🐂 The RFID Rift

Big news for beef jerky lovers. The dried deliciousness has made a name for itself this Valentine’s Day. Beef jerky bouquets for the win. Amirite?

P.S. Thanks for all the responses to Tuesday’s newsletter. Travis still has 100+ to go, but so far, he’s determined Canadians are uber clever, fish farming in Iowa is a thing, and 94% of you could use a pair of long johns cuz you’re really, really cold. Stay warm out there, folks!

Friday’s headlines:
Order in the [Cattle] Court
One Minute WASDE Update
Nitrogen's New Era

Welcome to the acronym party...

Ranchers Cattlemen Action Legal Fund United Stockgrowers of America (R-CALF USA) and the USDA’s subagency Animal and Plant Inspection Service (APHIS) are courting.

AKA, they’re seeing each other in court. AKA, there’s a lawsuit.

How we got here: An initial advisory committee spent months discussing the pros and cons of radio frequency identification (RFID) tags for traceability. But when the groups couldn’t reach a consensus, a new group - The Producer Traceability Council (PTC) - was formed.

The problem? Any opposing members to RFID weren’t invited to the PTC table. RFID advocates filled all the seats.

Then the USDA released a factsheet explaining the transition plan to RFID tags from metal ear tags on their website.

Let’s just say that none of this sat well with the R-CALF group…

R-CALF sees the proposed plans as imposing enormous cost requirements on operations with non-compliance leading to restricted market access.

Where this goes: After a quick legal hand slap from R-CALF, the USDA pumped the brakes and took the information off its website. With no new court dates set, R-CALF lawyers are filing complaints against the USDA for breaking rules and not allowing a public comment period. More to come here.

→ Got plenty of milk? This week's USDA reports noted growing cow herds and larger stocks will lead to projected lower prices for the first half of 2021 across cheese, butter, and all classes of milk.

→ Farmers Edge to IPO. The Canadian digital ag company submitted a prospectus and plans to close the first week of March.

→ The Philippines are on a shopping spree. The Southeast Asian country plans to double pork imports to nearly 400,000 tonnes to offset significant domestic losses due to African Swine Fever.

→ Timber is in trouble. A handful of U.S. legislators are urging the USDA to funnel COVID-19 aid to the logging industry which was passed over by previous relief packages.

→ An ag data deal. Proagrica has acquired CDMS, the go-to source on compliance and label data with agronomic application information on over 7,000 products.

→ Cargill goes fishin’. The global ag player is actively amping up its seafood business as it looks for acquisition targets in the $400 billion fish market.

→ Agribiz earnings everywhere: FMC celebrated 7% organic revenue growth for FY 2020, Pilgrim’s saw mixed results with a 1.8% rise in Q4 net sales, and Tyson’s Q1 net income fell 8.2% though operating income was strong.

With all the hype leading up to Tuesday's WASDE report, many market advisors summarized the update in one word: deflating.

Record-setting sales to China in recent weeks led to speculation that big changes were on the horizon. But ultimately, the USDA didn’t make any major data moves.

Key highlights:

→ Corn underwhelms. The anticlimatic change in corn exports despite recent sales left corn prices reeling. The USDA also held firm on South American production numbers despite the dry weather spell.

→ Soybeans get tight. Soybean sales rose 20 million bushels, sending U.S. ending stocks to their tightest level in seven years. Even though its domestic soybean prices increased, China hasn't called in new orders in the last few days. Those Lunar New Year celebrations are keeping them busy.

→ Beefed up. Expectations for higher slaughter rates and greater protein demand raised the projections across red meat and poultry. With high grain prices, producers may try to add more pounds outside of feedlots, slowing the flow of cattle and limiting beef production.

Commodity markets. Trade impacts. Mother Nature.

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The name of the game is nitrogen, and markets are keeping a close watch on 2021’s expected fertilizer frenzy.

In North America, improving farm economics, increased canola planting, and steady corn acres will keep demand strong.

But let’s go global:

India: Favorable weather in the region equals a projected buying spree that global markets like to see.
Brazil: A lack of domestic urea and better farm incomes will make South America a hot spot for sales.

Nitrogen’s biggest input - energy from natural gas or coal - is seeing climbing prices that factor into the other side of that demand equation: supply. With a rising cost curve among producers in regions like Europe and Asia, there’s a chance global nitrogen output could fall.

And you know what they say about opportunity and overalls…

There’s a lot of hard work being done by startups to rethink nitrogen usage, stabilization, and retention.

One example: Sound Agriculture. Their nutrient efficiency product, SOURCE, is newly available to corn and soybean producers. Touted to save 25-50 lbs of nitrogen/acre for by unlocking previously unavailable forms of nitrogen, it’s the new kid on the block of reducing dependence on the fertilizer.