 I'd like to welcome everyone to today's webinar. My name is Dave Ripplinger, Bioenergy and Bioeconomics Specialist with NDC Extension and the moderator of our webinar series. Following our traditional format, we will have a series of presentations. In fact, five of them we have a pretty full docket. We'll have a Q&A session at the end of the presentations, following the presentations. We ask that you use either the, we prefer that you use the Q&A tool which can also use the chat feature to ask questions. We're happy to answer them. We encourage you to ask them as we're going through. This webinar is being recorded. We do archive them on the internet. They're on YouTube as well as on the webinar series webpage. If you have any technical difficulties during today's webinar, feel free to contact me either using the chat or by email, david.ripplinger at ndsu.edu. I'll do my best to address your concerns. But with that, I'll turn it over to Brian Parman. All right, thanks, Dave. And like I said, my goal today was to remember to share the screen before I started talking. So I feel like with that mission accomplished, right? All right, so like with our typical format that we've been doing now for several years, try to stick to 15 minutes or so that I'm gonna be talking here about this and really just two topics today for this one. Fall fertilizer prices and then inflation and interest rates and what's going on with that real quick. So right now, what's been happening so far most of the summer throughout a lot of the summer is fertilizer prices have been sliding. So I wanna show just three charts essentially that are sort of the main drivers, the variables that have impact fertilizer prices in the US and one is the price of corn. And in some recent research that's been shown, the price of corn is even a bigger driver than LNG natural gas prices or even what's going on a broad geopolitically to an extent, but we've seen corn, this is just the December and I'm not giving a market talk, we obviously leave that to Fran. I'm just illustrating with this chart what December 23 spot prices for corn have done and it's been sliding since April of 22 all the way through. So and then we peaking out around almost 680 down to around 481, 485 as of this morning. And then here's what natural gas prices have done and no surprise when fertilizer prices were peaking, natural gas prices were around that spring of 22, some of the highest they'd been really since February, a quick spike in February of 21 but they've come off quite a bit and are just above two bucks, two and a half dollars per million BTUs for natural gas. So that's where you see where we were in 22 versus now heading into fall of 23. So natural gas prices down considerably, corn prices way off the high from 18 months ago or so. But one thing that also that happened recently, Chinese Eurya export policies have had a little bit of an impact on a fertilizer prices, namely Eurya. And this is a quote directly from Reuters read a few days ago is that China is slowing their fertilizer exports, which is raising some industry concerns, especially in India, who's a big receiver of Chinese exported Eurya, China exports about a third of the global Eurya and two Chinese state-owned companies are focusing solely on domestic supplies and what happened not too long ago, I think around last week, 500,000 metric tons of Eurya headed for India were held up at a port due to this export suspension that took effect immediately. So that's having the, at least for the time being briefly, a little bit of a muting effect on this downward slide. So moving on real quick to what fertilizer prices have done, you look at Eurya, the red line is 2023 and the green is 2022, obviously considerably off the highs when it was over $1,000 a ton last spring, right now sitting around $550 and basically moving sideways the last couple of weeks on Eurya with starter fertilizer, 1034.0. Again, can sit way off the peak. I mean, it came down sharply from August to September down from 700 to $600 a ton. Little bit of little slight increase in the last week. I think a lot of that's from the concern of what just happened in China. And it's not the amount that was turned around, okay? That's not a huge amount of fertilizer in the global grain scheme. It's the policy that China has stated that they're going to adopt, that's why it's kind of moved upwards there for that product. And then our phosphorus fertilizers, okay? Map and DAP, again, coming down way off the high, the peaking in 2022, you look at the green line there and these are according to DTN, spring of 22, up over $1,000 a ton for Map and DAP, now down to around $750 a ton and kind of moved edging up a little bit in the last week, but mostly moving sideways for the last three or four weeks or so. And kind of where we are really in terms of a lot of these fertilizer prices is where we were in the fall of 2021 when you look at it, when there was this big concern, you know, that fertilizer was running upwards, we're kind of crossing that threshold now where we were when we were getting concerned about fertilizer prices edging up. And we'll see if it continues to slide downward because the price of corn where it's at seems to indicate that it might continue trending downwards as well as natural gas prices. Now, what China did in suspending exports, I don't know how, if that'll be a brief uptick where the market digests what they've done and see then kind of takes a look at how global supplies are gonna be reallocated or perhaps coming from another exporter for to fill any of say India's demand requirements. If somebody else is gonna step up and do that, that remains to be seen. And a lot of times with these things it takes a little bit of time to sort it out. For instance, when Russia invaded Ukraine, there were big concerns about this very thing. And eventually the world sort of sorted it out. They carved out an export policy for Russia, et cetera. So we'll see how what happens. But again, at least two of the three variables that heavily influence the price of fertilizer have been trending towards lower prices. It's hard to say exactly where it'll be. Again, it's gonna depend on what China does being such a large player in the world if they continue to slide downward or if they've kind of leveled off for a while in kind of a wait and see pattern. And then potash prices, the final fertilizer product I tend to cover, that's even gone down past that 2021 threshold. And it's approaching closer to the long run five year average. So again, long story short, we've seen fertilizer prices slide dramatically over the last six months. We're starting to approach our longer run