Evening Report | September 20, 2024

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Your Pro Farmer newsletter is now available... Corn and wheat futures were unable to build on their corrective gains the previous week, signaling any extended move higher is going to be met with resistance. Soybeans were choppy. While there are increased global wheat supply concerns, the market will need a regular dose of bullish news to fuel sustained buying. In Washington, lawmakers are struggling to finalize a continuing resolution to avoid a partial government shutdown after Sept. 30, when the new fiscal year begins. The push for a new farm bill also continues, though there won’t be movement until the funding issue is resolved. The Fed kicked off its monetary policy easing with a 50-basis-point cut to short-term interest rates and signaled more reductions are coming. Key for agriculture will be how that impacts the U.S. dollar. The greenback initially dropped, though pressure wasn’t sustained. Our News page 4 feature takes a look at U.S. trade issues with key trading partners India, China, Brazil and Mexico that are frustrating U.S. farmers and farm-state lawmakers. We cover all of these items and much more in this week’s newsletter, which you can access here.

Cattle on Feed Report: Neutral... USDA estimated there were 11.198 million head of cattle in large feedlots (1,000-plus head) as of Sept. 1, up 71,000 head (0.6%) from last year. August placements declined 1.4%, while marketings fell 3.6% from year-ago levels.

Placements declined 4.8% for lightweights (under 600 lbs.), 4.4% for 7-weights and 1.6% for 8-weights. Feedlots placed the same number of 6-weight calves and heavyweights (1,000-plus lbs.) as last year. Placements increased 8.2% for 9-weights. On an individual state basis, placements declined 15,000 head in Kansas, 15,000 head in Nebraska, 25,000 head in Texas and 8,000 head in “other states.” Colorado placements increased 35,000 head from last year.

All of the categories were close to the average pre-report estimates. We anticipate limited market reaction on Monday.

GOP lawmakers urge Biden to prevent looming port strike amid stalled negotiations... Nearly 70 Republican House members have called on President Joe Biden to intervene in stalled negotiations between the United States Maritime Alliance (USMX) and the International Longshoremen’s Association (ILA) to prevent a potential port strike. A letter, led by Rep. Sam Graves (R-Mo.), urges the administration to provide support to both parties and use all available authority to keep goods flowing and avoid harm to the U.S. economy. It’s unclear if Biden will send top officials to mediate, as was done in 2023 for West Coast ports.

The American Soybean Association notes that while effects on bulk soybean exports will be limited, disruptions could ripple throughout the agricultural supply chain. It adds that container shipping is vital for transporting food-grade soy, soybean meal and perishables, including frozen meats and essential farming equipment. Last year, East and Gulf Coast ports exported over 2.5 MMT of soybeans via container.

Lingering issues on new farm bill... Despite lawmaker chatter this week about various high-level meetings regarding a new farm bill, the same issues remain: (1) Major policy differences between Republicans and Democrats and (2) House GOP funding issues for its farm bill. There is agreement that a financial/ag disaster aid package is needed. Both issues are being punted until after Nov. 5 elections.

The only way veteran farm bill watchers will up the odds of a new farm bill is if/when Senate Ag Chair Debbie Stabenow (D-Mich.) releases actual text of her farm bill. Only then can key policy differences between the two chambers be worked out. Also, it will be interesting to see how much additional funding Stabenow received for farm bill spending, and where it came from — if we will ever know that before she retires after this Congress.

Meanwhile, USDA Secretary Tom Vilsack said the main issue in farm bill negotiations is determining the size of reference price increases that trigger crop subsidy payments. Once settled, lawmakers could finalize the legislation, which has been stalled for months. Farm groups insist on higher reference prices due to rising production costs, while disagreements over SNAP funding and climate measures persist. Republicans propose a 15%-plus increase, while Stabenow suggests 5%. Vilsack urged practicality, as the House bill currently exceeds the budget by $33 billion. “I think we can get there if people are practical,” said Vilsack. Either the adjustment in reference prices must be tempered in size or additional funding must be found, he said.

USDA aims to finalize livestock rules by year-end, eyes cattle price rule in 2025... Vilsack announced plans to finalize two livestock-related rules by the end of 2024, aligning with the Biden administration’s regulatory goals. The rules address fair livestock markets and poultry grower payment systems. Meanwhile, a pre-rule on cattle price discovery is expected to move forward in early 2025. However, these efforts may face uncertainty if Donald Trump wins the 2024 election, potentially altering or halting rulemakings initiated by the Biden administration.

Analyst predicts food prices will not decrease despite political focus on inflation... Aaron Smith, a professor in the Department of Agricultural and Resource Economics at UC Berkeley, predicts food prices will not decline, stating they tend to follow the general upward trend of prices in the economy. He explains that processing, distribution and marketing costs drive price increases, especially for more processed foods. Smith suggests wages will eventually rise to restore purchasing power.