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  • Cull Cows Defy Seasonality

    Cull Cows Defy Seasonality

    All the talk of relaxing tariffs on imported beef, knowing that the majority of our beef imports are lean beef trimmings to go into ground beef competing with cull cow beef, suggested it might be time to take a quick look at the cull cow market.  

    Most will remember that cull cow prices tend to hit their seasonal lows in the Fall.  The most important reason for the price decline is that more cows are culled from the herd in the Fall.  For beef cattle, the largest proportion of cows are culled in the Fall following calf weaning.  On the dairy side, cow culling increases from summertime lows.  The increase in supplies of cows for sale results in lower prices.  Another contributor to lower prices is the end of grilling season, with consumers shifting over to more Fall and Winter consumption patterns.  

    So far this Fall, the cull cow market has defied normal seasonality.  Southern Plains cull cow auction prices hit about $165 per cwt back in June and have remained there since then.  A couple weeks of declines were followed by rebounds back to about $165 per cwt.  National average cutter quality cows have declined recently, slipping about $9 per cwt to $126.

    While the live cow market has not declined much, the same cannot be said for the cow beef market.  The boxed cow beef cutout climbed to $340 per cwt but has declined to $317 over the last two months.  Wholesale 90 percent lean beef has declined from $436 to $404 per cwt over the same period.  Both the boxed beef cutout and wholesale 90 percent lean have followed the normal season pattern, declining into the Fall.  

    We are likely to see some increased culling from the dairy side of the beef industry in the coming months.  USDA’s latest milk production report indicated the nation’s dairy cow herd at 9.85 million head.  That is the largest herd since at least 1993.  Milk production in September was 4 percent larger than the year before.  Milk prices are beginning to decline sharply with increased production.  There is no doubt that the increased returns from using beef bull instead of dairy breed semen to produce cross bred calves is boosting profits and aiding in the dairy herd expansion.  Beef cow culling is likely to remain low due to the historically small cow herd and incentives to expand.  More dairy cow culling and less beef cow culling will continue to leave cull cow prices high.

  • Consider the Risks When Taking a Residual Fertility Deduction

    Consider the Risks When Taking a Residual Fertility Deduction

    Consider the Risks When Taking a Residual Fertility Deduction

    There’s been much recent discussion about a “residual fertility” deduction for farm and ranchland. It’s been common practice among farmers for many years to take a tax deduction for the value of unexhausted fertilizer remaining in soil purchased with land. In recent years, however, this practice has expanded to include large deductions for the value of all soil nutrients, not necessarily those linked to prior fertilization. Questions about the legal basis for these deductions have increased as the value of these deductions have risen. 

    Fertilizer Expenditures and Section 180

    To understand this issue, it is important to understand the basis for deducting fertilizer in the first place. Years ago, the IRS required farmers to capitalize and deduct fertilizer costs over the useful life of the fertilizer. Because the fertilizer would not be used up in one year, the deductions had to be spread out. In 1960, Congress changed course, recognizing that farmers would benefit from deducting fertilizer expenses in the year paid. Section 180 thus allows farmers to elect to deduct in the year of application the cost of fertilizer, lime, and similar materials applied to land used in farming. 

    Residual Fertilizer Supply

    When farmland is purchased, a buyer may allocate part of the price to depreciable assets such as fencing or tile. Many farmers have also assigned a portion of the purchase price to the value of unexhausted fertilizer and deducted that expense accordingly. Although there is no statute, court case, or regulation specifically endorsing this practice, a 1991 IRS memorandum suggests this deduction is appropriate if properly proved. 

    In TAM 9211067, the IRS denied a claimed deduction for unexhausted fertilizer purchased with the land, but outlined requirements to support a possible deduction. The taxpayer must: (1) prove the presence and extent of fertilizer attributable to the prior owner, (2) show that the fertilizer is being exhausted, and (3) be the beneficial owner of the fertilizer, meaning it is inseparable from land the taxpayer owns. 

    If a farmer who purchases land can meet these three conditions, it appears they can elect under §180 to expense the value of the unexhausted fertilizer in the year of purchase, much like other purchased fertilizer, provided the land is used in farming and the taxpayer is engaged in the business of farming.

    A Caution

    In recent years, land purchasers have ventured beyond these parameters to take very large deductions based on the total nutrient content of the soil, not based upon the value of unexhausted fertilizer. These deductions are risky. Courts have stated that land alone, including the nutrients that comprise that soil, are not depreciable. Likewise, courts have not allowed depletion deductions for the decline of soil nutrients. Section 180 applies only to fertilizer applied to enrich the soil, and by extension, to unexhausted fertilizer in the soil. 

    Expansive claims based on general soil nutrients or inflated valuations may invite IRS scrutiny and penalties. Taxpayers bear the burden of proving they are entitled to any deductions they take. Deductions tied to land purchased many years ago or to unfertilized pastureland are especially vulnerable. Until Congress, the courts, or the IRS provide clear guidance, farmers and land purchasers should seek trusted counsel and weigh the risks of asserting a deduction for residual fertility.

