NW Call to Action
Lower commodity prices, higher production costs, and sustained high interest rates have put increasing pressure on working capital. It’s now your greatest asset and biggest competitive advantage. Join Tim Hammerich and leading farm financial coaches to explore how to expand in a downturn. You will learn how to create a capital plan across a range of financial scenarios while understanding how to access the capital you need to grow.
Date & Time: Feb. 22, 2024 8:00 AM Central Time
NE Current Events
There were a bunch of current events this week which were too important to not discuss at length in this week’s newsletter. Let’s cover them.
Inflation up-CPI came in at 3.1% last week, higher than the 2.9% that was expected. Home prices continue to drive inflation higher. Once this 3.1% figure came out, the odds of a rate decrease happening in the Fed’s March meeting drastically shrank. I still think the CME FedWatch has it wrong and is overly optimistic for rate decreases in the coming year. CME FedWatch Tool – CME Group
Interest rates up-Higher inflationary figures push the Fed to keep rates higher. Higher Fed rates risk pushing the U.S. toward a recession. We continue to see an inverted yield curve on the U.S. Treasury Bonds which also signals a recession (this is when long-term interest rates on U.S. Bonds become cheaper than short-term rates). 10 year Treasury Bonds have been pushing higher, making it more expensive for you to borrow money to buy farm ground. Resource Center | U.S. Department of the Treasury
Japan/UK recession-A country is experiencing a recession when they have 2 consecutive quarters of contracting GDP. Japan’s GDP shrank 3.3% in Q3 and now 0.4% in Q4. The UK was also contracting in the Q3 and was down again by 0.3% in Q4. UK economy slipped into technical recession at the end of 2023 (cnbc.com)
Dicamba ruling-Two weeks ago a federal court halted the use of dicamba products for 2024. Last week the U.S. EPA said farmers can use some existing supplies. Something to watch closely moving forward. US allows farmers to use existing supplies of dicamba weedkillers | Reuters
’24 acre outlook-USDA Ag Outlook Forum Data came out on February 15th with their projections on acres planted, average price, total crop, yield, ending stocks, and use. U.S. corn plantings are expected at 91.0M acres(94.6Ma in ’23) with soybeans at 87.5M acres(83.6Ma in ’23). 2024AOF-grains-oilseeds-outlook.pdf (usda.gov)
JD sales down/price up-John Deere earnings were down 11% in Q4 with sales down 4%. They are expecting sales to drop around 20% in ag for 2024 and they plan to help offset the drop in sales with an average 1.5% increase in prices. Deere Stock Falls After Farm-Equipment Maker Cuts Profit Outlook (wsj.com)
ARC/PLC decision tool-Do some research, talk with your insurance agent, and get into the USDA office to make your election prior to March 15th! Ag Policy | AgManager.info
Have a great week!
Grant
All views expressed on this site are my own and do not represent the opinions of any entity whatsoever with which I have been, am now, or will be affiliated. Information provided is authentic to the best of my knowledge, and as such, is prone to errors and the absence of key details. The content of this blog is for entertainment and informative purposes and should not be seen as professional advice to finances or any other field.