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No Holiday, No Problem For Beef, Pork Sales

Following robust Independence Day meat sales, analysts expected a softening of demand from consumers. Data from the week ending July 12, however, suggests – at least for one week – consumers remain aggressive buyers. According to Anne-Marie Roerink, president 210 Analytics, “elevated everyday demand resulted  in a 21.4% increase in dollar sales” at retail last week versus a year ago, and the spiking coronavirus pandemic appears to be the reason. “As COVID-19 cases are rising across many states, several rolled back the re-opening of restaurants and businesses,” Roerink said. “In some cases, the rollback prohibits in-restaurant dining altogether, in others, dine-in capacity was more restricted — much like late March and April. The reversal on restaurant openings along with rising consumer concern over COVID-19 is likely to shift dollars back from foodservice to food retail once more.” Roerink notes non-holiday weeks had been seeing some erosion in gains of dollar sales, but last week’s numbers represent a five percentage point increase from the latest non-holiday week, June 28. “This also became the 17th week of double-digit gains since the onset of the pandemic,” she said. “While higher prices drove much of this gain, volume increased as well, at +7.7%. This was the highest volume gain during a non-holiday week since mid-April. Unit purchases in the meat department increased by 16.2 million, or 8.1%, over the week of July 12 versus last year, while volume increased 7.7%. This points to more, but smaller, packages sold.” According to analysis by IRI, a data analysis firm, dollar sales are up 35.9% during the pandemic starting March 15 through July 12. Volume sales have increased 22.5% during the same time. The increase translates into an additional $7.4 billion in meat department sales during the pandemic. That includes an additional $3.3 billion for beef, $1 billion for chicken and $794 million for pork. Beef and pork production continue strong after the initial pandemic slowdown, while chicken production is down. “Pork and beef production continue to exceed year-ago, up 12.1% and 2.1%, respectively,” said Christine McCracken, Executive Director Food & Agribusiness for Rabobank. “A 10% year-over-year increase in hog slaughter drove the sizable increase in pork, with weights contributing the balance. Heavier carcass weights more than offset a slight (-0.8%) drop in fed cattle slaughter. Chicken production moved lower again this week, as slaughter levels continue to reflect the cuts taken this spring and higher weights offering a limited offset.”  
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U.S. blueberries, avocados gain access to China

U.S. blueberries grown in 11 states and California avocados now have access to the Chinese market as a result of the U.S.-China Phase One Economic and Trade Agreement. The U.S Department of Agriculture reported that both counties have signed protocols to allow the U.S. to export blueberries and California hass avocados into China. Other commodities approved for export include barley for processing, almond meal pellets and alfalfa hay pellets and cubes, according to a news release.

New access

U.S. blueberry exports to China could total $62 million annually, according to the release. USDA officials and Chinese plant health officials signed a work plan in May outlining the pest screening measures that blueberry producers must comply with to ship to China. Fresh blueberries from Florida, Georgia, Indiana, Louisiana, Michigan, Mississippi, New Jersey and North Carolina may be exported to China after treatment, according to the release. Blueberries from California, Washington and Oregon can export to China if growers use a systems approach to control pests. For California hass avocado producers, the USDA said access to the Chinese market will be worth an estimated $10 million per year. Chinese and U.S. officials signed a work plan in April describing the measures California producers and shippers must comply with before they ship fruit to China. The release said China’s agriculture agency has published the import requirements and also posted an approved list of California shippers to their website. Those shippers can begin to export now, the USDA said.
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Chinese Imports, SBA Loans and More

