This Week's Drought Summary
droughtmonitor.unl.edu
Heavy to excessive rainfall significantly improved or removed drought from parts of the Northeast and south-central Great Plains. The heaviest amounts fell in a broken pattern from lower New York through Vermont, and in a swath from central Oklahoma through the fringes of the Texas and Oklahoma Panhandles. Many of these areas recorded over 6 inches of rain, with totals approaching 9 inches in a few isolated spots. Lesser but still heavy amounts exceeding 3 inches fell on portions of the central Plains, Texas Gulf Coast, lower Mississippi Valley, interior Southeast, Carolina Coastline, and upper Great Lakes Region, allowing drought to ease in some of these areas. In contrast, other parts of Texas, the middle and upper Mississippi Valley, the lower Great Lakes, and the central and northern Dakotas received only several tenths of an inch of precipitation at best, resulting in several areas of deepening drought. Hot weather from the desert Southwest through the southern Plains and across Florida exacerbated drought conditions there. West of the Rockies, seasonably dry conditions prevailed.
Midwest
As in some other parts of the country, rainfall totals were a mixed bag across the Midwest Region last week, though more deterioration was noted than improvement. Most of Missouri, Iowa, Minnesota, Wisconsin, and the lower Great Lakes Region recorded subnormal rainfall, persisting or worsening dryness in these regions. A new area of exceptional drought (D4, the most intense category) was introduced in parts of central Missouri while D3 covered a large part of central and northeastern Missouri, southeastern Iowa, and southwestern Wisconsin. Precipitation deficits of 7 to 12 inches accumulated during the last 90 days in a large portion of central and northeastern Missouri, and 4- to 8-inch deficits were common in southwestern Wisconsin, parts of eastern Iowa, and scattered patches across Indiana, Illinois, the lower Peninsula of Michigan, and isolated spots in western Ohio. On the other hand, moderate to heavy rainfall doused the northern Great Lakes Region, the Upper Peninsula of Michigan, and a few locales in eastern sections of the region, leading to some improvement there.
High Plains
Heavy rainfall soaked much of south-central and southwestern Kansas, with 4 to locally 8 inches observed in many areas. Significant drought reduction resulted, although some degree of longer-term dryness remained in most locations. Eastern Nebraska, southeastern South Dakota, eastern Colorado, and a few other parts of Kansas received moderate to locally heavy rains, prompting substantial if less-widespread improvement in those areas. In addition, parts of Wyoming continued to benefit from the exceptionally wet and (in higher elevations) snowy winter, so D0 and D1 areas were again whittled down slightly. In contrast, moderate drought (D1) expanded in both the northwestern and northeastern sections of North Dakota, where persistently below-normal precipitation has been observed for the past few months. Although more improvement than deterioration occurred last week, exceptional drought (D4) remained over parts of southeastern Kansas, portions of west-central and north-central Kansas, and a few patches in eastern Nebraska.
Looking Ahead
According to the Weather Prediction Center (WPC), over the next 5 days (July 13 - 17) heavy precipitation is expected across Missouri and adjacent areas, where some of the most acute rainfall deficits have been observed recently. Amounts of 1.5 to locally over 3.0 inches are expected. Similarly heavy rains are anticipated in the eastern Lower Mississippi Valley, the central Appalachians, the southeastern Great Lakes Region, much of New England and the adjacent Northeast, parts of the mid-Atlantic Region, and southern Florida. Additional flooding is possible in portions of New England. Light to locally moderate rain is anticipated in most other locations east of the Mississippi River and across the central and south-central Great Plains. In contrast, most of Texas should see little if any precipitation, and seasonable dryness is expected west of the Rockies. Hot weather is anticipated along the southern tier of the country from the desert Southwest eastward through much of Florida, especially later in the period.
During the ensuing 5 days (July 18 - 22), the Climate Prediction Center (CPC) favors above normal temperatures across most of the contiguous 48 states, with odds leaning toward near or slightly below normal temperatures only in most of Washington, and in a swath from the northern Plain eastward across the upper Midwest and northern Appalachians through the lower Northeast. Dry weather is favored to continue across Texas and in most of the Intermountain West and Northwest. Increasing monsoonal activity is expected in southern Arizona and adjacent areas, where odds slightly favor above-normal precipitation. A slight tilt of the odds toward wetter than normal weather also covers the central and northern Plains, the Northeast and adjacent mid-Atlantic Region, and southern Florida.
