Marketing

THIESSE, from pg. 15

reduced in 2020 and 2021 due to impacts from the Covid pandemic.

The EPA has also been far less lenient with granting the “small refinery exemptions” to gasoline refiners this past year than occurred in some previous years; however, many farmers and investors remain highly concerned about where ethanol production and utilization will fit into future U.S. energy policy. Proposed Federal legislation such as the BBB bill, as well as statewide initiatives such as the “California Fuel Standards,” have put future research and development of biofuels in the forefront of the climate change battle. Most of the emphasis is on new types of biofuels such as renewable diesel which is refined from soybeans and other crops, utilizing a different process than traditional biodiesel. Another initiative is for “sustainable aviation fuel” which might be developed by alterations to the current ethanol production practices. These initiatives have some support from private companies, as well as the Federal government, and may offer some future opportunities for U.S. crop producers.

Trade policy — During the 2020-21 USDA marketing year for corn and soybeans, which ended on September 30, 2021, grain export levels returned to very solid levels compared to recent years. From 2017 to 2019, efforts to reset previous trade agreements with China resulted in serious trade disputes between the United States and China. Numerous tariffs were implemented on many goods and services being imported from China, as well as those being exported by the United States to China — including soybeans, pork, and other agricultural products. The new Phase 1 trade agreement between the United States and China was close to being fully implemented during 2020-21 marketing year. The result was a rebound of soybean exports to China to near “pre-trade war” levels, as well as a surprising increase in corn exports to China. There is concern the recent increased political tensions between the United States and China may lead to renewed trade disruptions between the two countries going forward.

There also continues to be discussions surrounding the possibility of the United States attempting to enter the Trans-Pacific Partnership trade agreement with many Asian countries, including Japan, as well as potential future trade agreements with other countries. In addition, there continues to be modifications in trade relations with Canada and Mexico, which together with China comprise the three largest trade partners for U.S. ag products.

Livestock-related issues — After January 1, 2022, the pork industry will be challenged by the implementation of “Proposition 12” — the California law which will restrict a significant amount of the pork produced in the Midwest and other areas of the United States from being sold in California. Pork producers are also very concerned with outbreak of African swine fever disease in the Dominican Republic and Haiti during the past year, and the potential production and market disruptions that would be caused by an AFS outbreak in the United States.

Many beef producers are concerned with the continuing impacts of the 2021 drought that affected many cow/calf production areas of the country. Beef producers are also quite interested in the Congressional hearings and Department of Justice investigations related to pricing practices within the beef processing industry.

Dairy farmers have seen some improvement in profit levels during the past year. However, the longterm trend in the dairy industry is for continued tight profit margins. This means that it will likely be necessary to continue federal dairy support programs in the future as a financial protection tool for small-to-medium sized dairy operations.

Looking ahead to the next Farm Bill — The current Farm Bill expires on Sept. 30, 2023, so Congressional discussions on the next Farm Bill will likely begin early in 2022. Current issues such as providing adequate an “safety net” for crop and livestock producers, response to climate change, and links to social issues are likely to affect the discussions surrounding the next Farm Bill. Following are some key questions relative to development of the next Farm Bill that will likely enter into the debate:

Will crop insurance continue to be protected as the corner-stone risk management tool for farmers or will there be efforts to create a permanent disaster program similar to the WHIP+ program?

Will crop producers still have annual farm program choices (PLC and ARC-CO) or will commodity farm programs transition back to more of a “pricesupport” program model?

Will climate change, carbon credits, and other carbon sequestration efforts be linked into the commodity title the next Farm Bill, either on a mandatory or voluntary approach?

Will CRP acres be expanded or set-aside acres be added to address carbon sequestration efforts?

How will the proposed funding and program enhancements for EQIP, CSP, and other existing conservation programs listed in the proposed BBB bill be incorporated into the next Farm Bill?

Will there be enhanced risk management tools be added to the Farm Bill for livestock producers?

Will there be other changes to the Nutrition Title of the Farm Bill?

What will be the baseline budget allocation for the various commodity titles in the next Farm Bill?

It should be noted that some policy experts feel that it is highly likely that the current Farm Bill could be extended by one year or more, given the current political divide in Congress on major policy issues.

There are numerous other issues and policy efforts that could impact farm operators and rural communities in 2022 and beyond. Some other key policy issues to be addressed going forward include inflation and rapidly rising farm input costs, labor shortages and immigration policy, rural health care access and costs, expansion of broadband coverage, and infrastructure needs. Obviously, concerns with the Covid pandemic have not gone away, so policies that are enacted at the Federal level, either through legislative action or administrative order, can certainly affect the future of the agriculture industry. Even though farmers and rural communities make up a small percentage of the total U.S. population, the policies that are passed by Congress and implemented by the Federal government targeting the ag industry can have a big impact on the future food supply, energy security and other aspects of life for the entire U.S. population.

Kent Thiesse is a government farm programs analyst and a vice president at MinnStar Bank in Lake Crystal, Minn. He may be reached at (507) 726-2137 or kent.thiesse@minnstarbank.com. v

Brazil soybean harvest begins January

NYSTROM, from pg. 16

Outlook: There was a noticeable absence of export sales announcements this week. January soybeans traded through the November high at $12.89.25 per bushel when they reached $12.97.5 per bushel at the end of the week. January soybeans closed over $12.80 per bushel for the first time since Sept. 29. Support for the January contract comes in near $12.50 and in the March contract near $12.55 per bushel. Next resistance in the January contract lies at $13.04, then $13.17.5 per bushel. Short-term resistance in the March contract is at $13.00 to $13.10 per bushel. I would look for further rangebound, choppy trade into the holiday season while keeping a close eye on South American weather developments. Soybean harvest in Brazil’s Parana region will begin in midJanuary.

For the week, January soybeans closed 17.5 cents higher at $12.85.25, March rallied 14.25 cents to $12.88.5, July was 11.25 cents higher at $12.99.25, and November fell 2 cents to $12.46.75 per bushel.

Merry Christmas and happy New Year!

Weekly price changes in March wheat: Chicago dropped 10.25 cents to $7.75, Kansas City 4.5 cents higher at $8.10, and Minneapolis managed a three quarter-cent gain to $10.22.5 per bushel. v