China imported 6.714 MMT of soybeans during April, a 926,000 MT (12%) retreat from year-ago, according to preliminary Chinese customs data. At this point in the season, China is focused on securing South American supplies and rains delayed shipments from Brazil. China’s overall exports surprised the market by rising 3.5% from year-ago in April after dropping 6.6% in March. Exports were expected to dive 18.8%. The increase was likely aided by the shipping of medical products. U.S. Trade Representative Bob Lighthizer and Chinese Vice Premier Liu He will hold discussions next week on the Phase 1 trade agreement between the two countries. Under the agreement, the two were to meet every six months. Earlier, the president indicated the trade deal is “secondary” to its handling of the coronavirus and he will consider retaliatory measures if the country does not hold up its end of the bargain. Global food prices fell 3.4% from March to April, according to the Food and Agriculture Organization (FAO) of the United Nation’s food price index. The index dropped 5.7 points to 165.5 points, hitting the lowest level since January 2019. The Small Business Administration (SBA) said yesterday that it has processed $183.5 billion in loans out of the $320 billion Congress authorized for the second round of the Paycheck Protection Program. The agency said on its website that it had processed over 2.4 million applications. At a White House event attended by Ag Secretary Sonny Perdue and Iowa Governor Kim Reynolds, President Trump said he has asked the Department of Justice (DOJ) to look into allegations meatpacking industry may have broke antitrust law, noting that slaughterhouses have been lowering prices paid to farmers as meat prices rose. Cattle Kill numbers have improved a bit this week, with Wednesday’s kill up 10,000 head from last week, though that is still just 69% of year-ago levels. Beef prices continue to soar with panic buying in full swing amid headlines about limits on meat purchases at major grocers and fast food joints. Meanwhile Slaughter picked up to 312,000 head on Wednesday as more shuttered plants reopened. That’s a 46,000-head increase from last week, though Wednesday’s kill was still down 38% from year-ago.
 
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Agreement Reached on Fixing Roads and Bridges

Democratic Congressional leaders say they have reached an agreement with President Trump to spend $2 trillion on infrastructure. Congressional leaders met with the President at the White House on Tuesday. Senate Minority Leader Chuck Schumer of New York called the dollar amount a "very good thing". He said the President pushed off tough questions about where that money will come from. Schumer says fellow Democrats told the President the group needs his ideas on funding. House Speaker Nancy Pelosi added that the eventual agreement "will be big and it will be bold". Pelosi says they've agreed to meet again to discuss how to pay for repairing roads, bridges and other infrastructure around the country. The nation's top business groups and labor unions have supported a plan to increase the federal tax, currently 18.3 cents a gallon since it was last raised in 1993. This is a developing story.
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Trade Red Ink on the Rise for U.S.

The U.S. trade deficit jumped nearly 19% in December. That pushes the trade imbalance for all of 2018 to a decade-high of $621 billion dollars. The Commerce Department says the gap between what the U.S. sells and what it buys from other countries rose to $59.8 billion in December. That's up from $50.3 billion in November. The trade gap on goods surged to record highs last year with China ($419.2 billion), Mexico ($81.5 billion) and the European Union ($169.3 billion). December's trade imbalance worsened because U.S. imports rose 2.1%, while exports to other countries fell by 1.9%.
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Toledo Passes Lake Erie Bill of Rights, Farmers Face Litigation

Citizens of Toledo value Lake Erie, and in a recent special election more than 60% of them voted to provide extra protections for the body of water. Now any citizen can sue anyone who “causes harm” to the lake’s ecosystem. Farmers should be concerned. “It’s one of those things if it wasn’t so serious it would be laughable,” says Joe Cornely, director of corporate communications at the Ohio Farm Bureau. “And any citizen of Toledo who feels that something they see on a farm might be damaging Lake Erie is empowered to sue those farmers and the City of Toledo would collect the penalties. Of course, farmers would also end up paying all the legal costs for himself or herself and the city.” This vote is 20 years in the making but rocketed to the top of Toledo’s priorities after a water safety scare in 2014. Pollution into the lake made the water unsafe to drink for a small population of the urban metropolis and since then a few active citizens made it their goal to clean up the lake. “Since then there have been a number of, I’m sure, very well intended and very passionate Toledo [citizens] who have simplified the problem to ‘stop nutrient runoff and the lake will clean up,’” Cornely says. For five years the legislature was unconvinced until this year’s landmark vote. While many states are in a battle over nutrients in watersheds, Ohio is the first to skip straight to litigation. States like Iowa and Illinois use nutrient reduction strategies to voluntarily clean up water, while Maryland has mandated nutrient reduction practices to keep the bay clean. This move in Ohio puts the power in the hands of its citizens, both the informed and uninformed of on-farm practices. However, Ohio already had laws in place regulating how farmers apply nutrients and who could apply nutrients. “We passed two pieces of legislations and are, I believe, the first in the nation to require farmers who apply nutrients to more than 50 acres to go through a state certification process,” Cornely says. “There’s training and testing involved, and you have to be certified to apply those nutrients. The second measure passed in Ohio focuses on the appropriate application in the western portion of the Lake Erie basin.” That ballot says farmers cannot apply nutrients or manure on snow-covered or frozen ground and it precludes nutrient application when significant rainfall is forecasted. This practice is required by law, but any other nutrient reduction practices used by farmers are voluntary. While the next few months could be nerve wracking for farmers in Ohio, there is light at the end of the tunnel. “Even the proponents of this are forthcoming to say this probably isn’t going to stand up in court,” Cornely says. “If I’m a farmer I can take heart in the fact that this eventually will be ruled unconstitutional. The problem is that this will take a lot of time and money.” In the immediate term farmers should be prepared for anything. “So, conceivably someone could file a lawsuit and a farmer in northwest Ohio or any of the 35 [impacted] counties in Ohio is subject to a lawsuit almost immediately,” he adds. The areas that citizens can sue farmers and businesses encompasses about five million people and 420,000 businesses.
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Speaker Ryan: Trump Will Not Sign Funding Bill

