Shipping Commodities is Near-Normal, For Now

Shipping commodities up and down America’s inland waterway system got pretty hard to do in 2022, especially along the Mississippi River. Extended drought cut water levels to almost impassable levels and resulted in shipping grinding to a halt in the river. The good news is those levels are finally beginning to rebound.

Mike Steenhoek is the executive director of the Soy Transportation Coalition, a group that keeps a sharp eye on shipping and the waterways year-round. They’re happy to see those river levels starting to rise because ships are once again carrying commodities to southern ports in the U.S.

Shipping
Mike Steenhoek of the Soy Transportation Coalition. (photo by the Iowa Soybean Association)

“Meaningful precipitation has occurred over the past several months,” he said from Ankeny, Iowa. “It’s made a significant impact throughout the entire inland waterway system.”

Steenhoek offered up Memphis, Tennessee, as an example, calling it one of the “ground-zero” locations for the low-water conditions last fall. That location is currently 10-10.5 feet of water depth in relation to the gauge.

“Last year at this time, we were at 19 feet,” he recalled. “So, we’re below last year. To give that some perspective, we were just about at a negative 11 feet in late October. We’re easily more than 20 feet better than we were in October, which is a significant increase making shipping easier.”

St. Louis, Missouri, was another example of “ground zero” in the low water level picture. That location is just a bit higher than at the same time in 2022, so the area has seen a nice rebound from the low levels. He says the moral of the story is the waterways have returned to a degree of “normalcy.” But there is a catch.

“It won’t take a lot of sustained dry conditions to tip us right back into lower conditions,” Steenhoek said. “It could critically impact some of those areas like St. Louis to Cairo, Illinois.”

Shipping commodities is getting back to near-normal levels, for now. The waterways need continued rainfall in case dry weather returns. (Photo by AgFax)

Cairo (pronounced KAY-row) is a significant point in the waterway system. That’s where the Ohio River meets the Mississippi and provides a big influx of water into the system so that St. Louis to Cairo area can be very susceptible to low water conditions.

How dry did some of those areas get? The levels sank so low that ships were actually running aground and getting stuck in the Mississippi River. When that happens, one of two things usually occurs.

“Those ships sometimes had to get dug out,” he recalled. “Sometimes, they had to sit there until water levels rose to the point they could move again.

We also had sediment buildup, or ‘shoaling,’ in multiple locations,” Steenhoek said. “That resulted in shipping having to stop or significantly slow down. That meant there was a lot of dredging activity occurring last year and continuing into 2023.”

The timing for ships getting stuck last fall was awful, as that’s a time when a high percentage of U.S. exports occurs between September and February. “That’s when the U.S. soybean spigot is turned on and we supply a lot of soybeans to the world market,” he said. “Bad time for one of the main ways we move product to our ports to go down.”

Steenhoek monitors shipping in the waterways closely and says there is good movement up and down the waterways right now. U.S. export volumes are comparable to even a little higher than where they were last year.

“That’s really good news,” he said. “The reports I’m getting, particularly from the export facilities down in the New Orleans area, say they are back to a healthy degree of normalcy.

“As I mentioned, we’d love to see steady precipitation continue,” Steenhoek added. “We don’t have a lot of excess water in the tank to rely on if things go that dry again.”

Plant-2023 is Already Set in Stone

Plant-2023 is already on the minds of farmers across the country. As proof, Farm Futures recently did a survey of farmers in all parts of the country who will get right to work this spring. Jacqueline Holland is the grain marketing analyst for Farm Futures.

Even if wheat plant-2023 does put a cap on corn and soybean plantings, Holland says American farmers are still going to plant a whole bunch of both crops.

“For corn, we’re looking at 90.5 million acres,” she said. “For soybeans, that’s 88.9 million acres. And for winter wheat, we calculated 34.9 million acres. For spring wheat, which includes hard red spring, white spring, and durum wheat, we’re anticipating 13.9 million acres. That gives us a grand total of 228.3 million acres for the three principal crops.”

plant-2023
Jacqueline Holland of Farm Futures

It’s been a few years since wheat took some acres from both corn and soybeans but rising input costs and still solid prices mean a lot of farmers may be giving wheat plant-2023 a second look. She was surprised when their winter wheat calculation came in lower than USDA’s prediction issued in January.