averages and costs per ton. Will it continue to slide? That remains to be seen. And China's policy, at least in the short run is gonna have an impact on if they continue to move downwards or possibly tick up a little bit into the future. Next, talking about interest rates in the Fed real quick. I know that's something we've been talking about in a lot of these meetings that have been conducted. The 30 year mortgage rate, this was pulled as of this morning, but it was as of last week. The remaining above 7%, which is the highest in decades, except for the period there briefly last November when the 30 year rate just peaked above 7% for a couple of weeks before sliding down to around the 6% range. As of, like I said, last week around 7.1%. And a lot of that's been driven by inflation and the Fed's actions to combat inflation. So here's the latest, oops, excuse me, the latest chart to come out from the BLS. Overall inflation up to 3.7%, mostly due to energy cost increases. So, and a lot of that's been gasoline. So it was a little bit higher than what the trades were expecting or industry was expecting inflation to come out at, but not dramatically. And as far as headline inflation goes, which does include energy and food, it's up a bit and over last month. And the big reason there is because of energy costs. And then core inflation was at about 4.3% down a little bit from the previous month and very close to in line with what industry and trades thought it was going to be. Now real quick, and I know I hammer this point all the time on unemployment when we're talking about inflation and then interest rates. And the reason for that is simple, simply because of the fact that a lot of what the Fed's doing with interest rates to slow the economy involves unemployment or the employment situation. And in other words, one of the things is wage growth that tends to take place when you have these inflationary periods, wages can continue to increase, causing folks to want to go out, perhaps a buy more because they're able to negotiate higher salaries. And wage growth can be driven a lot in part by how many unemployed people there are relative to a job availability, okay? So if we look at the unemployment rate just right now and it's just from the most recent report, it's still at a historically low level. Last check, they said, I saw a headline where it said it surged to 3.8%. I mean, that's pretty misleading when you consider the 3.8% is still historically low. Yeah, you're coming off three and a half, but 3.8 is a very low unemployment rate. And if it wasn't for the fact that August of 2018, August of 2019, when you look at this chart was so low, it would still be, we'd be in historic post pandemic low unemployment. And this is that number of job openings relative to people looking for work. And it's less than one, which indicates there's more open jobs, almost twice as many open jobs as there is people looking for work. So what does that do? It puts people in a position to negotiate for higher salaries. They have no fear of switching jobs and being able to find employment. And if a company does have to go through around a layoffs or contraction in order to exist in this higher interest rate environment, those people laid off don't have too much a problem finding a new job because of how many job openings there are. And I've said it before, but I have a theory on this that a lot of what's also helping drive the fact that unemployment isn't much of a factor despite higher rates. Not only the job openings, but the ability of people to find those jobs quickly due to like job search sites like Indeed and the older one monster.com and simply hired all that kind of stuff. The availability, if you're for instance, a truck driver or something like that and for whatever reason your company folds up, you would have no problems looking for available positions and finding them extremely quickly because of the advent of the internet which makes this current situation a bit different than it was say in the 1980s when there was no internet. And if you did get laid off, you had to make phone calls or check the one ads for help wanted or something now an internet search and you can find hundreds of them. So that's one of some of the challenges that the Fed is dealing with here and that yeah, they're raising rates to help curb spending and slow the growth rate of the economy but it's just not really happening as much as you think because of this unemployment situation. And so in essence, the recent data was mixed basically favoring a pause. So the feds meeting this month in September, core inflation down slightly, headline inflation up a bit but mostly due to gasoline, wholesale inflation up a little bit relative to expectations but not dramatically and part of that again gasoline and then unemployment up a bit but we're coming off of historic lows and it's still near historic lows. So by and large, the most recent data favors a pause by the Fed. I'm not saying it's impossible that they raise rates but it's a lot of writing says right now that it's unlikely and it's extremely unlikely that they lower them. And then the other thing is CD and treasury rates have continued to edge upwards. If you look at CDs being offered on a one year you can get 5.45% and treasuries right now 10 year pay 4.1% and then the shorter runs even a one year treasury will pay 5.221% yield. So we're seeing a lot of these other investment opportunities that haven't been a realistic option for folks. They're becoming a lot more attractive as these interest rates tick up. And so that, and I talked about it in a previous talk before but something to think about there is how that may have a crowding out effect a little bit on land prices. And then finally, I just wanted to show this and I guess I wanna pose the question at the end as far as inflation and interest rates go is this is what GDP growth has been quarter three of 2022 all the way through quarter three of 2023 and the quarter three is an estimate because we're in it right now at 2.5%. So I would ask you if you're wondering what interest rates are gonna do or at least what the Fed is gonna do what do you think would happen if the Federal Reserve suddenly dropped the federal funds rate quickly in the next few months down to say a half a percent or something like that and interest rates drop substantially in the next few months what do you think would happen with inflation if that were the action taken, okay? Do you think it would stay around 3.5% you think it would continue to go down or would you see inflation explode again in the coming months if that were to take place and the reason I put that out there to you is when