 Well, good afternoon. It is 1230. I'd like to welcome you to this week's Agricultural Market Situation and Outlook brought to you by NDC Extension Agri-Business. Once again, we'll be covering a variety of points related to the agricultural markets, especially as impacted by COVID-19. With that, I'll turn it over to Brian Parman. Thanks, Dave. All right, so this segment and this week, I'm going to go ahead and talk about, again, the employment situation since that's such a critical component and where I see that going here in the future. And as well, I kind of want to talk about housing prices. That's something important that I'll dig into as we move along here. So the first slide I've got is the usual initial jobless claims from the St. Louis Federal Reserve and I've got last week's number. And again, you see that these numbers are trending down. There's this continued downward trend of new filers. There's two reasons for that. Number one, businesses, fewer businesses are laying off employees than the initial period when COVID hit. And then the second part is a lot of the business have already let them go. And therefore, if anything that's not reopened or whatever, the initial claims, as you would expect, would spike early and then trend downward. This is still historically large numbers of people on unemployment, despite the fact that this is the lowest level since the weekending last week was the lowest since it really peaked up. It would still have been historic by all the metrics that we have since we've measured this for a new weekly jobless claim. Yes, it's below 2 million, but again, that previous record was about 695,000 or so. So yes, it's trending in the right direction, but this is still a historically high number. Now, weekly continuous jobless claims, okay, so which is shown on my next slide, what it basically has done is flattened. So it came down a little bit, but it's flattened out. Some folks have went back to work as businesses have reopened. And so while we have 1.8 million last week and about 2 million the week before, we can see that as businesses are opening, some folks are finding jobs again. So this weekly continuous claims, these are people who filed more than one week, is leveling out. It's still extremely high, much higher than the financial crisis recession. But again, it's stabilized. Moving forward with unemployment, just one last comment on that. What the market and what everyone is going to be watching is how fast this comes down. We know it's high, everyone knows it's high. They're basing decisions on the fact that this is going to improve. Folks expect it to improve as businesses reopen. But what I talked about last week is how many businesses failed to reopen or fail shortly after reopening after a disaster that's going to be watched. So I'm going to shift gears now to housing prices a little bit. So some information came out and according to some indices, May home prices were up 5.4% annualized and up 3.6% in April. So during this whole crisis, and when I talk about annualized, what I mean is it wasn't 5.4% in a month, it was 5.4% for the month of May as if it had continued for 12 months at the rate that it was increasing. But still, the rate of increase for May and April was a little bit high when you think about the fact that not a lot of homes were selling, folks were losing their jobs, we have this historically high unemployment. And so part of the reason for that is short supply due to COVID. I mean, folks weren't able to sell homes in person. People didn't think it was a good idea maybe to upgrade or sell their house at this time due to all the uncertainty. So there was short supply of homes. And then you had some pent up demand, especially among millennials. That's what they're finding is that millennials who for the last 10 plus years have been looking at renting for the most part condos and townhomes and living closer to the center of cities and looking for nightlife and atmosphere and those kind of things. They've shifted and started to move out into the suburbs some more and into these single family homes. And so this COVID thing apparently has kickstarted, especially with the low interest rates, then moving in that direction. That despite new housing starts and this goes back to that short supply decreased 30.2% in April, which is a record drop going back to the time this was even seen in 1959. Typically new housing starts are a good macro indicator for how the economy is doing. Where you see a big dip like this, it means we're moving, we would be moving into a massive recession, which has happened. But the other reason for new, it wasn't a market driven a lot in a lot of cases for the new housing starts drop. It was actually because construction companies couldn't operate. They couldn't build homes, even if they wanted to due to the lockdowns. Now equity is a big thing right now talking about homes. And it's not going to be like the financial crisis. The expectations are that homes may, and I'm going to talk about it in a minute, be declining in value over the next year. But the equity position in is a lot better than it was back in 2007 and eight. You didn't have these subprime balloon payment borrowing where they were borrowing 100% of the expectation with a ballooning interest rate. That hasn't been happening in these extremely low interest rates that fixed low interest rates means that nobody's going to have to worry about their house value falling say two or 3% and then having to refinance with a much higher interest rate. And so my next slide shows what this new housing start since December 2018 looks like. And if you go back, it's not as low as what happened before the