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AG UPDATE

AUGUST 8, 2024 | AG BANKING

ECONOMIC NEWS, Kiel Roehl, vp - ag banking

Market Table

The Fed concluded the July 24th meeting leaving rates unchanged, which was widely anticipated by the Market. The market consensus is for a rate cut in September, however central bankers did not make any obvious statement indicating this would happen. The Fed maintained its position that more progress and data is needed to justify a cut. However, they did mention the labor market for the 1st time. The labor market has begun to cool, however still remains within an acceptable range. Regardless of decisions made at the next meeting, they will likely draw significant criticism from political pundits and candidates. The table shows the June inflation readings that were released in July. PPI was hotter than expected but the market did not seemed too concerned. PPI and PCE were inline. Below is the PCE graph for the past 3 years.

Personal consumption index


MARKET NEWS, Miles Colson, svp - ag banking

December 2024 corn hit a new contract low on July 31, closing at $3.99 ¾. The December contract has not been below the $4 mark since November, 2020. This new step down is a continuation of an overall downward price move for not only corn, but also soybeans and wheat, which started earlier this spring.The USDA’s July 29 crop progress report reflected an increase in good/excellent corn rating to 68%, up 1% from last week and compared to just 55% last year. For soybeans, ratings fell 1% to 67% G/E compared to 68% last week. Rating was only 52% at this time a year ago.On August 12, USDA will be releasing their next Supply & Demand report. This report is not the final word on the 2024 crop, and any correlation between the August report and final yields has been elusive in the past, as shown in the following graphic. As can be seen, individual states are quite variable, and the US average change in yield between the August estimate and final yield has ranged between +8% and -7%, with an average of only about +1% of actual yields being higher than the August estimate.

DTN line graph

As of July 31:
  • • Corn SEP $3.80
  • Bull: Market very oversold, high short-interest. Ethanol margins are good – will this lead to increased usage?
  • Bear: If market is currently trading around a 182 bu/acre yield, is that still too low? Mostly very good growing conditions nationwide
  • • Soybeans AUG $10.30
  • Bull: Recent crop ratings level or seeing slight declines
  • Bear: Soybean oil and meal markets continue to struggle
  • • KC Wheat SEP $5.45
  • Bull: Russian and Ukrainian production estimates continue to be lower due to drought areas
  • Bear: Seasonal harvest pressure, lost export business due to prices and strong dollar
  • • Livestock
  • Feeders AUG $256
  • Live Cattle AUG $186
  • Lean hogs AUG $93

WEATHER, Luke Thomas, ag banker

Here are some key developments that have or will have big impact on our weather:
  • • Cooler temperatures in the western US mixed with hotter temperatures in the central US resulted in “ring of fire” precipitation pattern in the corn belt.
  • • Heat is now returning to the western US which will bring normal to hotter temperatures for most of the US.
  • • La Nina still has not developed as some had believed. If it is going develop it will be towards the end of the year or into early next year.

Weather map

Source: “AgWest Commodities - Weather.” Goagwest.com, goagwest.com/pages/weather-new.php. Accessed 29 July 2024.

GOVERNMENT PROGRAMS, Shelby McClung, vp - ag banking

  • • USDA recently announced an Aug. 14 application deadline for the Emergency Relief Program (ERP) 2022. FSA began taking applications for this disaster assistance program in October 2023. ERP 2022 covers losses to crops, trees, bushes and vines due to qualifying calendar year 2022 natural disasters including wildfires, floods, excessive heat, tornadoes, freeze, and drought, among others. Contact your FSA office for more information to apply ahead of this deadline.
  • • 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.
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_07.pdf. Accessed 31 July 2024

EVENTS & LEARNING OPPORTUNITIES

County fairs seem to be in full swing (or wrapping up) for most areas! 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.
  • •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

The Wall Street Journal. “After Years of Raising Prices, Food Companies hit Consumers’ Limits” Jesse Newman and Heather Haddon, 1 August 2024,

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I wanted to share some positive developments on the sad topic of high food costs. Newman and Haddon from WSJ write “Food companies are working on fixes for consumers fed up with high prices, while trying to protect some of the biggest profits earned in years.” Strike up a conversation on the economy and high grocery costs are soon cussed and discussed. “Americans in the past two years spent more of their income on food than they have in three decades.” While some food executives defend the price increases, “70% of consumers believe that restaurants, supermarkets and food manufactures are overcharging” according to economists at the University of Illinois and Purdue University. There are signs the message from consumers is being heard and felt in corporate wallets as “big food makers are leaning into lower prices to help lift stubborn sales volume.”
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