CoBank said high interest rates and a strong United States currency are “beginning to take a disproportionate toll on rural industries like agriculture, forest products, mining and manufacturing.”
While the U.S. economy is outperforming expectations, the rest of the world—Europe and China in particular—has fallen short.
As a result of the U.S. economic position relative to other countries, the dollar has gotten much stronger than previously anticipated.
The expectation that interest rates will remain high for the foreseeable future has also contributed to the strengthening dollar.
“The challenge for agriculture and other rural industries that rely heavily on global markets is their export partners simply can’t afford to buy U.S. products,” said Rob Fox, director of CoBank’s Knowledge Exchange.
“When you combine the loss of exports with a general slowdown in the U.S. economy, it’s a double whammy for many businesses operating in rural America.”
Historically low water levels on the Mississippi River are limiting grain movement heading into peak fall harvest season.
Higher barge rates on the river are pressuring interior basis values for corn and soybeans. The combination of a strong U.S. dollar and robust export competition from Brazil and Russia are creating major headwinds for the U.S. grain and oilseed export program.
Fertilizer prices continued to weaken in the third quarter. Anhydrous ammonia prices are down by 30 per cent, potash by 15 per cent.
Fuel ethanol production was very strong during the third quarter, averaging 16.1 billion gallons compared to 15.4 billion during the second quarter of 2023. A strong summer travel season and attractive fuel ethanol prices were the key demand drivers.
The U.S. Department of Agriculture expects beef output to decline by five per cent and another sev en per cent next year.
The composite boxed beef cutout climbed to record highs in June and July, averaging a 16 per cent more than a year ago for the same quarter.
With fed cattle prices up by 30 per cent compared to last year, packer margins came under pressure. Despite the rising price environment, consumer demand for beef has remained steadfast.
Hog futures climbed by 36 per cent from late May through early August. With production rising and seasonal interest fading, markets have since cooled.
The government’s latest hogs and pigs report suggests that while the industry is making efficiency gains, production levels will continue to teeter on meagre profit expectations.
Any increase in chicken production will be limited given the announcements of six plant closures this year.
Strong cheese production and slowing dairy exports combined to pull Class III milk prices down to a $13.77 per cwt. by midsummer. With ample cheese and strong milk production, Midwest spot loads of Class III milk bottomed out much lower than the five-year average.
Faced with low milk prices and high feed costs, dairy farmers sent more cows to slaughter to take advantage of record-high beef prices. Futures markets indicate milk prices will rise over the final quarter $17.30 per cwt. The biggest wild card for milk prices is China, the world’s leading dairy-product importer,
Inflation-adjusted annual food spending hit a record high in 2022, said the U.S.D.A.
The increase follows a trend dating back 25 years, with the number increasing by 70 per cent from 1997-2022.