“But if you go back at Chicago winter wheat futures prices during peak planting season last October, they were 25 percent higher than the year before,” Holland said. “At the same time, input prices for corn and beans were still rising, so maybe it shouldn’t be that surprising that wheat is drawing interest for plant-2023.”

The one thing even more surprising to her was how narrow the gap was between corn and soybean acres. It’s probably going down to the wire to see how the acres shake out. But, going into spring, it looks like farmers have already made up their minds about what and how much they’re planting in the spring.

“A lot of growers had finalized their plant-2023 rotations before 2023 even began,” she said. “Seventy percent said they already had things locked in and weren’t expecting to make any last-minute changes.”

One thing she’s going to watch closely is the soybean harvest. Holland says 88.9 million acres of soybeans have the potential to lead to a “record-large” crop. If that happens, some of the supply pressure weighing on commodity markets may ease a bit.

“However, if we see more soy crush plants coming online and increasing capacity by the time we harvest the crop, there may not be much of a price break,” she said. “That added demand could keep soybean prices high even though we could be looking at a record crop.

“That’s a big one I’m going to be watching in the coming months,” Holland said.

2023 and the year ahead for the ag economy

2023 and the ag economy
David Widmar, an agricultural economist with Agricultural Economic Insights. (Photo from www.aei.ag)

2023 and the ag economy combine to produce some trepidation as we look to next year. While the ag economy is doing okay despite several challenges like supply chain delays and high input costs, the question is how long this will last into next year. I talked with David Widmar, an agricultural economist with Agricultural Economic Insights in West Lafayette, Indiana.

There are no doubts that commodity prices are showing a lot of volatility at the end of this year, and Widmar says that’s causing a lot of angst. However, it’s generally still a positive story in the farm economy. But what’s ahead next year?

“We do expect that positive story to continue into 2023,” he said during the 2022 National Association of Farm Broadcasting’ annual convention in Kansas City. “One of the biggest reasons why is tight commodity inventories across all commodities in the U.S. and globally.”

The problem is when things get tight for corn, soybeans, and wheat, we really can’t substitute one crop for another. All of those crops will want to maintain their acreage shares. The idea of “robbing Peter to pay Paul” won’t work.

“We can’t plant fewer corn acres to make up for soybeans or vice versa,” he said. “So, everything is tight, and that will continue to be part of the narrative going into 2023.

“We know one thing about2023,” Widmar added. “There will come a point when we oversupply. We’ll bring in new production acres around the world, including South America, Southeast Asia, India, and hopefully Russia and Ukraine in the long term.”

The other thing that will eventually affect the markets is the possibility of big yields. There’s been a recent run of average to slightly below-average U.S. corn yields. “Eventually, more acres and yields will push us over again.”

Here’s the entire conversation during the NAFB’s Trade Talk event in Kansas City.

Commodities, Sports, and Prognostication

Commodities and sports typically don’t go together most years. However, this fall, the two topics have come together in an interesting way.

Being a long-time sports broadcaster, I’ve noticed that when the major sports seasons wrap up, certain sports media love to immediately do what they call a “way-too-early” look to the next season. Evidently, it’s not just a sports thing.

I know harvest is just ramping up in many areas as I write this, but Farm Futures took what some might think is a “way-too-early” survey of planting intentions for 2023, and I couldn’t pass it up. It looks like corn will be king once again next spring among all commodities.

Commodities
Corn looks to be king when it comes to 2023 spring planting (photo from agriculture.com)

Jacqueline Holland is the grain market analyst for Farm Futures, and she wrote an article about the survey. She says the way-too-soon survey results are favoring corn for spring planting despite some challenges that come with the commodity.

