 Good afternoon. My name is Dave Ripplinger. I'm an economics specialist with NDC Extension. Be moderating this and the future webinars that we're hosting again in 2022. Just to kind of kick things off to remind everybody we'll be doing questions and discussion at the end. So please use the chat or Q&A features. Do you have any questions during the presentations? Please list them there and we'll get to them when we're done. We're actually going to end this month's webinar with a little bit of a discussion on things that we're looking for in 2022, hopefully spurring some questions and some interaction with you who are joining us today. With that, I'd like to turn the floor over to Brian Parman who's going to be talking about fertilizer prices and inflation. Thanks Dave. Kicking off 2022 with our webinar series again and we're glad to have everyone who keeps logging in and viewing these because if you didn't, we wouldn't keep doing them so we're glad that you're here and willing to spend an hour, hour and a half talking to us. My presentation today is on pretty self-explanatory. Fertilizer prices and inflation, those are one of the things dominating national news as far as the economy goes and the other one really on the forefront of everyone's mind in terms of agriculture as we start focusing our attention on spring planning and what fertilizer prices are going to look like. So my first slide of the presentation outside of the title slide, I just grabbed some headlines from the national news different places and what they've basically said and discussing as far as inflation goes and part of it, one of the headlines was that we closed out December so all of 2021 with inflation at 7% which was the highest rate in 40 years and I have a chart that kind of shows that. A lot of folks are harkening back to the 1980s that being basically the last time that inflation hit 7% and it was actually higher during that time period in some of those years but definitely the highest that it's been since then. As a result the Federal Reserve has said that they're going to accelerate their increase in interest rates to help combat some of the inflation that's seemingly been accelerating last fall. Three rate hikes in the cards they're talking about for 2022 and as of the last several years that these rate hikes have been a quarter of a percent each. They don't have to be that small. There are many instances back in the 80s when inflation was a really large problem where they hiked rates quite a bit more than that several percentage points in one shot. And then as a result economists around the country have boosted their inflation forecast for 2022. Most were saying around that two and a half three percent range. Now they're thinking it might be a little bit higher. And then a headline this morning was that wholesale prices or the producer price index which is what it's also called jump nearly 10% in 2021 which was the highest on record but to be fair the record started for this in 2010. So not nearly as long of a history as some of these other inflation metrics but still the highest nonetheless and showing signs of this growing inflation. Now some folks have also said that because the December inflation number was a little bit lower than November that maybe it's decelerating but I would kind of issue a word of caution on that because a one month observation and I'll show it here in a sec some of the monthly numbers probably isn't enough to really to really say with something as far as inflation goes that it's slowing down. So my next chart just kind of shows three main categories three large categories in terms of folks's budget. All items were at seven percent inflation food inflation was a little bit lower than that that one's been dominating headlines as well the increase in food prices the big one being energy of course energy costs have been extremely high approaching 30 percent for the year and when you look at core inflation which is all items less food and energy that was closer to five and a half percent but when you add food and energy in mainly energy that inflation number is right around seven percent for the year. Now on a historical timeline which my next chart shows we can see where this a seven percent inflation rate actually would be and I put that in there they don't have this out yet so that seven percent isn't quite official they kind of wait for a lot of the dust to settle before they put the official number out in historical perspective but that line there across shows where seven percent inflation would be going back to about 1960 then again you got to go to the very early 1980s to see inflation numbers higher than that they were higher than that you look at there at 1980 inflation 13 13 and a half percent being being the highest as far as this data is concerned and then in the early to mid 70s north of 10 as well but still seven percent nonetheless definitely the highest we've seen since that about 1981 mark so you can see clearly why folks are pretty concerned about it and then this next table just shows the monthly inflation numbers as a percentage and the ones I've highlighted in yellow are the highest since 2011 for that month or at least as high if not higher so equal to or greater than and then in the right it's that total seven percent so you can see there were some lower numbers okay like for instance august of 2021 was three percent in 2020 it was four in 2017 it was four percent so it was lower so when folks are saying that you know it's decelerating maybe because it was less than november there were other months that were lower as well I don't think one or two months observations is probably enough to make a definitive statement on the direction inflation is going so it's different definitely something that folks are being mindful of the federal reserve is is getting ready to take action on it everyone's aware of the fact that inflation has been creeping up and has hit one of the highest marks that we certainly that we've seen in a very long time the highest in my lifetime actually I wasn't around in 1988 early early 1980s so but nonetheless it remains to be seen if the actions taking will will curb it and another thing to keep in mind any action that the federal reserve takes is probably going to be slow to react they've you know when I was going to school often inflation curbing inflation and monetary policy was compared more to steering a ship than steering a sports car where you got to start turning the wheel long before the turn is coming up because it takes a long time to get a big old ship to turn 90 degrees well inflation managing inflation and monetary policy is a lot the same way it'll be several quarters before we see the federal reserve's actions actually having an impact and then trying to determine how how great that impact was it's it's not an easy thing to do so the next part of this I just wanted to hit on fertilizer prices and what is kind of going on there this one this particular chart just shows fertilizer cost per pound of in okay so anhydrous is is fairly expensive it's the most expensive fertilizer product per ton but per pound of in because it has the most nitrogen in it it's actually the least expensive but since february of 21 roughly january of 21 anhydrous has gone from about 28 cents 27 cents retail to close to 90 cents 80 88 cents per pound and so you know more than doubling two two and a half times what that price was and all the other fertilizer products the common nitrogen products urea anhydrous and uan 28 and 32 have all kind of followed suit so my next chart looks specifically at potash actually in this case and potash prices have more than doubled since the since last winter if you look at this chart