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AG UPDATE

AUGUST 29, 2024 | AG BANKING

ECONOMIC NEWS, Kiel Roehl, vp - ag banking

The July CPI and PPI figures were in line to slightly below market expectations. This did not have a major impact on the interest rate market. Markets have shifted their focus from inflation to the job market. Fears of an economic slowdown have recently rattled markets. The Labor Department released the preliminary revised figures for the 12-month period through March lowering the number of new jobs downward by $818,000. On average employers added about 174,000 per month down from 242,000 or 28% fewer jobs. This revision is part of an annual process and is only the preliminary finding. Historically, the final figures can vary drastically from the initial release and market makers anticipated this release. The Fed will conclude its annual Jackson Hole symposium where all Fed officials plus several other central bankers meet to discuss global economic conditions. The Fed will not be issuing an interest rate decision at this time. Chairman Powell will give a speech on August 23rd. Many assume that this speech may give more detail on the Feds intent for a rate decision in September. Currently the market is expecting a 25bps decrease in September with a total of 75bps by the end of 2024.

MARKET NEWS, Miles Colson, svp - ag banking

USDA released its latest version of the World Agricultural Supply & Demand Estimates (WASDE) on August 12, 2024. This report marked the first time for the 2024 crop year that the USDA was able to use FSA and RMA acre information in their new-crop projections. Market expectations coming into the report were quite bearish, with anticipation of higher yields and some uncertainty about harvested acreage, usage and ending stocks. Upon release, the report ended up being bearish for soybeans, but relatively friendly for corn and wheat. A summary of report expectations and results is shown below.

Heartland Farm

Most notably, the forecast for new-crop 24/25 U.S. soybean supply was significantly increased in this report to 560 mb, up from 435 mb in the July report and compared to the pre-report trade estimate of only 472 mb. This projected supply increase put downward pressure on the soybean market after the report. The massive record corn yield projected in the report of 183.1 bu/acre was mostly offset by an anticipated decrease in harvested acreage and an increase in exports. New-crop 24/25 corn production came in at 15.147 mb versus a trade guess of 15.103 mb, and carryout inventory was actually projected lower than the July report, at 2,073 mb compared to an average estimate of 2,092 mb. Report data was mostly friendly to wheat, with lower expected inventories versus the July report. However, whether or not wheat prices will be able to respond positively to the report will be questionable, with the large amounts of corn and soybeans currently hanging over the market.In the corn market, initial reactions to the report were somewhat positive, with prices posting an “outside day up” on the December contract and closing 6 cents higher on August 12. While this action would often mark a trend reversal to the upside, it will remain to be seen whether there will be any substantial follow through for prices at this point in the season, with harvest looming.As of August 21:
  • • Corn SEP $3.75
  • Bull: USDA lowered harvested acreage and increased usage in most recent report – will this trend continue?
  • Bear: A record yield is forecast and carryover inventory from 2023-24 remains high.
  • • Soybeans SEP $9.58
  • Bull: Prices have retreated significantly over the past year and should be in a position to stimulate better demand/usage.
  • Bear: Record crop is on the way in the U.S. and most recent USDA estimate shows a projected carryover for 2024-25 of over 500 mb.
  • • KC Wheat SEP $5.34
  • Bull: Possible widening of Ukraine/Russia war, uncertainties on exports from that region.
  • Bear: Seasonal harvest pressure, lost export business due to prices and strong dollar.
  • • Livestock
  • Feeders AUG $239
  • Live Cattle AUG $181
  • Lean hogs OCT $76

WEATHER, Luke Thomas, ag banker

Here are some key developments that have or will have big impact on our weather:
  • • A USDA map dated 08/20/24 reports approximately 6% of corn production in the US is in an area experiencing drought. This is down from the 10% reported in June and July.
  • • A USDA map dated 08/20/24 reports approximately 8% of soybean production in the US is in an area experiencing drought.
  • • The data above combined with maps indicating good topsoil moisture and a mild weather forecast suggest a strong finish to the growing season

8/26 weather maps

Source: “AgWest Commodities - Weather.” Goagwest.com, goagwest.com/pages/weather-new.php. Accessed 19 August 2024.

GOVERNMENT PROGRAMS, Shelby McClung, vp - ag banking

There are options for Farm Service Agency loan customers during financial stress. If you are a borrower who is unable to make payments on a loan, contact your local FSA Farm Loan Manager to learn about the options available to you. Programs available include: Livestock Indemnity Program, Emergency Assistance for Livestock, and Emergency Conservation Program. Source: U.S. Department of Agriculture."Nebraska FSA and NRCS State Office Newsletter." Nebraska State Office, July 2024, 310002024_07.pdf (usda.gov).

EVENTS & LEARNING OPPORTUNITIES

State Fairs and some of our fall ag conferences have begun or are on the horizon.
  • •NEBRASKA STATE FAIR August 23rd - September 2nd
  • •KANSAS STATE FAIR September 6th - 15th
  • •COLORADO STATE FAIR August 23rd - September 2nd
  • •FALL AGRI-BUSINESS CONFERENCE IN LINCOLN September 5th and 6th (Kiel, Kendi, Josh, and Mike will attend)

OTHER CURRENT EVENTS, Mike Hamilton evp - ag banking

Northwest Kansas Today. Summer 2024, Volume 6, Issue 1,

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Opening my mailbox earlier this week, I pulled out a new edition of Northwest Kansas Today, a magazine published by the Dane G. Hanson Foundation. For readers not familiar with this Foundation, they serve northwest Kansas and are a big and influential contributor to supporting and promoting this region’s economy. In this edition, there were great articles on local feedyards and dairies, including McCarty Dairy and Foote Cattle Company – worth reading. An article on Kernza perennial grain stood out to me though. While far from being a prominent grain given the lack of significant consumer demand, the article described this grain’s consumer appeal as well as efforts to develop farming practices to produce it (much more detail is available at kernza.org). This isn’t a new idea, but the article reminded me of the concept of perennial crops and the positive implications they can have on soil health and cost of production.
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