“Even with higher fertilizer prices, farmers are still prepared to go all-in on corn,” she said. “Our survey found that farmers expect to plant 94.3 million acres of corn, a five percent increase from USDA’s current acreage estimates.”

If that prediction is realized, it would be the most corn planted in the U.S. since 95.4 million acres went into the ground in 2013. While soybean acres will be behind corn next year, U.S. growers are still sowing a lot of beans during spring planting in 2023.

“We expect farmers to plant 87.3 million acres of beans,” Holland said. “That’s almost a one percent decrease from this year’s acreage.” Cotton is one of the reasons that soybean acreage is going to drop a little. In the Mississippi Delta, a lot of acres in that region are going to provide “stiff competition” for soybeans during spring planting.

They also expect wheat acres to rise in 2023 thanks to more winter wheat acres in the Eastern Corn Belt. Farm Futures expects growers to plant 36.6 million acres of winter wheat. With more winter wheat acres going in the ground, spring wheat acres will back up from this year, with the 2023 estimate at 12.3 million acres.

“That means a grand total of 48.9 million acres of wheat will be planted in 2023,” she said.

Holland admits she was a little surprised at the survey results. She says there was a lot of price responsiveness to the rapidly-rising fertilizer prices heading into spring planting this year.

“When farmers were making their planting decisions in December last year, soybean prices were rallying strongly,” Holland recalled. “But with all of the issues we’ve seen with the flow of corn in the Black Sea this year, as well as the U.S. corn crop struggling with drought, corn has some bullish prospects for next year.”

She says if we do see a larger corn acreage next year, that might lead to some expansion back in the cattle market. In turn, that would likely revive some corn acreage in the Plains. Remember, about three million acres of corn went into prevent plant in the spring of this year.

Commodities
A Farm Futures Survey shows we might be harvesting a lot of corn again come fall of 2023. (Photo from kansasfarmfoodconnection)

“A lot of those acres were in the Dakotas and Minnesota,” she said. “Barring another bad weather event next year, I expect those acres to go back into corn in 2023.”

Farm Futures also has other questions in their survey beyond commodities and planting intentions. Those questions include where farmers are headed with input costs next year. Based on the survey responses, Holland says profit margins are going to shrink next year. The question is, how much?

“As of right now, it doesn’t look like growers are going to skimp on any fertilizer applications,” Holland said. “Most responses show farmers are ready to lock in their fertilizers at the lowest prices they can get. That will hopefully keep at least some liquidity in these crop budgets.

“We’ll see how these things ultimately shake out for planting and commodities,” she added. “There’s a long time between now and next spring.”

Rain Finally Shows In Farm Country Last Weekend

Rain. Finally. Last weekend saw at least some rain in parts of farm country. Had a chance to talk with John Baranick (rhymes with mechanic), ag meteorologist for DTN, who lives just down 169 from me in Jordan, Minnesota. He says while the rain benefitted the parts of rural America stuck in a drought, other areas didn’t need a lot of rainfall.

rain
2021

“It wasn’t just here in southern Minnesota. We also saw that it was even heavier south of the border in Iowa, with a lot more four-to-six inch amounts there. Very helpful for some areas, but not a lot of those areas needed it. It also extended down through southern Wisconsin and into Northern Illinois. A lot of those crops, again, didn’t really need it, but it’s definitely helpful wherever it hit. And that front is starting to come through the eastern half of the Corn Belt. Again, a lot of these areas are doing much better than we are out here in the West, but Illinois, Indiana, and Ohio are all seeing bouts of rain this week. They’ve had some flooding in some of these areas, but the rainfall that’s gone through is mostly favorable. It’s just those Western states that just haven’t.”

The Dakotas saw mixed results from the weekend rain.

“South Dakota got some pretty good rainfall. The eastern half of it did, but the western half didn’t, really. North Dakota has kind of been missing out on a bunch of rain lately, although their soil moisture, for the most part, and the crop conditions are still pretty good.”

