American Ag Today- 6/10/24

    enJune 10, 2024

    Podcast Summary

    • Spring planting season weather premiumDuring spring planting season, optimal time to market crops due to weather premium, but it decreases as crop grows and becomes known. Drought issues can increase premium and secure small profits for farmers.

      Now, during the spring planting season, can be an optimal time to market crops due to the weather premium built into the markets. According to Ben Brown, an Ag Economist at the University of Missouri, the weather premium tends to decrease as the crop grows and becomes better known. However, if there are drought issues throughout the summer, the weather premium could increase and remain high. Producers can take advantage of these weather rallies to secure small profits and ensure they can farm again the next year. It's important to note that this may not be the case everywhere, as some areas may still have weak basis markets or higher production costs, keeping them from reaching break-even levels. The USDA's first supply and demand tables for the 2024-25 crop season were also recently released, and Brown discussed the implications of the wheat numbers.

    • Wheat markets rallyWheat markets have rallied due to concerns over crop production in the US and Russia, with Russia's crop affected by drought and late freeze, potentially leading to decreased production and increased international demand. However, the global wheat complex is building stocks, which may limit the length of the price increase.

      The wheat markets have seen a rally due to concerns over crop production in both the United States and Russia. The Russian crop has been affected by drought and late freeze, leading to potential tears in the crop and increased international demand. Meanwhile, the US wheat crop, while currently facing dry weather in certain areas, is showing signs of improvement. Ag economist Ben Brown notes that these higher prices may not last long, as the global wheat complex is building stocks. However, the current market opportunity exists due to concerns over crop production, particularly in Russia. Wisconsin Senator Tammy Baldwin is pushing for the passage of legislation related to the AM radio for every vehicle act, which has already been voted out of the Commerce Committee.

    • US-Mexico farm tradeSenator Baldwin aims for bipartisan support and expedited process for US-Mexico farm trade bill, while Mexico's new president is expected to maintain strong US relations and status quo in farm trade.

      Senator Tammy Baldwin is pushing for the passage of a bipartisan floor consideration bill in the Senate, aiming for strong bipartisan support and the 60-vote threshold to avoid a filibuster. She hopes for an expedited process like unanimous consent. Meanwhile, Mexico's new president, Claudia Shinebaum, is expected to maintain the status quo in farm trade with the US, given her priority on strong US relations. Mexico is now the US's top agricultural export destination, with over $28.7 billion in exports in 2024. The USMCA, which includes issues like GMO corn and dairy with Canada, is set for review in 2026. Intriguingly, the filibuster, once used less frequently historically, is now used more often, but legislation can still be passed through unanimous consent. Early indications suggest Shinebaum will continue the US-Mexico-Canada agreement, but this depends on how she handles trade irritants. The International Grains Council report shows a reduction in global grain production and trade forecasts.

    • Global Grains MarketWheat and coarse grains production is decreasing by 4 million metric tons, while global grain trade is increasing by 8 million metric tons. Soybean trade is projected to rise, leading to record high inventories. Rice production has been revised upward, leading to higher consumption. Deere & Company is cutting jobs and building a new facility in Mexico.

      There have been revisions to the global grains market outlook for the 2023-24 marketing year. Wheat and coarse grains production is expected to decrease by 4 million metric tons, primarily due to lower estimates for sorghum and barley. However, the forecast for global grain trade has been raised by 8 million metric tons, driven by larger wheat and maize flows. Soybean trade is projected to increase by 2 million metric tons, leading to higher inventories and likely reaching an all-time high of 172.2 million metric tons. Global rice production has also been revised upward by 3 million metric tons, leading to higher consumption. In other news, Deere & Company, the world's top seller of farm machinery, is planning to cut an unknown number of employees from its global production and salaried workforce due to rising operational costs and dropping demand. Additionally, Deere has announced plans to purchase land in Ramos, Mexico for the construction of a new facility that will produce mid-frame skid steer loaders and compact track loaders, which will be relocated from its Dubuque Iowa Works production facility and is expected to be operational in 2026.

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