🌾 The U.S. Wheat Watch

Wheat often gets the supporting actor nod in the U.S. grain market theater. But with all the headlines about it this winter, its new-found star status has it center stage.

The storyline beings with Mother Nature not being kind to U.S. wheat farmers this season. Drought conditions throughout the fall and winter left growers worried about the crop’s potential. And then the recent record-smashing cold snaps have only made those concerns worse, even if it is winter wheat.

Then the plot thickened. Last week, the USDA released their supply and demand estimates for the crop, and they are taking note of Mother Nature’s toll.

The agency expects 500K more acres to be harvested than last year but with a lower average yield at 49.1 bushels/acre.

Translation: More acres doesn't necessarily mean more bushels to sell.

And that may be a problem this year.

→ Export taxes on Russian wheat took effect on February 15 and will double on March 1.
→ Argentina is battling dry conditions, limiting yield prospects on many crops, especially wheat.
→ Chinese demand for wheat continues to rise as farmers look for alternatives to pricey corn.

Bottom Line: It's not time for a curtain call yet. Demand for U.S. wheat is expected to surge in the coming months.

→ Hormel ain’t happy. Mixed quarterly results showed sales up 3.2% but earnings down 8.4%. The bigger stink? CEO Jim Snee hammered on Minnesota’s chaotic COVID-19 vaccine rollout.

→ Fertilizer’s can-do spirit. Ag retail king Nutrien posted a 17% spike in quarterly earnings thanks to strong nitrogen and potash demand.

→ USDA to the rescue. Over 100 federal employees in five states are aiding the COVID-19 vaccination deployment.

→ Seaweed turned cattle feed. The Australian government invested in ocean-farming startup Sea Forest, the producer of an Asparagopsis seaweed feed supplement that reduces cattle methane emissions up to 80%.

→ Tyson all-in on wearable tech. The meat processor's venture arm invested in Iterate Labs, the creator of a Fitbit-like gadget where artificial intelligence and digitized human motion sensors improve workforce safety.

Lettuce explain. Sorry, couldn’t help ourselves.

Dole Food Company and Ireland-based Total Produce have announced a sweet new chapter in their lives. Marriage via merger.

The world’s new largest fresh produce company will be incorporating over 250 facilities, including farms, manufacturing and ripening facilities, cold storage, packhouses, marketing and distribution hubs. And leaving their competition in the dust.

Down on the Dole farm: Dole alone owns and operates 112,000 acres of farmland and other holdings worldwide.

With over 170 years of history in fresh produce, the international power couple will be twice the size of its nearest competitor, Fresh Del Monte Produce, and worth nearly $10 billion in 2020 revenue.

Things are moving fast. The two companies already have a bun in the oven they are naming integrated supply chain efficiencies. Everything from growing, sourcing, importing, packaging, marketing, and distributing will be optimized. This not-so-little one is expected to bring what every parent wants, $30-$40 million in annual cost savings.

What’s ahead: The newly-named Dole plc will be incorporated in Ireland, with a global HQ in Dublin. The new mega-fruit and veggie company will be publicly listed on a major stock exchange in the U.S., with plans to raise $500-$700 million.

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John Deere, AGCO, and CNH are doling out virtual fist bumps for the new year.

A report from the Association of Equipment Manufacturers pegged total January 2021 farm tractor sales up 24.7% over 2020.

With 15,581 tractors rolling off U.S. dealership lots in the month, equipment of all shapes and sizes won big:
10K+ of the sales were two-wheel-drive tractors under 40 horsepower, a 32.9% jump.
Four-wheel drive equipment sales skyrocketed 33.7%.
Combines saw the surge, too, notching 76.8% more sales.

$peaking of all that green: Deere & Company is reeling on good vibes. The legendary farm machinery maker announced quarterly earnings up 137%.

What this means: The calendar turn tends to be the weakest months of sales for farm equipment. If incomes can hold strong, crop prices stay high, and production outlooks go up, expect 2021 to be a heyday for tractor makers.