Check our advice monitor on ProFarmer.com for updates to our marketing plan.
Corn and soybean producers: Increase old-crop sales... We’ve been waiting on an overdue corrective bounce in the corn and soybean markets to increase old-crop sales. Our patience has waned as the old-crop marketing year winds down with funds comfortable holding record net short positions. We advise all corn and soybean producers to sell another 10% of 2023-crop in the cash market. Be prepared to increase sales if funds decide to actively cover short positions and prices move higher.
Beige Book: Economic activity stable but slower growth expected... The Fed’s Beige Book highlighting economic activity in the 12 districts noted a slight to moderate pace of growth in a majority of districts during the reporting period. However, expectations for the future of the economy were for slower growth over the next six months due to uncertainty around the upcoming election, domestic policy, geopolitical conflict, and inflation. Specific to agriculture, districts reported:
Atlanta: Agriculture conditions improved slightly in recent weeks. Cattle farmers reported strong sales resulting from limited national supply. Poultry sales strengthened amid high beef prices, and poultry farmers expressed increased optimism about the remainder of the year. Dairy farmers saw strong demand and higher sales prices and were confident looking forward, but low cattle supply limited growth opportunities. However, row crops including cotton, continued to see weak demand. Soft grain prices hurt growers but benefitted farmers buying feed. Florida citrus farmers struggled as harvests were disappointing, leading to expectations of more growers exiting the market over the next year.
Chicago: Farm income expectations for the District waned in late May and June as key crop prices declined. Contacts indicated that farmers were slow to sell crops from storage and were holding back on selling ahead from their anticipated fall harvest in part because of low prices. Although recent flooding covered some acres, corn and soybean planting recovered from earlier weather-related challenges across much of the District, and overall crop conditions were off to a better start than in recent years. Corn, soybean and wheat prices were lower, with a strong wheat harvest already underway. A contact noted that an early wheat harvest would free up fields for second crop soybeans sooner than usual, allowing the soybeans to mature for longer. Milk and egg prices were higher, while hog prices faltered. Cattle prices were flat at a high level.
St. Louis: Overall agriculture conditions have remained stable since our previous report. The share of major District crops of soy, rice, corn, and cotton rated fair or better declined slightly in every state except Tennessee, where the share remained the same. Despite extreme high heat, soil conditions have improved relative to the drought conditions observed last growing season. District contacts reported that rains earlier in the year have helped protect against high temperatures, but high temperatures remain a concern. Contacts in agriculture equipment and services stated that the slowdown in transactions relative to their peak in 2021–2022 has continued.
Minneapolis: District agricultural conditions weakened since the last report. Lenders responding to an agricultural credit conditions survey overwhelmingly reported decreased farm incomes in the second quarter of 2024 relative to a year earlier, with expectations for further declines in the coming three months. Poultry producers were concerned about an avian influenza outbreak in the region. While ample precipitation was welcomed in some areas previously affected by drought, other areas were experiencing catastrophic flooding or delayed planting due to excess moisture.
Kansas City: Agricultural economic conditions in the Tenth District remained subdued alongside weak crop prices. The latest planting estimates and favorable growing conditions suggested corn and soybean production could be strong, factors likely to weigh on prices. Grain stocks from last year also remained elevated within District states and across the U.S., putting additional downward pressure on prices and reducing revenue opportunities. Cattle prices remained strong and continued to support favorable profit opportunities for cow/calf producers. Contacts throughout the region reported some deterioration in financial conditions for farm borrowers that was more pronounced in areas more heavily reliant on crop revenues and less concentrated in cattle production. In addition, elevated production costs, interest expenses and farm household expenditures remained primary concerns for many agricultural lenders.
Dallas: Crop and pasture conditions broadly improved with sufficient rainfall in most areas, particularly early in the reporting period. Livestock conditions were strong with little to no supplemental feeding needed thanks to ample availability of grazing and hay, and cattle prices continued to strengthen. Expected row crop production is promising, with moisture conditions much more favorable than last year. However, crop prices have fallen to levels below the cost of production for many producers, even with average yields.
San Francisco: Activity in the agriculture and resource-related sectors decreased slightly. Crop yields and past harvest inventories of tree fruit, tree nuts, and seafood remained high, reducing prices to below the cost of production for apples, grapes, raisins, walnuts, almonds, and frozen salmon. Domestic demand from food services and the retail sector was stable but generally soft, and demand from abroad remained solid.
Russia starts grain shipments from new Baltic terminal... Russia shipped its first grain from a new terminal at the Baltic Sea port of Ust-Luga, the Russian agricultural watchdog told Reuters, as the country seeks to diversify its grain export routes. The first shipment of 12,000 metric tons of grain was made in June from the Lugaport terminal, owned by the Russian private transport company Novotrans. The company has described Lugaport as its flagship large-scale investment project with annual grain terminal capacity of 7 MMT.
Smaller placements expected for June... Analysts expect USDA’s Cattle on Feed Report on Friday afternoon to show the large feedlot (1,000-plus head) inventory up 1.1% from year-ago at 11.327 million head, snapping a two-month string of year-on-year declines. After a 4.3% jump in placements during May, this month’s report is expected to show a 2.8% decline in the number of cattle moved into feedlots during June. Marketings are expected to decline 8.3% from June 2023.
Cattle on Feed | Avg. Trade Estimate (% of year-ago) | Range(% of year-ago) | Million head |
On Feed on July 1 | 101.1 | 100.1 – 102.0 | 11.327 |
Placements in June | 97.2 | 89.9 – 102.0 | 1.631 |
Marketings in June | 91.7 | 90.0 – 94.5 | 1.795 |
Painful surge in grocery prices: causes and analysis... The post-Covid surge in grocery prices has been a noticeable and financially painful part of the rising U.S. cost of living. Shoppers couldn’t miss the sharp price increases. Economist Thomas Klitgaard from the Federal Reserve Bank of New York analyzed the causes of this increase. Here are the key findings:
Stable prices before pandemic: The consumer price index (CPI) for food-at-home was stable for the five years prior to the pandemic, indicating little change in grocery bills from 2014 to 2019.
Sharp increases during pandemic:
• 2020: Prices rose by 4%.
• 2021: Prices increased by 6%.
• 2022: Prices jumped by 12%.
Overall, the food-at-home index increased 25% from the fourth quarter of 2019 to the first quarter of 2023.
Key components driving price increases:
• The underlying price of commodities, especially grains, saw significant increases. This rise cascaded down to other food items like beef, pork, poultry, eggs and dairy products.
• Wages: The wage bill at supermarkets rose substantially, contributing to higher grocery prices.
Minor Impacts:
• Klitgaard’s analysis suggests that price gouging by companies was not a significant factor in the price increases.
Bottom line: The surge in grocery prices was driven mainly by substantial increases in commodity prices and supermarket wages, rather than price gouging. The stability of grocery prices before the pandemic underscores the dramatic impact of these factors during the early 2020s. While grain prices have slumped since 2022, the wage bill keeps going up — with average hourly earnings up 6% in May from a year before. And Klitgaard warns that may bode ill for shoppers going forward. “An open question is whether grocery inflation can stay as moderate as it has been since early 2023 with grocery worker wage inflation still elevated,” he wrote.