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.
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 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.”
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.
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 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.
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.
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.”
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.
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.
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.
CFAP continues to expand its assistance to American farmers and ranchers.
Ag Secretary Sonny Perdue announced that his agency is making more commodities eligible for assistance under the Coronavirus Food Assistance Program. The USDA is also extending the application deadline for the program to September 11. After the agency looked through over 1,700 public comments and other data, the move means more farmers and ranchers will get the assistance they need to help keep their operations afloat through tough times.
USDA announced that the list of eligible commodities for the Coronavirus Food Assistance Program is expanding. (Photo from USDA.gov)
“We are standing with America’s farmers and ranchers to ensure they get through this pandemic and continue to produce enough food and fiber to feed America and the world,” Perdue says. “That is why he authorized this $16 billion worth of direct support in the CFAP program and today we are pleased to add additional commodities eligible to receive much needed assistance. CFAP is just one of the many ways USDA is helping producers weather the impacts of the pandemic. USDA is leveraging many tools to help producers, including deferring payments on loans and adding flexibilities to crop insurance and reporting deadlines
Background:
USDA collected comments and supporting data for consideration of additional commodities through June 22, 2020. The following additional commodities are now eligible for CFAP:
· Specialty Crops – Aloe leaves, bananas, batatas, bok choy, carambola (star fruit), cherimoya, chervil (French parsley), citron, curry leaves, daikon, dates, dill, donqua (winter melon), dragon fruit (red pitaya), endive, escarole, filberts, frisee, horseradish, kohlrabi, kumquats, leeks, mamey sapote, maple sap (for maple syrup), mesculin mix, microgreens, nectarines, parsley, persimmons, plantains, pomegranates, pummelos, pumpkins, rutabagas, shallots, tangelos, turnips/celeriac, turmeric, upland/winter cress, water cress, yautia/malanga, and yuca/cassava.
· Non-Specialty Crops and Livestock – Liquid eggs, frozen eggs, and all sheep. Only lambs and yearlings (sheep less than two years old) were previously eligible.
· Aquaculture – catfish, crawfish, largemouth bass and carp sold live as food fish, hybrid striped bass, red drum, salmon, sturgeon, tilapia, trout, ornamental/tropical fish, and recreational sportfish.
· Nursery Crops and Flowers – nursery crops and cut flowers.
Other changes to CFAP include:
· Seven commodities – onions (green), pistachios, peppermint, spearmint, walnuts and watermelons – are now eligible for Coronavirus Aid, Relief, and Economic Stability (CARES) Act funding for sales losses. Originally, these commodities were only eligible for payments on marketing adjustments.
· Correcting payment rates for onions (green), pistachios, peppermint, spearmint, walnuts, and watermelons.
To ensure availability of funding, producers with approved applications initially received 80 percent of their payments. The Farm Service Agency (FSA) will automatically issue the remaining 20 percent of the calculated payment to eligible producers. Going forward, producers who apply for CFAP will receive 100 percent of their total payment, not to exceed the payment limit, when their applications are approved.
Applying for CFAP:
Producers, especially those who have not worked with FSA previously, can call 877-508-8364 to begin the application process. An FSA staff member will help producers start their application during the phone call.
On farmers.gov/cfap, producers can:
Ag Secretary Sonny Perdue announced that his agency is making more commodities eligible for assistance under the Coronavirus Food Assistance Program. The USDA is also extending the application deadline for the program to September 11. After the agency looked through over 1,700 public comments and other data, the move means more farmers and ranchers will get the assistance they need to help keep their operations afloat through tough times.
“We are standing with America’s farmers and ranchers to ensure they get through this pandemic and continue to produce enough food and fiber to feed America and the world,” Perdue says. “That is why he authorized this $16 billion worth of direct support in the CFAP program and today we are pleased to add additional commodities eligible to receive much needed assistance. CFAP is just one of the many ways USDA is helping producers weather the impacts of the pandemic. USDA is leveraging many tools to help producers, including deferring payments on loans and adding flexibilities to crop insurance and reporting deadlines.”
