, the passage of these bills represents a compromise aimed at balancing economic interests with environmental and landowner concerns in the context of the proposed carbon dioxide pipeline project in South Dakota.
Farmers increasingly using solar power... U.S. farmers are increasingly turning to solar power as a means of stabilizing their incomes amid fluctuating crop prices and growing expenses. With cash receipts for crops like corn, soybeans and other commodities expected to plummet by double-digit percentages this year, many farmers are seeking alternative revenue streams.
This shift toward solar energy is a significant component of the renewable energy movement in the U.S., with a substantial portion of future solar development projected to occur on agricultural land. President Joe Biden’s Inflation Reduction Act (IRA/Climate Bill), which offers tax incentives for solar developers, is expected to further accelerate this trend, with the country’s top agricultural states set to receive substantial clean power investments by 2030.
The adoption of solar energy by farmers comes in various forms, including leasing land to developers or installing their own solar panels. This trend is evident in the significant increase in the number of farms with solar installations over the past five years.
However, some farmers express concerns about the potential impact of widespread solar development on agricultural land. They fear valuable farmland will be lost, exacerbating existing challenges faced by the farming community. Despite these concerns, many farmers view solar energy as a valuable asset that complements traditional farming practices, providing a stable source of income and acting as a form of insurance against market volatility.
Bipartisan report on agricultural labor issues and H-2A program reform... The Bipartisan House Agriculture Labor Working Group recently published a report focused on identifying workforce issues within the nation’s agricultural sector and proposing policy recommendations to address shortcomings in the H-2A visa program. Chaired by Reps. Rick Crawford (R-Ark.) and Don Davis (D-N.C.), the working group’s report comprises 21 recommendations, with 15 receiving majority support and six lacking it. Additionally, five recommendations were considered but ultimately omitted.
Although the House Agriculture Committee lacks direct authority over the H-2A program, which falls under the Labor Department’s jurisdiction, the chances of enacting legislation to implement the proposed changes appear slim.
Commenting on the report, American Farm Bureau Federation President Zippy Duvall noted that while the recommendations do not fully tackle all labor challenges faced by farmers, they offer vital solutions. These include streamlining H-2A employee recruitment and hiring processes, expanding the program to accommodate year-round needs, implementing a pay structure based on daily duties, and reforming wage calculation standards to ensure stability in farmworker pay rates. Duvall emphasized the urgent need to address the broken workforce system, citing its contribution to the rapid decline of farms in America. He underscored bipartisan consensus on the imperative to enhance the H-2A program for the benefit of the agriculture sector.
China spying concerns at ports increasing... Concerns are growing over potential Chinese espionage through port container cranes, as a congressional probe has identified communications equipment on some of these cranes, fueling fears of national security risks, the Wall Street Journal reports. The investigation revealed the presence of over a dozen cellular modems on crane components at one U.S. port, with another modem found in a server room at another port.
While it is common for modems to be installed on cranes for remote monitoring and maintenance tracking, some ports using cranes manufactured by China’s ZPMC had not requested this capability. Lawmakers noted ZPMC had repeatedly sought remote access to U.S.-based cranes and other maritime infrastructure.
This discovery is likely to bolster White House efforts to replace the Chinese-made cranes with equipment and technology sourced from the U.S., as outlined in a recent maritime security directive.
