Pro Farmer's Evening Report | July 9, 2021

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

Your Pro Farmer newsletter is now available!... Corn and soybean prices fell sharply coming out of the July 4 holiday weekend. Weather looks to remain generally favorable for at least another couple of weeks, which could keep selling pressure on both markets. Bulls will need bullish data from USDA in the July 12 crop reports to stem the selling pressure. But there remains very little supply-side cushion through the 2021-22 marketing year, as we highlight in our updated old- and new-crop balance sheets. See these items and much more in this week’s newsletter, which you can access here.

USDA to invest in building new meat processing plants… USDA today announced it will provide $500 million in grants, loans and technical assistance to help support “new competitive entrants into meat and poultry processing.” The funds are aimed at addressing “competition within the meat and poultry sectors and relieve supply chain bottlenecks by supporting new meat and poultry processing facilities,” USDA said. New facilities will “create competitive opportunities for producers in local and regional food systems so that farmers and ranchers have access to better choices and fairer prices.” Of the total funding, more than $150 million is earmarked to help existing, small processing facilities weather the COVID pandemic, stay in business and expand capacity. USDA has released a Request for Information (RFI), which it will soon publish in the Federal Register to solicit public input. The USDA’s announcement was largely in-line with expectations, but the funding will take time to get in place as rules take shape, “which means the situation will not likely be finalized until sometime in 2022,” IHS Markit said.

Biden signs executive order to tackle competition issues in ag, other industries… President Biden today signed an executive order aimed at promoting competition in several industries, including agriculture. Ag-related components of the order include directives for USDA to:

• Consider issuing new rules under the Packers and Stockyards Act making it easier for farmers to bring and win claims, stopping chicken processors from exploiting and underpaying chicken farmers and adopting anti-retaliation protections for farmers who speak out about bad practices.
• Consider issuing new rules defining when meat can bear “Product of USA” labels, so consumers have accurate, transparent labels enabling them to choose domestic products.
• Develop a plan to increase opportunities for farmers to access markets and receive a fair return, including supporting alternative food distribution systems, such as farmers markets, and developing standards and labels so consumers can choose to buy products that treat farmers fairly.

The order also encourages the Federal Trade Commission to limit powerful equipment manufacturers from restricting people’s ability to use independent repair shops or do DIY repairs — such as when tractor companies block farmers from repairing their own tractors. Overall, the executive order appeared to carry few surprises, IHS Markit said, and any regulatory changes probably will not happen until next year at the earliest. “It would seem unlikely that any changes resulting from the order that require a regulatory process would into 2022 before they would become effective and there would be ideally plenty of time for public input to shape the final result,” IHS Markit said.

Ethanol, ag industry monitoring Regan... Some veteran observers of Washington are starting to wonder if EPA Administrator Michael Regan, who won mostly applauds when he was announced, just may not be the person they thought. He will have to put “meat” on the coming Biden administration update of the Waters of the U.S. (WOTUS) rule. Another EPA hot topic is the RVOs for the 2021 and 2022 Renewable Fuel Program (RFS).

First all-wheat production estimate also coming next Monday… USDA will also issue its first all-wheat production estimate on July 12, including the first survey-based forecasts for other spring wheat and durum. Given the drought conditions in U.S. spring wheat areas, there is a wide range of estimates for other spring wheat and durum crop production.

Last dance for corn market bulls? USDA’s next monthly Supply and Demand report July 12 may also be one of the last opportunities to spark a summer rally in the corn market. USDA is expected to cut its estimate for corn stocks at the end of the 2020-21 marketing year to 1.008 billion bu., based on an average of analysts’ estimates, down from the 1.107 billion bu. currently projected. Estimated ending stocks for 2021-22 are expected to be increased to 1.402 billion bu. from 1.357 billion in USDA’s June Supply and Demand report.

French wheat yields expected to surpass last year’s… The average yield of this year’s French soft-wheat crop is estimated at 7.4 tons per hectare, 8% above 2020 and 4% above the average of the last 10 years, according to a statement today from crop institute Arvalis and grain industry group Intercereales.

China’s pig industry eyes fresh fears over Sichuan ASF outbreak… Trade sources in China say some farms in the central province of Sichuan are still battling severe outbreaks of African swine fever (ASF) and have been since March, with animals culled as the region battles to contain the outbreak, according to an AgResource Co report. Sichuan is a major hog production base in China, and the outbreak is suspected of spreading since early March this year, when a hog farm in Sichuan found ASF cases among its herd leaving 38 pigs dead and another 38 sick animals out of the 127 hogs in the herd, industry sources told Agricensus Thursday. “It is said the ASF epidemic is getting worse, and some farms are conducting clean-up procedures,” one source said.