Harvesting the Headlines: Week Ending February 17
16 Feb 2023
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:
Top news
1. From FBN: Market Outlook Ahead of the 2023 Growing Season
FBN® Chef Economist Kevin McNew gives a quick overview of what to expect for the 2023 crop year.
Corn will have plenty of factors supporting price this year.
Compared to last year, we do not have the headwinds due to the rising value of the U.S. dollar and the logistics problems on the Mississippi River.
Adding to price support on corn is the weather-related concerns for the Argentinian and Brazilian corn crop.
While fertilizer prices are expected to remain relatively high, U.S. corn growers have an advantage over other countries due to the abundant supply of natural gas.
2. For Love of Meat: Five Trends in China That Meat Executives Must Grasp
More than half of Chinese consumers eat meat regularly.
Pork dominates the meat menu in China, but rising income levels threaten pork’s market share.
Chinese consumers look, first and foremost, for product safety and quality and taste as opposed to price being the dominant concern in the West.
Growing demand for convenience is shaping new patterns of meat consumption in China.
Consumer awareness of sustainability is increasing in China but does not translate into enthusiasm for alternative meat.
3. Farm Debt-to-Asset Ratio Trends
In looking at one of the most watched financial metrics of the farm economy, debt levels are nowhere near the conditions of the 1980's.
However, this does not tell the whole story of the financial health of U.S. farmers.
This link shows that the larger the farm, the higher the debt-to-asset ratio we will generally expect to see.
In looking at "highly leveraged" operations, there are more crop operations than livestock operations.
With that said, there are fewer "highly leveraged" operations compared to the 1990's and early 2000's.
4. Agriculture’s Contributions to County Economic Activity
This link uses a couple of great graphics to illustrate the importance of production agriculture contribution at the county level.
Production agriculture accounted for $206 billion of the U.S. economy in 2021.
Non-metro counties generated only 10% of the total U.S. GDP, but contributed over half of GDP created from production agriculture.
The importance of production agriculture is not consistent geographically.
Many rural communities need more diverse economies to support production agriculture.
5. What Higher Interest Rates Mean for Ag
Three Purdue University ag economists recently shared how agriculture will be impacted by rising interest rates.
Increasing interest rates will put downward pressure on land prices.
Rising interest rates means the value of the dollar will likely strengthen.
The value of the dollar vs. other currencies might make U.S. ag assets like farmland even more attractive to foreign buyers.
Higher degrees of uncertainty increase the importance of ensuring you have sufficient levels of liquidity to cover payments, living expenses, and equipment depreciation.
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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16 Feb 2023