Harvesting the Headlines: Week Ending February 10
Between the 24/7 demands of running an agricultural operation and the blinding pace of our world today, there is little time to sift through all the headlines. The good news is that you no longer have to!
Our goal is to point you to some of the most important headlines in agriculture, so you can stay informed on the forces shaping your livelihoods.
To save you time, here are the week's top links and news items:
1. From FBN: January Fed Meeting Recap: Where Are Interest Rates Headed This Year?
Recent economic reports show strong job gains, low unemployment, and easing inflation.
Despite this, the Fed recently increased rates by 25 basis points, citing concerns that "expectations of higher inflation will become entrenched."
What does this mean to producers as plans are being made for the 2023 crop year? Most analysts agree that interest rates will continue to increase through mid-2023, with declines not coming until later in the year.
As a result, producers can likely expect higher interest costs for the majority of the 2023 crop year.
2. Farmland Becomes Flashpoint in U.S.- China Relations
A planned $700-million corn mill near Grand Forks, ND has become a flashpoint for a larger discussion about U.S. - China relations.
The project has brought numerous objections to the surface including, espionage and pricing American farmers out of the land market.
Recent data shows that Chinese investors own more than 338,000 acres at the end of 2020.
While this is not enough acres to threaten U.S. food security, a number of states are considering restrictions on foreign ownership of farmland. See this recent report for more information.
3. Smallest Cattle Herd in Eight Years: Will 2023 Set Record Prices?
The recent USDA cattle inventory report revealed the fourth consecutive year of contraction in the U.S. beef cow herd.
Accordingly, beef production is predicted to be 6.5% lower than last year.
The video in this link examines the possibility of record beef prices.
How quickly the herd can be rebuilt will likely determine the price ceiling going forward.
The rebuilding of the herd is generally predicted to be slower than 2014, due to "lack of potential replacement heifers, uncertainty about inflation and interest rates, and competition from pork, poultry, and imported beef."
4. Are Robots Going to Steal Our Jobs?
One of the more heavily discussed topics in recent times is the use of AI in agriculture. Many are concerned over the impact on agricultural jobs.
This link compares the current discussion of labor displacement to previous technological advancements in agriculture.
Also, many producers today report significant issues in maintaining a sufficient supply of agricultural workers.
While technological advancement will have an impact on the agricultural labor market, AI will first fill a gap left due to current labor shortages.
5. Is $620 Per Acre Cash Rent an Anomaly or the New Norm?
With strong commodity prices and limited supply of land to rent, the cash rent market is seeing significant increases.
Iowa has been the leading state for land prices, but Illinois seems to be generating the highest cash rents as of late.
Historically, cash rents were negotiated privately. However, today many farmers are using technology to find farms to rent.
Cash rent auctions and the increased use of technology are driving rents higher than in prior years.
Get in touch
If you have any links you'd like to share or have any questions, please contact Travis Carlstrom, Sr. Ag Credit Analyst at FBN.
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