Farm Lending Slows as Interest Rates Rise
Nate Kauffman, Senior Vice President, Economist, and Omaha Branch Executive
Federal Reserve Bank of Kansas City
Farm lending activity at commercial banks slowed through the first half of 2023 as interest rates continued to push higher. The volume of non-real estate farm loans at commercial banks declined for the second consecutive quarter and average interest rates on agricultural loans increased for the sixth consecutive quarter. The rise in interest rates was generally consistent across loans and lenders of all sizes, but rates remained slightly lower for bigger loans and at the largest banks. As rate terms have moved up rapidly over the past year, variable rate notes have become more prevalent.
The outlook for the U.S. farm economy has moderated in recent months as risks of more limited profit opportunities have grown alongside softening in commodity markets and elevated production expenses. High input costs and increases in interest rates have raised financing costs considerably, but conditions have also encouraged many producers to adjust operations to reduce borrowing needs or utilize cash reserves to fund some expenses. Broad strength in farm finances has continued to support historically strong loan performance, but farm profitability will remain important for agricultural credit conditions and lending demand in the coming months.
A slowdown in farm lending continued into the second quarter. According to the Survey of Terms of Lending to Farmers, the volume of new non-real estate farm loans at commercial banks was about 15% less than a year ago. The drop in lending was attributed to a lower average size of loans and a fewer number of loans compared with last year.
Agricultural lending has slowed as interest rates on farm loans have increased considerably. The median rate on non-real estate loans doubled from the beginning of 2021 and half of all new operating loans in the second quarter garnered a rate above 8.5%. Moreover, one tenth of new farm operating loans carried an interest rate of nearly 10% according to the second quarter survey. In contrast, at the beginning of 2022, more than half of all loans had a rate less than 4.5% and the sharp change has likely influenced operational and financing decisions for many producers.
The uptick in rates remained consistent across loans of all sizes. The average rate on loans of various amounts was at least 300 basis points above the average from 2015 to 2019. The mean rate on loans above $100,000 increased slightly more than smaller loans, but rates still remained somewhat lower for the largest-sized loans.
The rise in rates has also been largely consistent across banks of all sizes but has been steepest at the largest lenders. The average rate charged by banks with farm loan portfolios less than $25 million was about 200 basis points above the average from 2015 to 2019. The average rate at banks with portfolios more than $25 million was over 300 basis points higher and similar to loans of larger sizes, average rates remained slightly lower at the largest lenders.
Alongside broad increases in farm loan interest rates, the share of loans with variable rates has increased modestly. Over the last four quarters, nearly 80% of non-real estate farm loans were booked with a variable rate, which was noticeably more than the historic average. Lenders and borrowers have likely been less interested in locking in terms for the duration of the loan in response to the rapid increase in interest rates over the past year to their highest mark since 2007.
Soybean Farmers Encouraged to Vote in Nebraska Soybean Board Elections
The July election ballots for District 5 on the Nebraska Soybean Board (NSB) have been mailed to soybean farmers residing in that district. Each district ballot contains important information that will make the voting process easy to complete and return.
If you are a qualified soybean farmer living in District 5, the following candidates are asking for your vote. As a voter, you will learn about the candidates and why they would like to represent you on the Board. If you have not received a ballot, please call 402-466-1969 and request one. Ballots must be postmarked by July 31, 2023, to count.
"Encouraging farmers to actively contribute their voices in NSB elections is important," said Andy Chvatal, NSB executive director. "By electing farmers to the Board, we entrust leaders who bear the responsibility of determining the most effective utilization of checkoff dollars contributed by Nebraska's soybean growers."
District 5 Candidates (Counties of Cass, Johnson, Lancaster, Nemaha, Otoe, Pawnee, and Richardson.)
Mark Caspers – Auburn, NE – Nemaha County
Steve Landon – Greenwood, NE – Cass County
Dave Nielsen – Waverly, NE – Lancaster County
To view farmer biographies and more election info, visit nebraskasoybeans.org/newsroom/articles-and-press-releases/article/2023/07/your-voting-guide-for-the-2023-nebraska-soybean-board-elections
Other positions available in 2023 were District 7 and the At-Large position. Doug Saathoff, in District 7, ran unopposed, therefore, no election will be held and he will retain the position. Greg Anderson, in the At-Large position, ran unopposed and was re-elected by the sitting Board at the Nebraska Soybean Board meeting in June.