    Additional Resources

    There are a number of additional resources related to the Section 180 tax deduction.

    Many of your local Land Grant institutions offer annual tax workshops for tax professionals.  For locations around the country:  Land Grant Tax Workshops

    And specifically for workshops in our two states: Texas and Iowa

    Tidgren, Kristine, and Tiffany Lashmet. “Consider the Risks When Taking a Residual Fertility Deduction.” Southern Ag Today 5(47.1). November 17, 2025. Permalink

  • Christmas Trees: A Festive Specialty Crop in the Southeast

    Christmas Trees: A Festive Specialty Crop in the Southeast

    Commercial Christmas tree production is often associated with colder climates and northern regions. Yet, Christmas trees are grown in all 50 states – including the South – with North Carolina, Georgia, and Texas among the leading producers, based on 2022 USDA Census of Agriculture data (Figure 1 and Table 1). Based on 2022 USDA Census of Agriculture data, the value of sales from cultivated trees in the South exceeded $160 million. 

    Table 1. Christmas Tree Production by Southeastern State, Ranked

    StateNumber of Trees Cut 
    North Carolina3,208,419
    Virginia578,777
    Georgia63,915
    Texas43,668
    Alabama24,586
    South Carolina23,317
    Oklahoma21,352
    Tennessee12,129
    Mississippi11,175
    Louisiana10,825
    Arkansas8,410
    Florida8,353
    Kentucky4,748
    Note: Data collected from the USDA Census of Agriculture, 2022.

    Virginia Pine, Afghan Pine, Leyland Cypress, Eastern Red Cedar, Fraser Fir, and Carolina Sapphire are some of the tree varieties you will find growing in the South. Families relate buying a real Christmas tree to making memories or to family traditions. For some, it is the scent of the tree, the process of picking a tree, and bringing it home. For others, it is an environmentally conscious choice as these trees, when sustainably produced and managed, can have beneficial impacts on soil and wildlife. 

    Christmas trees are primarily sold in local retail stores and on Christmas tree farms, boosting local economies. Prices vary by height, variety, and whether you buy at a local nursery, a retailer, or at a Christmas farm. Expect prices to be close to $80 as the starting price for a 5-6 ft tree, up to $400 for a 12-13 ft tree at a farm. You can also buy wreaths, garlands, and participate in festive activities at the venues throughout November and December. Yet, the industry is challenged with the American Christmas Tree Association (ACTA) reporting that U.S. households prefer an artificial tree; 83% of households surveyed in the period Oct. 3-5, 2025, representing 1,033 adults of 18 years of age or older in the US. Prices for artificial trees range from $50 for a 6ft tree all the way up to $2,500 for a 12ft high-end variety.

    However, there is something ‘special’ about picking out a tree, like you carry back home a piece of community. So, if you want to find where to pick your next tree, organize a family trip, or simply learn more about tree production, visit a Christmas Tree farm near you—some are counting down the days to open to the public. More information can be found at your state’s Christmas Tree Association, providing you with a list of member farms, e.g., the Texas Christmas Tree Growers’ Association, the Virginia Christmas Tree Growers’ Association, and the North Carolina Christmas Tree Association. Other sources are the Southern Christmas Trees Association and the National Christmas Tree Association. And once the season is over, you can always check if there is a Christmas tree recycling program in your area. The National Christmas Tree Association offers a recycling guide.

    Links:

    ACTA: Survey Finds Artificial Christmas Trees Continue to Dominate U.S. Holiday Décor — The American Christmas Tree Association

    Bampasidou, Maria. “Christmas Trees: A Festive Specialty Crop in the Southeast.” Southern Ag Today 5(46.5). November 14, 2025. Permalink

  • Grain Sorghum Exports to China at Their Lowest in Over a Decade

    Grain Sorghum Exports to China at Their Lowest in Over a Decade

    In 2025, grain sorghum production for the United States totaled 10.2 million metric tons (MMT). This was led by Kansas, totaling 5.8 MMT, and Texas, 2.64 MMT. Colorado (497 thousand metric tons), Nebraska (494 TMT), and Oklahoma (479 TMT). Aside from a poor production year in 2022, the United States has averaged 9.35 MMT annually.

    The U.S. is by far the largest sorghum exporter, followed by Australia and Argentina. In 2024, the United States exported 5.24 MMT of sorghum worth $1.38 billion, with China being the leading importer. From 2020-2024, China imported more than 83 percent of U.S. exported sorghum with an FOB value ranging from $1.32-2.14 billion each year. In 2024, sorghum exports to China from the United States totaled 4.63 MMT and $1.23 billion. Annually since 2020, less than 16.4 percent of U.S. sorghum exports have gone to the rest of the world. In recent years, Ethiopia, Eritrea, Sudan, and Djibouti follow China in terms of volume imported, but none have imported more than 20 TMT since 2020.