Hope for averting a partial government shutdown dissipated Thursday afternoon as House Speaker Paul Ryan (R-Wis.) told reporters President Donald Trump would not sign a stopgap funding continuing resolution already passed in the Senate. "The president informed us he will not sign the bill that came from the Senate last evening because of his legitimate concerns for border security," Ryan said after meeting with Trump. "So what we're going to do is go back to the House and work with our members." President Trump has been pushing for $5 billion for border wall construction. Democrats, who gain a majority in the House in the new year, have balked at that figure. Nine cabinet departments will run out of funding at midnight Friday if a spending bill is not passed. USDA and FDA are included on that list. See what USDA reports and functions would be impacted by a partial government shutdown. The Senate on Wednesday evening passed a continuing resolution that would have extended funding at current levels through February 8. President Trump appeared to back off demands for the border wall funding, but was met with criticism from Freedom Caucus members who urged the president to use the budget deadline to fight for border security, prompting Trump to address the issue on Twitter on Thursday. Donald J. Trump ✔ @realDonaldTrump The Democrats, who know Steel Slats (Wall) are necessary for Border Security, are putting politics over Country. What they are just beginning to realize is that I will not sign any of their legislation, including infrastructure, unless it has perfect Border Security. U.S.A. WINS! This is a developing story.
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Federal Reserve Raises Interest Rates

Wednesday the Federal Reserve announced it would raise the target interest rate range for federal funds to 2.25% to 2.5%. This 25 basis point increase is the 9th highest interest rate increase since the financial crisis, according to Yahoo Finance. The new rate is effective Dec. 20, 2018. “The Board of Governors of the Federal Reserve System voted unanimously to raise the interest rate pain on required and excess reserve balances to 2.40%,” the statement explains. “Setting the interest rate pain on required and excess reserve balances 10 basis points below the top of the target range for federal funds rate is intended to foster trading in the federal funds market at rates well within the Federal Open Market Committee’s target range.” In related news the board approved a .25% point increase in the primary credit rate to 3.00%, also effective Dec. 20, 2018. The Federal Reserve noted the labor market and household spending remains strong. However, growth of business fixed investment has moderated from its earlier rapid growth. On a 12-month basis inflation overall and inflation for non-food or energy items remains near 2%. The Fed doesn’t expect longer-term inflation to change much. The rate increase came over the objections of President Donald Trump who, in a tweet, urged the Fed to “Feel the market, don’t just go by meaningless numbers.”
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Cannabis Named A Commodity Crop In The 2018 Farm Bill

