The USDA-NASS Cattle report from January 2022 showed a 1% reduction of cattle grazing on small grain pastures in Kansas, Oklahoma, and Texas (1.71 million head in 2022 vs. 1.73 million head in 2021). However, small grain pasture conditions are much worse than last year.
Producers face challenges putting weight on stocker cattle given the overall poor condition of small grains pastures in these areas during this winter. Even though Southern Plains drought conditions improved last week, most areas are still under drought. The Southern Plains will need more moisture for 1.71 million head grazing on small grain pastures. Although it’s likely that some of these cattle have already gone to feedlots since the inventory survey was completed.
Small grain pasture conditions have decreased considerably this year. In Kansas, winter wheat categorized in very poor, poor, and fair condition is 13 percentage points higher than last year. Oklahoma and Texas wheat conditions are 45 and 25 points higher, respectively, for similar categories. These areas represent 91 and 84 percent of total winter wheat planted in Texas and Oklahoma.
Grazing small grain pastures in poor condition will reduce average daily gain and might affect spring productivity. Poor grazing conditions will also increase supplemental feeding costs and mitigate future stockers’ margins.
In some areas, stockers are grazing deferred summer grasses. These cattle will probably have a lower daily gain unless supplemented. However, it will increase costs and potentially reduce spring forage supply for their cow-calf operation. As the drought continues, it’s likely that a significant number of cattle will be sold at lighter weights and earlier in the market.
Rice saw a record overall yield with the 2021 crop, but rice production was down almost 16% from the previous year. The overall rice yield was 7,709 lbs./acre, which beats the previous record high of 7,694 lbs./acre in 2013. This new record high was driven by a record medium-grain rice yield of 8,623 lbs./acre, which was 2.8% higher than the previous record. The 2021 long-grain rice crop saw the second-highest yield on record at 7,471 lbs./acre, just below the record of 7,517 obtained in 2018. Despite these high yields, 2021 production was lower than the previous year at 191.8 million hundredweight for all rice and 144.6 million hundredweight for long-grain rice. Lower production was driven by a reduction in planted acreage by nearly 17% in 2021 as compared to 2020. Mississippi saw the largest reduction of any state in planted acreage, down 36% from the previous year.
With lower production, U.S. long-grain rice ending stocks for the 2021 marketing year is currently estimated by the USDA at 21.4 million hundredweight resulting in a stocks-to-use ratio of 12.1%, which is down from 29.7% in 2020. Domestic U.S. consumption of long-grain rice, while lower than last year, remains strong, but exports remain flat compared to previous years. The current 2021 market year average price projection for long-grain rice is $13.20/cwt, which is the highest price since 2013.
U.S. long-grain rice acreage has fluctuated from around 2.5 million to 3 million acres year to year consistently since 2013. Given this pattern and current high prices, rice acreage is expected to rebound back to around 3 million acres in 2022. One potential factor that can limit an acreage increase is current high input costs and supply uncertainty. Soybeans are the common rotational crop planted with rice and currently, soybean prices are strong and can be planted at a lower cost of production per acre. Current high long-grain rice prices though will likely convince most producers to stay with their normal crop rotation.
goal of ensuring that all Americans have access to affordable, reliable, high-speed internet. The Bipartisan Infrastructure Law plans to invest $65 billion to help with this effort, with funding falling into seven major program areas. These areas include: (1) the Broadband Equity, Access, and Deployment Program ($42.45 billion), (2) the Affordable Connectivity Program ($14.2 billion); (3) Digital Equity Planning, Capacity and Competitive Grants ($2.75 billion); (4) the Tribal Broadband Connectivity Program ($2 billion), (5) Rural Broadband Programs at the Department of Agriculture ($2 billion); (6) the Middle Mile Broadband Infrastructure Program ($1 billion); and (7) Private Activity Bonds ($600 million).
Access to affordable, reliable, high-speed internet is a need expressed by socially disadvantaged farmers and ranchers (SDFR) in a research study conducted by Tougaloo College under the guidance of the SDFR Policy Research Center (Policy Center) at Alcorn State University. The research study sought to identify factors that hindered SDFR’s access to technology and the use of technology in the poverty-stricken counties located in Mississippi. After surveying respondents in 46 of the 82 counties in Mississippi, the study found that the internet was the most frequently referenced source for information about new technology.
According to USDA’s report, “Farm Computer Usage and Ownership”, 25% of farms in the United States have no access to the internet. As agricultural technology continues to change, become smarter and, integrate within agriculture tools that farmers utilize daily, they will likely require use of the internet and data to expand their knowledge of tools that may create greater farm productivity. With the expansion of broadband access to communities like those of the farmers surveyed, farmers will be able to learn more about agricultural technology.