The Plains States are still struggling with drought…tape

“It’s the states of Nebraska, Kansas, kind of northern Missouri that have missed out on a lot of the rainfall even with these fronts coming through, and they’ve had a lot hotter. Temperatures have been up near or eclipsing 100 degrees very consistently all summer long, so the heat has been putting on a whole lot of stress for those areas.”

There may finally be some cooler air on the way into the Plains next week and may bring at least a little rain with that front…tape

“We’re seeing late next week, maybe mid-to-late next week, a push a cooler air move through and that’s gonna come with a bit of showers too, so it’s not a whole lot of rainfall and probably on the order for most people have a half inch or less, But the temperatures are going to cool back down. Instead of seeing highs in the 90s and up near 100. It’s more like the 70s and 80s for several days, so it’s actually gonna be below-normal temperatures for a bit. That kind of occurs late next week into the following week, so it’ll be a nice relieving break for them.

Unfortunately, many parts of rural America are still stuck in a drought. We’ll talk about that more later this week.

Again, that’s DTN ag meteorologist John Baranick

Market Prices are Still Higher, But How long?

Market Prices are still higher, but for how long? Commodity markets are rarely dull and sometimes are outright wild. One-quarter of the way into 2022, and we’ve seen a lot of upward pressure in several commodities. The curious question is how long is this going to last given multiple outside factors that could bring the higher push to a halt.

Mike Zuzolo is the founder and president of Global Commodity Analytics in Atchison, Kansas. He’s been working in the markets in various positions since November 1995. Zuzolo has seen a lot of ups and downs over the years, and the corn market has been near all-time highs for quite a while.

market prices
Mike Zuzolo of Global Commodity Analytics in Atchison, Kansas (Photo from Facebook.com)

“We’ve been within reach of the all-time high for corn set in August 2012, at $8.43 3/4,” he said on the phone from Kansas. “You have the Hard Red Wheat drought, you have the E15 blend increase this summer, planting delays that are pressuring a marketplace that’s expecting more acres than what the USDA predicted earlier this year.

“And then you have the soybeans getting support from the vegetable oil market, which is supported by the crude oil market, and that is supported by the biggest feature of all, the war in Ukraine,” Zuzolo added.

Over the past four months, Zuzolo said there are two overarching factors that had the most influence on the corn market prices. One is the idea from the Federal Reserve that the U.S. had transitory inflation. At roughly the same time the Fed began to publicly acknowledge that wasn’t the case, Russia began its attack on Ukraine. He said most people didn’t seem to truly expect that would happen.

He calls these two events “black rhinos.” Those are events the public knew were possible but kind of turned away from, not thinking they would actually happen. “They aren’t like black swans that we didn’t know where out there,” he said. “You didn’t think they would have the impact on the markets that’s happened so far.”

The market prices could potentially feel the impacts of the war in Ukraine for years. Zuzolo, a long-time market observer, says the length of the impact may depend on who “wins” the war and how big it may get before it’s done.

The commodity markets may feel the impact of the war in Ukraine for years to come. (Photo from Hindustantimes.com)

“Does NATO get involved?” he wondered, “It would then go from two countries directly involved with a lot of support from multiple other countries, or does it expand into a NATO and China and Syria and Iran conflict. The regional conflict would have a great chance of blossoming into more of a full-on world war.”

He thinks the trade is beginning to take the potential conflict escalation into account, “and they should.” A recent weekly stocks report of distillate fuels in the U.S., which is mainly heating oil and diesel fuel, showed America’s distillate fuels at their lowest point since 2008.

“All of the sudden, we have a situation where the wheat market is contending with a situation similar to 2008 in terms of drought potential, knocking down yields,” he said. “Now, we have the energy sector also looking like 2008. If you throw the Russia/Ukraine issue on top of that, then yes, you could have something that lasts for quite some time.”

