U.S. Farmer Sentiment Stable As Inflation Expectations Subside

Farmer sentiment changed very little in December compared to the preceding month. The Purdue University-CME Group Ag Economy Barometer recorded a reading of 114, just one point lower than a month earlier. Both sub-indices of the barometer, the Index of Current Conditions and the Index of Future Expectations, also fell one point below their respective November readings. The Current Conditions Index for December was 112, while the Future Expectations Index was 115. All three indices were weaker than in December 2022, with the barometer falling ten percent below a year earlier. Farmers still pointed to input costs at year-end as their top concern for the year ahead, but the percentage of farmers choosing the risk of lower crop and/or livestock prices rose from just 16 percent in January to 26 percent in December. Inflation expectations among farmers moderated during 2023. Compared to a year earlier, far fewer producers expect inflation to exceed six percent in the new year, and a large majority look for inflation to average less than four percent in 2024.

USDA to Reconvene FMMO Hearings

The Department of Agriculture (USDA) will reconvene the national public hearing to consider proposals seeking to amend the uniform pricing formulas applicable in all 11 Federal milk marketing orders. The process will restart January 16, lasting through January 19th, and reconvene again on the 29th, if needed. The hearing began August 23, 2023, and is being held in Carmel, Indiana. Copies of the notice to reconvene, guidelines for participating, and exhibits entered during the hearing are available on the National Federal Milk Marketing Order Pricing Formula Hearing webpage.  Proponents contend that the uniform FMMO pricing formulas should be amended, as significant changes in the dairy industry and milk marketing have occurred since their adoption in the early 2000s. Forty proposals were submitted by stakeholders for consideration. Of those, 21 directly impact the uniform pricing formulas and are being considered at the hearing. Dairy producers may testify in person at any time during the hearing.

National Agricultural Law Center Recaps Top 2023 Issues

The Waters of the U.S. rule rewrite topped the list of agricultural issues for the National Agricultural Law Center in 2023. While WOTUS was the top issue for 2024, California’s Proposition 12 came in second, with the one-year Farm Bill extension third. The organization listed EPA’s rollout of the Endangered Species Protection Program and the Federal Insecticide, Fungicide, and Rodenticide Act fourth. Other top issues include the Arkansas foreign ownership of land restrictions, competition in the livestock sector and water use from the Colorado River. Right to repair gained traction as farmers continued to advocate for the right to access manufacturer-controlled tools and information. The list rounds out with growth in the industrial hemp sector and civil litigation over pesticides, such as glyphosate exposure. The organization expects corporate transparency rules requiring disclosure of ownership interests in companies, proposed H-2A changes and a myriad of issues before the Supreme Court as ones to watch for 2024.

GE Crops Dominate U.S. Soybean, Cotton, and Corn Acres

New data from USDA's Economic Research Service shows Genetically engineered crops dominate the U.S. agriculture sector. Genetically engineered seeds were commercially introduced in the United States for major field crops in 1996, with adoption rates increasing rapidly in the following years. The two main GE trait types are herbicide-tolerant and insect-resistant. USDA reports information on GE crops in the data product Adoption of Genetically Engineered Crops in the United States. The data shows that by 2008, more than 50 percent of corn, cotton, and soybean acres were planted with at least one GE seed trait. Today, more than 90 percent of those acres are planted using at least one GE trait. Other traits have been developed, including resistance to viruses, fungi, and drought or enhanced protein, oil, or vitamin content. While herbicide-tolerant seeds are also widely used in alfalfa, canola, and sugar beet production, most GE acres are occupied by three major field crops: corn, cotton, and soybeans.

Programs offer U.S. Dairy Farmers Carbon-Asset Payments

Three carbon projects initiated in 2021 and 2022 issued nearly $3 million in carbon-asset payments to U.S. dairy farmers who used Agolin® Ruminant to create verified emissions reductions. A verified emissions reduction is a carbon asset that can be used as an offset or within a value chain. It represents one metric ton of greenhouse gas emissions equivalent that is either avoided or removed from the atmosphere through an intervention that has been independently verified as part of a carbon reduction project. Agolin Ruminant is a proprietary blend of essential oils that improves milk production and feed efficiency in beef and dairy cattle. Concord Agriculture Partners has chosen Agolin Ruminant to create a new carbon inset project, which guarantees that participating dairy producers will receive an industry-leading 85 percent of the gross value of the carbon asset. Alltech, a global leader in agriculture, acquired a majority interest in Agolin SA in May 2023.

Fuel Prices Start 2024 With Decline

Fuel prices began the new year declining after a late-year increase during the holiday season. GasBuddy reports the nation's average gasoline price reverted, falling 1.6 cents from a week ago to $3.06 per gallon. The national average is down 17.3 cents from a month ago and 12.6 cents per gallon lower than a year ago. The national average diesel price fell 4.5 cents last week and stands at $3.96 per gallon—71 cents lower than one year ago. GasBuddy's Patrick De Haan says, "The good news continues for average diesel prices, which slipped below $4 per gallon again and stand at their lowest level since the summer." Crude oil prices were up sharply in the first trading session of 2024, as the U.S. waged an attack on Houthi (who-thee) militants, downing three Houthi ships from a U.S. military helicopter. Forecasts projecting a rise in Chinese demand for its February Lunar New Year may have been boosting optimism and oil prices in early trade as well.

Wednesday Watch List

Markets

After Tuesday's bearish closes, traders will remain fixated on anything weather-related for South America will continue to watch for private estimates of Brazil's soybean production, ahead of next week's updates from Conab and USDA. International indices of manufacturing will roll in overnight from various countries, followed by a manufacturing index for the U.S. at 9 a.m. The Energy Department's weekly inventory report will be out Thursday, due to this week's holiday schedule.

Weather

A small disturbance moving along the Gulf Coast will make for some significant showers for Wednesday, easing drought in the southern Delta a little bit. A larger storm system is moving through the Western U.S. that will create a bigger storm for the southern tier of the country starting on Thursday. Light snow will also move through the Great Lakes.