Reflecting on the year in agriculture

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2019 has certainly been another year for the books. With 2019 coming to an end, it’s time to reflect on the biggest stories in agriculture. It’s been a year full of uncertainty and never-ending breaking news, but here is our list of the year’s biggest ag stories.

Brent Gloy and David Widmar, co-founders of Agriculture Economics Insight, put together some of their biggest stories of the year to share:

Trade war continues

The U.S.-China trade war continued to cause chaos in agricultural markets in 2019. There were frequent whispers and even proclamations that the trade war was nearly ready to end, but through most of the year, little progress was made. China occasionally decided to waive ag tariffs and import some goods, but by and large, the ag trade between these two countries ground to a halt. Then, an early Christmas present arrived as word came out that a partial phase-one agreement appears to be moving forward. For agriculture, the package is the big shiny box under the tree, but we will have to wait a bit to find out exactly what’s in it.

African Swine Fever spreads

Arguably the second-biggest story of the year also involved China. African Swine Fever (ASF) continued to ravage its pork industry. Keep in mind that China is not just any hog producer and consumer. Its production and demand are massive, regularly accounting for just under half the world’s production and consumption. The USDA estimated Chinese pork production in 2019 was down 14% from 2018. The disease appears to show no signs of relenting, as forecasts are that China’s pork production will again fall in 2020, down another 25% from 2019 levels. Outside China, the disease is spreading around Asia and threatens other nations. Late in 2019 ASF was found in a wild herd of hogs in Poland, just miles from the German border. Germany is on high-alert as the county is the E.U.’s largest producer of pork.

Farm economy improved, teetering

The farm economy has been in the dumps for a while, and 2019 was no different. At this point, things appear to remain stable, in large part to the $20 billion-plus that USDA has pumped into the farm economy through the MFP program. USDA’s net farm income estimates turned higher on the basis of MFP payments and cost adjustments. While the uptick in farm income is a welcomed improvement, challenges still remain. Namely that farm debt continues higher while producers continue to burn working capital. Direct farm payments now represent more than 20% of farm income.

Spring weather headaches

Unprecedented spring rains made it difficult for producers to get their crops planted, and nearly 20 million acres went unplanted — by far the highest level of prevented planting observed in recent memory.

Below-trend yields

Arguably behind the proverbial eight-ball after the slow, wet spring, both U.S. corn and soybean crops came in below-trend in 2019. While yields were higher than most might have initially expected, it’s the first time since 2014 that the U.S. crops came in below trend. The rapidly changing prospects led to some wild markets, with corn prices hitting $4.73 per bushel and then falling to $3.52 by early September.

Late planted = late harvest

For many producers, the 2019 harvest was as frustrating as planting. Many headlines have captured the magnitude of more than 1 billion bushels of corn unharvested in early December. Of course, it was just a few months ago that many faced scarce propane supplies for drying their crop.

USMCA: Across the finish line?

After President Trump announced trade negotiators in November 2018 reached a deal to improve NAFTA, progress on USMCA continues throughout 2019. Those efforts appear to be bearing fruit as the House prepares to vote on the bill. Of course, the Senate will also have to sign off on the deal as part of the U.S.-ratification process.

Lower interest rates

After four rate hikes in 2018, the year 2019 got started with the Federal Reserve positioning to again raise interest rates. In reality, however, the Fed lowered its target rate three times throughout 2019.

Alt meat breaks out

There have been many potential meat substitutes developed over the years, but alternative meat made big news when Burger King announced they would take the Impossible Whopper nationwide in 2019. Rival Beyond Meat also had a big year. After going public at $25 per share, Beyond Meat’s stock rose 163% on its first day of trading. It then went on a wild ride peaking at $268 per share before trading recently in the $70’s. Other companies are also heading into this space. The impact on demand for real meat is hard to predict, but it will be something to watch over the longer run.

Fights intensify over fuels standard

There was a lot of drama around the renewable fuels standard in 2019. The president and secretary of agriculture frequently touted the implementation of the year-round e15 regulations in farm country. The EPA formalized the rule at the end of May, but that was not the end of the story. Shortly thereafter, farmers and others started to understand the extent of the small-refinery exemptions (SRE’s) to the RFS that had been granted by the EPA. Then Poet announced it was closing an ethanol plant and directly blamed the administration’s grants of exemptions. From there the administration sought to find a compromise that would please both ag and oil interests. That’s a tall order, and we would expect more drama in 2020.

Here’s to next year!

Well, there you have it. As we close out the books on another year, we have to admit that turning the page to a new year is somewhat appealing. Here’s to hoping that better things are in store for 2020.

Source; KPC News