There are a lot of negative features out there that can affect market prices. He said the trade can’t get a handle on what the supply is right now. Folks in the markets don’t know if the demand is being rationed aggressively enough at this point, because they don’t know if the supply has stopped going down yet. 

market prices
High Path Avian Influenza continues to lower the available supply of poultry. (Photo from newsweek.com)

  “The Highly Pathogenic Avian Influenza is in 20-something states right now,” Zuzolo said, “we have a hog herd that is shrinking as of the March Hogs and Pigs Report, and we have a cattle herd that is seeing an almost-weekly drop of one-to-three pounds on a dressed basis. I think we’re only four or five pounds above where we were a year ago, and this is in the beginning of what could be one of the worst droughts in cattle country.”

The International Monetary Fund (IMF) recently cut world GDP by almost a full percentage point just since January. While the IMF puts a lot of it at the foot of the war in Ukraine, Zuzolo says it goes back to the supply chain issues. The U.S. couldn’t afford any more problems on the supply side with energy and crude oil than what the country already faced because of COVID-19.

Thinking long term, Zuzolo spoke to the possibility of the U.S. having to ration exports in order to make sure the U.S. had enough food to feed the country. He doesn’t think it will happen in terms of food exports, but it could happen in other sectors.

“In terms of crude oil, we recently lost a lot more barrels of oil than the trade expected,” Zuzolo said. “It wasn’t because of extra strong demand, it was three times more than the trade expected because we were exporting it out the door. If we can’t bring up the rig count here in the United States and start producing more to meet international and domestic demand, it will then be time to start thinking about rationing.”

Zuzolo said this will have to be a topic of conversation three-to-six months down the line if the war expands and the conflict gets any bigger than it already is. In the meantime, it’s harder than ever to guess what’s ahead in 2022 for the markets.

“I’m gonna stick with what I’ve said recently,” he said. “Because this is a supply cost-push, weather-induced, inflationary move, I still feel the first half of calendar year 2022 is the best time for grain hedgers to get their hedges in place, and yes, I do think they’ll need them. It’s because of the fact that it’s not demand led, and that we are on track for a recession, a greater than 50 percent chance, by the fourth quarter of this year.”

Commodity markets are never dull, are they? (Photo from wikipedia.com)

He says it’s important to get grain hedges in place by the end of June. For the livestock and poultry producer, the second half of 2022 is going to give them a better opportunity to hedge better profit.

“At that point, not only will high market price prices for grains pull down the weights, the HPAI will pull down supply, as will some natural herd reductions. That will all begin to be felt in the market price and the available supplies of market-ready cattle and hogs by the time we get to August and September.

“I still want to hedge the livestock markets, but I don’t think we’re on as big of a timeline as I am on the grains during the first half of the year,” he added.

Planting questions in 2022

Planting questions abound here in the late stages of winter. How many acres of corn, soybeans, wheat, and other crops will get planted in 2022? The acreage battle is a hot topic of conversation in the markets and in coffee shops across rural America. This year’s acreage battle is far from over and actually began last year.

That’s the opinion of Joe Vaclavik of Standard Grain in Nashville, Tennessee. The long-time market expert says this has gone on for months for a variety of reasons, led by fertilizer issues.

planting questions
Joe Vaclavik is the founder and president of Standard Grain in Nashville, Tennessee. (Photo from mobile.twitter.com)

“Even going back to last fall, the market was very aware of upcoming fertilizer challenges,” he said on the phone from his Nashville office. “It was widely known that fertilizer prices were rising rapidly and would have an impact on this year’s acreage mix.”

He said for a moment in time, they saw the ratios and new-crop prices seem to favor corn. It appeared the market was trying to buy corn acreage back because of the potential of losing acres due to fertilizer prices. The fact of the matter is no one has a clue what the crop rotations are going to look like.

“There are several well-respected analysts like the University of Illinois that had an estimate of 96 million corn acres,” he said. “That would be an increase near 2.5 million over last year.

“And then, Farm Futures did a customer survey and came away with an estimate of 90 million acres,” he added. “The difference between 96 million and 90 million acres in terms of pricing implications, balance sheets, and fundamentals is phenomenal. Those are two totally-different markets and totally-different worlds.”

