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Applications Open for Southeast Asia Trade Mission

USDA Undersecretary for Trade and Foreign Agricultural Affairs Alexis Taylor will lead an agribusiness trade mission to Malaysia and Singapore from October 30-November 3. The Foreign Ag Service is accepting applications from U.S. exporters wanting to take part in the trade mission. “Malaysia and Singapore are important markets in our efforts to diversify prospects for U.S. food and agricultural exports in Southeast Asia,” Taylor says. “These markets provide both a source of stability for American exports and a tremendous opportunity to further expand U.S. trade in the region.” She also says consumer demand for American products in both countries is on the rise, making this agribusiness trade mission extremely timely. America’s agricultural and related product exports to Malaysia reached $1.13 billion in 2022. U.S. agricultural exports to Singapore grew 190 percent between 2012 and 2022, reaching a record $1.4 billion in 2022. For more information or to apply, go to usda.gov.

NACD 2023 Summer Conservation Forum Held This Week in ND

The National Association of Conservation Districts held the 2023 Summer Conservation Forum and Tours in Bismarck, North Dakota.

This summer’s meeting brought together conservation leaders from across the country to discuss emerging natural resource concerns and innovative solutions. The meeting included a grassland conservation and grazing management panel, as well as remarks from Natural Resources Conservation Service Chief Terry Cosby and Farm Service Agency Administrator Zach Ducheneaux. North Dakota Senator John Hoeven spoke about the importance of locally-led conservation, partnerships, and an approach that isn’t one size fits all.

“Make the approach fit farmers and ranchers,” he said. NACD President Kim LaFleur emphasized the importance of developing next-generation leaders at all levels and engaging new audiences and partners. The event also gave attendees the opportunity to see conservation in action, including a tour of the Black Leg Ranch.

Several other conservation leaders addressed changing natural resource challenges in their regions.

National FFA Organization Names American Star Finalists

The National FFA Organization has announced the 16 finalists for its 2023 top achievement awards. The awards include the American Star Farmer, American Star in Agribusiness, American Star in Agricultural Placement, and the American Star in Agriscience.

The American Star Awards represent the best of the best among thousands of American FFA Degree recipients. The award recognizes FFA members who have developed outstanding agricultural skills and competencies by completing a Supervised Agricultural Experience (SAE) program. A required activity, the SAE allows members to learn by doing. Members can own and operate an agricultural business, intern at an agricultural business, or conduct an agriculture-based scientific experience and report the results.

Other requirements for receiving an award include demonstrating top management skills, completing key agricultural education, scholastic, and leadership requirements, and earning an American FFA Degree, the organization’s highest level of student accomplishment.

For more information about the American Star Awards, go to FFA.org/Stars.

Wednesday, July 19th, 2023 Video and Audio Program

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Weather concerns, Black Sea tensions and the falling U.S. dollar are seemingly the three legs of the stool giving the grain markets bullish momentum. We dissect those stories and look at the technical factors in the trade today with Mike Zuzolo of Global Commodity Analytics. Learn more online by visiting https://www.globalcommresearch.com.

Also, we take a look at news headlines and hear from Ryan Moe of StoneX in Segment One as he reports from a crop tour throughout Iowa, Minnesota, Wisconsin and northern Illinois.

Today’s program is brought to you in part by Growmark/FS; learn more online at https://www.growmark.com.

AUDIO ONLY SHOW LINKS:

https://podcasts.apple.com/us/podcast/market-talk/id1533318516?i=1000621673847

Weather a Bigger Market Driver Than Expired Black Sea Grain Deal

Russia has officially abandoned the Black Sea Grain Deal. Joe Vaclavik, founder and President of Standard Grain, says the question is how long the deal will be off the books.

He says, “It’s canceled for now, but Russia has kind of left the door open. They said if our demands are met, we could, again, continue the brand deal, so this is something that could be suspended for a day, a week, or a month. We don’t know. In terms of the impact on the market, Monday, we rallied early on this news, and then we sold off, so I think, at the end of the day, it’s not the biggest deal in the world. You have to remember; Ukraine has become a much smaller exporter of all these crops since pre-invasion type days. Pre-invasion, I went back this morning and looked at the February 2022 WASDE report prior to the invasion. USDA was projecting at that time that Ukraine would account for almost 12 percent of all global wheat exports, so they were a pretty big deal, right? Well, this year, the projection is that they’re going to account for 4.9 percent of all global wheat exports, I believe, a much smaller percentage. So, I just don’t think it’s the deal that it used to be.”

It’s probably more important to the corn market according to Vaclavik. “USDA projects, I believe this year, they’re going to be just south of 10 percent of all global corn exports. Even if the deal is suspended indefinitely, those numbers aren’t going to go to zero,” says Vaclavik. “They’re still going to rail to grain out west through Europe. That’s been going on for a while, so I don’t know. I don’t think that’s the big market-mover here today. Actually, I think the weather forecast is the bigger deal today.”