the red line is 2021 that gray dotted line near the bottom is the five-year average and potash has gone from about 375 maybe 380 dollars a ton in january all the way up to 810 so more than double and that that's one fertilizer component that has obviously seen it and and they all have to a degree but potash has increased pretty remarkably my next two charts they show phosphorus prices for map and dap to commonly applied phosphorus fertilizers increased as well again that gray dotted line at the at the bottom and these charts are courtesy of dtn that's that five-year average and you can see that map went from about 550 dollars a ton closing out 2021 at over 900 a ton and dap starting the year around 480 dollars a ton and closing out closer to 880 dollars a ton so phosphorus prices up pretty dramatically as well and then my next chart the last chart of this presentation shows urea prices something that's frequently applied in in north dakota and right around 375 or so dollars a ton to start the year right at that five-year average and closing out the year closer to 920 dollars a ton so more than double on the on the urea prices as well so pretty much across the board large fertilizer increases especially beginning back in october that september october time frame is when we've really seen fertilizer prices take off and while the slope of these maybe the increase in prices have decelerated a little bit it's still increasing and it's still been week over week we're seeing prices rise over and over again and so one other thing to mention on fertilizer prices as well is there is a study done out of texas a and m and some concerns about tariffs on nitrogen fertilizer coming coming down the pike petitioned by cf industries with the international trade commission to impose tariffs on fertilizer from those countries trinidad and tobago as well as russia and the international trade commission ruled over the summer that imports of uan were harming domestic producers because they were being sold relatively cheaply or less expensive than then and harming domestic producers the u.s department of commerce their preliminary evaluation of these tariffs from this petition recommends that the tariffs actually be implemented and the study from texas a and m that that just came out not that long ago basically stated that on average it would add about 102 dollars per ton to current fertilizer prices so that would be on top of what prices already are right now because the tariff hasn't been to my knowledge implemented yet so there's this study was funded by the national corn growers and as a concern for what these tariffs might do to nitrogen prices and the study conducted by a and m said yeah it will increase them 102 dollars per ton on average so definitely going to have an impact which tariffs often do that when you put a tariff on a on an import the likely result of that is going to be higher domestic prices on the country that imposes the tariff some are worried about even potentially some shortages or something like that that's been some of the concern i didn't read anything that there would be an an additional amount of any kind of shortage though that's obviously possible but it is likely going to add an additional cost to a to a product that's already fairly costly so not not any good news right now on the fertilizer cost front um coming out uh to start the year so i know folks are going to be having a lot of uh decisions to make as far as planting what crops do you plant how much are you going to apply again this is a great time to encourage soil testing this year because it's probably a year that uh that it's that it will in fact pay off not applying any more than we absolutely have to so with that i will go ahead and turn it over to our next speaker who i believe is dr olson if we keep the same order we've been going with and uh thank you very much and i'll be around at the end for questions all right thank you brian uh so again i'm frane olson i'm the crop economist and marketing specialist with nds u extension here's my contact information so again if you think of something uh later on after this session you want to get a hold of me this is how you you contact me so my first slide i just wanted to remind everybody that um yesterday the usd actually repeat plate reported three key update four key updates get my math right uh the first is the january update for the world agricultural supply demand estimates or the wasdy that's a monthly update um and and again provides both the supply side as well as the demand side for us as well as the international grains they also released the uh 2021 crop production summary so this is the final official numbers for corn and soybean production and uh production both yields acreage is harvested in total production it also has listed for a lot of other crops but the market was primarily watching corn and soybeans and of course those numbers then feed into that january wasdy we also had a quarterly grain stocks report so every three every four every three months four times a year usda does a major survey of not only farmers but also industry on how much grain do you have in reserve at a particular point in time so the grain stocks report we got out yesterday was actually for december one so it's as of december one and then the final one was the winter wheat and canola seedings so now canola seedings it's winter canola i want to be very specific about that so it's winter wheat and winter canola seedings so on the next slide i just want to provide an overview of the the corn and soybean production numbers so again these are the final estimates uh our final numbers that we will get for uh total production yields and area harvested for corn and beans along with a lot of other other crops on the very bottom highlighted in red are the numbers that got reported yesterday uh the the black line black row just above that is the information that we had as of november so november was the last time that usda revised or updated their forecast for yield and acreage and total production so when we look at the november numbers versus the january numbers which are final you can start to see some small shifts and adjustments the top row highlighted in blue is what the trade was expecting and so you got to be a little bit careful saying well was the number up or down from where we expected or was the number up or down from last year's or last um the last estimate in both cases the corn production number was slightly above what the trade was expecting and what we saw in november again these are very very small refinements but when we get to the bottom line on how many bushels do we have available it will um it can make a difference there was no adjustments in the yield there was the the increase in production really came from a slight increase in harvested area there wasn't quite as much abandonment as we had first expected as well as there's a possibility some of that corn silage that was initially intended to be um chopped corn silage now got switched into actually being harvested for corn on the soybean side again very very similar the numbers of what the trade is expecting the numbers we saw in november very similar to what we what we got in the soybean the the slight revision was an upward revision in the yield per acre we're going from about 51.2 to 51.4 bushels per acre and harvested acreage was again well within the range of what we were expecting so no major big shock value here but a few small tweaks and few small adjustments the next slide shows the ending stocks number so this is you take the total supply subtract out all the proposed usage or forecasted usage how much do we think we're going to have in reserve just before harvest of next