financial crisis, but it is the biggest single period drop since this has been recorded. I mean, that's over, again, 30%. So my next slide is a map of the US that I took from a new source mortgage daily. And it just shows, now this is nominal, but the average home gain in several of the states. And if you look at North Dakota, the average home in North Dakota gained $4,000 in value over the last year. Okay, so that's pretty strong in some of these other states like New Mexico gained $15,000, Arizona $20,000, Idaho up $24,000 on average per home. So again, the equity position and to put this into perspective, most people outside of Ag, their measure of wealth is in their home and in the stock market, their savings and their investments. So to equate it to farming, it's kind of like farmland, cropland values and pastureland values. As long as those remain high and folks equity position in them is strong, then their wealth looks good, they look decent on the balance sheets and there's not a whole lot of worry among lenders or the borrowers themselves that they're underwater in serious trouble. Same things as applies to home values in the stock market to those who aren't in Ag, as long as their home value stays strong and the stock market stays relatively high, they feel good about it, they continue to spend where a consumer driven economy and that's important. So again, this is a good position because they could fall a few percentage points and it's not going to put most people underwater, not even close, not like the financial crisis of 10 years ago. So my next slide just shows these future home values and I used the Zillow analysis that's available to anyone online and median home values and remember the median is a point at which exactly half the homes in North Dakota are below this number and exactly half are above. So it's not an average, it's the median is about $237,000. Values increased over the last year in North Dakota almost 2% and that's where you get that 4,000 bucks, kind of pretty close to average and they're rating it mostly a buyer's market here, part of that's what's gone on with the energy industry and Ag's been a little bit depressed being our two biggest in the forecast for North Dakota is a decline of about 2.2% in the next year. That's a pretty small decrease, all things considered. So we don't expect home values in the state to really drop. Now for the US, home prices are actually up on average 4.1% in the last 12 months, so up pretty strong and they rate it mostly a seller's market and even in North Dakota you're going to have pockets that are hot where home prices are increasing, you'll have pockets where they're decreasing due to new school construction etc etc or maybe in the areas like the gas and oil fields where they decline much more than 2% but this is again just an average which explains everything without explaining anything and then the prediction for the US over the next 12 months is a small decline of 1.5% which again is not enough to put most borrowers underwater by far and away more people have more equity in their home than 1.5%. So my final slide I just show the median home prices for selected North Dakota cities with Bismarck being the highest median at 263 and of the towns that are displayed Grand Forks being the lowest at 147 and a half thousand. I had Devils Lake on here but I had to throw them out because there's a lot of lake homes and cabins that sell for you know a lot less than a hundred thousand dollars dragging that average down dramatically so I didn't have a lot of faith in that note. It's basically where it sits now and again a slight decline so moving forward it doesn't look like real estate values in terms of homes and everything else is going to be a problem but at the same time we got to watch the markets and everything else because again this is a consumer driven economy the money that's spent the more beneficial it is to ag especially livestock sector and so this is something we're going to continue to watch and things could change pretty dramatically depending on what happens this fall do we have a vaccine do we have a big spike during cold and flu season all of that's going to play a play a role in this but as it stands right now we're not in a terrible position or even really a bad position at all as far as values and then again we'll continue to watch this unemployment situation and and see exactly how fast we get a rebound out of that so thank you and with that I'd like to go ahead and turn it over to Frayn Olson thank you all right good afternoon everybody um Frayn Olson I'm the crop economist and marketing specialist with NDSU extension this week I guess I'd like to kind of continue on the theme of looking forward and and evaluating what are the core variables that the marketplace is looking at what are some of the things happening now that we need to be paying attention to as we move into this kind of critical summer season where we tend to see a lot more volatility in prices so this week I'd like to focus kind of globally and identify a few of the key variables and in particular some some of the specific countries that I'm watching very closely to try and get an indication of possible shifts or changes so before I do that on my first slide I'd like to just kind of quick provide an overview of what came out in the WASDE report WASDE stands for the world agricultural supply and demand estimates every month USDA updates their current position and the forecast moving forward and at this time of the year we're really looking kind of at two marketing years at the same time we're looking at the 2019-20 marketing year which is old crop as well as the 2020-21 marketing