Vaclavik says it’s not surprising to see Ukraine drop that far in how much grain they’ll ship around the world. He says, “No, it’s not shocking at all. I mean, production is down, exports are down, so nothing is surprising about it. We’ve got a war going on. The farmers are having an incredibly difficult time with everything, I mean, seed, fuel, labor, you name it.”

He says dry weather in the U.S. is currently the biggest driver in the markets. Vaclavik, “Right now, it’s the middle of July. We are trading U.S. weather almost exclusively, and you have a forecast which turned decidedly drier last night and into this morning. There’s not much rain in sight at all for the central Corn Belt between now through the end of the month. And there’s some heat in the forecast for next week. We’re talking 90s, maybe 100 degrees by Thursday or Friday next week across the entirety of the central Corn Belt. Now, I know that we’ve got seed corn that’s drought-tolerant and has fantastic genetics, and this year may be a very good test of that because we’re running huge moisture deficits across the board despite the fact that we’ve seen to improved rainfall here in July. But this forecast is, at least for the short term, bullish. I don’t know if that means the crops have to deteriorate in terms of condition, but it doesn’t help.”

For more information, go to standardgrain.com.

Ad Hoc Government Payments Caused Farmers to Store More Grain

University research shows ad hoc payments result in farmers holding more grain in storage. Published by the University of Illinois’ FarmdocDAILY, the research estimated the impact of the unprecedented surge in ad hoc farm payments from 2018 to 2020 on grain inventories held by farmers.

Under the Market Facilitation Program, U.S. farmers received approximately $23 billion during the 2018-19 and 2019-20 marketing years. While USDA designed MFP to avoid distorting farmer planting and production decisions, these payments may still have affected farm decision-making, in particular, the decision to store production after harvest. However, the research estimates the impact of MFP payments on the market-level inventories was modest. Even in the case of soybeans in December 2018, the market and quarter where with the largest impact, U.S. soybean stocks were only 226 million bushels or six percent higher than they would have been in the absence of MFP payments.

The conclusion: MFP did impact outcomes relevant to commodity price levels, though any potential market distortion was likely small.

Grassley Seeks to Attach Foreign Farm Ownership Rider to Defense Bill

Senator Chuck Grassley (R-IA) is reintroducing legislation to target foreign ownership of U.S. farmland by malign actors like China and Russia but aims this year to attach it to the must-pass defense bill.

Grassley says three-percent of U.S. farmland is held by foreign firms, including 550,000 acres in his home state of Iowa alone.

The longtime Ag Senator is reintroducing with other Ag lawmakers, the “Food Security is National Security Act”. “The bill has bipartisan support, and we have filed it as an amendment to the National Defense Authorization bill,” says Grassley. “Our food security, and indeed our national security is at stake, if we do not thoughtfully consider the impact of these foreign investments.”

The bill requires the USDA and FDA to have permanent seats on the Committee on Foreign Investment in the United States, or ‘CFIUS’–an inter-agency panel that reviews the national security impacts of foreign investments in the United States.

But Grassley says that effort’s come up short. “While the United States recognizes the need for closely examining foreign investment, for some reason, agriculture’s excluded from that conversation. That’s why, last week, I led an effort by Senator Stabenow and Senator Ernst to reintroduce our bill,” according to Grassley.

U.S. lawmakers increasingly point to food as a national security issue, as Russia prosecutes its war in Ukraine and halts the Black Sea grain deal, China threatens Taiwan and North Korea and Iran develop or test nuclear weapons.

USDA reports China, Russia and Iran accounted for a combined 200,000 acres of foreign owned ag land here in 2019, China, most of it, largely by owning Smithfield Foods.

But allies Canada, the Netherlands, Italy and Germany hold the lions’ share of foreign-own U.S. ag land—over 35 million acres.

Farmland Values Show Signs of Stabilizing

OMAHA, NEBRASKA – July 18, 2023 – While cropland continued to gain value in the first half of 2023, Farm Credit Services of America (FCSAmerica) reports signs that the real estate market is stabilizing.

FCSAmerica, a financial cooperative, appraises 63 benchmark farms twice a year to monitor trends in real estate in its four-state territory of Iowa, Nebraska, South Dakota and Wyoming. FCSAmerica’s July 2023 Benchmark Farmland Report was released today.

The chart below reflects the average change in value for multiple land types: dryland and irrigated cropland farms, crop-pasture farms and pasture-ranch operations. The number of benchmark farms appraised in each state is indicated in parentheses.

STATE Six-Month Change One-Year Change Five-Year Change Ten-Year Change
Iowa (21) 0.40% 4.00% 58.10% 31.90%
Nebraska (18) 3.20% 8.40% 42.00% 22.90%
South Dakota (22) 4.60% 14 42.40% 44.10%
Wyoming (2) 0.80% 13.30% 64.30% 121.50%

 

Benchmark values in the first half of 2023 remained strong in markets where the availability of land was limited and were steadier in areas with a consistent supply. Higher quality cropland also supported higher values, while average to below-average ground saw smaller increases. This is indicative of a more stable market.

