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Strong financials increase farmer sentiment... Producers’ improved perspective on their farms’ financial position appeared to be the primary driver of 9-point increase in the Purdue/CME Group Ag Economy Barometer in December. It is the only second increase in farmer sentiment since May.
The Farm Financial Performance Index climbed 7 points this month and was the only index higher than before the pandemic’s onset. The Index of Current Conditions and the Index of Future Expectations also rose in December with a stronger current conditions index primarily responsible for the barometer’s rise.
Rising input costs are a worry for farmers with nearly half (47%) of producers choosing it as a top concern for 2022. About four out of ten respondents said they expect farm input prices to rise by more than 30% in 2022 compared to 2021. Supply chain issues continue to haunt the nation’s agricultural sector. Forty-five percent of respondents said tight farm machinery inventories impacted their machinery purchase plans and 39% of producers in this month’s survey reported difficulty in purchasing crop inputs for the 2022 crop season.
Ethanol industry gave mixed comments during EPA RFS hearing... Ethanol industry officials praised and criticized EPA’s Renewable Volume Obligations (RVOs) proposed rules during the virtual hearing hosted by the agency. The proposed targets released on Dec. 7 would retroactively lower blending targets for 2020 and 2021, while increasing them for 2022.
Ethanol industry officials like that the agency set the 2022 volume at 15 billion gallons, would restore the first 250 million gallons waived in 2016 and include another 250 million gallons in 2023. The industry criticized EPA for going back and resetting the volumes for 2020 and 2021 at lower levels.
Refiners say the blending targets from EPA are burdensome.
Advocates from both sides, including organized labor, business leaders and elected officials testified.
Winter wheat damage likely to be limited with next cold blast... Another cold surge forecast for the second half of this week in the Midwest and Plains will likely result in limited winterkill for wheat, according to World Weather Inc. The weather watcher is most concerned about an area from central Missouri through central Illinois to central Indiana as having the highest chance of winterkill due to being snow-free and little snow predicted before the cold wave.
World Weather is also somewhat concerned about Nebraska, Kansas and Colorado. However, those areas will have a much better chance of receiving some snow before the colder weather drops into the region Wednesday night into Thursday.
The southwestern Plains, which is snow-free, is not expected to drop below zero and the last cold snap might have helped to harden the winter wheat crop in the area, World Weather noted.
OPEC+ producers keep with planned production increase... OPEC+ sources reported the group agreed in its meeting on Tuesday to stick with the planned 400,000-barrels-per-day (bpd) output increase in February because it expects the demand impact of the Omicron variant to be short-lived. While Covid-19 cases are rising, it is not shutting down economies.
However, some oil analysts note OPEC+ might change its production plans if tensions over Ukraine flares up between the West and Russia or if nuclear talks with Iran progress and oil sanctions are lifted.
EU 2021-22 soft wheat exports up to 14.01 MMT... Soft wheat exports from the European Union for the 2021-22 season reached 14.01 MMT by Jan. 2, up 380,000 MT from a year ago, according to data published by the European Commission.
Barley exports totaled 4.52 MMT, up 660,000 MT from the previous year. Corn imports were down to 7.33 MMT, down 1.33 MMT from last year.
Due to technical issues, France’s export figures were only complete up to November. The commission had expected the French data to be complete at the start of the year.
U.S. prevails in USMCA dairy case... A U.S.-Mexico-Canada-Agreement (USMCA) panel ruled that Canada’s dairy policies designed to protect its industry violated its obligations under the trade deal between the three countries. The U.S. argued Canada used a complex set of tariff-rate quotas as supply management to give a share of the dairy market exclusively for dairy processors and violated an agreement made in 2018.
Canada has until Feb. 3 to change its policy into compliance or be subject to countermeasures from the U.S. that could include tariffs.
Canadian officials said they would defend their dairy industry. They maintained the USMCA decision still backed the country’s ability to maintain its supply management program and that only the tariff-rate quotas needed to be changed.
Paper outlines challenges ahead for climate-smart agriculture policies... Deploying climate-smart agriculture (CSA) policies globally will provide benefits from reducing greenhouse gas (GHG) emissions and providing carbon capture. But a report from the American Enterprise Institute (AEI) cautions putting those policies in place with incentives also risk running such efforts afoul of world trade rules. “While government implementation of mitigation and adaptation policies may help address climate change, concerns arise if CSA policies run counter to international trade disciplines,” the report prepared by former USDA Chief Economist Joe Glauber said.
“In particular, CSA policies could directly conflict with World Trade Organization (WTO) trade rules if those policies distort production and trade.” Efforts tied incentivize new technologies and practices relative to input use could also be ones that would be considered “Amber Box” subsidies under the WTO — ones that potentially can be trade distorting — as opposed to be considered “Green Box” payments — ones that provide minimally trade distorting impacts.
“Input subsidies to encourage adoption of new GHG technologies would generally be considered amber box programs since they are tied to production or the input itself,” the paper said, as “paying farmers to adopt no-tillage practices would presumably be based on planted area.”
However, cost-share payments could well be considered Green Box under WTO rules if they are limited to “extra costs or loss of income involved with complying with the government program.”