Background:
USDA collected comments and supporting data for consideration of additional commodities through June 22, 2020. The following additional commodities are now eligible for CFAP:
· Specialty Crops – aloe leaves, bananas, batatas, bok choy, carambola (star fruit), cherimoya, chervil (French parsley), citron, curry leaves, daikon, dates, dill, donqua (winter melon), dragon fruit (red pitaya), endive, escarole, filberts, frisee, horseradish, kohlrabi, kumquats, leeks, mamey sapote, maple sap (for maple syrup), mesculin mix, microgreens, nectarines, parsley, persimmons, plantains, pomegranates, pummelos, pumpkins, rutabagas, shallots, tangelos, turnips/celeriac, turmeric, upland/winter cress, water cress, yautia/malanga, and yuca/cassava.
· Non-Specialty Crops and Livestock – liquid eggs, frozen eggs, and all sheep. Only lambs and yearlings (sheep less than two years old) were previously eligible.
· Aquaculture – catfish, crawfish, largemouth bass and carp sold live as food fish, hybrid striped bass, red drum, salmon, sturgeon, tilapia, trout, ornamental/tropical fish, and recreational sportfish.
· Nursery Crops and Flowers – nursery crops and cut flowers.
Other changes to CFAP include:
· Seven commodities – onions (green), pistachios, peppermint, spearmint, walnuts and watermelons – are now eligible for Coronavirus Aid, Relief, and Economic Stability (CARES) Act funding for sales losses. Originally, these commodities were only eligible for payments on marketing adjustments.
· Correcting payment rates for onions (green), pistachios, peppermint, spearmint, walnuts, and watermelons.
To ensure availability of funding, producers with approved applications initially received 80 percent of their payments. The Farm Service Agency (FSA) will automatically issue the remaining 20 percent of the calculated payment to eligible producers. Going forward, producers who apply for CFAP will receive 100 percent of their total payment, not to exceed the payment limit, when their applications are approved.
Applying for CFAP:
Producers, especially those who have not worked with FSA previously, can call 877-508-8364 to begin the application process. An FSA staff member will help producers start their application during the phone call.
On farmers.gov/cfap, producers can:
· Download the AD-3114 application form and manually complete the form to submit to their local USDA Service Center by mail, electronically or by hand delivery to their local office or office drop box.
· Complete the application form using the CFAP Application Generator and Payment Calculator. This Excel workbook allows customers to input information specific to their operation to determine estimated payments and populate the application form, which can be printed, then signed and submitted to their local USDA Service Center.
· If producers have login credentials known as eAuthentication, they can use the online CFAP Application Portal to certify eligible commodities online, digitally sign applications and submit directly to the local USDA Service Center.
All other eligibility forms, such as those related to adjusted gross income and payment information, can be downloaded from farmers.gov/cfap. For existing FSA customers, these documents are likely already on file.
All USDA Service Centers are open for business, including some that are open to visitors to conduct business in person by appointment only. All Service Center visitors wishing to conduct business with FSA, Natural Resources Conservation Service or any other Service Center agency should call ahead and schedule an appointment. Service Centers that are open for appointments will pre-screen visitors based on health concerns or recent travel, and visitors must adhere to social distancing guidelines. Visitors are also required to wear a face covering during their appointment. Our program delivery staff will be in the office, and they will be working with our producers in the office, by phone and using online tools. More information can be found at farmers.gov/coronavirus.
· Download the AD-3114 application form and manually complete the form to submit to their local USDA Service Center by mail, electronically or by hand delivery to their local office or office drop box.
· Complete the application form using the CFAP Application Generator and Payment Calculator. This Excel workbook allows customers to input information specific to their operation to determine estimated payments and populate the application form, which can be printed, then signed and submitted to their local USDA Service Center.
· If producers have login credentials known as eAuthentication, they can use the online CFAP Application Portal to certify eligible commodities online, digitally sign applications and submit directly to the local USDA Service Center.
