The USDA says America’s agricultural exports in fiscal year 2023 are forecast at $181 billion, down $3.5 billion from the February forecast. The revision is driven by decreases in corn, wheat, beef, and poultry exports.

Corn exports are forecast $2.1 billion lower to $14.5 billion on lower unit values and volumes as Brazil is projected to harvest a record second-corn crop. Wheat exports are projected down $900 million to $7.4 billion because of lower volumes and values, as well as increased competition. Soybean exports are projected up $300 million to $32.3 billion on slightly higher volumes.

Total livestock, poultry, and dairy exports are expected to decrease by $1.2 billion to $39.3 billion. Declines in beef and poultry exports will more than offset increases in dairy exports. Cotton exports will be $6 billion, up $200 million, as higher volumes more than offset lower unit values. Ethanol exports were unchanged at $3.6 billion.

Market volatility is hitting livestock producers while their input costs have climbed. Bernt Nelson, an economist with the American Farm Bureau Federation, says prices were much higher last year before dropping off in the first quarter of 2023.

Nelson; “The input costs, demand, and supply really combined to give us a different situation here. Profitability started to deplete when we saw prices dropping in hogs. Prices really rallied high last year. In fact, we saw some record cash offerings put out for hogs. Now, as we look forward in 2023 and especially for the first quarter, price has really dropped off. Input costs, feeds, labor, infrastructure, and things of that nature have stayed really high comparatively, and so profitability really fell out of the hog market for the first quarter.”

He says the hog market can change dramatically, and we’ve already seen big shifts take place; “We looked at markets Tuesday and we saw a limit-up move in lean hogs, especially in July futures. Really at the drop of a dime, we went through a very bearish market situation to a very bullish market situation. Cash traded a lot higher. Not just a little higher, but dramatically higher. The national average hog price was up $11.50, and it’s expected to continue follow through.”

Nelson said he’s expecting prices to move higher in the months ahead, thanks to a few key factors.

He says; “The global pork supply is much tighter, and demand from other countries like China is starting to pick up. All meat supplies are getting tighter, globally. We have avian influenza affecting the poultry industry. We have tighter supplies in beef from the ongoing drought scenarios, and high input costs. And we’re still seeing some drought linger on, especially in the Corn Belt region, and tighter global supplies in the pork market due to African swine fever and declining overall inventories.

Representatives Michelle Fischbach of Minnesota and Adrian Smith of Nebraska led 62 colleagues in a letter to U.S. Trade Representative Katherine Tai regarding Mexico.

The House members are calling on Ambassador Tai to fully utilize the tools available under the U.S.-Mexico-Canada Agreement to hold Mexico accountable for its commitments. They’re asking Tai to proceed with a formal USMCA dispute to address Mexico’s discriminatory policies banning U.S. biotech corn.

“Now that the thirty-day period for consultations has lapsed without Mexico making any changes, we urge you to take swift enforcement action by initiating a USMCA dispute,” the letter says. “Two months have passed since you made strong comments on Mexico during Congressional testimony, and we strongly believe it’s time to take additional steps in the matter.”

The letter also points out that a lack of action would create a dangerous precedent that promises made under USMCA can be ignored without consequence.

Rural America often faces a shortage of mental health care. Farming is one of the hardest jobs in the world, and many farmers are suffering because of the intense stress. Wisconsin Senator Tammy Baldwin says the Farmers First Act of 2023 is bipartisan legislation designed to help those who need it.

Baldwin; “We have a mental health crisis in our rural communities, and it disproportionately impacts farmers and farm workers, where the suicide rate is almost three and a half times the national average. But you think about farming and oftentimes there are really difficult circumstances, whether that’s long hours, being isolated, heavy physical labor, and all the headwinds that farmers are facing in terms of just getting ahead.”

She says the Farmers First Act provides resources where they’re needed the most; “Farmers First tries to match the resources so that no one needs to go through these struggles alone. It does so in a variety of ways, through grant programs to make sure that resources are available when a mental health crisis hits.”

The funds are intended to be used at the local level when people need somewhere to turn for help. Baldwin; “This legislation provides resources so that more folks in rural communities can recognize the signs of someone who’s struggling with their mental health and get them help. And these grants can fund everything from increasing what we might say mental health literacy so that people can recognize telltale signs, but also fund things like toll-free crisis lines and farmers support groups.”

Story provided by NAFB News Service and Brian Winnekins, WRDN, Durand, Wisconsin

Congressman Tom Tiffany of Wisconsin reintroduced the Guaranteeing Robust Agricultural Independence and Nutrition for America (GRAIN) Act. It would place a one-year moratorium on the enrollment of farmland in the Conservation Reserve Program, which pays farmers to leave land uncultivated.

After the one-year moratorium, the bill would prevent prime farmland from getting enrolled in the CRP. “Food security is national security, and America needs to be taking the necessary steps to shore up our food supply,” Tiffany says. “We can only have a prosperous future if we allow our nation’s farmers to unleash their full production potential.”

He also says the bill came about because the administration expanded the CRP in a “green fantasy” attempting to achieve net-zero emissions. Tiffany’s GRAIN for America Act would not impact farmland that is already a part of the CRP. Additionally, farmers who already have land in the CRP can re-enroll during the moratorium.