year once again the bottom row is in red is the numbers we got yesterday the the row above that highlighted in black is the information from the december report so that was the last time we had estimates and then of course the blue line on top is what the trade was expecting to see again not big shifts not big changes but some refinements ending stocks on all wheat increased slightly mainly because there was a reduction in the forecast for exports on the corn side the increase in corn ending stocks is primarily because of the increase in harvested area okay there was some small adjustments we had a small increase in ethanol we had a small reduction in exports on the demand side but those were basically washed so again small refinements small tweaks and adjustments for soybeans again very small adjustments very small tracking differences the the reason the bottom line for ending stocks increases primarily because we had a slightly higher yield than we had first expected the next slide is a summary of the grain stocks report now this this is one of those reports that often kind of flies underneath the radar screen but it is really important for corn and and the reason this has followed so much for corn is because it's very difficult to try and track the amount of corn going into the feed and what we call feed and residual basically going into the livestock sector because a lot of that corn does not go across a scale anywhere so it's it's it's grown on the farm goes from the combine into a bin from the bin into an animal and so these quarterly stocks report is one of the ways that we try and track feed usage and we again there's some adjustments for seasonality in the fact that especially during the winter months feed feeding tends to be a little heavier so again no major surprises small adjustments when we look at the the top row which is the blue one what the trade is expecting to see versus the bottom row in red very similar numbers we tightened up the trade was expecting a little bit higher numbers for wheat obviously the corn one is well within rounding error and then the soybean one also well within rounding error the next slide is winter wheat seedings so again the same process the row on the bottom in red is the actual numbers we got the row above it in black is from last year's information or basically the final planting so we had from from 2021 and then the blue on top is what the trade is expecting again not not anything major I guess other than against some refinements the if you look at the numbers the trade was expecting um when we look at buy class so we have hard red winter wheat the hard red win week numbers came in a little bit lower than what the trade was expecting but a little bit higher than we had last year so we were looking for an increase the increase wasn't quite as much for soft red winter wheat the expectation was we're going to see a slight reduction and we actually got a slight increase and thus the reason that the chicago wheat futures dropped significantly last yesterday is because we it looks as though we're going to have a bit more soft red winter wheat plantings than we had first expected and then the white winter wheat which is primarily in the pacific northwest again came in very very close to what the trade was expecting so once again some small refinements then the next slide is really what sets us up for what the market's talking about today and that is what is the size of the south american crop so once again these are usda estimates their usda forecasts there's a lot of private companies that will forecast their own uh production numbers and and again understand that when a private company comes out with these numbers we can get some pretty large swings from one reporting period to the next the red line on the bottom red row excuse me on the bottom is what usd came out with the black line highlighted just above that is for last months estimates and then of course the blue is on top with what the trade was expecting so let's there's a couple of things i really want to highlight and it it's a combination of both corn and soybean so we have both argentina and brazil um the corn number so let's look argentine corn came in very very close usd really didn't revise that very much a lot of the private forecasters have revised that down a lot more heavily and i'll show you some maps in just a moment to try and explain that for the soybeans there's actually a recognition that yet argentine soybeans are in trouble and so surprisingly usda dropped their forecast by about three million metric ton which you know for usda is actually a pretty large reduction brazilian corn again about a three million bushel uh three million metric ton uh production drop and surprisingly a five million metric ton drop in brazilian soybeans so the the reduction from usda standpoint a little bit heavier cutback on the soybeans than the corn but there's a lot of private forecasters that are actually looking at much much lower numbers than what usda is forecasting so the next slide please so let's talk a little bit about the weather conditions right now and i want to highlight last year we had a record soybean crop in the united states we so we had the largest soybean crop we've ever produced in bushel count we've had the second largest corn crop we've ever produced in united states and one of the reasons is because we had the eastern corn belt the i the illinois the indiana ohio kentucky missouri even parts of kansas and nebraska had a very very good year even though we had some very dry conditions here in the northern and central plains a very similar thing is happening right now in brazil so notice the production in regions we have that northern production region primarily modic grosso the tip and then grosso those are the two kind of northern states um they produce about 35 percent of the soybeans in the in in brazil and if you look in the very very bottom you've got padona and you've got riro grandosul those two uh those two states account for about another 30 percent and what we're seeing is a very very uh big difference between the crop condition ratings in the north versus the crop condition ratings in the south northern moda northern portions in moda grosso they have already started harvest so this the new crop soybeans are already hitting the marketplace now the the harvest progress has been okay but again you start with some of those very northern regions we really haven't gotten into that heavy soybean regions of moda grosso quite yet but they're coming very soon when we get into the southern part they're a little bit further behind and they're getting into some key reproductive stages i don't know exactly where they're at based on you know can planting date but the southern regions are are seeing some really really important key reproductive stages so remember this map as we start going forward the next slide please is for corn and i want to focus on the slide on the left hand side so when we talk about corn in brazil there's actually two corn crops the one in the left hand side called the first season corn is where we're at today the second season corn is often referred to as the sofrina crop won't be planted until the soybean harvest is complete so we're really focused on the left hand side this first season notice that most of the corn for this first season which accounts for about 25 percent of the total production is in the south it's in those southern growing regions next slide please this isn't an estimate again this is uh from usda crop explorer so these are n dvi this would be vegetative indexes and this is a departure from average so if it's green it's above average if it's that brownish or gold or red it would be below