Your Pro Farmer newsletter is now available... USDA made modest changes to its U.S. ending stocks forecasts despite including a note that said current trade policies in place at the time of the WASDE Report were factored into the balance sheets. In fact, USDA kept ending stocks for both corn and soybeans unchanged for a second straight month. It raised wheat ending stocks and kept cotton carryover unchanged. There were many changes to the global wheat balance sheets, including forecasts for production, exports and imports for key countries. Much of the market attention remains on the ever-changing trade policies under President Trump. China, Canada and the European Union have taken aggressive actions with retaliation, while Mexico has taken a wait-and-see approach. As the U.S. growing season draws closer, there will be more focus on weather. The latest government forecast continues to call for ENSO-neutral conditions through the U.S. growing season. We cover all of these items and much more in this week’s newsletter, which you can access here.
USDA economic assistance update... USDA is nearing its March 21 deadline to open applications for $10 billion in economic assistance approved by Congress in December. USDA Secretary Brooke Rollins said her agency is on track to meet this deadline, with applications expected to be available shortly. This assistance is part of a broader nearly $31 billion package, which includes disaster aid for farmers affected by natural disasters in 2023 and 2024.
- Economic assistance program: The $10 billion economic aid will be distributed through the Emergency Commodity Assistance Program (E-CAP), with payments based on crops planted and market prices.
- Application process: Pre-filled applications will be sent to producers where information is already on file, using 2024 acreage reporting data. Producers can review, sign, and return these applications to local FSA service centers.
- Deadline and timing: Rollins aims to release payments before the March 21 deadline, with initial payments likely to be around 85% of the total, followed by a supplemental payment in the summer.
- Farmers can expect to receive the economic assistance aid relatively quickly after submitting their applications, as USDA aims to distribute the funds efficiently. The process is designed to be simple, transparent, and fast, with pre-filled applications being sent to producers where information is already on file, using 2024 acreage reporting data. Exact payment schedules may vary based on the efficiency of the application process and the speed at which USDA can verify and process applications.
Update on ag disaster aid relief... The distribution of $20.78 billion in disaster relief among farmers will be managed by USDA, focusing on covering necessary expenses related to losses of revenue, quality, or production due to natural disasters in 2023 and 2024. Here’s how it will be distributed:
- Eligible losses: The aid will cover losses from droughts, wildfires, hurricanes, floods, derechos, excessive heat, tornadoes, winter storms, freeze (including polar vortex), smoke exposure and excessive moisture.
- Crop coverage: Eligible crops include milk, on-farm stored commodities, crops prevented from planting and harvested adulterated wine grapes.
- Livestock assistance: Up to $2 billion will be used to cover livestock losses due to drought, wildfires and floods.
- Payment structure: Producers with crop insurance or Noninsured Crop Disaster Assistance Program (NAP) coverage can receive payments covering up to 90% of their disaster-related revenue losses. Those without coverage are capped at 70% unless their uninsured losses are deemed insignificant.
- Block grants: USDA may provide disaster assistance through block grants to eligible states and territories, including compensation for timber, citrus, pecan, and poultry losses.
- Payment timing: Payments are likely to begin after the application process is initiated. USDA has not announced a specific start date for disaster aid applications but is working on streamlining the process.
The process for distributing these funds is expected to be more farmer-friendly than USDA’s last ag disaster relief program implementation.
U.S. Economic Policy Uncertainty Index elevated but not record-high... The U.S. Economic Policy Uncertainty Index is a widely used metric developed by Scott R. Baker, Nick Bloom, and Steven J. Davis to quantify economic uncertainty related to policy decisions. It combines three main components:
- Newspaper coverage: This involves tracking the volume of articles from major U.S. newspapers (such as the New York Times and Wall Street Journal) that discuss economic policy uncertainty.
- Federal tax code expirations: This component measures the number of federal tax provisions set to expire, as reported by the Congressional Budget Office (CBO), indicating uncertainty about future tax policies.
- Forecast disagreement: It assesses the dispersion in predictions among economic forecasters regarding key variables like the Consumer Price Index (CPI) and government expenditures, reflecting uncertainty about future policy impacts.
As of March 12, the U.S. Economic Policy Uncertainty Index stood at 369.42, which is significantly lower than its record high of 1026.38 in January 2024 but still reflects heightened uncertainty compared to historical averages. This elevated level of uncertainty is attributed to factors such as policy changes, trade tariff fluctuations and concerns about government shutdowns.
The index has historically spiked during periods of significant policy changes or crises, such as the Great Recession and the Covid-19 pandemic. High levels of policy uncertainty can lead to reduced economic activity as businesses and consumers delay major decisions due to increased risk perceptions.
Economic policy uncertainty can significantly impact financial markets and economic growth. It often leads to increased volatility in equity markets, as seen in the Russell 1000 index, particularly during election cycles. While higher uncertainty does not necessarily lead to sustained market volatility, it can cause short-term spikes.
The elevated index value indicates increased economic risks, as businesses and consumers may delay decisions due to policy ambiguity. This rise coincides with other worrying economic indicators, such as declining consumer sentiment and increased market volatility.
U.S. consumer sentiment drops, inflation expectations soar on tariffs... U.S. consumer sentiment fell to a more than two-year low and long-term inflation expectations jumped by the most since 1993, according to the preliminary March data from the University of Michigan’s Survey of Consumers. The preliminary March sentiment index dropped 10.5% from February to 57.9, the lowest level since November 2022. The Current Economic Conditions Index dropped 3.3%, while the Index of Consumer Expectations plunged 15.3%.
Surveys of Consumers Director Joanne Hsu said, “Sentiment has now fallen for three consecutive months and is currently down 22% from December 2024. While current economic conditions were little changed, expectations for the future deteriorated across multiple facets of the economy, including personal finances, labor markets, inflation, business conditions, and stock markets. Many consumers cited the high level of uncertainty around policy and other economic factors; frequent gyrations in economic policies make it very difficult for consumers to plan for the future, regardless of one’s policy preferences.”
Year-ahead inflation surged to 4.9%, the highest since November 2022. Long-run inflation expectations jumped from 3.5% in February to 3.9% in March, the largest month-over-month increase seen since 1993.
EPA extends 2024 RFS compliance deadline... EPA has formally published its plan in the Federal Register to extend the compliance reporting deadline for the 2024 Renewable Fuel Standard (RFS). The final rule takes effect on March 13, with an operational date of March 7. Originally proposed in December, the extension moves the deadline from March 31, 2025, to the next quarterly compliance reporting deadline after the revised 2024 cellulosic biofuel standard is finalized. EPA clarified that this rule does not finalize a waiver for the 2024 cellulosic biofuel requirement, which will be addressed separately.
USDA reopens comment period on HPAI indemnity rule... USDA’s Animal and Plant Health Inspection Service (APHIS) has reopened the comment period for its interim rule on indemnity payments for highly pathogenic avian influenza (HPAI). Originally closed on March 3, the new deadline for public comments is April 14, as announced in a Federal Register notice.