year which is the new crop so I just highlighted in red is the numbers that came out on the report if you look at the very top row highlight the bolded ones in black are the what the trade was expecting so that was a there's a survey done of of forecasters private forecasters said on on average these forecast were expecting the number to look like this and then in the red is what USDA actually provided us yesterday and as you can see let's start with to the 2019-20 which is old crop when we look at the actual numbers now this would be for ending stocks so the ending stocks number captures both potential changes in the supply side as well as the demand side so it's kind of one number encapsulates pretty much everything that we're looking at and if you look across there and compare what the trade was expecting versus the number that we actually came out from the USDA very very similar numbers there really weren't any major surprises within the whole report there was a few tweaks and changes here along the way that we're kind of paying attention to but in in the whole grand scheme of things relatively minor shifts so looking at 2019-2020 again relatively small changes on the 2021 I just want to comment a little bit on the wheat number because that that will come up later on in our discussion is that the expectation at least the forecast for the average wheat yield in Kansas actually jumped a little bit from last month's forecast to this month's forecast that increased the potential for production which then increased and without any changes in the usage side basically increased the ending stocks number a little bit so that was one of those things that was a little bit of a surprise we weren't really expecting that but it did show up so again if you compare the bolded line on the very top versus the bottom line which is the red one you see some subtle differences you also notice that when we look at the range what's the highest trade estimate versus the lowest trade estimate it's a much much wider range for new crop than it is for the old crop but you know again there's fewer variables that can happen in the old crop between now and the end of the marketing year so summarize not any real big shifts a lot of the numbers that we expected to see are the ones that we did see so on my first slide or the next slide really focusing on kind of the global situation I started with probably the simplest global market the follow which is soybeans because on the soybean side we have you know a handful of exporters major exporters and we have really one dominant importer but I to provide some scale and scope I just wanted to compare and again these are all USDA numbers the red slash line is the current forecast so again this would be the forecast for new crop soybeans the blue bar is old crop soybeans so when we compare kind of the old crop numbers to the new crop numbers I also wanted to provide some kind of historical context to see what has happened over the last several years in both export volumes and import volumes so again as a reference point Brazil is the largest soybean exporter in the world they surpassed the United States here about five years ago as being the dominant supplier soybeans now again this is soybean sales globally US is number two and then Argentina is number three now Argentina produces a lot of soybeans but most of the exports that Argentina have is for process product for they crush it the soybeans into oil and meal before they export the oil and meal products they don't not a huge exporter of raw soybeans or of whole soybeans so when we look at major exporters again of whole soybeans it's really the United States and Brazil and on the United States notice the green bar and the blue bar those were the major drop we saw is really because of the of the trade war between the United States and China now what we are expecting again USDA's forecasting given this phase one agreement that the we'll see a rebounding US export sales particularly into China because of the agreement I'm going to in a few minutes make a few more comments about that but just to show the relative size of the US export market or the amount of beans that we sell versus the Brazilians on the next slide we're looking at the usage or the importers in the global market who buys soybeans whole soybeans off the global market and we have one actually dominant market which is China we do have some other markets that are potential uses for both US soybeans as well as Brazilian soybeans but they are relatively small in comparison and again you used to notice that the green bar that that drop that we see is really because of of the African swine fever and the cutback in the in the hog herd in China the blue bar again these USDA numbers it's a forecast that there's going to be a rebound that they'll have some of that under control and the importation of soybeans by China is going to remain or rebound to levels that we've seen in the previously so the moral of the story on this is if we're going to have and be able to maintain the strong export pace for our US soybeans we really need to have that Chinese market the European market is is a relatively stable market as well as Southeast Asia we have some growth potential in Southeast Asia as well as Mexico but again in in size wise in relative comparison they're pretty small so a couple comments on and update everybody on what's going on you know we do have the phase one agreement they're pushing forward on on implementing that however given the political tensions that are going on right now between the United States and China you know there's some concerns starting to seep into the marketplace and there's really