IN THE KNOW

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AG UPDATE

JULY 16, 2024 | AG BANKING

ECONOMIC NEWS, Kiel Roehl, vp - ag banking

CPI data was released on 7-11-24. Headline CPI came in at 3% compared to a 3.1% expectation. The M/M change was a decrease of 0.1% (-0.1%). Expectations were for a 0.1% increase. Core CPI was cooler than expected as well. The M/M change was an increase of 0.2% with the annual increase of 3.4%. Both of these are 0.1% lower than expectations. This inflation news will increase the expectations that the Fed will decrease rates in September. The initial impact to the interest rate market from this report is a 0.126% decline in 2 year rates, 0.13% decline in 5 year rates and 0.11% decline for 10 year. The June PPI will be released July 12th with the PCE released on July 26th. The Fed is scheduled to meet at the end of July and again on September 17-18. Chairman Powell has recently made comments that the labor market is beginning to cool. Increasing unemployment and continued slowing of inflation will likely push the Fed into action. Regardless of any action or lack of action the fed will be subject to intense political scrutiny. Rate decisions will carry large political impacts, which is unfortunate heading into the elections season.

MARKET NEWS, Miles Colson, svp - ag banking

Impacts from the June 28th crop report continue to resonate through the grain markets. As previously reported, USDA shocked the markets with a corn acreage estimate of 91.5 million acres, up over 1M acres from both the March estimate and the average trade guess coming into the report. Soybeans were more in line with expectations, however price action for the beans has for the most part followed corn. Since the end of June, the primary growing regions have also seen overall ample rains and moderate temperatures which have added confidence for the market that the 2024 crops will be plentiful.

Crop progress report table

The July 8 Crop Progress report showed corn maturity was ahead of average pace, with 24% silking versus only 14% on average. Corn condition improved by 1% to 68% good/excellent versus 67% last week and only 55% g/e last year. Soybeans were reported to be 34% blooming versus an average of 28%, with condition also at 68% compared to last week’s rating of 67% and versus 51% a year ago.The market will next turn to the USDA Supply and Demand report which will be released on July 12. Attention will be focused on any change in projected yield estimates (currently forecast at 181 bu/acre for corn and 52 bu/ac for soybeans), overall supply numbers as well as usage and the effects to anticipated ending grain stocks for 2024-25. Analyst estimates at this time are for an increase of 158 mb in projected new crop corn inventory, thanks to the higher acreage figures presented in the June 28 report.As of July 10:

• Corn JUL $4.03
o Bull: Areas of too-wet/flooding in corn belt, did “acres yet to be planted” on June 28 USDA report actually get planted?
o Bear: Anticipated 91.5 million acres of corn planted, 181 bushel projected yield may be still be low? US holds over 80% of world old-crop corn stocks at this time
• Soybeans JUL $11.41
o Bull: Planted acreage steady in June 28 report, too wet in southern Minnesota and northwest Iowa
o Bear: Soybean products demand remains sluggish, export competition is heavy
• KC Wheat JUL $5.73
o Bull: Russian and Ukrainian production estimates continue to be lower due to drought areas
o Bear: Seasonal harvest pressure, lost export business due to prices and strong dollar
• Livestock
o Feeders AUG $254
o Live Cattle AUG $182
o Lean hogs JUL $88

WEATHER, Luke Thomas, ag banker

Here are some key developments that have or will have big impact on our weather:

• Southwest monsoon has outperformed expectations after more moisture was received than expected.
• Jet stream is expected to retreat farther north indicating hotter second half of July.
• La Nina development has stalled indicating a “normal” weather pattern for the remainder of the year.

Source: “AgWest Commodities - Weather.” Goagwest.com, goagwest.com/pages/weather-new.php. Accessed 11 July 2024.

GOVERNMENT PROGRAMS, Shelby McClung, vp - ag banking

• Reminder to producers to report acres to maintain eligibility for assistance in the event of a loss. The deadline for springs acreage certification, perennial forage (pastures) and Conservation Reserve Program (CRP) is July 15. Important to include prevented plant and failed acreage.
• The Livestock Indemnity Program (LIP) provides financial assistance to producers who suffer livestock losses above normal mortality due to adverse weather, which can include extreme heat. Producers are encouraged to contact the county FSA office to report losses as soon as they become apparent.

Source: U.S. Department of Agriculture. "Nebraska FSA and NRCS State Office Newsletter." Nebraska State Office, June 2024,https://www.fsa.usda.gov/Assets/ USDAFSAPublic/usdafiles/StateOffices/Nebraska/ newsletters/2024/310002024_06.pdf. Accessed 10 July 2024

EVENTS & LEARNING OPPORTUNITIES

Other than county fairs kicking off this week, there aren't a lot of other ag events to keep on your calendar. We know how hard the 4-Hers work to earn a spot at state fair, so you may want to keep those dates on your calendar - it will be here before you know it!

•NEBRASKA STATE FAIR August 23rd - September 2nd
•KANSAS STATE FAIR September 6th - 15th
•COLORADO STATE FAIR August 23rd - September 2nd

OTHER CURRENT EVENTS, Mike Hamilton evp - ag banking

ABA Banking Journal. “Study: Bank Customers Want Personalized Financial Advice” American Bankers Association, 3 July 2024,
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A recent J.D. Power study showed that financial advice is “resonating more than ever” with retail customers. However, only 42% of survey respondents reported that their bank offered personalized guidance. When customers did receive advice, the survey showed 76% of them acted on it. The survey also indicated that when customers “received personalized banking advice/guidance,” overall satisfaction with their bank substantially increases. We need to remember that customers count on us to be bank experts and to care enough about them to consider their needs. When lenders do this, share ideas, and have meaningful conversations with their customers, everyone benefits. Additionally, the survey shows a majority of customers will typically act on our recommendations.