Election results for District 5 will be announced in August.
ALFALFA WINDROW MANAGEMENT
– Todd Whitney, NE Extension Educator
Timely curing alfalfa windrows can be a challenge with rain and adverse weather. Also, alfalfa stems dry slower than leaves; so higher nutritional value leaves sometimes dry & drop from the stems prior to baling. As the in-field hay drying extends beyond the traditional 2-3 days; alfalfa regrowth usually becomes yellow under the windrows. Then, progressive strips of light green or chlorotic yellow may develop within alfalfa fields due to lack of sunlight and reduced photosynthesis; leading to weakened yellow plants which are slow to regrow and potentially more prone to disease.
To overcome alfalfa hay harvesting challenges, research has documented the advantages of wider windrow swaths and crimper conditioning to lower harvest drying times. Compared to taller windrows, wider swaths dry alfalfa 25 to 40% quicker; since wider widths intercept more solar rays. Another consideration for decreasing windrow curing time is allowing the alfalfa to grow longer into mature stages at the time of swathing; since plant moisture content decreases as plants age. So, if the alfalfa stand is already thin or under stress; it is recommended to wait longer for hay cutting. Whereas, if the stand is strong and vigorous, cutting the stressed areas earlier will be fine.
If high quality hay is needed such as for dairies; then the early bud to 10% bloom alfalfa stage is the trigger for cutting. If the targeted harvested hay use is for beef cows or feedlot cattle; then swathing can be delayed to provide more growing time for the stunted plants to increase field biomass before the next cutting.
Adverse weather conditions or rainy days can delay swathing and baling. Consider using wider windrows and possibly delay swathing harvest timing to reduce potential yellowing alfalfa disease.
Faster windrow baling will reduce alfalfa regrowth trampling and potentially make your next cutting plants stronger with increased nutrition and hay value.
Nebraska Grazing Conference
The 2023 Nebraska Grazing Conference will be held August 8 and 9 at the Younes Conference Center in Kearney, NE. This year’s conference features speakers highlighting Grazing Lands Conservation, Emerging Issues in Grazing Lands, and Precision Livestock Management. The featured banquet speaker for the Conference is Curt Pate.
The conference will begin with a field tour from 9:30 am to 11:30 am. Discussion topics will focus on Stress-free Livestock Management. The scheduled speakers are Curt Pate and Ruth Woiwode. There is no fee to attend the field tour.
Another highlight is the recognition of the 2022 Leopold Conservation Award recipient. This year’s recipient is the Logan Pribbeno Family from the Wine Glass Ranch located in Imperial, NE. This will begin a panel discussion from the current and several former Leopold Conservation Award winners who will provide an assessment of their past, present, and future grazing land conservation efforts. Tentative panelists are Nancy Peterson, Homer Buell, and Tim Kalkowski.
Other scheduled speakers include Shelly Kelly (The Sandhills Task Force), Rebecca Kern-Lunbery (Ward Laboratories), Leah Peterson (The Nebraska Grazing Lands Coalition), Jeff Nichols (USDA-NRCS), and Jerry Volesky and Gwendwr Meridith (University of Nebraska-Lincoln).
The second day of the Conference is devoted to Precision Livestock Management with a focus on available technology. Scheduled speakers include Yijie Xiong and Mitch Stephenson from the University of Nebraska-Lincoln followed by a panel discussion of technology users.
To learn more about the conference, or to register, go to https://grassland.unl.edu/nebraska-grazing-conference-registration. Questions about the conference may be directed to Daren Redfearn, chair, Nebraska Grazing Conference at dredfearn2@unl.edu.
Sponsor and exhibitor booths will showcase new programs, equipment, and products to conference participants. Additional information about becoming a sponsor or exhibitor is outlined on the Nebraska Grazing Conference webpage. Questions related to booth space may be directed to Brent Plugge at (308) 236-1235 or brent.plugge@unl.edu.