you think about how long are we going to live in an environment where rates are seven perhaps 8% or so ask yourself what would happen if rates fall dramatically in next year, six months or so what would happen with inflation then and then would the Fed have to get even more aggressive with the federal funds rate to slow it down because they would have lost some of their credibility on how long they're going to keep them high and that is actually something that happened in the 80s when the Federal Reserve was bouncing the federal funds rate up and down to try to get out ahead of inflation but when they would drop it inflation would spike up so that's the thing kind of the take home of this message here is that yes fertilizer prices have been sliding there was some global decision making going on by China that's impacted that trend of it continuing to slide downwards but two major variables influencing fertilizer prices are still favoring it to tread downward we'll see what happened with China and then as far as interest rates go in inflation kind of a mixed report coming reports coming out of August probably favoring the Fed to pause rate hikes for September but certainly leaving the door open for the November meeting on another rate hike then if right now the data essentially not moving or basically hitting expectations or sliding trending down slowly my favorite pause but I think a continued very slow trend downwards in November and the Fed might still want to be more aggressive and do another rate hike then which is kind of what markets are thinking as well so I will be on at the end of the webinar to answer any questions as usual as our typical format and with that I will go ahead and stop sharing my screen and turn it over to Dr. Frane Olson who will be your next presenter thank you very much. So again here Frane Olson I'm the crop economist marketing specialist with NDSU Extension here's my contact information so if there is something you think about later you wanna visit about please don't hesitate to either email or call I'll try and get back to you as soon as I can my schedule's getting kind of busy now as we move into the fall season but I will do my best to get back to you as quickly as possible so I wanna start out with some of the big key takeaways so here are if the next couple of slides are my big takeaways that I want you guys to remember then I have some figures and tables and charts to reinforce it so first we got USDA report out on Wednesday and we did get an update on both the corn and soybean yield forecasts what's interesting about the September forecast is that that is the first time that USDA not only takes a farmer survey uses satellite imagery or what they call remote sensing to make yield estimates but they also have what they call objective yield estimates so they actually send contract employees out into randomly selected fields to actually do yield counts just like a crop adjuster would do so we now have three sources of data instead of just two sources as they get closer to harvest we're trying to really zero in on what the yield and yield estimates were the yield S adjustments we were expecting both a slight reduction in both corn and soybean yield forecasts we got those very near what the trade estimates were I'll show you that in just a few minutes the surprise and the reason the corn prices went down and kind of pulled soybeans and wheat with it was we had an increase in planted acreage now I saw a few things coming across the wire the news wires and I know there's some splashes in social media that everybody's all up in arms about where did USDA find all these extra acres so I did want to talk about that specifically in the September report when September report comes through USDA can also now begin cross-checking the survey data they got from farmers with their FSA acreage certifications so now they're combining two data sources the FSA certification and even though FSA hasn't compiled all of the total numbers they've got a lot of the numbers in the system and they've been analyzing them and they compare and share that with the people that put together with NAS the ag statistics service and they compare those to make sure are we, we're trying to be as accurate as possible for the acreage both planted acres and harvested acreage and 774,000 acre increase in harvested area for corn sounds like a really big number but when you put this in perspective that increase is less than 1% okay so that's really only it's less than a 1% adjustment and when we're talking 87 million acres the 1% plus or minus that's pretty easy and also you gotta remember that when USDA does their surveys of farmers with that June report saying how many acres did you actually seed a lot of farmers will round they'll round up, they'll round down and so they are estimates but when they go into the FSA office you better have that number exact and so when we start cross-checking even though not all farmers enroll in farm programs and participate in the farm programs we can still use that as a benchmark so I just wanna say from my perspective I don't get freaked out about this I know it was a bigger number than I think a lot were expecting but please realize that that's well within the margin for forecasting and the margin for sampling because I do a lot of sampling work over the years and plus or minus 1% man you're hitting it right on the mark so another thing that happened in the reports that we got was USDA did reduce the wheat production and export levels, forecasted export levels for both Australia and Canada one comment on Canada really quick the number that USDA is using is essentially the one that came out of Statistics Canada a while ago Statistics Canada right now in today right now today in this stage is looking at satellite imagery and trying to forecast yields primarily through satellite imagery they don't do a lot of ground truthing because of the costs involved in that so I would not be surprised personally in my personal opinion that as we get closer to harvest we get more harvest reports coming out of Canada that we start to see in particular the wheat yields continue to slip a little bit I have less of a read on what the canola yields are I do think the canola may hold up a little bit better because of the dry weather and the timing of the heat and conditions in Canada but I would not be surprised as we start seeing a little bit more of the top end of the Canadian wheat crop coming down the other comment is from US spring wheat harvest because I've been talking to some of the elevators talking to some farmers as they go through their harvest early reports are suggesting that the spring wheat protein