In any given year, Vaclavik says trying to predict or estimate what the acreage will be is a near-impossible task. Occasionally, someone will predict accurate numbers, but no one is consistently accurate. There are always “curveballs,” and this year will feature more curveballs than ever.

“This uncertainty doesn’t just apply to corn and soybean acres,” he said. “You have another bunch of crops that also make money for farmers. Spring wheat makes money; oats make money; small grains make money.”

The “other piece of the pie” among the planting questions is that principle crop acreage has trended lower for the last 7-8 years. Things are in a state of flux, and he feels the unknown might actually be more supportive than not for the markets. The fertilizer question and its impact depends on where you’re located.

“I’ve talked to people who have their fertilizer needs covered, and they feel good about the situation,” Vaclavik says. “The thing is that most farmers really don’t want to change their rotations. I did a survey of my customers a while back and most said they’re rarely in favor of switching rotations, if ever.

“If they can stick to their rotations, that’s what they’ll do,” he added. “But it still could be tricky.”

Even a farmer who’s already locked in their fertilizer for the 2022 season can still run into fertilizer problems. Actually, getting the physical delivery of that product could be a different story because of serious supply chain issues.

planting questions
Lots of interesting discussion surrounding what crops might be going in the ground during spring planting this year. (Photo from YouTube.com)

Corn is also a more input-intensive crop, so farmers can’t have their fertilizer not show up when it’s time get moving on spring planting. While not everyone is going to struggle to get fertilizer, there is still a risk going into springtime. Consequently, fertilizer will be a major deciding factor in answering those planting questions.

Small grains could be an interesting topic in the spring. Vaclavik says he would not be surprised to see more spring grains in the acreage mix. One thing that people might not be talking about a lot is some of the northern United States and even into Canada are still experiencing drought.

“Things are still dry in the Dakotas and over the border in Canada,” Vaclavik said. “They are still in a drought, and that will be an additional factor when it comes to acreage. It all depends on what farmers are comfortable planting into the dry conditions. I know it’s not as bad as last summer, but there is still a drought in that region.

“I haven’t seen a year like this in recent memory where it’s so hard to predict the answers to the planting questions that we’re asking,” he added.

Harvest 2021 deep dive shows variability

Harvest 2021 is proceeding along at a good pace. Mike Zuzolo is the Founder and President of Global Commodity Analytics in Atchison, Kansas. He took a deep dive last week into the crop progress numbers and found a lot of variability in the results.

“Comparing the pace of the corn harvest 2021 versus the pace of the soybean harvest suggests that the corn yields are indeed a little more variable than beans,” Zuzolo said. “I hate to say lowered because of the issues that we’re seeing with the yields coming in. We’re seeing very good, very top-end yields coming in down in Kansas and Nebraska.

Harvest 2021
Mike Zuzolo is President and Founder of Global Commodity Analytics in Atchison, Kansas.

“My business clients and subscribers say strong yields are coming in through certain parts of Illinois,” he added. “However, my question is whether they’re top-end yields. Probably 90 percent of the producers I work with throughout Nebraska and Kansas would say ‘yes,’ we have top-end corn yields, and we’re close to wrapping up. However, central Illinois and central Indiana are probably around 50 percent complete, by comparison.”

Illinois and Indiana farmers are probably close to 75 percent done with soybean harvest 2021, but recent rainfall has slowed them down a bit. His clients in both states are saying they have top0-end yields in just 25 percent of their corn, but everything else is above average.

He thinks the numbers are showing the corn yields are more variable, especially because our corn and soybeans both have low moisture content. Six of the top 18 corn-producing states are at 50 percent or greater on corn harvest. About 29 percent of the national harvest 2021 is done compared to 24 percent at the same time last year.

“Those kinds of numbers are completely upside down when it comes to the soybean harvest,” Zuzolo said. “Just two of the 18 major soybean-producing states are at 50 percent or greater on harvest pace. The national soybean harvest is at 35 percent compared to 34 percent at the same time in 2020.”

Here’s the rest of the conversation.