Please note that the conference will be held over two days with the Field Tour being held on Tuesday morning of the first day. Conference sessions will begin on Tuesday afternoon following the field tour and conclude with Curt Pate speaking at the Tuesday evening banquet. The second day will open with a breakfast buffet and the conference will conclude following the Wednesday morning sessions around noon.
Howell named head of Department of Biological and Agricultural Engineering at University of Arkansas
Terry Howell, who has spent the past five years leading the University of Nebraska-Lincoln’s Food Processing Center, has been named the next head of the Department of Biological and Agricultural Engineering at the University of Arkansas.
During his time at Nebraska, Howell has led the Food Processing Center’s multi-disciplinary team of food scientists and engineers providing consulting, laboratory and pilot plant testing, and training in the food industry. Howell has been pivotal in leveraging the people, equipment, and facility resources to improve the impact of Nebraska’s investment in the Food Processing Center on the food and agriculture industry in the state, region, and beyond.
Howell is a longtime member of the American Society of Agricultural and Biological Engineers and served as the Society President in 2014. He is a coauthor of Math Concepts for Food Engineers, now in its second edition. He has also authored or coauthored various book chapters and refereed publications and presented at numerous stakeholder, conference, and invited sessions. In 2020, Howell and a diverse team were honored with the UNL Institute of Agriculture and Natural Resources Omtvedt Team Award for Innovation related to the production of 200,000 gallons of hand sanitizer to serve Nebraskans during the COVID-19 pandemic.
Prior to joining UNL, Howell was the senior manager of product development at McKee Food Corporation. He has a Ph.D. in Food Engineering from the University of Wisconsin-Madison.
Howell’s last day in his current role will be July 14. A search will be launched to identify his replacement. For more information on the Food Processing Center, visit https://fpc.unl.edu/.
CHS Reports Third Quarter Earnings
CHS Inc., the nation's leading agribusiness cooperative, today released results for its third quarter ended May 31, 2023. The company reported quarterly net income of $547.5 million compared to a record third quarter net income of $576.6 million in fiscal year 2022. For the first nine months of fiscal year 2023, the company reported net income of $1.6 billion and revenues of $36.1 billion, compared to net income of $1.2 billion and revenues of $34.4 billion recorded during the same period of fiscal year 2022.
Fiscal 2023 third quarter highlights include:
Our Energy segment delivered strong earnings, reflecting sustained favorable market conditions in our refined fuels business.
Improved soybean and canola crush margins due to strong meal and oil demand resulted in higher earnings in our oilseed processing business.
Market-driven price decreases for wholesale and retail agronomy products resulted in lower margins versus the same period last year.
"Consumer demand remains strong for energy and oilseed products, and our joint venture investments continue to contribute to strong earnings and round out our well-diversified portfolio," said Jay Debertin, president and CEO of CHS Inc. "As we enter the end of our fiscal year, opportunities remain for profitability and growth in the agriculture industry, and CHS is well-positioned to maximize value for our member cooperatives, farmer-owners and customers."
Energy
Pretax earnings of $199 million for the third quarter of fiscal year 2023 represent a $35.8 million increase versus the prior year period and reflect:
Strong refining margins attributed to global market conditions and favorable pricing of heavy Canadian crude oil in our refined fuels business
Higher margins were partially offset by decreased refined fuels production volumes related to planned major maintenance at our refinery in Laurel, Mont.
Ag
Pretax earnings of $233.5 million represent a $40.2 million decrease in earnings versus the prior year period and reflect:
Increased margins in our grain and oilseed and processing product categories, due primarily to strong meal and oil demand
Market-driven price decreases, particularly for wholesale and retail agronomy products, which led to lower margins
Nitrogen Production
Pretax earnings of $56.3 million represent a $121.9 million decrease versus the prior year period due to lower equity income from CF Nitrogen attributed to decreased market prices of urea and UAN.
Corporate and Other
Pretax earnings of $69.3 million represent a $45.8 million increase versus the prior year period and reflect improved equity income from our Ventura Foods joint venture and increased interest income due to higher interest rates.
NFU Participates in White House Event on Competition in the Farm Bill
Today, National Farmers Union (NFU) President Rob Larew participated in a meeting hosted by the White House and the United States Department of Agriculture (USDA) to discuss competition priorities in the farm bill.