    The ongoing tariff war has caused a decrease in Chinese imports of many U.S. products, including sorghum. In the partial year through July, only 82 TMT of sorghum have been exported; in the same time period in 2024, more than 3.24 MMT of sorghum were exported. As of July 2025, exports were down 80% when compared to the previous year, with sales to China down 97%. Some of these imports are primarily being substituted by Australia and Argentina. Similarly, in 2018 and 2019, sorghum trade between China and the United States fell but rebounded with the U.S.-China “Phase One” Deal that occurred in 2020. The recent agreement between the U.S. and China could reopen the Chinese market for U.S. sorghum.

    World Sorghum Exports, 2013-2024

    World Sorghum Imports, 2013-2024

    U.S. Sorghum Exports, 2016- July 2025

    Sources

    Foreign Agricultural Service (FAS). Global Agricultural Trade System (GATS). Online database. Online public database accessed November 2025.

    Nguema, Abigail. “Grain and Feed Update.” Foreign Agricultural Services. September 30, 2025.

    United Nations Department of Economic and Social Affairs. Comtrade. Online public database accessed November 2025.

    USDA Foreign Agricultural Service (FAS). Production, Supply and Distribution Online (PS&DView). Online public database accessed November 2025.

  • What WASDE Days Do to Grain Futures: Intraday Volatility Patterns You Can Plan Around

    What WASDE Days Do to Grain Futures: Intraday Volatility Patterns You Can Plan Around

    When there isn’t a government shutdown that limits reporting activities, the World Agricultural Supply and Demand Estimates (WASDE) report is a once-a-month shock that does more than nudge the average price. On release days, the intraday volatility pattern—its level across the session, its midday spike, and how quickly that spike fades—differs from ordinary days in ways that traders, merchandisers, and risk managers can plan around. A recent research article evaluated the impact of the WASDE report on commodity futures markets’ volatility (Lee and Park, 2024). Here we translate this research into practical guidance for traders when a WASDE report is released. 

    Most trading plans benchmark a point estimate—an expected move or a single daily volatility number. But markets trade through time. On WASDE days, volatility is comparatively calm into late morning, jumps right after the 11:00 a.m. Central Time (CT) release, and then eases within about an hour. Treating the day like any other misses the timing and the intraday pattern that drives fills, slippage, and margin exposure.

    We study corn and soybean futures from January 2013 through April 2023, focusing on regular trading hours (8:30 a.m. to 2:00 p.m. CT) and explicitly comparing three kinds of sessions: the release day itself, the day before, and the day after. Instead of averaging volatility across the whole day, we recover the intraday volatility curve—how volatility evolves minute by minute. We then ask two questions. First, what does volatility look like on WASDE days relative to other days? Second, is volatility the same across the before/after/release-day split? 

    On release days, volatility is subdued at the open, eases into mid-morning, and then spikes right after 11:00 a.m. CT (see Figure 1 and 2). Figure 1 shows the day before and the day after with a simple fade from the open without the midday surge seen on WASDE release days. The spike is visible in both corn and soybeans and typically fades within about an hour, as shown on Figure 2. Formally, release-day intraday volatility differs from the adjacent days, while the before and after pair are statistically indistinguishable. Another practical detail emerges at the open: on release days, when the market’s early-session volatility often starts lower than on non-release days, consistent with traders holding back risk until the report is released. The result is a day that is quieter than usual in the morning, busier than usual just after 11:00 a.m. CT, and fairly normal again by early afternoon.

    There are a few key takeaways from this research. One could use smaller orders just before the 11:00 a.m. CT release, then wait 5–15 minutes afterward to see where prices settle before adjusting. If buying, selling, or hedging, skip those first few minutes after 11:00—quotes and spreads are still resetting, and a short wait often saves money. For risk planning, don’t treat the whole day as high-volatility; expect a short, sharp bump around 11:00 that usually fades within about an hour.

    While these patterns describe typical release days across a long sample, individual months will differ with the surprise content of the report and with concurrent macro news. The point is not that every WASDE day looks the same, but that the intraday volatility pattern on those days is predictably different enough to plan around. Remember that all trading comes with risks and the guidance in this article is for educational purposes only and is not a guarantee of outcomes.

    Figure 1. Intraday volatility up to 11:00 a.m. (Central Time) WASDE release 

    Figure 2. Intraday volatility on WASDE release days (corn and soybeans)

    Minute-by-minute volatility with a 95% confidence band (gray). The vertical dashed line marks the 11:00 a.m. Central Time release. Both markets are relatively quiet into late morning, show a sharp 5–15-minute spike right after 11:00, and then settle toward baseline within about an hour; the exact height of the spike varies by month.

    References

    • Andersen, T. G., Su, T., Todorov, V., and Zhang, Z. (2024). Intraday periodic volatility curves. Journal of the American Statistical Association, 119(546):1181–1191.
    • Lee, K. and Park, E. (2024). Exploring calendar effects: the impact of WASDE releases on grain futures market volatility. Applied Economics Letters, 1–6.

    Park, Eunchun. “What WASDE Days Do to Grain Futures: Intraday Volatility Patterns You Can Plan Around.” Southern Ag Today 5(46.3). November 12, 2025. Permalink