Rescue dogs and the U.S. livestock industry

rescue dogs
Rescue dogs coming into the U.S. from Asia are causing some concern for pork producers, who are worried about Foreign Animal Diseases tagging along for the ride and infecting U.S. herds, which would be disastrous. (Photo from nationalhogfarmer.com)

Rescue dogs and foreign animal diseases are not something I ever expected would combine in the same story. However, a recent assignment for the National Association of Farm Broadcasting brought the two previously unrelated issues face-to-face. The National Pork Producers Council is alarmed at the number of rescue dogs coming into the U.S. from countries currently battling a serious Foreign Animal Disease outbreak.

The potential is there for some of those FADs to ride along with the dogs, either on the coats or equipment like dog crates as the animals enter the country. Liz Wagstrom is the Chief Veterinarian for the NPPC, and she says they’re especially concerned about animals coming in from Asia.

“Rescue dogs are being brought into the U.S. from Asia after being rescued out of wet markets or the meat trade,” Wagstrom said. “They could be contaminated with blood, urine, or manure, which could carry something like African Swine Fever, Foot-and-Mouth Disease, or Classic Swine Fever.”

The dogs themselves aren’t susceptible to those diseases. However, Wagstrom says they could carry contamination on their coats, in their bedding, or even dog dishes and toys they came into the country with could get contaminated.

“Our concern is those rescue dogs could enter the United States, be adopted by someone on a farm, and be carrying a virus,” she said. “The crates they ride in, or other items like dishes and toys could be contaminated. That could lead to disaster.”

Dr. Liz Wagstrom is the Chief Veterinarian for the National Pork Producers Council. (Photo from Twitter.com)

Not only are domestic herds at risk, but if crates or other items aren’t properly disposed of and feral pigs get into or near them, that will also spread disease quickly. “We feel that if these animals are coming in, we need rules in place to do it safely,” she said.

Which government agency has jurisdiction over this is a “confusing issue.” The vast majority of dogs come into the country with their owners, and those dogs fall under the authority of the Centers for Disease Control and Prevention. Hagstrom, a long-time veterinarian, says the CDC is “basically looking to see if those dogs have a rabies vaccination.”

Dogs that come in for resale fall under the U.S. Department of Agriculture authority. However, she points out that most of that authority focuses on animal welfare. A very small number of dogs coming into the country get evaluated as a possible risk to livestock.

“That would be herding dogs from certain areas that get evaluated for tapeworms,” she says. “It might also include dogs from the new areas of the world infected by screwworms. We think the USDA definitely has the authority to expand their oversight of the dogs that come in either for sale or adoption.

“A Foreign Animal Disease outbreak in the U.S. will immediately shut down all trade,” Wagstrom said while on the phone from Arizona, “which means we’d have a lot of extra animals on hand.

“Even if it was African Swine Fever that only impacted hogs, we have trading partners that may question milk, meat, and poultry exports,” she added. “The depressed prices for pork will likely put downward pressure on the price of beef, poultry, and dairy products.”

That means a Foreign Animal Disease of any kind will be a multi-billion-dollar hit to U.S. livestock, but it might not stop there. There’s a potential hit to the soybean industry because pork is a big part of its market. “It could have a devastating impact on U.S. agriculture as a whole,” Hagstrom says.

She says NPPC has studied the Animal Protection Act, which gives USDA authority over animals, their conveyances, bedding, and animal feed if they could potentially harm the livestock industry. If the agency was concerned about just dog diseases, then USDA doesn’t have the authority.

“However, because we’re talking about the health of the livestock industry, we believe they have the authority to write rules on how to safely bring the dogs into the country,” she says. “We do understand they’re being rescued from some horrific conditions in many cases. If they’re coming in to be rescued, let’s make sure they’re coming safely.

“Let’s get them quarantined and make sure they get washed,” Hagstrom says. “We also need to make sure their crates, bedding, and anything else that came into the country are properly disposed of. That will make it a win-win for both the dogs and U.S. livestock.”