Cannabis Named A Commodity Crop In The 2018 Farm Bill While the full text of the 2018 farm bill hasn't been released yet, U.S. Rep. Collin Peterson, D-Minn., says the new bill will look a lot like the one that expired in September. What isn't the same in the expired bill? Cannabis, in the form of industrial hemp, receives crop status in the bill, opening a significant door for farmers growing it. Official release of the farm bill will be next week, due to memorials and the funeral of former President George H.W. Bush, says ProFarmer policy analyst Jim Wiesemeyer. Congressional leaders have still not determined when the House and Senate will vote on the measure. The farm bill is done, including most, if not all, estimates from the Congressional Budget Office, despite reports to the contrary, Wiesemeyer says. Getting the bill done was a challenge. "We've had problems trying to button this thing up," Peterson, the ranking Democrat on the House Agriculture Committee, told reporters at a news conference in Moorhead. "Frankly, it's a damn miracle we got it done." Peterson is encouraged by the progress industrial hemp will gain by inclusion in the bill. "I may grow some hemp on my farm. I'm looking at it," Peterson said. "There's a big market for this stuff that we've been ceding to Canada and other places." According to a story from The Hill, the hemp-specific provisions included in the farm bill were largely shepherded by Senate Majority Speaker Mitch McConnell (R-Ky.). The changes amend the federal Controlled Substances Act of 1970 so that industrial hemp plants containing less than 0.3% THC are no longer classified as a Schedule I prohibited substance. This language shifts regulatory responsibility from the federal level to the state level. Industrial hemp can be grown for its fiber and a health supplement called CBD oil.
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2019 Cotton Outlook: Big Crop, Start Marketing Now

Expectations are that the 2019 cotton crop is going to be big--just as big as the one in 2018 and maybe bigger. Farmers are likely to seed 14 million acres of the crop across the Cotton Belt areas of Texas, the South and Southeast, according to John Robinson, Professor and Extension Economist-Cotton Marketing with Texas A&M AgriLife. "We have a really good chance of having a 21-million-bale crop," Robinson predicts, adding that he anticipates having 4.3 million bales from 2018 to carry over into the new year. "That means we'll have at least a 25-million-bale supply, and I think that's low," he notes. "It'll probably be more like 26 million, and that would be a large, large supply." By comparison, the National Cotton Council estimates the 2018 U.S. crop will total 19.8 million bales. Mill use is forecast at 3.4 million bales, while exports are forecast to be 15 million bales. The estimated total offtake stands at 18.9 million bales. With beginning stocks of 4.3 million bales, this would result in U.S. ending stocks of 5.0 million bales on July 31, 2019, and a stocks-to-use ratio of 26.5 percent. Robinson says two key factors are likely to contribute to a big 2019 crop: poor prices for corn, soybeans and peanuts, which will drive farmers to plant more cotton, and abundant rainfall, thanks to the forecast of El Niño conditions by the NOAA (National Oceanic and Atmospheric Administration). The NOAA predicts a 70% chance of wetter-than-normal conditions this winter that could extend through next spring and up to early July. "The planting and establishment periods will have plenty of moisture, meaning everything will come up and get off to a great start," Robinson says. Strong early-season growth next spring means farmers will be less likely to abandon cotton acres. Between 12% and 15% abandonment is common in the South and Southeast, and 40% to 50% abandonment in Texas is not unusual, Robinson says. With more than adequate moisture predicted, he anticipates that total abandoned cotton acres next year will likely be in the neighborhood of only 10% The expectation for a big crop signals the likelihood of weaker prices in the year ahead, which could impact the futures market as early as April or May when WASDE numbers are confirmed by USDA. "I believe we'll have futures falling all the way into the 60s, if that happens," Robinson says. Future prices were in the mid-70s as Farm Journal went to print, and Robinson, concerned that prices will fall, was urging cotton growers to start locking in prices for a portion of their crop. "It has been a while since we've had futures below 70 cents, but I at least want to remind farmers of the possibility of downside price risk," he says. "My stump speech is do some pricing, some hedging early, like now." O.A. Cleveland professor emeritus, agricultural economics, Mississippi State University, takes an even stronger stance on marketing. "A December 2018 futures price at 80 cents and/or a December 2019 futures price above 80 cents both plead with you to begin or add to your price fixing. If one has not fixed any 2018 crop, then it is time to price at least 50 percent of expected production. Ditto the 2019 crop!"
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