levels are below average so yields are hanging in there I think everybody's a little bit surprised at the test weights test weights have been stronger than I think a lot of folks are expecting given the dry weather but we are seeing the protein levels come in a little bit below average which is also indicative of some really nice big plump kernels so as you get higher test weights you get higher plump kernels you tend to have a lower percentage protein now coming into harvest the protein spreads from 14 to 15 going up was about one cent per bushel now it's anywhere from four to five cents per bushel on the way down from 14% and under before harvest we were about two cents per bushel up two cents per fifth excuse me two cents per fifth drop we're now looking at eight cents per fifth drop so there are some kind of issues starting to show up it looks like we're gonna have slightly below average protein for those that are interested in that I typically don't see major adjustments in these levels throughout the rest of the winter season so if you have some lower protein stuff you put it in the bin hoping for the protein premiums to change and store your way out of the problem based on history and what I have historically seen happening that typically doesn't happen we might get a little bit of improvement but really not enough to justify the cost of storage one more comment before I jump into the actual numbers from the report you may have been hearing that transit through the Panama Canal is starting to slow so they use a lake Lake Gitan Lake excuse me some stuttering again they use that lake the water in that lake to be able to pump the water in and out of the Panama Canal to be able to get the ships to transit from the Atlantic to the Pacific or Pacific to the Atlantic well because of some pretty severe drought conditions that lake has very very low water levels and so they're not able to pump as much water as quickly as the normally do so that means that from entering to exiting the Panama Canal is getting slower wait times are currently anywhere from 14 to 21 days so the number of vessels going back and forth both east and west has slowed so these restrictions the slower pace is expected to continue into 2024 at least into the early parts of next year and normally I wouldn't bring this up much but there was a colleague of mine that pointed out actually the amount of agricultural products going through the Panama Canal has increased in the last several years so I went back and dug some numbers up and I was actually surprised I typically I say well there isn't a lot of grain that goes through the Panama Canal system but over the last couple years there has been an increased level of that so if we look at the 2022 numbers just for reference if we look at all US soybean exports about 26% of that volume went through the Panama Canal about 17% of all corn about 6% of all wheat exports went through the Panama Canal now if we isolate and look at just the soybeans exported through the Gulf like all of the barge traffic coming from the middle of the soybean corn soybean country into the Louisiana Gulf or the Texas Gulf if we isolate just those bushels that come out of the Gulf of Mexico almost half go through the Panama Canal so this is a big deal potentially a big deal for agriculture it's gonna probably change some of the flow patterns how we get soybeans moved from the United States into the international markets and I say may this may have an impact on soybean shipments through the PNW so because of this backlog the extra costs of going through either through the Panama Canal or around the Cape of Godhorn in South Africa as an alternative route we may see some of those soybeans in this region being more diverted to the PNW region instead so we'll have to watch what happens to basis levels and those throughputs to show you the numbers specifically so the blue line on top was the average trade estimate so this is before the report comes out the survey, the forecasters and the folks that are putting together their own private estimates on what do you expect the USDA to release so that's the column in blue on the very top in the highlighted black towards the bottom is the numbers that we got last month and then the number in red in the very bottom is what we got this month now those numbers are for forecast for ending stocks how much grain are we gonna have in reserve just before harvest of next year so we're trying to do a lot of forecasting forward and saying what are we gonna have for reserves about this time next year the wheat number was very, very close it was basically unchanged from last month nobody was expecting any big adjustments for the corn number we were expecting that corn ending stocks to decrease so that's both production and consumption the production part most of that was in the form of a lower yield forecast well yes we did get a lower yield forecast but we got the increase in acreage so total production was actually very similar to what we saw from last month's numbers so there really wasn't, there was actually a slight increase in ending stocks because of some other adjustments on the demand side on the soybeans, kind of the same similar story we were expecting to see the soybean yields drop off there was very little adjustment in the planted and harvested acreage but that yield reduction wasn't quite as large as what the trade was expecting so when taking an aggregate it was the corn number that surprised everybody they were looking for a decrease from last month to this month but we actually got a slight increase and that was kind of the surprise if we look specifically at the yield numbers and then obviously total production as a result of that again the blue line on very top is what the average trade estimate was the black line towards the highlighted black towards the bottom is what we had last month and then the red line on the very bottom is the number we actually received so if you compare the blue line to the red line from a yield standpoint 173.5 versus 173.8 very, very similar actually very similar to the kind of yields we got last year, okay now the difference obviously is our total production went up because of the increased acreage for corn on the soybean side 50.2 versus 50.1 pretty much right on the mark spot on the total production numbers were very, very similar so not a lot of shock value on the soybean side to put this graphically when we look at total corn production this is actually from the Secretary of Ag's briefing report so if we look at those little blue dots that's what the private forecasters are expecting and then the little red square is what the NAS estimate was so that's