Values on pasture and ranchland were supported by high demand and limited supply. Since July 2022, South Dakota has seen pasture values rise 12.2%, much of the increase happening in the past six months. Wyoming values are up 15.5% year-over-year. Nebraska pasture, by comparison, is down slightly.

For all agricultural land types, values remain at record highs. The steepest gains occurred in the last half of 2020 through 2021. The market has remained resilient in the past year despite successive interest rate hikes and drought in much of the region.

“The other driver in real estate is farm profitability and the overall financial health of agriculture, which has been extremely strong,” said Tim Koch, executive vice president of business development for FCSAmerica. “Profitability and optimism in agriculture have more than offset the negative pressures created by the increased interest rates.”

Profit margins continue to tighten because of higher input costs and lower commodity prices. Producers generally are planning for 2023 profits near break-even levels. This could result in a flattening of land values, with some areas possibly seeing a slight decline, Koch said.

“There is lots of liquidity on farm balance sheets and overall leverage is down significantly,” he said. “So even if profit margins, on average, return to break-even levels, the overall financial strength of producers will lead them to stay in the real estate market. We still could see instances of aggressive bidding for the right farm in the right location.”

Below are state-by-state trends in benchmark farmland values for the first half of 2023:

Iowa Values for 15 of the state’s 21 benchmark farms increased by less than 5%, and four declined slightly. The highest increase was 9.1%, the greatest decline, 6.3%. The overall year-over-year gain of 4.0% compares to increases of 37% and 12.8% in 2020 and 2021, respectively.

Nebraska Seven of the state’s 18 benchmark farms increased in value by at least 5%, with two experiencing double-digit hikes, including a northeast Nebraska farm with an 18.3% gain. Nine farms saw little to no change and two declined in value. The year-over-year increase of 8.4% statewide compares to gains of 22.1% and 14.3% in 2020 and 2021, respectively.

South Dakota Values rose by double digits on five of 22 benchmark farms, improving more than 25%. Fifteen farms saw values increase by 5% or less and the remaining two by 5% to 10%. Year-over-year values rose 14% compared to 21% and 17.3% in 2020 and 2021, respectively.

Wyoming The benchmark cropland farm experienced no change in value, while the value on the pasture unit increased 1.5%.

About Farm Credit Services of America

Farm Credit Services of America is a customer-owned financial cooperative proud to finance the growth of rural America, including the special needs of young and beginning producers. With nearly $40.4 billion in assets and $7.1 billion in members’ equity, FCSAmerica is one of the region’s leading providers of credit and insurance services to farmers, ranchers, agribusiness and rural residents in Iowa, Nebraska, South Dakota and Wyoming. Learn more at fcsamerica.com.

Russia Terminates Black Sea Grain Deal; U.S. Markets See Minimal Impact

Russia leaving the Black Sea Grain Initiative this week has several impacts globally. American Farm Bureau Federation Economist Bernt Nelson says the deal, which allows Ukraine to safely export grain, means Ukraine must utilize other ports.

Nelson says; “Ukraine is still the largest producer of sunflower oil, it’s number six in corn, it’s number seven for wheat production, and it uses the Black Sea to primarily move exports. And so, this will force Ukraine to rely on the Danube ports, along the Danube River that borders Romania. Romania is a member of NATO. So, this kind of provides some safety for these ports.”

Those ports were neglected over the years, but Ukraine started investing in them after Russia invaded the country. Nelson; “So, they’ve dramatically increased the capacity of these ports from about one and a half percent capacity to about 20 percent of Ukraine’s export capacity. And these ports should provide a fairly effective route for grain to be moving out of Ukraine. With that being said, by shutting down that Black Sea corridor, it has the potential to decrease Ukraine’s capacity by about 25 million metric tons.”

While the announcement did create some changes in the markets, Nelson says grain markets are still focused on weather. Nelson says; “We did see wheat take quite a jump, but we also saw it come back down. Now, these markets are still really focused on the weather issues. We saw a lot of rain occurring in the Corn Belt over the last two weeks in an area that was dry. And now as we progress through pollination, we’re still seeing really good conditions for corn pollination. And this is really having a lot more of an influence on these market than the news of the Black Sea deal.”

U.S. Again a Top Beef Supplier to Japan

The United States is again a top supplier of beef to Japan, according to USDA’s Economic Research Service.

U.S. market share collapsed in 2004 after a single case of bovine spongiform encephalopathy, commonly referred to as “mad cow disease,” was detected in a cow shipped from Canada to the United States. In response, Japan placed an embargo on all U.S. and Canadian beef products. In 2006, Japan began phasing out the ban on U.S. beef and fully lifted it in May 2019. Over this period, U.S. beef imports rebounded nearly to pre-ban levels, shipping 233,000 metric tons to Japan in 2021.

The U.S. is now the second largest supplier of beef to Japan, behind Australia. Recently ratified trade agreements between Japan and these partner countries are expected to contribute to changes in Japan’s market for imported beef. Researchers estimate that by 2033, annual scheduled reductions in Japan’s import tariffs will increase imports of U.S. beef by 27 percent, or $413.8 million, from 2018 levels.