To give ourselves the best chance of keeping the livestock industry safe, NPPC says we need more agricultural inspectors at ports of entry into the U.S. Last year, the government authorized over 700 new ag inspectors and 60 K-9 teams. However, the Coronavirus put a damper on those plans.

“Those new positions were funded by user fees on international airline tickets and international cargo,” she said. “Those fees went away because of the 95 percent decrease in international travel brought on by COVID-19 in 2020. That meant we had to work through the appropriations process to keep those inspectors funded at the current level.”

NPPC and other organizations are back at the appropriations table and asking for additional funding to continue to increase the number of agricultural inspectors as travel hopefully gets back to normal levels.

Planting predictions and grain stocks numbers

Planting
Mike Zuzolo is president of Global Commodity Analytics in Atchison, Kansas. He spent some time looking over the numbers in the USDA’s Prospective Planting and Grain Stocks Reports. (Photo from globalcommresearch.com)

Planting crops and grain stocks were a topic of conversation in the markets this week. The USDA issued its Prospective Planting and Stocks Reports, with the biggest surprise coming from the planting numbers. Corn planting is estimated at 91.1 million acres, up less than one percent from a year ago. Mike Zuzolo is the President of Global Commodity Analytics in Atchison, Kansas. He says the trade was expecting more corn acres in the report.

“I think that’s right. Look at the news wire estimates. The lowest number we saw was down around 91 million acres. I don’t publish to the newswires anymore because the algo-traders use them to position themselves before the numbers come out. I send stuff out to the producers and investors that I work with. So, I was below 92 and having a really tough time going above 91.5.”

He says one reason farmers may be shying away from more corn acres is the quickly rising cost of inputs. However, corn wasn’t the only surprise in the planting report.

“What was surprising to me is how did the soybeans come in at 87.6 million planted, when the trade, including myself, were closer to 89 and 90 million. What happened was most of the other producers in other parts of the country, including the cotton producer, the sorghum producer, and the rice producer all ‘stayed in their lane’ this year and they kept planting what they normally produce. I think this brings with it a little more questioning, especially with that Deep South looking wetter than normal from the Tennessee River Valley down to Louisiana, so we’re going to have to keep an eye on that because soybean acres could grow, similar to the way corn acres could grow because the of the way the weather is shaping up.”

He says the Deep South weather picture looks wet, while the main corn and soybean areas, especially in the Plains States, are leaning toward a drier pattern.

Zuzolo was disappointed in USDA’s prediction of 46.4 million all-wheat acres, the fourth-lowest planted area since records began in 1919.

“I think the big thing we saw in the planting that I’ll wrap up with, and this is where we have a leader to the downside, and that is the wheat market. We wanted it to be the leader to the upside with the drought in the High Plains and Central Plains and in the hard red wheat belt specifically, driving prices higher and make corn that much more expensive, not allowing wheat to get into a feed category. But unfortunately, we are seeing the wheat-corn spread dip into the 50-60-cent per bushel range. Soft red wheat minus corn, that is feed category for wheat, that is the lowest since late 2017.”

Corn planting totaled 91.1 million acres, up less than one percent from a year ago. Soybeans are estimated at 87.6 million acres, up five percent. All wheat acres are 46.4 million, up five percent. The all-cotton planting projection for 2021 is 12 million acres, one percent lower than last year.

The Stocks Report showed corn stocks down three percent from last year, soybean stocks down 31 percent, and all wheat stocks were seven percent lower than 2020.

“I was glad that the soybeans came in a little bit higher and would rather have it that way, and the wheat a little bit higher than the corn. The corn came in at 67 million bushels, 37 million bushels light, versus the average trade guess. And so, that keeps your old crop corn well bid.”

Corn in all positions totaled 7.7 billion bushels, down three percent from last year. Soybeans stored in all positions were 1.56 billion bushels, 31 percent lower than last March. All wheat stored in positions totaled 1.31 billion bushels, seven percent lower than last year. Durum wheat stocks in all positions were 42.7 billion bushels, 17 percent lower than last year.

Again, that’s Mike Zuzolo of Global Commodity Analytics in Kansas.