what the USDA is forecasting versus what the private traders were expecting so if you look at August USDA report was right in the middle of where everybody was expecting it you look at September definitely towards the high end and that was the reason that we had the surprise and the downward pressure on corn prices when we'd look at the states by state where's the corn are going to be produced what were the shifts that we saw in production now this is the change so the number in there for example in North Dakota of 138 that's the USDA forecast for the average corn yield the 5.3 underneath means that that was 5.3 bushels per acre higher than last year so we're using last year as a reference point the reason I wanted to show this very quickly is notice where we're seeing some reductions versus where we're seeing the increases the point I'm trying to make here last year we had really really good yields in the heart of the corn belt so Iowa, Illinois, Indiana, Ohio they all had even parts of Nebraska had some drought issues but those areas Minnesota those areas were really had some very very good fantastic yields it was the outside it was outside or the fringes for the corn belt it really had some of the production issues well this year essentially the opposite is happening so some of the major problems I shouldn't say major problems but some of the lower yields that we're seeing some of those well we're not we're having a good year but not a fantastic year are happening in the middle of the corn belt and those fringe areas or these transition areas as we move around the outside belt of the corn area is where we're having some increase or pickup in production so it's kind of the same story we're flipping the geography so you've got to be very carefully listening to yield and yield reports and what farmers are harvesting and what they're seeing out in the field and where are we talking about what region of the US are we speaking of on the soybean side again just very similar to what we saw on the corn this is for total production so total bushels produced the blue dots are the private estimates and then the red squares what USDA or the NASS National Ag Statistics Service actually came out with last month USDA came out kind of on the low side a little bit of a surprise and that's where we got quite a lift in the soybean market this September the September report this month right exactly with what other private analysts and traders were expecting so it was really kind of a neutral kind of report for soybeans a neutral report for wheat but it was a downward pressure on the corn crop similar story with soybean yields again is this gonna be higher or lower than last year when we look at national average yields they're a little bit higher this year than we saw last year but we're also in those outside those fringe areas having a little bit better crop now in North Dakota we're down a bit from what we were expecting or what we saw last year that's the current expectation but you look up and down the plain states and almost every one of those is either a slight increase or a pretty significant increase from last year so even though again there are some areas in the corn belt that are showing some stress you get just outside of that Iowa, Illinois Minnesota kind of range and you get either East or West and suddenly the soybean yield potential increases so with that that's the end of my discussion I will stop sharing and we will hand things off to Mr. Petrie. Good afternoon everybody, Tim Petrie central livestock marketing columnist just give you a quick update on the competing meats and then the cattle situation particularly want to compare this year with the previous 2014 record year to see how we're doing on cattle prices so first of all just going to start off with kind of a drone's view of an entire meat livestock meat sector in the US basically commercial red meat and poultry production is in a long-term uptrend it culminated last year 2002 with record high meat production 107.5 million pounds there and this year the frame mentioned was the report that just came out on Tuesday USD was still kind of at record production until the report came out now and they've lowered production beef production's down almost 5% this year and while the others are hanging in there a little higher so anyway as of now then we don't have a record year this year but my main talk here is that we last year 2002 we had record high meat production when I'm giving this presentation live I usually ask the audience what does record high production usually mean to prices and usually I see a lot of thumbs pointing downward but the only way we could have higher prices with high production of course is if we had make it up on the demand side strong demand and we did have strong demand for meat last year Brian showed you the law unemployment fits into that and also we were coming out of coldwoods so restaurants were restocking and so on so interesting even though we had record high meat production just go across there starting in the upper left hog prices reached record when you see that little record icon means an all-time record high we had record high hog prices there in July of last year and then they came down and all of these are gonna have a similar theme we had record high prices last year they've came down they're still above the purple line is 2017 to 21 the blue line is 2022 and the red line is 2023 that's on all my charts and so the theme is that we're off record this year but we're still above average and so on the right hand side again is Lambs Lambs were record high there and May of 2022 it actually came off quite drastically but now we've improved up to above average levels and chicken prices now in the lower left to kind of the same story record high last year and May came off there lower than last year but still above average and you know turkey prices were record high last Thanksgiving and they've also come off some from last year but are above average so last year record high production record high prices now when we get into cattle cattle prices were not record high last year the one meat commodity that weren't record high why is that? Well we had record high beef production last year buoyed by very very high beef cow slaughter and heifer slaughter because of the ongoing growth that particularly in the southern plains but a lot in cattle country and so that held the lid on prices some and we were not at record levels there heifers were not kept for replacement when in the feedlots in fact we have the highest percentage of heifers on feed here the last year so that we've ever had 40% or the feedlot population is heifers simply because they