US exports to China in 2021 reached almost $33 billion, a 24.6 percent increase from last year. As a matter of fact, China has been the largest market for US commodities in the last couple of years surpassing Canada and Mexico. Moreover, in 2021 China was the number one destination for soybeans, corn, sorghum, cotton, and nuts, accounting for 69 percent of all US commodities exported to China. Although year over year US exports to China have been higher, they still fell short of the agreed amount for 2021 under the Phase 1 agreement. The chart above shows the monthly cumulative amount of US exports to China for 2012, 2020, 2021, and Phase I 2020 and 2021. US exports to China in 2012 were the largest amount exported ever before the Phase 1 agreement, around $26 billion, while Phase 1 2020 and 2021 amounts were agreed at $32 and $39 billion, respectively. The red line represents 2020 exports and the yellow line 2021 exports and both years US exports fell short of reaching 83 and 85 percent of the agreed amount under the Phase 1 agreement (blue and black lines). Although 2020 and 2021 exports fell below the agreed amount, both years marked the largest amount of US exports to China. Hopefully, this trend continues for 2022 and beyond.
Monthly Cumulative Amount of US Exports to China for 2012, 2020, 2021, and Phase I 2020 and 2021.
The last couple of weeks, we have focused on the rise in fertilizer prices. Today, we are highlighting nitrogen price trends in the context of relative prices. Historical highs for nitrogen at $1,000/ton were reached in the summer of 2008. Of course, those levels have been reached and even surpassed recently. Other nitrogen price peaks occurred in 2011, 2012, and again in 2014. But are these the “most expensive” fertilizer prices farmers have paid? The answer depends on the crop you are producing.
Figure 1 below illustrates how fertilizer (nitrogen) typically follows corn price. Nitrogen and corn prices dating back to January 2000 are converted to an index of the respective series average (series average = 100%). The green line is the monthly index for the nearby Dec Corn Contract, while the red line represents a monthly spot price index for nitrogen. The black area shows the relative value of fertilizer measured in bushels of corn. For a corn producer, fertilizer is most expensive when it takes more corn to pay for it. Examining the relative price history, the fertilizer highs back in 2001, 2003, and 2005 were far more significant than they might first appear. Driven more by natural gas prices in that era, rising fertilizer coincided with flat or even falling corn prices. In November of 2005, a ton of nitrogen fertilizer was worth a series high of almost 250 bushels of corn. High nominal prices in 2011 and 2012 were accompanied by higher corn and the relative fertilizer value was closer to the more affordable 20-year average of 110 bushels per ton of nitrogen. In 2014 corn price fell quickly, while nitrogen held steady resulting in a relative value increase to almost 200 bushels.
Figure 1. Relative Prices (Nitrogen / Corn)
Cotton producers have faced a slightly different history because fertilizer is less connected to cotton price. Figure 2 illustrates the cotton and nitrogen price relationship. The relative value of nitrogen, measured in pounds of cotton, most often follows the nominal price of nitrogen. For the 20-year series, the average value of nitrogen was roughly equal to 620 pounds of cotton. While short-lived, the 2008 nominal price peak for fertilizer also represents the most expensive fertilizer value measured by equivalent pounds of cotton at almost 2,000 pounds. With all prices riding the same wave in 2010-11, the relative nitrogen value held steady at around 500 pounds of cotton per ton of nitrogen. Cotton prices retreated over the next 5-6 years, translating into a sustained period of relatively expensive fertilizer value which twice rose above the mark of 1,000 pounds of cotton per ton nitrogen.
Figure 2. Relative Prices (Nitrogen / Cotton)
The chart data stops in December of 2021, so where do relative values stand today? Since 2000, only twice has the relative value of nitrogen exceeded 200 bushels of corn. With corn at $5.75/bu. and nitrogen around $1,200/ton, the relative nitrogen value is 208 bushels. Similarly, a ton of nitrogen has rarely been valued at over 1,000 pounds of cotton, and today the value is closer to 1,200 pounds of cotton assuming a $1.00/lb. cotton price. Yes, commodity prices are higher and may offset some of the increased fertilizer prices. However, even relative nitrogen values are approaching all-time highs in this incredibly challenging environment.
AFPC Briefing Paper 22-01, nitrogen prices compiled from DTN spot market price data for the last trading day of each month. The markets include New Orleans, Corn Belt, Southern Plains, South Central, Southeast and Florida. Corn and Cotton prices are author compiled of monthly futures prices of nearby harvest month contracts.
