Railroad Strike Threatens US Supply Chain

Last Week’s Moves 

Corn 696-0  (+4.54%)  |  Soybeans 1488-2 (-4.77%)  |  SRW Wheat 858-6 (+5.89%)

KC Wheat 927-6 (+5.61%)  |  Live Cattle 145.750 (+0.83%)  |  Lean Hogs 82.755 (+0.09%

Welcome to your weekly agriculture report, where we cover everything you’ll need to know for the week ahead. This week, the US supply chain becomes a hot topic and surging fertilizer costs continue to impact farmer's profits.

Sights Set on Supply Chains

The US Supply chain has become a hot topic as concerns ramp up amid the busiest time in agriculture. Concerns arise at a time when producers rely on seamless supply chains to support their operations this fall and grain flows out of the fields only to depend on further transportation to its final destination. Of course, that is up in the air for some, as shifts in global demand leave some unanswered questions and unmet expectations. 

• Trains and Trucks, and Ports, Oh My!... Rail strike threats loom following another week with no change and no resolve for the first time in 30 years. This has been evolving since mid-August, stemming from the inability to reach agreements. The cooling-off period ends September 16, allowing unions to begin striking. Concerns are escalating as large quantities of grain will be moving via rail in the coming months.
• The Little Engine that is Trying To… Advocacy organizations have now intervened, highlighting how disastrous a rail strike would be, let alone at such a critical time in agriculture. Led by the National Grain and Feed Association and supported by Farm Bureau, a letter was sent pleading for an agreement to be reached.

Surging Fertilizer Costs Continue to Impact Farmer's Profits

US fertilizer giant Mosaic is selling less fertilizer, at a significant profit, despite US farmers’ pleas to expand the domestic fertilizer supply to ease local hardships.

• Fertilizer frenzy… Mosaic’s hold on the US fertilizer market has only tightened in recent months, as competitors in Europe and Canada have been forced to cut production due to high costs of natural gas, which is used to produce ammonia, a key ingredient in fertilizers.
• Paying the price… A 2022 Texas A&M study estimated that US farmers face $128,000 in extra costs per farm due to the rise in fertilizer prices.
• Waiting for waiver… Over the past months, many farmers and American Politicians have called on the US government for a waiver on Moroccan fertilizers, as the  phosphate-rich North African country has significantly boosted production amid fears of a looming global food crisis.

Across the globe, fertilizer demand in Brazil is predicted to drop for the first time in eight years.  Using less fertilizer will make their crops more susceptible to weather risks and may impact soy and corn crop production.

• Cutting consumption… According to StoneX Brazilian farmers will probably consume 7.2% less fertilizers in 2022 due to higher costs.  Producers will rely on nutrients that remained in soil from previous seasons, including phosphorus and potassium.
• Peak Prices Prevail… Fertilizer suppliers are reluctant to cut prices given they purchased much of their product when prices were high to avoid shortages after Russia’s invasion of Ukraine created global bottlenecks.

What else you need to know… 

• Can Cattle Handle the Heat?... Higher prices and low cattle numbers could easily continue following a stressful, hot summer. This prolonged heat exposure could decrease pregnancy rates by as much as 60%, leading to culling questions.
• Out of this World…Curiosity, space travel, and global food shortages are all leading researchers to maximize nutrition in crops. From NASA sending cotton seeds to the International space station to planning for missions to Mars, space and agriculture are closer related than you may think.
• By Royal Appointment…The Bank of England announced that Monday, September 19th, will serve as a bank holiday in honor of Queen Elizabeth II. As a bank holiday, the LSE will be closed on the day of her funeral.

That’s all we have for you this week, do you have anything for us? We’d love to hear from you with stories or recommendations for new sections to include! Drop us a line at news@barchart.com with any feedback or input.

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