FY 2025 Approps | Farm bill | Election polls | IMF report | Another bird flu case in Iowa
June 17, 2024
Early morning look at the beginning of the week including some items on Profarmer.com, AgWeb.com or AgriTalk, or some weekend topics that will be detailed further in the mid-morning Updates or are in The Week Ahead (link).
- House is out and Senate is in a few days in a holiday-shortened week. Link to The Week Ahead for details of Washington’s agenda.
- “Triple witching” occurs on Friday — an event in which stock options, stock index futures and stock index options all expire on the same day.
- Ag markets last week (Pro Farmer): USDA’s June 12 Supply & Demand and Crop Production Reports contained no major surprises. That keeps near-term focus on weather and crop developments, both in the U.S. and around the world, heading through the critical summer timeframe. With funds broadly net short the grain markets, any significant weather/crop concerns would likely trigger an active wave of buying. But barring such an occurrence, sustained price strength may be hard to come by. Last week, corn firmed, soybeans mildly favored the upside and wheat extended its recent pullback. Cattle futures were supported by strength in the cash cattle market and wholesale beef prices. Hog futures paused their contra-seasonal price decline.
- China is buying soybeans again, but why? This past week, USDA reported a soybean sale of 3.89 million bushels to China and another 4.4 million bushels to unknown destinations during the 2023-2024 marketing year. Tyne Morgan assesses some reasons (link).
- Brent rose 4% to $82.62, on Friday one of the best weekly gains in months, as gasoline and diesel markets strengthened. U.S. crude oil futures settled Friday at $78.45 per barrel, up 3.9% for the week. Crude prices could rise a bit over the next 100 days as seasonal demand picks up and refineries start drawing down inventories, according to Tom Kloza, global head of energy analysis at OPIS. Beyond that, the outlook is worse. OPEC+ is expected to unwind voluntary production cuts in late 2024 and 2025, adding to a global surplus. The International Energy Agency forecast a potential glut of 8 million barrels per day by 2030, as the clean-energy transition picks up.
- Fed watch: Federal Reserve officials are out with conflicting views on what may occur regarding interest rates. In a speech on Friday, Federal Reserve Bank of Chicago President Austan Goolsbee said that more reports like the latest CPI could allow the Fed to start cutting interest rates. Fed Bank of Cleveland President Loretta Mester said she still sees inflation risks as tilted to the upside despite welcome news in the latest data. Federal Reserve Bank of Minneapolis President Neel Kashkari said the central bank is in a good position to take its time and watch incoming data before starting to cut interest rates. If there is one rate cut this year, it will likely come toward the end of the year, he said. By the end of Friday, Fed fund futures were back to pricing in two quarter-point cuts by the end of the year.
- An economic warning from Dr. Vince Malanga, president of LaSalle Economics. So far, the drive for price stability carries the day at the Fed. Calendar effects this summer will make progress difficult, Malanga believes, but the reverse will occur in the autumn, he warns. Malanga’s upshot: We may well be left with below trend growth and above trend inflation, with the FOMC suddenly finding itself behind the proverbial curve. More in Updates.
Weather: The first major heat wave of the season is set to hit regions from the Great Lakes to the Atlantic Ocean, increasing electricity demand and disrupting transportation while posing health risks. Manhattan will see temperatures rise to 91°F (33°C) on Tuesday, feeling closer to 100°F with humidity. Nights will offer little relief as temperatures remain high, according to Allison Santorelli from the U.S. Weather Prediction Center.
Widespread record-breaking temperatures are expected across the Midwest, Northeast, and Mid-Atlantic, lasting through the week and possibly into the next weekend. The heat will stress electric grids and increase wholesale prices as demand soars. Trains may need to run slower to prevent track warping, affecting freight and passenger traffic. Heat-related illnesses are also likely to rise, particularly among the elderly, children, and outdoor workers.
AgriTalk’s free-for-all program on Friday (link) focused on several topics, including if and for how long President Trump’s unity and more friendly demeanor will last. The roundtable discussion also focused on the SNAP/food stamp program, which accounts for 81.9% of the $1.51 trillion farm bill baseline over ten years. The discussion included the following graphic of huge overpayments for SNAP during a time when farm-state lawmakers are finding it hard to garner extra funding for other programs. SNAP supporters don’t like to talk about this topic.
The AgriTalk program also included a chat with former NASCAR driver Richard Childress, chairman and CEO of Richard Childress Racing (RCR), one of the most storied teams in NASCAR that he founded in 1969. In 1984, Childress made a deal with another driver, someone who at the age of 30 was said to be past his prime. The driver’s name? Dale Earnhardt. While Earnhardt had driven for RCR in a handful of events during the 1981 season, it wasn’t until 1984 when Earnhardt raced full time for Childress. It didn’t take long for Earnhardt and Childress to find their way into Victory Lane; their first win together came at Talladega Superspeedway on July 29, 1984. It was the first of 67 wins Earnhardt would record under the RCR banner.
The highly anticipated NASCAR Cup Series Iowa Corn 350 took place at Iowa Speedway on Sunday, June 16, in Newton, Iowa. “Hot day at Iowa Speedway with temperatures starting to cool as the sun starts to approach the horizon. But Iowa fans were still treated to some hot racing on the partially repaved track that is now 18 years old. Track designer Rusty Wallace exclaimed the racing is exactly like he hoped it would be with cars running 2 and 3 wide,” says NASCAR race attendee Roger Bernard. But even as he loved the racing, the 1989 champion and NASCAR hall of famer Rusty Wallace said “No, I’m good” when asked if it made him wanted to suit up and jump in a car and hit the track.
(AP Photo/Charlie Neibergall)
- Bird flu update: Another bird flu case in Iowa, a backgrounder on bird flu, and a concern that a shortage of bird flu tests in the U.S. could obscure a potential future pandemic. Link to details on all three topics.
- USDA announced a $50 million grant to support farm workers and agricultural employees across the country. This funding, awarded through the Farm Labor Stabilization and Protection Pilot (FLSP) Program, will benefit 141 recipients in 40 states and Puerto Rico, reaching 177 unique agricultural operations and over 11,000 workers. The grants aim to address labor challenges, enhance protections for farmworkers, and expand legal migration pathways for agricultural labor.
- On the election front:
- Iowa Poll to show where voters stand on Biden, Kennedy and Trump, plus his felony conviction.
- USA Today released new surveys of Black voters in Michigan and Pennsylvania, revealing significant skepticism towards both major presidential candidates, with particularly negative implications for Joe Biden.
- 2024 election cycle is heating up as summer begins, with several key political events approaching. The Hill lists five of them (see Updates).
- Other quick takes:
- China targets EU pork with anti-dumping investigation after EU EV action
- China new home prices drop the most since 2015
- Copper slumps to 2-month low
- Dollar hovers near 6-week high
- Ozempic fuels hunt for smaller clothes
- Mountain Valley Pipeline expected to start operating soon
Pakistan is experiencing record levels of rice exports