Last week, the Labor Dept. reported that the Consumer Price Index for March was up 3.5% from a year ago. Driving the index higher: shelter costs, representing 36.2% of the CPI, were up 5.7% - and showing no signs of abating. So now - faced with the combination of higher-than-expected GDP growth, a stronger-than-expected jobs market, and sticky inflation – the Federal Reserve will likely shift gears again.
Read MoreOn Friday, the Labor Dept reported that U.S. employers added 303,000 net new jobs in March – an incredibly high number at this “mature” point in an economic recovery. It was the 4th straight month with employment gains above 250k. By comparison, the U.S. economy managed just 166,000 new jobs per month pre-pandemic in 2019.
Read MoreIn last week’s quarterly Hogs & Pigs Report, the USDA pegged total U.S. inventories on March 1 at 74.6M head, up 0.6% from a year ago. The market hog inventory at 68.6M head was up 0.8% from a year ago. The Dec-Feb pig crop was up 1.9% and pigs-per-litter up 4.6% from a year earlier. These numbers are mildly bearish for current hog prices.
Read MoreIn Friday’s cattle report, the USDA said feedlot inventories on Mar 1st were 11.83M head, up 1.3% from a year ago. New placements onto feedlots in Feb were up 9.7%, as producers recovered from harsh winter conditions that slowed placements in Jan. In March’s WASDE, the USDA projected a 2.4% drop in beef production for 2024, coming on top of a 4.7% decline in 2023.
Read MoreAt last week’s Market Vision Conference, Eric Meyer of HighGround Dairy said that replacement heifers are at a 20-year low and very expensive. As a result, no milk-cow herd growth is expected in 2024 despite lower feed prices. Jan milk production was 1.1% below a year ago and future milk supplies could have difficulty meeting any increase in demand.
Read MoreIn Friday’s WASDE report, the USDA left corn and wheat balance sheets mostly unchanged, while lowering its 2023/24 corn price forecast to $4.75 per bushel, and wheat to $7.15. At Feb’s Agricultural Outlook Forum, the USDA said 2024/25 prices will be even lower: $4.40 for corn and $6.00 per bushel for wheat. The USDA also cut its 2023/24 soy-oil projection to $.49 per pound, down 24.9% from a year ago.
Read MoreIn last week’s cold storage report, the USDA said that total beef supplies in freezers at the end of January were down 11% from a year ago; pork supplies were down 10%; and chicken down 7%. Meat demand remains strong, while producers have yet to ramp up production. In February’s WASDE report, the USDA projected a 2.9% drop in beef production for 2024, coming on top of a 4.7% decline in 2023.
Read MoreIn Friday’s cattle report, the USDA said feedlot inventories on Feb 1st were 12.80M head, up 0.4% from a year ago. New placements onto feedlots in Jan were down 7.4%, but higher than expected, given harsh winter weather conditions that slowed cattle operations and transportation. In Jan’s semi-annual cattle inventory report, the USDA pegged all cattle and calves in the U.S. on Jan 1st at 87.16M head, down 1.9% from a year ago.
Read MoreLast week’s USDA Agricultural Outlook Forum gave a first look at crop potential for the 2024/25 growing season – and it was a good one for feed prices. Corn output next year is projected to be 15.04B bushels, down 2.0% from a record large 15.43B this year (2023/24). However, it will be enough to raise the corn stocks-to-use ratio to 17.2% for 2024/25, up from 14.9% this year.
Read MoreTwo forces should be driving soy-oil prices higher. The first is El Niño, which historically brings drought to Malaysia and Indonesia, cutting palm oil production. Secondly, new refining techniques allow renewable diesel to be made from 100% veg-oil - and be indistinguishable from petroleum-based diesel. Renewable diesel plants under construction will double production from 2022 to 2025.
Read MoreIn last week’s semi-annual cattle inventory report, the USDA pegged all cattle and calves in the U.S. on Jan 1st at 87.16M head, down 1.9% from a year ago. The all-beef inventory was down 2.5%, while dairy cow numbers were 0.4% lower than a year ago. The estimates were close to expectations, but it’s still hard to believe that this is the smallest USDA herd data since they began the survey in 1972…
Read MoreIn Jan’s WASDE, the USDA increased corn yield to 177.3 bushels per acre and raised production to 15.34B bushels, both record highs. Corn futures had averaged a drought-induced $6.49 per bushel for the first 7 months of 2023, until late-season rain helped the crop recover. Prices tumbled to $4.75 (on average) for Q4 2023. Lower corn/feed prices should keep poultry producers in the black for 2024.
Read MoreIn Friday’s cattle report, the USDA said feedlot inventories on Jan 1st were 12.93M head, up 2.1% from a year ago. New placements onto feedlots in Dec were down 4.5%, and Dec marketings were 0.9% below last year. Like last month, larger feedlot inventories, combined with fewer placements and marketings, indicate a back-up in supply and/or a slowdown in demand.
Read MoreThe consensus of 71 economists surveyed by the Wall St Journal is for 1.0% U.S. GDP growth in 2024, down from 2.6% in 2023. They put the probability of recession in 2024 at 39%, with Q2 and Q3 the most likely quarters to see negative growth. The economists project that unemployment will rise from 3.7% in Dec 2023, to 4.1% by mid-year 2024 and 4.3% by year’s end.
Read MoreIn Dec’s quarterly Hogs & Pigs Report, the USDA pegged total U.S. inventories on Dec 1 at 75.0M head, about the same as a year ago and down slightly from the prior quarter. Breeding inventory (6.0M head) was down 3% from both last year and the previous quarter. The market hog inventory at 69.0M head is up 0.3% from a year ago.
Read MoreIn its monthly cattle report, the USDA said feedlot inventories on Dec 1st were 12.01M head, up 2.7% from a year ago. New placements onto feedlots in Nov were down 1.9%, and Nov marketings were down 7.4%. Larger feedlot inventories, combined with fewer placements and marketings, indicate a back-up in supply and/or a slowdown in demand.
Read More‘Twas the night after Christmas, and down at Mar-a-Lago, the ex-Pres was thriving on loans from Wells Fargo. Indictments were hung by the chimney with care, in hopes that immunity would soon be declared. Then up on the roof there rose such a clatter, he sent up Melania to see what was the matter. When what to her wondering eyes should appear…
Read MoreThe Federal Reserve has finished raising interest rates. At last week’s Open Market Committee Meeting, the Fed held rates steady, and Chairman Jerome Powell said that he anticipated 3 rate cuts next year – most likely in the 2nd half of the year. Some private economists expect 5 cuts. That’s because inflation has mostly been tamed.
Read MoreThe 6-month pause in Avian Flu ended last month. A warm summer delayed wild bird migration (from Canada southward), but now the number of HPAI inflected flocks is piling up. In the month of November, we lost 5.1M egg layers, 1.4M turkeys, and 1.0M broilers. The states up & down the Mississippi flyway have been hardest hit.
Read MoreChicken looks to be what’s on the menu for 2024. Following 11 months in the red, chicken producers finally turned profitable in Sept and look to stay that way. High prices for competing proteins have helped support chicken prices. While on the cost side, corn prices that averaged $6.43 per bushel for the first half of 2023, have tumbled to $4.64 (12/1).
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