average so we're this is using satellite imagery trying to say how green or healthy an estimate of the healthiness of the crop if you notice now if you if you look at the northern regions in motto grosso again some of the reason that this is a little bit blank is because they've started harvest already these satellite images were taken from january one through january eight so we're looking at a kind of a range of of of time period here notice the northern region it looks like it's above average so the crop health is above average but if you get into the southern regions it's well below average so brazil is facing a very similar situation that we were we did in the united states there's areas that are in deep trouble and there's areas that are going to have a fantastic crop so the challenge we have is saying what is going to the average going to be across the region especially for soybeans if we're talking first crop corn that red area is really the heart of that first crop corner region okay so the corn market is also responding to some of this information about weather temperature and rainfall in both brazil and argentina next slide please this is argentina this is again a map of where they grow soybeans in argentina cordoba is the big soybean producing state as well as a big corn producing state but notice they have an area they're kind of in the middle of the country that's really the heart of their corn and soybeans now the development of the soybean crop in argentina is very similar from a timing standpoint to what what we're seeing in southern brazil so they're they're in the vegetative stage probably nearing that flowering stage next slide please this is a map and trying to show where is corn produced in argentina and again just like like in iowa or in elinoy the corn and the soybean crop are planted and harvested at about the same time so their their develop crop development is also at about the same stage again once again notice cordoba being that state that has the the heaviest production levels we're counting bushels or metric ton here next slide please this is the vegetative index vegetative health index and for argentina again for that same time period from january one through january eighth once again the darker the red or the maroons the worse off it is it's below average the greens means it's above average now one of the thing that that has happened especially in southern brazil as well as argentina is that they have had very very dry conditions and exceptionally hot conditions for the last about week to 10 days so um yesterday uh there there were temperatures recorded of a recorded at 113 degrees fahrenheit in some of the central growing regions in argentina and it's very dry one of the reasons we're seeing some some reduction in the prices today is that there are forecasts for some additional rains and a little bit cooler temperatures hitting both argentina as well as southern brazil going into next week so the moral of the story is the the brazilian corn and soybean crop as well as the in the south as well as the argentine corn and soybean crop in the south are looking at some really critical development stages so the weather's being watched very closely and we're starting to see some more market volatility because of the weather conditions and the weather forecasts so uh hopefully if i remember right that's my last slide i'll turn things over to tim petrie and he'll give an update on the livestock sector good afternoon everybody kim petrie extension livestock marketing economist if we go to my first slide i'm going to show you what the cattle prices are doing and you know we started last month when i talked to you the market started heating up and uh particularly on the feeder cattle side we've uh continued that really really strong market and now have the best prices we've had since 2015 and it couldn't be more timely because uh usually these first three weeks in january are our biggest marketing weeks uh you know we think of the end of october november being big and that's when the calf market starts and the nationwide that's kind of the case but north dakota our biggest uh weeks are right now and that's going to happen this week i'm sure and the weather is moderating a lot of calves coming in uh kiss had over about 7300 yesterday and you know and napoleon and stockman's are going on today and they got big sales going on too so we're going to sell a lot of calves and and uh you know the prices kind of when we look at the charts we'll see but you know since the middle of october right now 800 pound steers are selling for the same price as 550 steers were back in october so calves that were held was a was a really good idea there so let's move along here let's talk about slaughter steers to begin with just if you'd go can you go back dave yeah just talk slaughter steers i know i'm not a lot of cattle fed to slaughter waiting north dakota but two biggest things that affect feeder cattle are slaughter steer prices particularly the distant futures when whatever weight calves are being sold now whenever they will reach uh market weight and then the other thing is corn that train just got through talking about so um i'll spend a little bit more time on this giving you the key at the bottom because the rest of the charts are all color coded the same uh the red line is usually i did i use is usually the current price so the red line is 2022 and then the light blue line 21 purple 2020 and the green line 2019 i like to throw the last three years on just because of it happened in the last three years it could happen again but anyway uh you see you know oh the last couple years we really under underperformed on the cattle market 2020 of course COVID and and completely out of whack there and didn't follow seasonal patterns and $95 fed cattle at purple line back there and so uh go to last year then we started off at relatively low levels there in the left hand side the light blue line 110 cattle fed cattle and we just continually improved throughout the year we did stall off in the summer there about 125 but usually we go down in the in the summer there and so we just maintained uh you know fundamentals were improving strong export demand strong domestic demand we were starting to get the backlog of fed cattle that had built up through the pandemic finished and and so uh we marched on there and then in october then we uh finally really started getting things straight and around and and brought cattle up from 125 up to 140 fed cattle and go back to the left hand side then we're starting off there about 140 so our expectations for this year are for quite a bit better cattle prices than than uh we had last year again last year at this time we're at 110 and now we're in 40 so $30 better to start off the year the red bars there the red squares there are the futures market you know starting there with february up into april over 140 and you know we're going to average according to the futures at least 140 on cattle this year and so that's what's helping to spark the feeder cattle market is that you know feedlots can can hedge $140 fed cattle and and that helps out on the feeder cattle and then you know we've reduced the cow herd for three straight years we'll get our final beginning of 2020 numbers here at the end of the month january 31st is the annual cattle inventory report out for nasso next month i'll be report on that we know there's going to be fewer cattle fewer beef cows and so we'll uh you know have a lower calf crop next year so that's all funneling into higher price we see there on the top of the chart there the orange squares then are the 2023 futures again up another five dollars or more from uh this year and i think the way it looks now