“We need a farm bill that prioritizes fair and competitive markets. Today’s meeting shows the continued commitment from this administration on competition in the agricultural economy and the need for this issue to be addressed in the 2023 Farm Bill,” said NFU President Rob Larew. “Our Fairness for Farmers campaign has been sounding the alarm on monopolies and consolidation across the food and agriculture industry and this meeting is a sign that we’re being heard by the President and other decision makers. We’re going to keep fighting for fairness and are happy to have growing bipartisan support in this fight.”
In 2021, NFU launched the Fairness for Farmers campaign with the mission to promote competitive markets and address the monopoly crisis in agriculture and our communities.
Since the launch of the campaign, USDA created a Farmer Fairness portal, ramped up interagency collaboration with the Department of Justice, invested millions of dollars to create a more competitive and resilient meat and poultry supply chain, and issued rules to strengthen the Packers and Stockyards Act and to increase transparency in livestock product labeling. NFU looks forward to continuing to work with USDA to build fairer and more competitive markets, and is working to include a Competition Title in the next farm bill.
Cattle Producers Praise Congressional Resolution Supporting Beef Checkoff
Today, cattle industry leaders praised the introduction of a bipartisan congressional resolution recognizing the importance of commodity checkoff programs, including the Beef Checkoff.
"As a cattle producer who invests in the Beef Checkoff, I know how important this program is to the continued success of America’s cattlemen and cattlewomen. The Beef Checkoff was created by cattle producers, is run by cattle producers, and provides immense benefit to cattle producers,” said National Cattlemen’s Beef Association (NCBA) President Todd Wilkinson, a South Dakota cattle producer. “I am proud of Representative Barry Moore (R-AL) for leading this resolution and standing with cattle producers to recognize the importance of checkoff programs. I hope more members of Congress listen to farmers and ranchers and reject animal rights activist-led proposals like the OFF Act that undermine producer control of checkoffs.”
Every time cattle are sold in the U.S., $1 from the sale goes to support the Beef Checkoff. These investments are collected by the Cattlemen’s Beef Board (CBB), a producer-led organization overseen by the U.S. Department of Agriculture (USDA). Each year, industry organizations, research institutions, and land grant universities develop proposals focused on strengthening beef demand through research, consumer education, marketing, and promotion efforts. The cattlemen and cattlewomen that volunteer their time to serve on the Beef Board, as appointed by the Secretary of Agriculture, determine which proposals to fund. The organizations that receive funding become contractors to the Beef Checkoff and undergo regular audits to ensure the judicious use of producer dollars and compliance to the program.
"The Beef Checkoff might be most well-known for the Beef. It's What's for Dinner. campaign, but the Checkoff's benefits go far beyond advertising. Checkoff-funded programs have led to the development of new cuts of beef and strengthened consumer trust in the cattle industry's animal welfare and sustainability," said NCBA Policy Division Chairman Gene Copenhaver, a Virginia cattle producer. "The Checkoff has made sure that beef is at the center of Americans' dinner plates for generations while providing a strong return on investment to cattle producers. I am proud to pay into the Checkoff and know that this collective effort does way more for my operation and this industry than I could do own my own.”
USDA Requests Public Comment on the Federal Strategy to Advance Greenhouse Gas Measurement and Monitoring for the Agriculture and Forest Sectors
The U.S. Department of Agriculture (USDA) published a Federal Register Notice requesting public input on the draft Federal Strategy to Advance Greenhouse Gas Measurement and Monitoring for the Agriculture and Forestry Sectors on behalf of the Biden-Harris Administration’s Greenhouse Gas Monitoring & Measurement Interagency Working Group. The Federal Strategy was prepared by USDA, the U.S. Environmental Protection Agency, Department of Interior, National Aeronautics and Space Administration, and others.
The draft Federal Strategy outlines a framework for enhancing greenhouse gas measurement, monitoring, reporting, and verification (MMRV) within the agriculture and forestry sectors, with a specific focus on the Administration’s Climate-Smart Agriculture and Forestry initiative. It also aligns with ongoing work across the federal government to quantify carbon sequestration and carbon dioxide, methane, and nitrous oxide emissions outcomes associated with activities funded through the Inflation Reduction Act (IRA). On July 12, USDA announced a $300 million investment to advance priorities set by the strategy.