three issues that politically that we're looking at one of them is of course Hong Kong and the change in the the the way that the Chinese government is going to oversee the both economic and political activity within Hong Kong there's a lot of concern about some of the new rules and new new requirements of being put in place obviously there's still some some tension going on with COVID-19 and you know who what country is blaming the other country for the for the creation or the spread of COVID-19 again that's that's a political issue but it is seeping into the marketplace and the last one that I want to bring up and remind everybody is also the Huawei fraud case so again the U.S. has requested and and Canada has it has done this that they with detain the chief financial officer from Huawei which is that that very large Chinese technology company and of course that is also causing some political strain not only with with Canada and and in China but also the U.S. and China because again U.S. was the one that was was requesting that that Canada detain the the CFO so what I'm I'm trying to get get to is that we are moving forward on the phase one agreement but there are these challenges we're facing right now and again the market is going to be very sensitive to their expectations about whether this phase one agreement will be fulfilled or not there have been some rumors that they may change the timeframe at least for this this first year of the phase one agreement they may shift the timeline back just a little bit to so it doesn't start necessarily on on on January 1 when we count current count start counting exports but actually start a little bit later in the season again those are rumors that are flowing right now I have no confirmation that that's actually happening I also just on a sidebar if you look at Southeast Asia that's a cluster a group of countries Southeast Asia is typically defined or clustered as Indonesia Malaysia Philippines Thailand and Vietnam so I kind of listed those on the very bottom on the next slide we'll start kicking into corn and who are the major what countries are the major corn exporters you know United States historically and even today is still the largest corn exporter in the world but you can see there's three contenders that are now starting to grow and expand their corn exports and are really starting to provide a lot more competition for us corn in the global market and those three countries are Brazil Argentina and Ukraine and when you look at this the relative size at least for not only the blue bars which is the old crop but also now more importantly the red bars which is the forecast for new crop those three countries Brazil Argentina and Ukraine are really gaining some ground on the US and the US dominance that the that that we had in the global corn market I do want to comment a little bit about all three of those countries Brazil again we usually think of Brazil as the major soybean export competitor we don't always think about corn now Brazil's corn and the corn expansion has primarily been in what they call the safrina crop or the second crop Brazil is close enough to the equator that they can do continuous cropping they'll take the soybeans off during their fall or spring and they'll turn right around and start planting corn back onto the soybean ground and so this this safrina crop or the second crop what they call the winter crop of corn is really the dominant corn production in the production cycle for Brazilian safrina corn is very similar to that to the US one so they have a very similar planting and harvesting schedule to US corn so the Brazilian corn right now there are the core producing regions are experiencing some drier weather there's some concerns again that as the crop is being planted and it becomes you know starts to grow and gets into the vegetative development phase that these dry conditions they're going to be kind of hovering on the edge of being too dry and and and not having enough rainfall so there are some concerns starting to enter the marketplace that the Brazilian corn crop may not be as large as we first expected now given the USDA numbers and the current USDA forecast which is reflected on this graph that is expecting a pretty large corn crop so if if there are if yields aren't nearly as as good as we expect if there gets to be some production problems Brazil may not be as an aggressive a seller into the global markets which then may open up the door for some additional US export sales now the other thing that I'm worried about and it impacts both of the soybean issue as well as corn for both Brazil and Argentina is is their economic strength again they had some they had some very economic stress coming into the COVID-19 crisis Brazil in particular has been hitting the news a lot because of their inability to control the spread of the disease and the large death rates they're seeing and this is really again creating quite an economic toll on the country for both Brazil and Argentina now so far both Brazil and Argentina have been able to meet their export sales commitments there have been some delays for particular deliveries but in general they've been able to keep up now again will they be able to fill those sales later on that's something the market's going to watch very closely my final comment I do want to point out Ukraine a lot of times you don't think about Ukraine as a major corn competitor for the United States but as you can see the last several years the growth rate in Ukrainian exports have been pretty impressive and they've now grown to a point where they need a real contender in the global export market for corn on the next slide we're