we can just keep going up uh into into 2024 and 2025 20 if we continue our 10-year cycle our our highs have been in 2005 2015 would be a cyclical price high and so that if we continue in the weather and a lot of other things that 2025 will be our next cyclical high so looks like a you know a couple more good years ahead of us barring uh catastrophes so go to the next slide then we'll just hit the feeder cattle market classes here are 550 to six weight calves same color code there and you know the purple and blue lines let's go to the right hand side of the chart there october in the middle of october that middle week october 15th is always a tough time to sell calves it was the same way and in uh 19 and 20 and 20 and 21 we were we were higher this last year but uh you know that's been the low for the year a lot of reasons for that one is the calves just tend to come right off pasture are not weaned and not bunk trained and so on and the winter wheat crop hasn't grown enough yet to put calves on winter wheat down in the south also the farmer feeders are combining corn the Iowa southern minnesota uh and in the Nebraska are still combining corn and so when those things start to develop winter wheat and then the corn gets combined and and the calves tend to be weaned that it tends to spark the price and really really did this year you can see and so again we're starting off there right up there close to 190 on 560 550 to six weight calves compared to 165 last year but but anyway a nice improvement so we're expecting again like fed cattle and looking at the fed cattle futures and what can be hedged we're looking for a much better year again throughout most of the year uh and uh and and the same thing for the next year so better calf raises head again barring some emergency and move on then to the heavier weight feeder cattle the 800 pounders kind of the same story there like the other two like fed cattle and calves mid-year we climbed above the last couple years and then since uh october have seen a nice spark and prices again uh last week we uh averaged 167 on these eight weight steers and again in the in the previous slide we showed you in october 550 calves were one average 165 and now the 800 pounders are there that are being sold now were 550s back in october they're bringing the even a little bit better prices so uh it was a good year to hang on to calves i realized a number of a lot of people couldn't do it because we're short of feed and and had to keep the cows around and that was a very good idea because uh you know we need the cows to have calves to take advantage of it there is a futures market obviously for feeder cattle and uh you know our corn is down 12 cents today and most feeder cattle contracts are up uh a dollar 20 and so we're back to that change corn 10 cents change feeder cattle uh you know buck in the opposite direction and so the futures again are kind of following the fed cattle are singler signaling better prices throughout the year up by the uh end of the year uh this this this fall up there at about 182 so uh signaling a much better year there again we're going to have fewer to sell our calf crop is going to be lower this fall than it was the last fall and in the fall before and uh so as you know as long as demand holds there we're going to have fewer if you were so i think better times ahead so go to the next slide uh kind of just talk about here's last week's market report and uh just kind of concentrate there on the on the middle there under steers under where that purple circle is but you know i when i show you that about that 189 average last week and they're going to average higher this week the average on 556 weight it kists uh yesterday was just right shy of 195 so i think we'll bring them we've got a lot of cattle selling this week and and the prices even be better but you know that that 189 there but again we you know there's that wide range and prices that always occurs there were selling quite a few calves 556 weight calves over 200 now and up to those fancy ones up to 208 but you know some down to 176 just watching a sale for a little while this morning it's at the non-weaned calves and and you know and no no shots and things like that down at the bottom side there so again when i show you the charts it's an average but there are certainly calves selling higher than that and calves selling lower than that so go to the next slide probably the easiest market class of cattle to predict particularly in the fall are cowl prices and again here's the last three years and kind of interesting we go right back there till the end of september the last three years they were just identical back there at $60 and i i realize this is the lower my my chart here is for those 85 to 90 really really lean cows or be typical of a broken mouth cow that had a calf on her all year and and you know may or may not be open but anyway it's just like calves you see on the market report on the upper right hand corner there there producers tell me i sell my cows for a lot more than whatever they're even selling now $57 that's right because again of the quality so mine tends to be the lower end of the cows here but you see 60 bucks there in the first end of september first of october and by the middle of october they've fallen off 10 bucks and it happened the last three years and it probably happened again this year but i think we'll be a little higher level than we've been the last couple years beef cows slaughter was up 10 percent this year and won't be as high this year i think unless a major major drought sits in particularly down in the southern plains and unfortunately is getting a little dry there so again we're starting off now with cows above where they were the last three years up there and i think we can do better on cow prices as long as a major drought doesn't set in so go to the next slide then we'll just finish up here with lambs and kind of the same thing on lambs as cattle and and i don't have a hog chart but the kind of the same thing there is we're seeing much much improved lamb prices there there's bowman sole lambs up in the top right hand corner you know those lighter weight 60 pound lambs up there over 300 dollars and so much much improved from last year then the slaughter lambs in the bottom as well last year again the pandemic really hurt lambs and a lot of lambs sold at at white tablecloth restaurants that that were closed and so on so all lambs just sold a load of lambs out a tap in a week ago and you know up there at 231 dollars so look for a good lamb market again this year where the the u.s or even though we're holding in an even increasing numbers in north dakota and northern plain states the mountain states are still kind of struggling and so we'll have fewer lambs and really really strong demand ethnic demand and so on so i think another good year so with that turn it over to dave and hear about bioproducts great thanks tim dave ripplinger bioproducts bioenergy economic specialists i'm going to talk about a few things today starting with corn ethanol frank did mention earlier that usda did up their their estimated use of corn for ethanol for this marketing year just a bit but very strong demand continues supporting profitability across the industry even with uh six dollar corn so we're expecting that to continue for for some time which is which is good news on the bad side or the tough side our two pieces of news that just came out in the last week the first was that the supreme court rejected year-round e-15 sales so the previous administration changed the rules that would allow e-15 there was a long-standing concern about read vapor pressure and the ability to sell e-15 as it didn't quite align previous administration