Recurring Events Impact Agriculture

Corn 680-6 (-0.33%)  |  Soybeans 1372-0 (-0.97%)  |  SRW Wheat 838-6 (-2.56%)

KC Wheat 938-0 (-1.37%)  |  Live Cattle 154.125 (+3.30%)  |  Lean Hogs 87.925 (+3.50%)

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Welcome to your weekly agriculture report, where we cover everything you'll need to know for the week ahead. This week we revisit familiar topics that continue to escalate and impact US agriculture, including international and geopolitical factors, supply chain, and logistics. 

Chinese Confusion

Following China’s week-long Congress meeting, it was announced that changes would be made to their leadership. Along with leadership changes, the next five years outlined by this party will be keeping a close watch on relations with the US, Russia, Taiwan, and Beijing. On the commodities front, we can expect significant changes. 

• Constitutional Conundrum… The China Communist Party allowed two amendments to be made to their constitution, which further solidified the party's leadership and positions. This comes after changes were made in 2018 to eliminate the two-term limit of leaders, which Xi Jinping will be capitalizing on as he takes his third term.
• Soybean Sentiment… Farmer sentiment was down at the beginning of the month. However, if there were a soybean sentiment scale, it likely would have seen some action following soybean imports. China, which has been holding off soybean and meal purchases due to high global prices, has upped the purchasing action from the US. 
• Import Action… The uptick in imports comes after Russia's war on Ukraine has impacted China heavily. Countries including China, Bangladesh, Egypt, and Tunisia have seen the most repercussions of the grain deal. With Turkey saying they see no reason the deal won't be extended, Russia continues to sing a different tune, inevitably impacting its decision to increase imports. 

Delivery Dilly-Dally 

It’s the same issue, a different day when it comes to logistics and transportation issues plaguing all major agricultural players. All major grain transportation and delivery methods are faced with their own challenges, many of which have resurfaced after the same problems previously this year.

• Waiting on the (Water Levels) to Change… Many are not waiting on the world to change, but there are quite a few people and countries waiting for the Mississippi River levels to change as more grain piles up, waiting to make its trek to New Orleans via the river. Portions of the Mississippi remain closed, while Memphis sees record lows.
• Rail Serious Strike Threats… November 19th will begin a wave of rail strikes unless Congress steps in to resolve long-standing issues.  A rail strike will exacerbate existing transportation delays, which could cost up to $2 billion per day.
• Black Sea Shipments… Late November could end the Black Sea Grain Initiative if the year-long deal is not accepted. Ukraine has recently stated Russia is at fault for the limited capacity of grain mobilization in recent months, operating at 25-30% capacity. Moscow continues to threaten the elimination of the deal unless their contingencies are met.

Fertilizer Frights

Just in time for Halloween, fertilizer continues to give everyone a scare as we look at supply for recently harvested acres. Just as grain struggles to get out, fertilizer struggles to get in and out of the countryside. 

• Under the USDA… The USDA has announced intentions to invest $500 million in domestic fertilizer production following a year of extreme highs for the necessary input. Many fertilizer production facilities are currently under construction but are expected to begin contributing to the supply by 2024.
• Farmers Aren't Buying It… Such extreme price swings earlier in the year have turned farmers off from the idea of buying fertilizer, leading to stockpiles that just can't move. International forces are at play as top fertilizer-producing countries have factors impacting their export decisions. As prices continue their week-over-week downward trend, sales are still limited. 

What else you need to know… 

• Bolivian Battle… Strikes are occurring in Santa Cruz following the decision to postpone a census focused on population and housing information. This will shut down the city as an agricultural hub. 
• Rural Slow Growth… Per the USDA's Economic Research Service, the rural population of the United States has increased by 12.5% since 1980. In the same time frame, urban populations grew by 54%. Who said everyone was moving out of cities? 
• Blue and Gold…Over 60,000 students and agriculture industry leaders will be traveling to Indianapolis, Indiana, this week for the 95th National FFA Convention. That's a lot of blue corduroy! 

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.