All other eligibility forms, such as those related to adjusted gross income and payment information, can be downloaded from farmers.gov/cfap. For existing FSA customers, these documents are likely already on file.
Here’s the entire Friday night press conference with Ag Secretary Sonny Perdue.
U.S. Secretary of Agriculture Sonny Perdue today announced the Coronavirus Food Assistance Program (CFAP). This new U.S. Department of Agriculture (USDA) program will take several actions to assist farmers, ranchers, and consumers in response to the COVID-19 national emergency. President Trump directed USDA to craft this $19 billion immediate relief program to provide critical support to our farmers and ranchers, maintain the integrity of our food supply chain, and ensure every American continues to receive and have access to the food they need.
President Donald Trump and Ag Secretary Sonny Perdue announce details regarding a $19 billion aid package for agriculture and the U.S. food supply chain. (photo from flipboard.com)
“During this time of national crisis, President Trump and USDA are standing with our farmers, ranchers, and all citizens to make sure they are taken care of,” Secretary Perdue said. “The American food supply chain had to adapt, and it remains safe, secure, and strong, and we all know that starts with America’s farmers and ranchers. This program will not only provide immediate relief for our farmers and ranchers, but it will also allow for the purchase and distribution of our agricultural abundance to help our fellow Americans in need.”
CFAP will use the funding and authorities provided in the Coronavirus Aid, Relief, and Economic Security Act (CARES), the Families First Coronavirus Response Act (FFCRA), and other USDA existing authorities. The program includes two major elements to achieve these goals.
Direct Support to Farmers and Ranchers: The program will provide $16 billion in direct support based on actual losses for agricultural producers where prices and market supply chains have been impacted and will assist producers with additional adjustment and marketing costs resulting from lost demand and short-term oversupply for the 2020 marketing year caused by COVID-19.
USDA Purchase and Distribution: USDA will partner with regional and local distributors, whose workforce has been significantly impacted by the closure of many restaurants, hotels, and other food service entities, to purchase $3 billion in fresh produce, dairy, and meat. We will begin with the procurement of an estimated $100 million per month in fresh fruits and vegetables, $100 million per month in a variety of dairy products, and $100 million per month in meat products. The distributors and wholesalers will then provide a pre-approved box of fresh produce, dairy, and meat products to food banks, community and faith based organizations, and other non-profits serving Americans in need.
On top of these targeted programs USDA will utilize other available funding sources to purchase and distribute food to those in need.
USDA has up to an additional $873.3 million available in Section 32 funding to purchase a variety of agricultural products for distribution to food banks. The use of these funds will be determined by industry requests, USDA agricultural market analysis, and food bank needs.
The FFCRA and CARES Act provided an at least $850 million for food bank administrative costs and USDA food purchases, of which a minimum of $600 million will be designated for food purchases. The use of these funds will be determined by food bank need and product availability.
Further details regarding eligibility, rates, and other implementation will be released at a later date. Additional Background:USDA has taken action during the COVID-19 national emergency to make sure children and families are fed during a time of school closures and job losses, as well as increase flexibilities and extensions in USDA’s farm programs to ensure the U.S. food supply chain remains safe and secure. Feeding Kids and Families
USDA expanded flexibilities and waivers in all 50 states and territories to ensure kids and families who need food can get it during this national emergency.
USDA is partnering with the Baylor Collaborative on Hunger and Poverty, McLane Global, PepsiCo, and others to deliver more than 1,000,000 meals a week to students in a limited number of rural schools closed due to COVID-19.
USDA authorized Pandemic EBT in Michigan and Rhode Island, a supplemental food purchasing benefit to current SNAP participants and as a new EBT benefit to other eligible households to offset the cost of meals that would have otherwise been consumed at school.
USDA expanded an innovative SNAP online grocery purchase pilot program in Arizona and California, Florida and Idaho, and DC and North Carolina, in addition to Alabama, Iowa, Nebraska, New York, Oregon and Washington.