The Notice seeks information on four topics: general comments or questions about the draft Federal Strategy; animal agriculture; croplands; and data & data sharing. Comments are invited from a variety of stakeholders, including users and providers of agriculture and forestry MMRV data, methods, and analyses; state and local agencies; the private sector; researchers; and non-governmental organizations. Responses to the RFI will inform planning and implementation of an agriculture and forestry MMRV framework and agency activities.
The Notice will be available for public input until August 11, 2023, and is available through the Federal Register at https://www.regulations.gov/docket/USDA-2023-0009.
Union Pacific and Canadian National Put Biofuels to the Test with Train-Track Treadmills
When it comes to reducing greenhouse gas emissions, Union Pacific and Canadian National (CN) are aligned.
The Class I railroads joined forces in 2023 to share the costs and resources needed to test a blend of renewable fuels on two classes of locomotives. The signal is clear: In addition to being the most environmentally responsible way to move freight by land, the rail industry is united to find solutions to further reduce rail’s environmental footprint.
“Working with Union Pacific and our suppliers is absolutely the right thing to do, for our stakeholders, our customers and the communities in which we operate,” said François Bélanger, senior director, Sustainability at CN. “It underscores our commitment as an industry to finding more sustainable paths forward.”
The collaboration allows CN and Union Pacific to get more done in a faster time frame, a boon for both companies and their customers, said Mark Lutz, assistant vice president – Fuel and Environment Management, at Union Pacific.
“It’s a great way to move the sustainability ball forward quicker and more efficiently, at a time when our shippers are looking to reduce their own carbon emissions with more environmentally responsible transportation,” said Lutz.
Stationary tests on two locomotive models began in April. These tests are akin to locomotive engines running on a treadmill, while using renewable fuel. The locomotives run 24-7 without moving, at a testing and training facility operated by the Association of American Railroads' (AAR) MxV Rail facility in Pueblo, Colorado.
“Stationary testing is a great way to test the emissions and durability of engines running renewable fuels, while minimally impacting railroad operations,” said Jason Fox, senior director – Locomotive Engineering and Quality, for Union Pacific.
The stationary tests should be completed by the end of 2023, and, essentially, will consolidate years of over-the-road testing down to about eight months.
These tests will help determine the feasibility and efficiency of running renewable fuels on two Wabtec locomotives models. The goal is to establish that renewable fuels will not impact the engine’s reliability and will meet the U.S. Environmental Protection Agency’s goal emission requirements.
As part of an overall industry effort, Union Pacific and CN’s partnership made sense, as both companies share similar climate goals and strategies.
Both are committed to science-based targets of reducing greenhouse gas emissions by 2030, and the two are the only Class I railroads to date who have committed to setting a 2050 net-zero emissions target.
“Meeting the 2030 climate goals is an important step toward the decarbonization of our activities,” said Bélanger. “To achieve this, we must take action today.”
Renewable fuels will play a significant role in reducing rail’s carbon footprint and help Union Pacific and CN progress toward their climate goals, working in parallel to develop and test long-term alternative propulsion solutions.
“The industry is looking for an alternative form of locomotive combustion that doesn’t rely on fossil fuels but, right now, clean alternatives such as hydrogen are not commercially available,” said Lutz.
“As we look to 2030 and beyond, decarbonizing rail transportation will need new locomotive propulsion technologies and collaboration across the whole rail industry will be required to make it happen,” said Bélanger.
North American SAF Conference & Expo Announces Agenda and Upcoming Speaker Lineup
SAF Magazine and the Commercial Aviation Alternative Fuels Initiative (CAAFI) announced the preliminary agenda for the North American SAF Conference & Expo taking place August 29-30 at the Minneapolis Convention Center in Minneapolis, MN.
This is the first annual North American SAF Conference & Expo, which will be held in collaboration with CAAFI. Since 2006, the CAAFI has sought to enhance energy security and environmental sustainability for aviation through the use of alternative jet fuels.