The National Dairy Farmers Assuring Responsible Management Program Excellence Awards are back for a third year. The awards recognize farms and evaluators who demonstrate excellence in the FARM Program.

Awards are given in four categories, including Animal Care and Antibiotic Stewardship, Environmental Stewardship, Workforce Development, and FARM Evaluator. “We are so proud of the farms that participate in our program areas and our dedicated evaluators,” says Emily Stepp, executive director of the FARM Program. “We believe it’s important to publicly recognize the people that make the FARM Program so successful.” Farms or FARM evaluators can be nominated by fellow dairy farmers, community members, extension, cooperative and processor staff, veterinarians, and themselves. Nominations are open through August 1.

Nominated farms must have a current FARM Program evaluation in the respective category area and must be in good standing with the program. Evaluators must be FARM Program certified. More information is at nationaldairyfarm.com.

The Bureau of Land Management’s recent conservation proposal would be a major shift in public land management. Shelby Hagenauer, American Farm Bureau Federation Senior Government Affairs Director, says the proposal could change the way farmers and ranchers operate in the Western U.S.

Hagenauer; “There are several things they are proposing. The first one and probably the most significant is elevating conservation as a use under the Federal Lands Policy and Management Act of 1976. They’re proposing to create a new kind of lease on BLM lands, a conservation lease. They’re prioritizing the designation and protection of areas of critical environmental concern, and these are areas that have special management attention, and they could include simply closing down areas entirely from public use.”

Hagenauer says the proposal was developed with no stakeholder input or advanced notification; “These are really complicated issues and conversations that should be facilitated by the agency with the involvement of all stakeholders, folks interested in grazing, the energy industry, recreationalists, they should have these conversations over years to develop really solid durable solutions. Right now, public input is confined to a 75-day public comment period, and further, the public meetings they are holding have left stakeholders of all kinds with more questions than answers.”

She encourages Farm Bureau members to contact their lawmakers regarding the issue.

Hagenauer; “Work with your state Farm Bureau, provide comments about the benefits your work has on the land. You can contact members of Congress and Senators to tell them what the impacts may be to your ranch. Ask them to support an extension of the comment period. And finally, there’s legislation that would require the BLM director to withdraw the proposal, so that they could go back to the drawing board and work collaboratively with all of these interests in a true multiple use spirit.”

DENVER (May 31, 2023)—The cost of storing grain, commonly referred to as the cost of carry, has soared to record highs due to rising interest rates, high commodity prices and increasing costs for labor, insurance, transportation and energy. That is putting a significant squeeze on grain elevators, which may be forced to lower their local bids on grain to manage through the unfavorable economics of holding commodities.

According to a new report from CoBank’s Knowledge Exchange, the interest-related cost of carry in the 2023-2024 crop year will increase 21% for corn, 42% for soybeans and 50% for all-wheat, year-over-year. Each of those costs is estimated to be the highest on record. The projections are based on the forecasted average annual interest rate for grain merchandisers of 7.75% for the 2023-2024 crop year, and USDA’s marketing year average price forecasts of $4.80/bu. for corn, $12.10/bu. for soybeans and $8.00/bu. for all-wheat.

Financing the ownership of corn, wheat and soybean inventories is a major cost of carry for grain elevators. Interest expense as a percentage of the total cost of carry can vary widely among grain merchandisers and between crop years. But it can typically comprise one-quarter to one-third or more of a grain elevator’s total cost of storing grain and oilseeds.

“For grain elevators, the sharp rise in interest rates couldn’t have come at a worse time as they borrow higher-priced funds on commodities that have also remained at historically high prices,” said Tanner Ehmke, lead grains and oilseeds economist for CoBank. “And while grain elevators are motivated to move inventory as fast as possible to lower carrying costs, processors and end users will want to delay ownership of commodities to reduce their own inventory costs.”

The persistent inverse in futures markets, where the price of later-dated contracts are lower than spot prices, further complicates matters for grain elevators. In normal market conditions when supplies are abundant, forward futures contracts are priced higher than the nearby spot prices to account for storage costs and a small risk premium. When futures prices are lower than spot prices, farmers are motivated to sell commodities rather than hold them for future sale.

Cooperative elevators are in business to buy and market their members’ grain. That means they will be obligated to carry inventory despite the economic disincentive of doing so. Holding commodities in high-interest rate environments also ties up a company’s working capital, which can put a strain on other business operations. This is especially problematic in volatile markets when liquidity is needed for managing margin calls on futures hedges.

“It’s a challenging situation for cooperative grain elevators as well as farmers, because it comes at a time when farmers are also facing higher costs,” said Ehmke. “Co-op managers will need to closely scrutinize their operating costs and impose greater discipline on cost wherever possible. And if they need to lower their bids and widen basis to cover storage costs, they should communicate early and consistently with farmer members who will be impacted.”

The positive news on carrying costs is that the Federal Reserve is expected to hold interest rates at their current levels for the foreseeable future. And USDA is forecasting corn, soybean and all-wheat prices to drop for the 2023-2024 crop year from the year prior, which will take some pressure off carrying costs.

Watch a video synopsis and read the report, Rising Cost of Carry Will Force Cooperative Grain Elevators to Lower Bids, Widen Basis.