Evening Report | October 28, 2024

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Initial winter wheat conditions much lower than expected... USDA’s initial winter wheat crop conditions rated 38% of the crop as “good” to “excellent,” nine points lower than analysts surveyed by Reuters expected. The “poor” to “very poor” rating stood at 23%. Last year at this time, USDA rated 47% of the crop in the top two categories and 18% in the bottom two.

USDA reported 80% of the crop was planted (84% average) and 56% had emerged (61%).

Corn, soybean harvest remains well ahead of average... USDA reported corn harvest advanced 16 percentage points to 81% as of Sunday, 17 points ahead of the five-year average. Soybean harvest advanced eight points to 89%, 11 points ahead of average.

For corn, only Colorado (58% vs. 59%) was running behind the average pace for late October. All 18 of the top soybean production states were ahead of their average pace.

Cotton conditions decline... USDA’s final national cotton conditions rated 33% as “good” to “excellent,” down four points from last week. The “poor” to “very poor” rating increased three points to 36%.

USDA reported 97% of the crop had bolls opening, three points ahead of average. Harvest increased to 52%, six points ahead of the 2019-23 average.

Firms slow soybean buying on stalled U.S. biofuels policy... The lack of guidance for a new clean-fuel tax credit is causing biofuels producers, including Cargill and Bunge, to put off some purchases of soyoil for early next year, Bloomberg reported, citing people familiar with the matter. That’s damping demand for soybeans.

By mid-October, most fuel retailers had procured only about 10% of their biodiesel feedstocks for the first quarter of next year, said David Fialkov, executive vice president of government affairs for NATSO, a trade group for truck stops and transportation energy centers. That compares with more than 80% by that time over the past decade.

The industry is waiting for the Treasury Department to issue guidance for the 45Z clean fuel production credit that will begin in January. Thorny issues dividing the industry include whether the tax incentive will be available for low-carbon fuels made from foreign-sourced biofuel ingredients, like animal fat waste and used cooking oil that compete with soybeans and other U.S.-grown crops. Another big uncertainty is the outcome of U.S. presidential and congressional elections on Nov. 5, and how that could impact the domestic biofuels policy.

Stabenow key to whether there’s a new farm bill this year... Senate Ag Chair Debbie Stabenow (D-Mich.) holds the key as to whether a farm bill can be completed this calendar year, according to Washington-based sources. The unknown is whether Stabenow can work out a deal with the other farm bill players, Senate Ag ranking member John Boozman, House Ag Chair Glenn “GT” Thompson (R-Pa.) and House Ag ranking member David Scott (D-Ga.). Some say that could be at least possible after elections. Some other items the contacts mentioned:

· A win-win for Democrats and Republicans is a must for farm bill completion.

· Democrats must be content on funding and policy issues relative to food and nutrition and conservation.

· Republicans must be satisfied relative to getting most if not all of the increase in reference prices contained in the House Ag Committee-passed measure.

· Some say Stabenow would like another farm bill completion for her legacy items as she is not running for re-election. Others say she already has billions of dollars in additional conservation funding via the Inflation Reduction Ac (IRA/Climate Act) and adequate food and nutrition funding without a new farm bill, especially relative to the Thrifty Food Plan.

· Results of the Nov. 5 elections, whenever they come, will likely help determine the odds of a farm bill this year.

· Some veteran Washington contacts still give the odds of a farm bill this year at only 15%. This group thinks a new farm bill will be part of an already busy agenda for a new Congress and new White House in 2025. This is the reason why some optimists think once the anchor of the elections is out of the way, the four major farm bill players can at least talk with perhaps more flexibility and perhaps more funding than the current farm bill baseline. That will depend in part on whether House Budget Chair Jody Arrington (R-Tex.) is able to get more funding beyond what is now signaled by the Congressional Budget Office (CBO).

· Contacts continue to signal high odds for ag disaster and ag price mitigation measures to be part of a “minibus” spending package that includes Agriculture appropriations for fiscal year (FY) 2025. House Speak Mike Johnson (R-La.) does not support a year-end omnibus spending bill and will likely again push his layered approach to spending measures like last fiscal year.

WSJ: Many farmers support Trump despite tariff concerns... The Wall Street Journal (WSJ) that many American farmers are planning to support Donald Trump in the upcoming election, despite concerns about potential trade wars that could harm their businesses. The article highlights the complex factors influencing rural voters’ decisions in key swing states like Wisconsin.

The article recalls the previous trade war initiated by Trump in 2018, which resulted in a $27 billion loss in U.S. agricultural exports. Despite this, many rural voters continue to support Trump, often citing concerns about border security and illegal immigration. The Trump administration provided that $27 billion to impacted farmers in direct payments.

The potential for new trade tensions comes at a challenging time for American farmers. Crop prices have been declining, while costs for fertilizer, labor and seed have increased or stayed firm. Additionally, Congress has yet to renew the farm bill, a crucial piece of legislation that provides financial support to farmers.

While some farmers are wary of potential trade conflicts, others view them as necessary.

The article also notes that some farmers are looking beyond trade issues.

Bottom line: WSJ’s report underscores the complexity of rural voter sentiment, with many farmers weighing trade concerns against other political priorities as they decide how to cast their ballots in the upcoming election.

Lawmakers demand answers following Pure Prairie Poultry bankruptcy... Rep. Brad Finstad (R-Minn.), a member of the House Ag Committee, and Sen. Chuck Grassley (R-Iowa) led seven bicameral members of Congress in a letter to USDA Secretary Tom Vilsack regarding distribution and oversight of grants and loans following the recent bankruptcy filing of Pure Prairie Poultry. The poultry processor received more than $45 million in USDA grants and loans intended to help meat and poultry processors start or expand processing capacity. Pure Prairie Poultry filed for Chapter 11 bankruptcy on Sept. 20, which resulted in up to 50 farmers and more than 2 million chickens throughout Minnesota, Iowa and Wisconsin being left without feed or the necessary processing capacity due to the closure of Pure Prairie’s Charles City, Iowa plant.

“USDA has provided millions of dollars in taxpayer-funded loans and grants to meat and poultry processors across the country, which is why my colleagues and I are calling on USDA to provide answers,” said Finstad. “While expanding livestock markets and processing capacity is critical for farm country, the lack of oversight of these dollars by USDA harmed producers and caused a significant disruption to our nation’s food supply chain.”

“USDA is responsible for keeping tabs on the taxpayer-funded grants it administers, but it clearly dropped the ball with Pure Prairie. Iowans and others across America’s Heartland have lost their jobs and their poultry market as a result of Pure Prairie’s closure. USDA must explain to Congress and the public what went wrong to help prevent a repeat scenario,” said Grassley.

In part, the letter states: “Over the past two years, USDA has provided $223 million in loan guarantees and grants to 30 meat and poultry processing companies. While we share USDA’s desired goals of expanding meat processing capacity and markets and building a robust national food supply chain, it is critical that livestock producers have resilient systems to ensure the production of healthy and affordable protein for both domestic and global consumption. Moreover, American taxpayers deserve the peace of mind that their dollars are being spent wisely.”