didn't go in with a bone when in the feedlots and the steer numbers were going down because we've had lower cap crops actually this would be the fifth year lower cap so we had a lot more heifers kept cattle on feed higher so let's just get into what we're doing this year then and at least the good news for selling cattle is that this year now it's our turn to be the cattle sector is turned to be record high and so here's fed steer prices and fed steer is a very important for feeder cattle half the equation for what feeder cattle prices are what will fed steer bring particular when we look at those futures prices there from feeder cattle being sold now and when they'll be slaughtered and so on but anyway the purple line again is 2014 in this case that was the last year we had record high prices 2014 there's the purple line is 2014 record high prices then the red line are this year prices but we started out the year above we're $20 above there about 140 up to 160 and they've just continued to march up above last year so we are gonna set a record high this year all-time record high for fed cattle prices leveled off here through the summer usually they'll be down in the summer when our slaughter picks up but they've held well because of our shorter supplies and right there 182 or so and then I put the gold our next year's futures saying again we're gonna have smaller calf crop this year so we're gonna have fewer fed cattle next year so that's gonna be supportive to prices so by next year futures there and April are up there today trading up there between 198 and 199 right up there close to 200 so you know the prognosis is in our lower supplies as long as demand holds last year we had record export demand this year demand is struggling a little bit on the export market because mainly because of our high price and we have less but our prices are still responding due to the short supplies. Oh, go to the cap prices the same story there the purple line is 2014 that was our previous all-time record high and we've done better than that throughout the year so we're gonna set a new record high for feeder for these 556 weeks years in North Dakota not a lot selling yet we're still a month away from having you know bigger runs in the market and so but there's still support there certainly where it was last year because we've been above where we were and you know that right there that little oh in 2014 see right there that middle of October is a low actually the last five years the low that seasonal low there is right that middle of October when the first week when a lot of them hit the market they're balling calves and lean calves and so on still very looks like very very favorable prices go to the heavier weight yearling prices now and again we've got you know both Napoleon and Dickinson has special grass yearling grass cattle sales going on right now cattle are selling very very well the feed lots are after and again we've got a shorter supply and they like these green northern spears so tomorrow those market reports would be out if we want to look at the ranges and what they brought and so on but still trading above throughout the year 2014 so we're going to set a record again and there's today's futures market for next year the 2024 futures you know by a year from now up there at about one at two or 80 or so and so a better times ahead it looks like given again our short supply unless something disasters happens or we have a drought in the corn belt or something next year that would affect that the one market class of cattle that haven't been at record high levels this year are called cow prices although they've been improving and they go up seasonal anyway and are strong they just did not surpass the 2014 the purple line there a good reason for that I'll show you that in a minute is that our beef cow slaughter is still a high because of the drought in areas of the US and so a lot of cows still coming to market and again I just want you know $100 last year was last week $100 of cow prices I know producer Tim Juan getting more from my cows and that these are the series that I get from USDA are the 85 to 90% lean cows which would be typically broken most cows that have had a calf on them so you know be probably towards the lower of the market on the right hand side there where you see that market report this is a Monday market report this week from the North Dakota auction and yeah there were cows selling for up in the 120, 118 and the teams and so on higher and that'd be the higher yielding cows and so on you know this series the trend would be the same for those better selling cows but that this is just the one that I have access to from USDA and so like it all depends on whether next year and you know how much rain we get in the drought but we're gonna have fewer cows to sell and so quite likely to be at record high levels next year on cold cows as well so again the story is why our fed steer at record high levels and you look at the weekly slaughter on the top chart again the red line is this year so we are below last year on steer slaughter which would be expected because we've got a lower calf crop the last several years and we're below average the purple is average and blue is last year red this year again so that's supporting fed cattle prices while going to the bottom look at beef cow slaughter although the red line is off last year where we had really, it was really dry by October of last year 75% of the beef cow herd was in drought and now we're at, I've got a slide the next slide to show you we're at about 45% are still in drought is why we're still above average beef cow slaughter which is and you know tending to keep a lid on beef cows here here is a map of the US the dark green is where the major these are by counties the major cow calf areas and the major density of cows in that county and then the red dash line is the drought monitor I didn't bring the current drought monitor Ron's going to talk more about that in a minute but you see still a lot of cows in drought down to the bottom 45% of our cow herd is still in drought that's leading to the big sales of cows and so on but it's further going to be supportive to prices in the future because we're going to have less no herd rebuilding taking place this year and will we rebuild the herd next year that's when we start rebuilding the herd is when prices usually really, really go up because we sell fewer cows and keep every calf's back and you see that a drought particularly there across the Northern North and the quarter of Ron's going to talk more about that and some USDA help in that case so again, it all depends on whether and do we rebuild the herd and so on