said it aligned with the spirit of the rule there was lawsuit appeal and then the final appeal to the supreme court so the supreme court has rejected year-round e-15 sales the the original decision came out last summer with the the actual enactment or the actual use of the rule not coming until later the supreme court not following soon we're going to see those e-15 sales or the you know that availability of marketplace declined pretty quickly you know unfortunate as the industry is looking for new larger markets for product and e-15 was very promising especially in the last year or so was e-15 on a on a fuel basis in many many markets was lower cost than gasoline again in the united states most of our ethanol is used as a fuel additive for octane as opposed to fuel for energy but again with with the price the relative prices of gasoline and ethanol e-15 and a lot of markets did work for both consumers and the retailer the other piece of news that just came out which is also not positive is the administration considering reducing the 2022 renewable fuel mandate so each year the administration is supposed to come up with numbers for the the next year regarding how much how much needs to be blended or used in the united states with different categories in december the administration came out with its its numbers for 2022 as well as revised numbers for 20 and 21 they they they said in december that they were going to be looking at or proposed a 15 billion gallons which is what's in mandate and what everybody expected and when i say mandate it was in the original law now it looks like the administration is under considerable pressure and opened the idea of reducing that number somewhat and again that would be unfortunate because it would remove that that underlying support in terms of use at the same time you know demand is relatively strong so just looking at where we're at for production have the last two years and then just a dot for this year as you can see we're we're about where we've been in terms of production really looking forward to a strong amount of use we'll see if the economy starts to get a little bit shaky later on in the year but right now we've seen pretty steep you know almost a complete recovery in in the transportation fuel market the gasoline market an ethanol moving along with that you know we're not at record levels of production by any stretch but again quite profitable for those who are who are operating just looking a little bit at stocks again we're kind of in that same spot where we have been looking forward not you know looking hopefully to see a little bit more stable numbers here in 2022 we had a lot of fluctuation obviously we had a build-up with COVID drawdown last year and actually pretty tight supplies for much of the year continuing on you know even to today where you know we're at the lower end of where we typically want to be again which supports those higher prices we'll see exactly how things pan out again there's there's been pretty steady demand for for gasoline which has been pulling that ethanol through the system but not allowing that accumulation of stocks which might lead to some downward pressure pressure on prices this is a slide that presents the blend of ethanol and gasoline and one of the reasons I'll bring this up is one of the arguments used for reducing the the renewable fuel mandate or that that volume for 2022 is that you can't blend more and of course without E15 that's true to some extent but of course we have E85 the other thing to bring up in this too is it's basically just a bunch of noise we see a lot of variation from from week to week but it's also aligned with statistics chart where if I if I back this up to have zero with the on the vertical axis this this variation would look a whole lot smaller again we see that variation from week to week you know typically just under 10 and we're going to expect that to continue moving forward another side note too is actually E85 use in california continues to grow at a pretty steady clip it's a small number but continues to grow and is actually a pretty good market that exists last piece of news or information about the market that's going on there's actually a third carbon pipeline announced earlier this week so again we had our first announcement last year from summit carbon solutions which is looking to build a pipeline from iowa to north dakota taking co2 that's produced during fermentation of ethanol refineries transporting it in that case to north dakota to western north dakota to permanently sequester in the ground two more projects and again the one just this last week the the other one that came up in 2021 was navigator co2 ventures which a very long pipeline to go into illinois to formations there and then finally the one that was just announced is wolf carbon solutions but they have a pretty strong relationship with adm the the pipeline would be owned and operated by wolf i can go 350 miles to to illinois and actually make use of some geology that adm already controls and has been using for co2 capture so again you see this huge movement and this is uh something i think we should all take as evidence of the the bigger implications for carbon including outside of the carbon offset markets which typically have gotten a lot of news as those are you know contracts that are being presented direct to the farmers in this case it's an opportunity presented to ethanol refiners but increasing that demand pull for low carbon fuels for corn ethanol and ultimately for corn so those were the the presentations that we had we're going to change it up just a little bit this year and we actually have a bit of time to do this to help spur discussion and maybe some cajoling and the like i would thought we'd ask the panelists what they they might be looking for in 2022 in terms of of news or events or concerns and since frank you turned your camera on first i'll give you the floor as dangerous as that is all right i i promise i will make this brief um so so actually i've been thinking about this quite a bit and one of the things that has been driving our grain markets for the last several years at you know once we've got the the us china trade war um at least put on hold it has been this very strong rebound in export sales and the two driving forces behind that have been china number one and actually a strong very strong demand from mexico and so as i look forward um we spend a lot of time talking about production that's obviously something on everybody's mind we continue to argue about that and and that will be front and center news but i also want to look at the demand base because even though we're having the largest soybean crop on record and the second largest corn crop on record we still have this very strong underlying demand base that's helping to support prices so if we start to see some of that underlying demand base in particular the growth in that demand base start to slow which is why i'm a bit concerned about um about china that the growth rate of the chinese livestock sector starting to slow um that could potentially have some implications the longer term but thanks ryan brian did you have any thoughts anything you're looking at this year well still keeping an eye on uh obviously uh production costs being a big issue and not just fertilizer that's in uh the equipment market used equipment's up you know a tremendous amount big reason for that is with uh new equipment you know there's uh areas where there are a lot of pieces of new equipment sitting on lots uh that don't run because they don't have the uh the final parts that they need to actually be operable which then drives up used equipment costs because you know in theory you can have