Evening Report | October 15, 2024

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Corn harvest approaches half-way point... USDA reported corn harvest reached 47% as of Sunday, an increase of 17 percentage points over the past week and eight points ahead of the five-year average. USDA’s final corn crop condition ratings of the season showed 64% of the crop as “good” to “excellent” (unchanged) and 12% “poor” to “very poor” (down one point).

Soybean harvest two-thirds done... USDA reported soybean harvest reached 67%, a 20-point advance over the past week and 16 points ahead of the five-year average. Each of the 18 production states aside from North Carolina (equal to the five-year average) was running ahead to well ahead of the average harvest pace.

Cotton conditions improve... USDA rated 34% of the cotton crop as “good” to “excellent,” up five points from the previous week. The “poor” to “very poor” rating declined one point to 34%.

USDA reported harvest reached 34%, four points ahead of the five-year average.

Winter wheat planting, emergence slightly behind average... USDA reported 64% of the winter wheat crop was planted as of Sunday, two points behind the five-year average. Planting stood at 61% in Texas (60% average), 43% in Oklahoma (60%) and 68% in Kansas (66%).

USDA reported the winter wheat crop was 35% emerged, three points behind average for mid-October.

NOPA crush posts new record for September… Members of the National Oilseed Processors Association (NOPA) crushed 177.320 million bu. of soybeans last month, a record for September. The crush pace increased 12.2% from August and 7.2% from last year’s 165.456 million bu., which was the previous record for the month. NOPA data implies a full September crush of 187.0 million bushels.

Soyoil stocks among NOPA members as of Sept. 30 dropped for a sixth straight month to 1.066 billion pounds, the tightest end-of-month supply since November 2014. Stocks fell 6.3% from August and 3.8% from year-ago.

Fischer: $20 billion ag disaster aid for Hurricane Hellene... Dr. Bart Fischer, co-director of the Agricultural and Food Policy Center at Texas A&M University, has suggested that a potential disaster aid package in response to Hurricane Helene could include commodity payments to farmers. This proposal comes as Southern lawmakers are calling for disaster assistance legislation following the hurricane’s devastation. Fischer outlined several key points regarding the potential disaster aid package, according to the Texas Farm Bureau:

· The package could combine disaster assistance with commodity program price supports for farmers.

· He estimates the proposed legislation could be in the “$20 billion range.”

· Fischer expects such a proposal could emerge within the next week or two.

This potential disaster aid package is being discussed against the backdrop of several critical issues facing American agriculture. The current farm bill expired on Sept. 30, 2024, leading to the shutdown of several important programs. Fischer highlighted the pressing need for disaster aid, citing: Hurricane Helene’s impact, wildfires in the Texas Panhandle earlier in 2024 and the overall collapse in the farm economy. He noted that there has been no disaster assistance for farmers in both 2023 and 2024, despite rising production costs.

Bottom line: Washington insiders give high odds of a combined disaster aid/ag financial aid package being approved in the post-election lame-duck session of Congress. There is still a lot of uncertainty as to whether Congress will complete a new farm bill this calendar year. Key to that is whether outgoing Senate Ag Chair Debbie Stabenow (D-Mich.) releases official farm bill text for the Senate to consider.

Highlights of Bloomberg’s interview with U.S. Trade Representative Katherine Tai...

· U.S. tariffs on China: “At the moment we are not negotiating anything with the PRC on trade, but one day we may be back at the table, in which case these tariffs will be useful as leverage, right?” One reason for the continuation of the tariffs “is we really haven’t seen the PRC make any changes to its fundamental systemic structural policies that would make sense for us to provide any relaxation,” she said.

· Worker-centered approach: The Biden administration sees tariffs as “useful, especially if you can combine them with other economic policies” designed to help workers, she said. Tariffs can also be an “effective part of a new kind of industrial policy that both allows you to try to level the playing field and to create this defensive wall to prevent these unfairly produced, excessively produced goods from flowing into your market,” Tai said.

· Trade policy coordination: “I would say on say the EV tariffs, the solar tariffs, steel and aluminum, you see us really converging around a more coordinated kind of defense with the Canadians, even with the Mexicans to some degree,” she said. The U.S. still has “challenges with Mexico, but the Mexicans did something very important when on steel for example, they increased their tariffs on all their non-FTA partners in August of 2023,” according to Tai. “Then also with the Europeans too, actually creating a defensive system on EVs.”

· WTO leadership race: “There’s a period of time when others who may be interested can throw their hat in the ring. And then once you know what the field looks like, then there’s a whole other process that goes from there,” Tai said. Because it’s a process that’ll take several months, “I think that that’s what you’re seeing playing out in Geneva right now,” she said. “From our perspective, we are going to ensure that the integrity of the process is respected.”

Trump vows to renegotiate USMCA... Donald Trump on a Sunday news show expressed his intention to renegotiate the United States-Mexico-Canada Agreement (USMCA) if he is elected president. Trump stated he will formally notify Mexico and Canada of his intention to invoke the six-year renegotiation provisions of USMCA upon taking office. The review of the agreement is scheduled to commence on July 1, 2026, as stipulated by a clause in the USMCA.

Trump’s main reasons for wanting to renegotiate the USMCA include:

· Protecting the U.S. auto industry: He aims to implement stronger protections against transshipment to prevent China and other countries from smuggling products and auto parts into the United States tax-free through Mexico.

· Addressing Chinese automakers: Trump has expressed particular concern about Chinese automakers’ plans to open plants in Mexico and export vehicles to the U.S.

To achieve his goals, Trump suggested several measures:

· Tariffs on Chinese-made vehicles: He has threatened to impose tariffs of 100%, 200%, or even 1,000% on vehicles made by Chinese automakers in Mexico.

· Universal baseline tariffs: Trump proposes implementing a system of universal baseline tariffs on most foreign products.

· Phasing out Chinese imports: He plans to adopt a four-year plan to phase out all Chinese imports of essential goods.

· Eliminating China’s trade status: Trump wants to completely eliminate China’s most favored nation trade status.

Despite his criticism of current trade arrangements, Trump has praised USMCA, referring to the agreement as a “great deal” and an improvement over NAFTA. He acknowledged the need for cooperation.

Mexican President Claudia Sheinbaum has indicated her government is prepared to review and renegotiate the trade pact, regardless of who wins the U.S. election. The proposed changes could have significant implications for the auto industry, particularly for U.S. automakers with manufacturing plants in Mexico.

RFK Jr., criticizes U.S. agricultural policies, promotes sustainable farming... Robert F. Kennedy Jr., an independent presidential candidate, has taken a strong stance against current agricultural policies in the United States. In a recent video posted on social media platform X, Kennedy outlined his vision for transforming America’s farming system.

Kennedy asserted that current agricultural policy is “destroying America’s health on every level.” He stood outside USDA’s building in Washington, D.C. to deliver this message, symbolizing his intention to change the system from within. He promised that “when Donald Trump gets me inside the building I’m standing outside right now,” he will rewrite regulations to benefit smaller agricultural operators. This approach aligns with his broader campaign promise to challenge large corporations and support small businesses.

A key aspect of Kennedy’s agricultural vision is the promotion of sustainable and regenerative farming practices. He believes these methods can help build soil quality and replenish aquifers. Kennedy pledged to ban agricultural chemicals that are already prohibited in other countries. This aligns with his campaign’s focus on environmental protection and public health. He also promised to remove conflicts of interest from USDA dietary panels, suggesting a reform in how nutritional guidelines are determined.

Implementing such sweeping changes would likely face significant challenges, given the entrenched nature of current agricultural systems and the economic interests involved.