but here's the 556 calves in the 78 feeder steers and fed steers and you look I just showed you the 2024 futures when things look positive now because this is the fifth straight year of a lower calf, the cow numbers probably and next year's two is no herd rebuilding so with that, let's turn it over to Ron and he'll talk more about the drought and how that's affecting forage conditions here. Ron Haugen, Extension Farm Management Specialist I'm going to talk about the livestock forage program just a little quick description here, LFP especially in 2021, almost every county in the state qualified, no counties have qualified until just recently, it's payments to eligible livestock producers with eligible livestock in eligible counties. Payments are based on grazing losses suffered in native or improved pasture. It provides payments to livestock producers also if you're on some federal land and then there's a qualifying fire. The FSA does the calculations, the calculations are called monthly payments either one, three, four or five times the monthly payment rate. It is adjusted by 60%, I'll get into the calculation in a little bit here. The general program provisions then, LFP payments are based on the drought monitor and as Tim talked about, the drought monitor comes out every week and just recently now, eight North Dakota counties qualify. The livestock that are covered are a whole range of livestock here from beef to ostrich. And as a livestock producer, you must owner share, you must owner share or contract the livestock 60 days before the beginning of the drought. You must have pasture land either owned or rented. You must be in an eligible county or as I mentioned in a renting from the federal agency that has stopped grazing because of fire. You need to certify that you have a loss and file a timely claim. Application is very easy. You just go to your FSA office. You have till 30 days of the end of the calendar year to qualify. So that means January 31st, 2024, you've got until that is the deadline for qualifying limitation of 125,000 and also the AGI of 900,000 applies. So as you look at the drought monitor, there's the different areas of drought, D2, D3 and D4. You get one payment if you're in D2 for at least eight consecutive weeks. You get three payments if you're in D3 for at least one time or at any time you get three payments. You get four payments if you're in D3 for four weeks or D4 at any time and you get five payments if you're in D4 for four weeks, not necessarily four weeks in a row. So the drought monitor that came out September 5th that triggered this, that there's a D3 area here in the red. So it's touching eight North Dakota counties. So they qualify for getting three payments. Some of these other counties up here, they're in D2, they may qualify until the end of the grazing period we don't know depending on the weather. So these payments, these counties here, there's eight of them that will get three payments. You can see they're showing on the map here. This next map here shows if in one more week these four counties to the West remain in D2, they will get one payment. And one more week for these eight counties, they will increase their from three payments to four payments. We don't know about Pembina or Walsh yet. They may take a little couple more weeks then before they end up in the one payment area. We have a tool online. Here is the link so you can go and actually estimate your payment if you're any of those counties. Basically it's an Excel spreadsheet. You plug in all the yellow cells, you put in your name. You can pick North Dakota, Minnesota and South Dakota, pick your county and you put in your number of head for the various livestock and any shares. And these payments are set in statute now for this coming year. The adult beef was raised to 58.12. So you can see here this monthly feed cost, if you had 100 adults and 50 non adults, 500 pounds or more, it would be 7,991. The next part of the calculator you put in your pasture land. This is for the simple example, let's say 1,100 acres of native pasture land and 200 acres of improved. The spreadsheet pulls in the animal units for the county and you get, based on those calculations, 14,529. Then the last thing you take the lesser of A or B. A was 79.91, B was 14.5. You take 7.991 times 60%. And the county would be three payments. This is assuming a Benson County example here. And then you take off 5.7% for sequestration. That would be your payment. Pretty simple, all you do is go to your FSA office and give them the information and certify that and you will get some payment. Just because the drought monitor triggered your county. Okay, next, I guess we're going to David to finish up here. So I just have a few comments to make about some recent developments in biofuels. I apologize for the walls of text but they're driven by that enough, I figure. So the first piece of news which is very positive for the biofuels industry for the next decade or so is a draft rule from the California Air Resources Board. So talked about carb a lot. They oversee California's low carbon fuel standard which incentivizes the use of low carbon fuels. Mandates it and then creates a cap and trade system to incentivize the use of those fuels. Every few years, carb reviews the regulations and identifies possible changes. They're just completing that process now. In the last week, they sent to the Office of Finance in California, they're the folks who review this prior to them being issued. But anyways, they sent their numbers over and what we saw was they actually wanna increase the target emissions mandate from 20% of the 2010 baseline to 30%. So essentially, because the program has been relatively successful because of changes in technology and market and all of that, they want to toughen the mandate, increasing that emissions reduction to increase a reduction by 50%, really substantial and just to put it in layman's terms. So in 2030, the average carbon footprint of transportation fuel sold in the state has to be at least 30% less than that 2010 average. Most of this is a chart from carb and what it is, the black is what actually happened in terms of compliance that's years past. And then the gray line with the black dots showed the future compliance targets by year through 2030. And again, you can see a go to that negative 20% number at that time. And then at the bottom right-hand corner, we have that proposed mandate. So I'm not gonna draw in the line. I haven't seen the actual proposed rule. I'd assume it is going to be a constant reduction by year. But again, that change, that proposed change is really quite significant. One of the reasons this might be happening