used equipment right now uh it and and and it runs but at the same time folks aren't trading off their old equipment for new equipment because they need the old equipment because they can't get their new equipment because they're on the wait list so that's a mouthful and hopefully i didn't confuse myself or anyone else with uh with that statement but that's and then finally and i didn't bring it up is uh the the issues that are possibly going to be there with regard to herbicides and pesticides that may be used the ability to manufacture those products given the limited supply of some of the chemicals like yellow phosphorus that goes into making things like glyphosate as well as uh liberty and others and what are the alternatives for weed things like weed control if in fact there is a limited supply or prices are prohibitively high or something on some of these uh some of these chemicals that that we need so that's another thing that hopefully won't be a big issue but it's one that i'm definitely tracking and and hopefully don't have to do a i don't know sad report on in the next two or three months he's right tim how will you yeah okay well uh on the cattle and sheep side particular my biggest concern obviously is the drought that we had and the pasture conditions and that we're going to need rain now thankfully particularly in southeastern north dakota up to central north dakota we've had rain and the drought monitor looks a lot better but not so much in particularly in the northwest and so we have no control over the weather but on the other hand we need to make plans and so as we get closer i you know snow coming across the day and so on so all the moisture helps but that's a major concern and we're going to have to make decisions earlier this year if the drought you know looks like it's kind of holding around so that's a big concern from for me on the livestock sector and then just following up on on a frame in china and so on uh you know china's has been our third best customer for beef and just skyrocketing in amounts there and that's really helped out the the fed cattle market but uh you know that there's can be issues there one of the things that helped us out is that that brazil had two atypical bse cases so china cut them off for about three months they're taking beef back from them again now canada just got a case an atypical case and so china uh uh japan and uh cut off canada and and with these atypical cases it's kind of a temporary deal but it can affect prices in the short run so just because the prices look uh very good into the next couple years and some of these short run things can come along to cause the market to go down so certainly be aware of that and on the shorter term things like backgrounding or something um you know looking at some price risk management in your marketing plan may be warranted so i'll quit there yeah and then i'll i'll finish up and if there's any uh conversation you guys want to have about the points either made during during your presentations or during this this discussion be great uh i'm i'm looking to hear uh what discussion happens as the farm bill comes up you know you're gonna start hearing murmurs about that and some specifics and i'm specifically interested in what they might be saying about carbon and climate uh there's a possibility uh if not a likelihood that the the next farm bill is gonna formally engage with those topics and exactly what that might mean in terms of possible programs which could be additional uh funds maybe an incentive for for farmers to adopt certain practices kind of like we saw last year with the the cover crop payment that was kind of thrown in in March uh you know exactly how that might take place or will there be regulation or education or who knows what again not much has been said but you got 12 months to look forward to to those types of conversations yeah okay uh frame maybe you can follow up in this but there's a chat wondering where the budgets are for 2022 and Ron Hogan isn't on he's doing the budgets and you know i think one of the struggles this year is on the production costs what are they going to be and then maybe when on prices so i think they're you know there they will have budgets but they're held up a little bit i don't know if you know any more than that or not yeah i've in in fact i've been emailing back and forth with ron and i know he's he's literally he is working on them right as we speak um and i'm i'm in the process of updating some of my price forecasts to get them included so hopefully they will be out very very shortly tim you got a question about hogs oh my goodness how are the hog markets doing okay uh yeah they kind of fell off seasoning like they always do in the fall and now with the higher corn prices they uh got down to break even levels and and so there was a struggle there but you know the looking at the futures market i didn't have my chart here but uh the futures for 2022 are falling a normal seasonal pattern back up to a hundred dollars for this summer and uh and even though corn prices are six dollars that's well above the cost of production so that could be another good year for for the hog market just get through got through the seasonal pattern here in november and we'll see higher prices in fact they have started to to spark here as well great and then probably a question for you brian will there be enough fertilizer to go around in the spring um i think that there's probably going to be some um regional or local shortages i think that that's probably likely and there's a there's a pretty big reason for that and that is a lot of the folks that i have spoken with who buy and sell fertilizer are very concerned about being stuck holding the bag on high price fertilizer if prices fall and they don't have it all sold because right now at the prices we're talking about that they're that they're having to pay and then turn around and pass on if you know if fertilizer is at let's just say a thousand dollars a ton and it falls 10 percent and they're left holding thousands and thousands of tons at 10 percent well that's after a 10 percent drop that's a that's a hundred dollars a ton that they lose and so if we're talking about 5,000 10,000 20,000 100,000 tons that they're sitting on that they haven't yet priced and sold yet nominally that turns into a lot of dollars now if it's 400 dollars a ton and it's down 10 percent that's you know roughly 40 bucks right so 40 dollars a ton lost so as a percentage it's the same but we're dealing with such big numbers because of the cost of what it costs per ton that a drop of 5, 7, 10 percent on fertilizer and doesn't even have to be that big could really financially hurt a co-op or a chemical distributor of some kind and they're really concerned about that and as a result they're probably not going to run the risk of having a big big supply sitting on hand that's that's a lot to say that they're they're not going to order much more than they have priced or that they already have commitments to buy and as a result that could wind up with some some local shortages if folks are coming back later on and requesting more than they actually you know typically used or priced in the first place I think that that the risk of that is probably pretty high and and it all stems from folks worried about who are making these decisions buying and selling being left holding the bag if and when prices finally drop if frame wants to add something to that or Dave that's fine but that's that's that's the big concern among our retailers I would agree with what Brian just said a question for me about the renewable diesel market and demands it remains hot it's a big deal the the price of carbon in California has has gone