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The News:
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Ag Barometer Gets Busted
- Lumber Tumble
- Agrotools Adds $21M to Its Toolbox
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Farmers Got the Feels…and They Ain’t Good |
There’s a storm a-brewin'.
At least that’s what it looked like when the barometer tanked earlier this week. Or to be more accurate, the Ag Economy Barometer.
Gloomy forecast: When Purdue University and CME Group released the Ag Economy Barometer report for the month of May, the message was clear—farmers aren’t exactly in a "glass half full" mood.
Researchers pulled out their phones and dialed up 400 producers, asking them questions to gauge their sentiment regarding the current and future outlook for their farms.
And when the results were tallied… well… it wasn’t good. The index dropped 22 points to a dismal 99… about the same level we saw when COVID made its grand entrance early in spring 2020.
And it’s not looking up: 38% of producers said they expect their farm’s financial performance to get even worse this year.
So what’s driving the depression? You guessed it…input costs.
As those cringe-worthy fuel and fertilizer bills stack up, last year’s sunshine has morphed into a cumulonimbus catastrophe. Yeah, we had to look that word up too.
Soundbite: According to James Mintert of Purdue University’s Center for Commercial Agriculture, the "rapid rise" in costs and "uncertainty" about future input prices is "leaving producers very concerned about their farms’ financial performance."
Is the worst yet to come? According to farmers, yeah, it is. When it’s all said and done, 57% of them say they expect 2022 input costs to rise 30% over their 2021 prices. Ouch.
Here’s to hoping that prices (inputs… not commodities) tank this summer/fall as much as farmers’ current economic outlook.
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→ Happy planting. After a slow start, farmers across the U.S. now have 94% of their corn planted (compared to a 92% 5-year average); soybeans have also mostly caught up, although wheat planting is still lagging behind.
→ Heading south. John Deere is moving its tractor cab production out of Waterloo, Iowa, and to Mexico starting in 2024—although the company says the Iowa plant will still produce new products.
→ Dairy gold. U.S. dairy exports reached their second-highest monthly value ever in April, spurred by supply issues out of the EU and New Zealand.
→ Mooving to sustainability. Nestlé is trying to move its dairy production (currently the company’s largest raw material input) to net-zero emissions by 2050.
→ Not a horror movie plot. After more than a decade of an approval process, the USDA is permitting Oregon State University ag scientists to release a parasitic wasp they hope will decrease the population of fruit flies.
→ New negotiator. The White House has nominated Doug McKalip, senior adviser to the USDA secretary, to fill the empty chief ag negotiator position.
→ More money, more (pig) problems. Despite a year of record profitability, U.S. pork production is struggling to expand because of a host of issues, including animal disease, tight labor markets, cost of facility construction, and high input prices.
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Niruti Stock | Getty Images
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Lumber prices are going down: they’re yelling, "timber!"
Some background: We all remember the high costs of lumber during the height of the pandemic. With supply chain issues and labor shortages, prices went as high as a sycamore grows.
Inflation tree-tment: Now, with rising inflation rates and higher inventories, the prices of lumber are going the other way—dropping 52% since March.
How Canada fits in: The U.S. depends a lot on Canadian imports of lumber: 85% of the imported lumber used in the U.S. comes from our friends to the north. Adding to the frustration in the lumber markets is a tariff increase on Canadian lumber shipments from 9% to 17.9%.
What this means: People are ready to build their houses (9 out of 10 houses in the U.S. are wood-framed), while sawmills are decreasing production levels. New home constructions rose 6.8% in February, 22% above the level of February 2021.
But with lowered production, the CEO of Deacon Lumber in Kansas City says the U.S. doesn’t have enough lumber to meet the demand of new house construction—nearly 2M homes.
As recession predictions grow, there’s still some concern about what the lumber industry—particularly lumber demand—will look like.
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You Could Shape the Next Era in Ag |
Today’s ag research drives tomorrow’s innovation and progress. Make sure you’re a part of it.
In an industry that includes so many different sectors, it can be difficult to make sure your voice is heard. That is, until Ag Access.
They’re a full-service marketing research company that draws from a rich, diverse community of ag industry members to truly understand the pulse of the industry.
Through more than 500 studies a year sent to a wide variety of ag professionals, Ag Access gains insights from every corner of the ag economy, and helps companies make data-driven decisions (without having to design their own research studies).
So whether you’re a grower or retailer, a hobby farmer or specialty grower, an ag banker or a veterinarian—make sure your voice is part of the chorus helping drive the industry forward. Join our insight community today.
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Agrotools Adds $21M to Its Toolbox |
Add another tool to your AgTech tool belt.
Agrotools raised a crisp $21M, bringing total company value to nearly $94M. The technology and intelligence company for agribusiness provides remote analyses for managing risks and opportunities, with an emphasis on ag customers in rural areas.
What will they do with the $$? The Brazilian-based company is looking to expand its business in the U.S., Latin America, and other regions. Agrotools will further invest in key technologies including AI, blockchain, gamification, technology democratization, and satellite data sources.
It will also hone in on critical business pieces including cybersecurity and strengthening governance.
They’ve done their homework. Agrotools analyzes more than 1,300 layers of data from multiple sources to provide details on suppliers and customers across a specific rural area to spark competition, while ensuring environmental, social, and governance compliance. It has analyzed more than 4.5M rural territories and monitors more than $3B in commodities with its platform.
What’s in the toolbox? Financial resources, rural insurance, raw materials, input sales, capital markets, and retail opportunities. Agrotools has more than $10B in rural finance portfolios and nearly $20B in monitored agribusiness operations.
Soundbite: "My dream, since the beginning of Agrotools, is to change global agribusiness, bringing to it efficiency and true sustainability," said Sergio Rocha, Agrotools CEO. "In short, we want to meet the earth’s needs to overcome the climate and food crises, using cutting-edge technology."
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Our research for today’s timber story led us to the American Loggers Council website where we were met with loads of lumber facts.
And this one caught us for a surprise…
Can you fill in the blank?
In 2020, the U.S. had ____% more trees than it did in 1970.
Answer at the bottom of the email.
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Written & Edited by Kevin Cross, Sheridan Wimmer, Amelia VanLandegen, Ashley Scoby, and Travis Martin
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