Re y nolds Land & Cattle

BULL SALE

SATURDAY, MARCH 18, 2023

SANFORD, COLORADO · AT THE RANCH · 1pm

Guest

4 0+YEARS of AI. Our Limousin have a Brown Swiss background that results in greater maternal ability, growth and good dispositions. Our mother cows are selected for their ability to work at high altitude and to wean a growthy calf under range conditions.

5 0YEARS OF PRODUCING HIGH QUALITY BULLS

Lunch will be served at the Ranch. Sale Catalogs available on request. Airport only 14 miles from Ranch.

“The economic cracks that emerged in late 2022 in housing and tech are beginning to spread to manufacturing, finance and retail,” said Dan Kowalski, vice president of CoBank’s Knowledge Exchange division. “These sectors are showing signs of weakness but not to the degree of pointing to an imminent recession. Manufacturing and retail are both undergoing a normalization phase as pandemic consumption of goods has shifted to post-pandemic consumption of services.”

The Federal Reserve raised its benchmark overnight rate by more than 400 basis points in 2022 and it is not finished hiking. The Fed has made it clear it is focused less on headline inflation and more squarely on the labor market and core services inflation excluding housing. With job growth far outpacing the availability of workers, the scarcity of labor is cause for concern, especially for the services sector.

China’s abrupt reversal of its zero-COVID policy is unleashing the full brunt of the virus. The humanitarian toll has been severe. Little data is coming out of China, but reports have estimated that in some regions up to 75 percent of the labor force has been infected — forcing shutdowns at manufacturing plants and causing major delays in trucking and at ports. U.S. exporters are feeling the impacts now, as supply chain problems have been preventing the movement of many goods into and around China.

Grains, Farm Supply & Biofuels

Grain markets balanced several challenges in the fourth quarter, from the war in Ukraine and economic slowdowns in China and Europe to interest rate hikes in the U.S. and other developed economies. The continuation of these factors and La Nina weather conditions into 2023 will likely put pressure on grain storage and merchandising margins. Stocks-to-use ratios for corn, soybeans and wheat finished 2022 at multi-year lows driven by strong domestic demand.

For the second year in a row, ag retailers posted exceptionally strong revenue and profit growth, driven by sturdy grain market fundamentals. Interestingly, despite high spring demand and tight global supplies, fertilizer prices declined during the fourth quarter amid falling prices for natural gas. While the farm supply sector begins 2023 on strong financial footing, rising wages, higher interest rates and continued high transportation costs are likely to tighten margins.

Ethanol production in the fourth quarter nearly caught up to pre-COVID levels, aver- aging 15.5 billion gallons for the quarter. Profit margins averaged $0.27/gallon compared to $0.25 for the first nine months of 2022 and long-run historical average levels of $0.25 to $0.30. Profitability was well above average during October and November, but increasing corn prices, coupled with a 12 percent decline in ethanol fuel prices, pushed down margins in December. Year-round sales of E15 gained momentum with the Biden administration’s announcement of its intention to review states’ proposals.

Animal Protein & Dairy

Animal protein production surged in the fourth quarter, with the weekly average increasing six percent compared to the third quarter. While cold storage inventories edged higher through the second half of the year, they remain below the five-year average due to the ongoing strength of demand.

In a major shift from the prevailing conditions earlier in the year, chicken markets were well-supplied during the fourth quarter thanks to increased placements and higher live weights. Retail chicken prices remained elevated, averaging $1.85/lb. for the quarter. However, wholesale chicken prices crumbled