Uncertainty over trade policy, weather and African Swine Fever dominated agricultural markets last quarter.
Grain elevators and end users are navigating heightened market volatility as the size of this fall’s corn harvest remains uncertain.
Over the past two years, the U.S. has clashed with some of its most important trading partners. CoBank analyzed 11 commodities representing a cross section of agricultural exports in Q4 2018 to understand who pays tariffs.
Global economic growth continues to slide, as tariffs drag on global trade and manufacturing.
Blockchain, the distributed ledger technology behind cryptocurrencies like Bitcoin where identical records of transactions are stored on multiple computers, is still in its infancy but has seen a flood of pilot programs and proof-of-concepts from companies around the world as they race to harness its power of transparency.
U.S. agriculture is poised for serious challenges for the remainder of 2019.
The U.S. economy is still performing well by most key measures. However, consumers, investors, companies and other market participants have become more wary about the near-term future with seemingly good reason.
Agriculture and its farmer cooperatives will face a challenging environment in 2019. Commodity markets have steadied, but resolution of ongoing trade disputes and completion of recently concluded trade negotiations will be critical to restoring optimism for the year ahead.
Domestic orange production has been declining steadily over the last two decades, driven largely by dwindling crops in Florida.
Part of the rural labor shortage story is best told through statistics and trends. But to gain a more full picture of how labor challenges are affecting businesses, it is best to hear directly from those meeting the challenges head on.
The risk of an escalating trade war is the greatest threat to the U.S. and agricultural economies in the near term. Nearly 70 percent of U.S. agricultural exports are sold to destinations that are under active negotiations or embroiled in trade disputes.
After nearly a decade of record-low interest rates, the market environment is changing. The ongoing strength of the U.S. economy amid the second-longest expansion since WWII is stirring inflation. With the U.S. economy widely expected to continue growing into 2019, the Federal Reserve is expected to continue on a path of gradual rate increases to stem rising inflation and prepare for the next recession. Meanwhile, surging U.S. government debt is pushing yields on longer-dated bonds higher, thereby raising long-term rates as well.
Agribusiness interest in blockchain technology is rapidly growing. Increasingly,companies are recognizing how the emerging technology’s enhanced data management capabilities can create supply chain efficiencies and reduce friction in transactions. The agriculture sector stands to benefit from the technology’s potential to lower transaction costs, optimize logistics, increase traceability, and enhance food safety protocols.
An impending trade war, continued large global supplies, and negotiations over a new farm bill and tax extenders continue to present challenges for U.S. agriculture and farmer cooperatives. Reduced harvests in Argentina and potential droughts in some parts of the U.S. have steadied grain and oilseed market prices but there remains a potential for significant volatility.
The long-term outlook for grains and ethanol is one of cautious optimism, with domestic and global demand expected to continue rising as export competition builds abroad. In the absence of major weather disruptions, global grain surpluses are expected to persist in the near term. Acreage expansions and improvements to yields in major competing export hubs like South America and the Former Soviet Union will be headwinds to U.S. exports.
The ethanol industry is currently in an expansion phase. Blessed with an abundant supply of cheap corn, rising domestic ethanol demand and a quickening export pace, ethanol producers marked strong profits in 2016. Ethanol producers are aggressively reinvesting their profits into the core operations and expanding production capacity via plant expansions and increased efficiencies.
Feed mills have enjoyed substantial increases in profitability in recent years as grain prices have fallen, making the cost of their main input more affordable. Driven by the expansions in animal slaughter capacity at the local level, feed mills are bracing for a surge in demand in the years ahead.
After benefiting from multiple years of record high prices for agricultural commodities, U.S. farmers and ranchers are now struggling to adapt to the new economic reality of persistently low crop and livestock prices and stubbornly high production costs.
As a result of this year’s crop surpluses, interior basis levels for corn and wheat across the U.S. have reached multiyear lows, offering elevators the opportunity to profit on basis appreciation on company-owned grain.
Over the next three years, the theme of worldwide crop abundance outpacing global demand will dominate the marketplace, while competition among the exporting nations heats up.
Grain handlers are anticipating a flood of orders for feed wheat, which should enable them to move excess wheat inventories out of storage ahead of what is expected to be a record-large fall harvest.
As agricultural commodity prices have fallen in recent years, so have growers’ incomes. The latter have fallen more than 50 percent from 2013 to today. Meanwhile, farmers’ debt-to-income ratio is on the rise and approaching levels not seen since the farm crisis of the 1980s.
Grain merchandisers are starting the new-crop growing season with weaker financial opportunities than in recent years, though their balance sheets generally remain strong.