“We are excited to have CAAFI involved in this year’s conference,” says John Nelson, vice president of operations, sales and marketing at BBI International. “They have been instrumental in helping shape parts of the agenda and ensuring the content is in alignment with the U.S. government’s Sustainable Aviation Fuel Grand Challenge Roadmap, which lays out the current state and future research, analysis, commercial and policy needs to reach the SAF goals of three billion gallons of SAF per year by 2030. ”
The program contains two full days of content across multiple different industry topics, including:
Why Sustainable Aviation Fuels Are Critically Important for Producers and Airlines
A Conversation with Technology Developers about SAF Innovation and the Coming Build-Out
The Keys to Successfully Deploying SAF Production in Corn Country
Reviewing Cutting Edge Technologies Aimed at Commercial-Scale SAF Production
Strategies for Ensuring Feedstock Availability and Alignment with Federal Production Credit Requirements
"There was an overwhelming number of abstracts submitted this year," says Tim Portz, program director at BBI International. "The agenda is robust, expansive and allows attendees to learn from some of the industry's top thought leaders."
The conference begins Tuesday, August 29th at 7:30 am (CDT) and will be open to all registered attendees.
To view the online agenda for the North American SAF Conference & Expo, North American SAF Conference & Expo agenda here https://2023-saf.bbiconferences.com/ema/DisplayPage.aspx?pageId=Agenda1.
CoBank Quarterly: U.S. Economic Slowdown Likely Ahead as Monetary Policy Actions Begin to Take Effect
The U.S. economy continues to defy gravity and remains strong despite lingering inflationary pressures, higher borrowing costs and a barrage of other headwinds. Consumers continue to spend aggressively on services, businesses are still investing and the labor market remains incredibly strong. Secure jobs are the most important element in consumer spending and well-employed Americans have powered the economic recovery for three years.
However, looming risks to the economy are increasing in number and size. According to a new quarterly report from CoBank’s Knowledge Exchange, the full impact of monetary policy actions—raising interest rates, quantitative easing and contracting the money supply—have yet to be felt. Those policy actions, combined with depleted consumer savings, tighter commercial bank lending standards and the persistently inverted yield curve are likely to result in a mild recession by the fourth quarter of 2023.
“There is still a lot of wind at the back of this economy and we don’t believe a severe contraction is coming,” said Dan Kowalski, vice president of CoBank’s Knowledge Exchange. “But we do believe it is important to not misinterpret delayed impacts for minimal impacts. Monetary effects can be slow in developing, and history tells us that the economy can seem just fine right before a recession hits.”
The labor market remains relatively tight, but the situation has improved significantly as female and non-native workers have stormed back into the work force. The labor force participation rate for women between the ages of 25-54 now stands at an all-time high, up more than 4 percentage points from the low in April 2020.
Foreign-born employment has increased at roughly double the pace of native-born employment since April 2020. The successes in these two groups have been critical so far in the economic recovery. But looking forward, it raises the question of how many more workers are available to be coaxed in off the sidelines. Ultimately, the U.S. labor force challenges are far from over.
Grains, Farm Supply & Biofuels
With the corn and soybean growing season in full swing, drought across the Central U.S. is driving heightened seasonal market volatility. Markets are balancing the quickly deteriorating crop conditions against the potential for El Nino to bring wetter conditions later in the growing season. Wheat harvest is advancing northward in the U.S. and is revealing high variability in crop quality. USDA expects the U.S. hard red winter wheat crop to be the smallest since 1957 on substantially higher abandonments and lower yields.
Ag retailers faced a more challenging environment in the second quarter as fertilizer prices continued to fall. Prices were weighed down by reduced demand, as farmers took advantage of pre-payment programs last fall to purchase fertilizer in advance. Despite an overall slowdown in inflation, ag retailers continued to face rising costs, especially for property insurance. Grain and farm supply cooperatives paid about 50% more for property and casualty insurance coverage during the January and April 2023 renewal seasons.
The ethanol complex delivered strong second quarter results with steady production and above-average profitability. Operating margins averaged 45 cents per gallon, nearly double the long-term average. While the finalized blending requirements under the Renewable Fuel Standard (RFS) were somewhat disappointing for ethanol, they were incrementally positive for biomass-based diesel. The new rules call for 2.82 billion gallons of biodiesel and renewable diesel in 2023 and 3.35 billion gallons in 2025.
Animal Protein & Dairy
As the summer grilling season kicked off, beef demand remained incredibly resilient despite elevated prices for consumers. Retail beef prices averaged $7.50 per pound in May, a record high for the period, and an increase of 2% year-over-year. Robust demand combined with tighter cattle supplies spurred market momentum for cattle. Fed cattle values reached record levels, above $180 per cwt. and feeder cattle shot above $240 per cwt. While consumers have yet to balk at higher beef prices, things could quickly change when seasonal support wanes.