USDA released The COVID-19 Federal Rural Resource Guide, a first-of-its-kind resource for rural leaders looking for federal funding and partnership opportunities to help address this pandemic.
USDA opened a second application window (April 14, 2020 to July 13, 2020) for $72 million of funding under the Distance Learning and Telemedicine (DLT) grant program.
USDA Rural Development lenders may offer 180-day loan payment deferrals without prior agency approval for Business and Industry Loan Guarantees, Rural Energy for America Program Loan Guarantees, Community Facilities Loan Guarantees, and Water and Waste Disposal Loan Guarantees.
USDA will use the $100 million provided for the ReConnect Program in the CARES Act to invest in qualified 100 percent grant projects.
For all the information on USDA’s work during the COVID-19 pandemic and resources available, please visit https://www.usda.gov/coronavirus.
Here’s the complete conversation with Arlan Suderman of INTL FCStone on the commodity markets reaction to the coronavirus outbreak.
Coronavirus headlines and the commodity markets. It’s been a while since we’ve seen the commodity markets this reactive to news headlines on an almost daily basis. While it’s not unheard of, one commodity expert says it’s been over a decade since the markets have been hit this hard by the news. Arlan Suderman is the Chief Commodities Analyst for INTL FCStone, talks about why the news coronavirus headlines seem to be playing havoc in the commodity markets.
“I think that’s a question a lot of people have these days,” Suderman says. “It’s a valid point to discuss.
Arlan Suderman, Chief Commodities Analyst at INTL FCStone says the commodity markets have been hit hard by news reports surrounding the coronavirus, as well as the resulting “fear outbreak” from people all over the world.
“I was initially downplaying the market reaction in January,” he recalled, “before doing some research at the end of that month. This is the type of virus that’s going to trigger a lot of fear in people. When you have that much fear, the fear of the coronavirus headlines will be worse than the threat of the virus itself.”
He points out that when people get afraid, they stay home, they don’t travel, and they don’t go out in public as much. That’s been the case in China as everywhere the disease has hotspot outbreaks, everybody stays home.
“Shanghai, a city of millions of people, is now a ghost town,” Suderman said. “Now we’re seeing pictures of that in lots of other places, including Italy.
“When people stay home and don’t go out, they tend to consume
less food,” he added. “That includes consuming less meat and a lot more
starches. Overall, it does tend to change consumption patterns a lot.”
People also consume less energy in these situations as they aren’t driving a lot while airlines are also canceling flights as people don’t want to travel. Less consumption in the energy markets hurts the biofuels markets as well.
Even things like shipping commodities get much more complicated as people are staying home, thanks to the coronavirus headlines. That’s been the case in China and is becoming prevalent in other countries too.
“People didn’t show up to work,” he said. “Ports become
congested, ships don’t get unloaded, and shipping slows way down. That’s lost
demand you likely don’t get back. You may get some of it back, but not all.
Joe Vaclavik, founder and president of Standard Grains in Chicago talks about the potential effect the Coronavirus may or may not have on the grains. (Photo from vimeo.com)
Coronavirus. As it continues to make headlines, commodity experts are wondering what kind of effect the spread of the virus will have on markets. Joe Vaclavik, President of Standard Grains in Chicago, says the outbreak will have some effect, but it’s hard to tell what kind or for how long.
“It’s not a positive. I don’t know that it’s the biggest negative in the world. It could be, and that’s why you’re seeing liquidation in some of these markets, like the stock market, and that’s why you’re seeing the grain markets soften up. Nobody wants to be long in this stuff. The Coronavirus probably goes the way of SARS, or some of these other similar types of outbreaks that we’ve last a month, maybe two months, maybe the better part of a year. Then, it probably makes its way out of the headline.”
He says the possibility of a significant impact on markets has likely grown over the past couple of weeks.