down a little bit or the market's somewhat weakening a lot more volatility in those prices but still more than high enough to have a serious demand pull on renewable diesel and vegetable oil which we're seeing throughout you know the whole veggie oil complex and again that feeds back to the canola announcement you know that that was made EPA noted that they submitted the canola renewable diesel pathway to to OMB which is basically that last step it does have to go on the register for a little bit and have comments but that's a really big deal the the demand for renewable diesel has impacted all vegetable oil prices but canola has not been an approved feedstock at the federal level and so once that gets approved there'll be that that new market for feedstock which still will not be enough and so we'll see exactly how that plays out in coming months and years but the market remains quite strong and we'll as a whole and and we'll we have a lot more to to realize over the next year or so I think this next one's for Frain yeah so some of the other oil seed crops so they tend to follow soybean prices and yes there is some some correlation if you look back historically if we have good supplies lots of oil crops that are available the soybean market tends to have a huge impact on canola as well as on sunflower this year is the exception are the canola stocks both in the US as well as in Canada are exceptionally tight and so right now even though there is this connection this correlation or relationship canola prices right now are well above kind of the typical ratio that relationship and I do expect canola to have much more of a independent life from what's going on in soybeans now obviously if soybean takes a really big hit that we start to see soybean prices drop dramatically that will start pulling some of the canola prices down but the supply demand conditions in particular and canola are so exceptionally tight right now that it is kind of getting a life of its own and that then is also impacting sunflower prices because canola and sunflowers tend to be a closer substitute from an oil seed standpoint then let's say canola sunflower and soybean oil there's some differences in this characteristics but not only for frying but also for cooking so this year in particular we're starting to see more of a separation canola seems to have more of a life of its own what a pulse crop outlook look like uh it depends upon the pulse specifically but right now and again I want to separate old crop pricing from new crop pricing old crop supplies are exceptionally tight new crop supplies the market the processors or those those handlers bean handlers and final end users are working very hard to try and incentivize additional acreage to try and not only refill what we have but also refill some of the supply chain so what does the outlook look like a lot will depend I do think we're going to have an increase in acres obviously everything will depend upon yield my concern with the pulse crops like a lot of these other small market crops is that they tend to have what's called an inelastic demand so the demand basis has is a kind of a bandwidth and as long as we stay in that bandwidth everything seems to work okay but if we get a year or a couple years we have very very large supplies prices tend to fall very rapidly because we don't have a lot of alternative uses there aren't a lot of other people that are looking for that kind of product on the flip side like we're seeing right now if we have a very tight supply if we don't have a lot of available prices tend to skyrocket they go up very very high and it's basically a race amongst the people that need it the worst okay so what what I'm a little concerned about is we're at the very high level right now so if we start to get increased acreage planted acreage and we have a very good yield we can go from a very very tight supplies to very very excessive supplies really fast so we can see potentially a big swing lower in in in spot market prices by harvest depending upon what happens so there isn't an incentive to plant them I would not be worried about planting them other than to try and get as many enemy as much production contract as you feel comfortable because if we do have a big crop we're going to have much lower prices by harvest any hope of a rebound in the next couple of months for the wheat market there is a possibility and right now kind of what's pulling spring wheat down is really the winter wheat markets Argentina is going to have actually a very good winter wheat crop Australia had a very good winter wheat crop so the winter wheat supplies both domestically and globally are very comfortable which again is now pulling down some of the the spring wheat is it possible to go higher yes I do think it is in particular for new crop wheat so right now we have quite a price spread between old crop spring wheat and new crop spring wheat I do think we'll start to see some stronger new crop spring wheat prices as we get closer to planting time because it in my opinion right now given the price relationships new crop spring wheat isn't quite strong enough I think to hold the kind of acres that they really need to hold there are some things happening globally now obviously with the with the tensions going between Ukraine and Russia that we need to be watching from a political standpoint that would obviously be a game changer to be very honest I hope that they resolve their problems and we don't get into any kind of major conflict because that would cause disruption throughout our entire system grain markets spring wheat have them been falling rapidly do I start my panic selling now or write this out assume about 70 percent sold on both old old crops okay um that's a really good question no I I would be a little cautious right now what one of the other things that's happening is we are seeing given the information I just went through on corn the other thing that's helping kind of helping pull some of the wheat complex down is that we're seeing a softening in corn prices and and so there is this connection between corn and and wheat when when corn prices are very low wheat does its own thing but when corn prices are very high we have to keep your premium for wheat above corn in order to prevent it from being used as a livestock feed and we're starting to see those corn prices soften a bit because of some of the information coming out of USDA I do think we'll see a little bit more of a rebound in corn prices in particular because of what's happening in South America right now so my right now my sense is I think you'll have one more shot at it probably won't get quite to the levels we saw before Christmas but I do think you have one more shot guys just don't miss it well best time for new crop uh sweet sales um I I'll be honest I would wait until close to that that March 31 planting intentions report I think that it will be that March intentions report either just before or just after that the markets are going to work have to work very very hard to make sure they maintain spring wheat acres great and I think we've answered all the questions given that we're a little bit over might as well wrap her up I want to thank the the panelists for presenting and for everybody for joining us today we will be back in a month again right after the next WASDE report we'll be here for our webinar on Thursday February 10th at the same time 1 o'clock central if you would like to see the slides or recording of this or and the most recent webinars you can check it out at the website online that other than that I hope that y'all have a great day and that it doesn't snow too much the next day or so but yeah get your snowblower serviced and gassed up