Excess hog supply and weak pork demand put hog prices in jeopardy this spring. After a steady start to the year, the CME lean hog index tumbled about $10 per cwt., to $72 from mid-March to late April. However, more favorable market conditions across the animal protein segment drove lean hog values up 30% through May and June. While still down about $15 year-over-year, the pork cutout landed in the upper $90s, gaining about $20 per cwt. through the quarter.
Domestic chicken consumption was up about 4% year-over-year through June 1, which has helped chip away at elevated cold storage holdings. Wholesale broiler meat prices have largely rebounded to pre-pandemic levels, following significant declines in late 2022 and early 2023. Feed costs have come down about 10% from last year but remain well above their historic averages. For broiler integrators, increased feed costs coupled with higher operational expenses have crimped profitability.
U.S. milk producers continue to struggle in the current price environment. The national all-in mailbox milk price has dropped below the $20 per cwt. mark after averaging $25.34 per cwt. in 2022. While several factors are to blame for this year’s milk price decline, the sharp drop in American/cheddar-style cheese prices is the most significant. Prices for the category have dropped by one-third since the beginning of the year. Milk and feed futures suggest producer profitability should improve considerably by October when Class III milk prices are anticipated to increase by about $3 per cwt.
Cotton, Rice & Specialty Crops
U.S. cotton production is rebounding from last year’s crop that was devastated by extreme drought across the southwest. Recent rainfall in top-producing Texas is expected to reduce abandonment following three years of severe drought. The U.S. cotton crop is now estimated at 16.5 million bales, up 14% from last year. Price inflation for clothing and apparel in the U.S. continues to ease with the moderation of cotton prices, which may work to draw in new consumer demand.
U.S. rice production is expected to recover from last year’s small crop, although concerns over dryness and worsening conditions in the mid-South have led to increased volatility of rough rice prices. With improved water availability this year, California medium grain rice production is also expected to rebound with planted acreage at 465,000 acres. That’s a substantial increase from last year’s planted acreage of 220,000 acres that were restricted by historic drought conditions.
Sugar prices remain historically high as markets ration tight global supplies. USDA currently calls for a rebound in world sugar production for 2023-2024, but concerns are growing that El Nino will result in smaller harvests in 2023-2024. In the U.S., there is no relief in sight for high prices as wet weather delayed planting across northern states this spring, which resulted in a smaller U.S. sugarbeet crop.
The tight farm labor market continues to be especially challenging for U.S. specialty crop producers. The Federal Reserve Bank of San Francisco reported that weekly median wages for farm workers swelled to a record high $915 in April, a 24% increase from the year earlier. In June, the House Agriculture Committee created a bipartisan working group, tasked with evaluating the H-2A program and finding solutions for the labor supply challenges facing farmers.
Food & Beverage
While food manufacturers generally indicate they are back to business as usual in the post-pandemic era, many consumers continue to harbor a crisis-management mentality when it comes to food costs. Rising food prices are challenging both at-home and away-from-home food spending. The Consumer Price Index for all food in May was 6.7% higher than May 2022, while food away-from-home prices were up 8.3%. To offset higher prices, consumers are continuing behaviors initially seen during the pandemic, namely eating more meals at home. Foot traffic in restaurants remains well below pre-pandemic levels.
Power, Water & Communications
Falling fuel and energy prices have brought some much-needed relief to rural consumers, who were uniquely disadvantaged by rising energy bills in recent years. Gasoline, diesel, heating oil, natural gas and electricity all cost less than they did a year ago. Rural discretionary incomes fell by a staggering 50% from 2020 to 2022 compared to 13% for urban residents. Transportation and home energy expenses were responsible for two-thirds of the inflationary divide between rural and urban households.
Microsoft, Google and Meta are investing billions of dollars in artificial intelligence applications, which have exploded onto the scene in recent months. Applications like ChatGPT will dramatically increase the need for data processing capacity, fiber network connectivity and other communications infrastructure. Telecommunications operators in rural and smaller cities are well positioned to meet this growing need, as data storage and computation needs to occur in near proximity to where AI applications are run.
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