“There’s always that risk that it turns into something much bigger. It could eventually disrupt the flow of trade. Maybe there’s a country out there that decides to throw up trade barriers and says ‘hey, we don’t want corn from the U.S. because they’ve got too much of that virus going around. There’s always that sort of risk on the table.”
Mike Zuzolo, President of Global Commodity Analytics in Atchison, Kansas, says there are a couple ways to look at the spread of Coronavirus and it’s possible effect on the livestock markets. (Photo from YouTube.com)
Mike Zuzolo, President of Global Commodity Analytics in Kansas, says the virus will likely have a significant impact on China’s poultry flocks. Separate reports have millions of chickens “on the edge of death.” But they aren’t necessarily sick with Coronavirus.
“Animal feed suppliers cannot get their shipments through, raw materials can’t get through, and this also corresponds with another article from the South China Morning Post that said hedging is not being done, soy meal is not being hedged, so soybeans are not being bought. I think what you’re looking at is probably pent-up demand for the livestock industry and that 300-million chickens die because of not being fed because of Coronavirus. That number of pounds of protein, you’re going to have to replace, eventually.”
There is a long-term buying potential for commodities, but only if the virus outbreak doesn’t last longer than reports are suggesting.
“If China and the scientists are correct and we see a peak in the maximum pressure of this virus, outbreaks of this virus, and, in the next 7-10 days, the price action we’re seeing right now will not last. It will set up a long-term buying potential for commodities.”
Again, that’s Mike Zuzolo of Global Commodity Analytics, as well as Joe Vaclavik of Standard Grains.
Here’s the full conversation with Joe Vaclavik of Standard Grain in Chicago. You can download it on your computer by clicking on the three dots on the right side of the player. Play it here on your mobile device.
Joe Vaclavik is the founder and president of Standard Grain in Chicago. He took a look at 2019 in the grain markets and said the challenges just never let up over the entire length of the calendar. (Photo from Twitter.com)
Grain Markets officially bid 2019 a not-so-fond adieu. Like most other segments of American agriculture, grain farmers are more than happy to put 2019 in the past. Joe Vaclavik, founder and president of Standard Grains in Chicago, says last year didn’t start off well in the grain markets and it just kept going for the next 12 months.
“We had a pretty comfortable, if not burdensome supply situation entering the calendar year, so, the calendar year kind of began similar to what we’ve seen the last two, three, four years, a comfortable supply-demand situation, not anything terribly tight. Low prices, farmers not making a ton of money, you got the trade war going on, a lot of overall negative factors I would say to start the year.”
He says the spring is when things began to get “interesting.”
“Both in the markets and the weather. We basically sold the markets off until about that May time frame, that I think traders started to realize that we had some serious weather problems. Wet weather, cold weather, planting delays continued, and typically we are always told the crop’s always going to be planted, and planting delays are not a cause for concern.”
However, as the spring continued, things turned more serious in the markets.
“Planting delays turned into a major concern. There was a point in time in late May into maybe the mid part of June where we just had no clue what type of production was possible, and out of that, we had a very significant crop scare rally in the corn market and in the soybean market, to a lesser extent.”
Farmers continued to plant corn long past what would be a normal planting date. Vaclavik says the market was rallying as farmers continued to plant, even into early July in a few locations. He says the market peaked in June because it bought a “whole bunch of corn acres” that wouldn’t have been there otherwise.
Vaclavik says farmers faced challenges from a weather standpoint, logistics, and from a demand standpoint with trade challenges in 2019. With all that stacked against them, the question is how much grain U.S. farmers produced last year. Vaclavik says the answer depends on who you ask.
“A lot of people think that the numbers USDA has put out are just not achievable given the late planting, the wet spring, the late harvest, so there’s still some debate out there. I’m not one to tell you with any degree of certainty that we know for sure what the crop is, and we’ve got this big report on January 10, which is the final crop production report, and I suppose if USDA is going to make any sort of sweeping adjustment, it probably comes on that date.”
Again, Joe Vaclavik is the president of Standard Grains in Chicago.