and one of the reasons it's good news for biofuels is its impact on carbon credit prices. That is the incentive for marketing these low carbon fuels in California. This chart, which I've shown versions of in the past, show the volume of credits transacted, which are the blue bars. And then the small horizontal bars show the price of that carbon. They actually have three different ones. Well, we can see if we go back to about 2020, the price of carbon was about $20, excuse me, $200 metric ton. It's declined more recently to around a $70, $80 level. Substantial reduction, which again means there's less of incentive to bring that next gallon to market. And again, a likely driver of this change. Just to be clear on what this means, this is extremely supportive of increased biofuel use. In 2020, California was about 15% of the nation's biofuel use. That'll probably be 20% this year with a rapid increase in the adoption of renewable diesel. And so we don't know exactly where we're gonna be in 2030. It certainly does not mean that we're going to necessarily use 50% more biofuel. Again, the actual mechanism and the way in which that goal can be reached leads it up to the market. So the price of low carbon fuels, the introduction of low carbon fuels, the possibility of innovative things happening is certainly out there. But we'll see exactly what it means, but it's very much bullish for biofuels and consequently for all of agriculture. It's interesting that this news hasn't hit the mainstream egg press yet, but it is gonna be extremely impactful on par with the LCFS that's been really, really important to agriculture in the last five years especially. Also to note too, so that the mandates are gonna start changing in 2025. So that line is going to be drawn from 2025 to 2030. But it's important to note too, because these credits can be carried over, there's an immediate impact on biofuel markets. There is concern that the renewable diesel market is was mature or growing close to maturity that the capacity announced and under construction might have led to a glutton renewable diesel with this that's likely not the case, although some future projects may still be left uncompleted. Talking quickly about carbon pipelines, getting a lot of press, both in the mainstream press and the egg press locally. Talking specifically about the summit, though the recent developments are hitting many of the Midwestern carbon dioxide pipelines. Summit specifically is gonna collect CO2 from ethanol refineries in North Dakota, Minnesota, South Dakota, Iowa, bring that to North Dakota, Central Western North Dakota, bury in the geology. The driver for this again is a federal tax credit 45Q, which was dramatically increased last year. And then also those policies programs that incentivize reducing carbon footprints. For example, California's LCFS. The news in this space is that permits in North Dakota and just recently South Dakota have been denied in the last two months. This doesn't mean that these folks can't and they certainly will reapply, but negative news for both of them. At the same time in Iowa, they're having hearings now and expect to have their decision by the end of the month. Those conversations have been really quite heated and bit of a question of which way it would go. Obviously, they certainly need to have the permit in North Dakota to get to the geology, but the loss of any of these states would really change the profitability of the project as a whole. Last thing I wanna talk about is federal sustainable aviation fuel, greenhouse gas model. So it's very, very important when you look at the value of biofuels, two different places to consider that carbon footprint. And how we calculate that is really, really important. There's a couple of different ways in which we do this. Most recently, the GREAT model, and I'm not gonna read the whole acronym for you, but the GREAT model has really started to dominate California, uses a version of the GREAT model to calculate carbon footprints. And what the ethanol industry in the United States wants to do is they wanna make sure that the federal government, the IRS, use GREAT when calculating the carbon footprint of alcohol the jet. So ethanol, corn ethanol converted into sustainable aviation fuel. And the reason they wanna do that is compared to the alternative, which is the Corsia model, which is the international model. You know, the GREAT model doesn't fully account for or harshly penalize indirect land use change. So the ethanol folks very, very much want to see GREAT be used because it will increase the likelihood that refineries will be eligible or increase the volume available from those refineries because it won't be hit as much. A piece of news from this week, in addition to folks just, you know, drawing attention to a lobbying for that desire change, the USDA did just announce that they are gonna spend almost half a million dollars to support the expansion of GREAT to consider SAF. And so that's, you know, it's gonna go to the folks who manage GREAT to more fully build out the model for that specific use. One point that is pretty important without the carbon pipelines, the ethanol carbon footprint is probably too big no matter what to ever make the SAF levels. The SAF has a mandate of a certain reduction in greenhouse gas emissions. And this might all be for not if the pipelines aren't built and essentially exclude the ethanol industry from that market which they're very much looking forward to becoming involved with. So those were my comments at this time we'll open it up for questions or comments. I could also ask the other presenters if there's anything they'd like to add about their own topic or other things they might have thought of when others were speaking. Yeah, Ron, I think you said that the LFP model was Minnesota, South Dakota and North Dakota, isn't it? Not Minnesota, it's Montana, isn't it? Oh, yeah, sorry about that. I meant to say Montana and South Dakota. Yep. Yeah, and one other thing I want to say I'm with our newsletter that we put out if you're not receiving it, email me. Even the best way, you know, just Google my name, Brian Parman, NDSU, email me and I'll put you on the list if you would like to be one of the folks who receive our monthly newsletter that we put out. I'd like to thank everybody for attending and the other panelists for presenting. We will be meeting next month. This time it'll be Thursday, October 12th, not Friday the 13th, the day before that happens but we'll be back after the next WASDE report on that Thursday. Let me, oh, did we get a question? Nope, just a comment. But thanks everybody for attending and we'll see you next month. Thanks.