looking on the flip side okay what about the importers who are the big buyers of corn off the global market now I cheated a little bit again I've got the EU 28 which is the European Union it's all 28 countries and yes you know Britain is trying to exit and so that these numbers will be adjusted a little bit going backwards but the European market is a very large market for corn they import a lot of corn the European Union has a little bit more difficult time growing corn just because of their climate and then Southeast Asia again the Southeast Asian countries I noted before on the soybean talk are the same ones that we were talking about right now so again we have a pretty diverse field of opportunities to be able to sell US corn into these different markets again as a reminder I want to kind of remind everybody that Mexico is our number one corn buyer Japan is our number two corn buyer I guess Japan has typically been a very stable market for us they are very consistent buyer of US corn if you notice Mexico has had a nice growth rate in the expansion and increased imports most of that from the United States but again coming back to the COVID-19 issues the Mexican economy is also having some problems and again Mexico is also one of those hot spots for COVID-19 infections death rates and for mortality is relatively high there are some concerns then about potential growth as we move forward because most of the corn that Mexico imports is the yellow corn that's used for livestock feed it's the white corn you've grown domestically that's used for human consumption for the food products like tortillas so again these are some things that I in the back of my mind I'm trying to watch very closely is what how bad is the economic conditions in Mexico and what's the potential rebound in the Mexican economy so to summarize the corn market we have a lot of potential markets they tend to be relatively large some of them are growing some of them are fairly stable on the next slide we're going to go to the most complex which is really the wheat market because not only are there a lot of countries that export produce and export wheat but we have this this different classes of wheat every all the all the exporters as well as the importers are looking for something a little bit different not only in what they can offer to the global market but also what they're buying from the global market and and the United States now because of of our cutback in in in wheat production but also because we had a harder time competing the global markets on the wheat front and we follow them from really the number one wheat exporter several years ago to a number two or a number three depending upon what year you want to pick Russia is now the largest exporter of bulk wheat into the global markets again you can see the blue bar which is old crop and then the the red bar which is the forecast for new crop uh Russia southern Russia in particular has had some weather problems it gets getting a bit dry later on in the season however the the crop is pretty much made um the Russian winter wheat crop which is their predominant exports has a production cycle very similar to Kansas and and so when you think about when they're planting when they're harvesting when the the heads are filling that very very similar time frame so the dry weather that's sitting southern russia now is really kind of late in the season it might impact some of the test weights but not necessarily impact the underlying yield now the european union is on a little bit different production cycle a little bit later in the cycle and they're two big countries that that produce an export wheat which is number one France and number two Germany both have some dry areas showing up now that's they're getting closer kind of that reproductive stage where it's flowering for it's pollinating and we're starting to get seed development so dry weather during that production phase may have a larger impact on on on potential yields and production later on so that is something that the the markets is watching very very closely is the weather conditions in particular in both again France and Germany and their ability then to potentially compete with us in the global market on exports and unite on the us again we we're right now third largest and then followed closely by Canada when it looks at total bushels exported obviously Canada the primary export is spring wheat some Durham in the United States we have winter wheat which which is the largest volume and then spring wheat and Durham as well as some white wheat and some soft red wheat so we got a little bit more diversification in our classes we also think about Ukraine Australia and Argentina I do want to point out Australia very quickly the last couple years Australia's had some severe drought conditions it looks like some of those are now mitigating the Australian the forecast for the Australian wheat production going into the 2021 marketing year is for a considerable rebound in their ability to export into the global market and then my last slide just kind of wrap things up is who buys you at who buys wheat off the global market and and again because of the wide range and diversity of countries and that actually buy wheat we tend to glump them into categories so we got North Africa South Asia and the Middle East again those are bundles of countries if you look on the very bottom below the graph I've listed the countries that kind of that are included in those different categories for the U.S. and the U.S. market we used to be a very dominant exporter into North Africa the the Russian exports out of the Black Sea have really taken over because of logistical advantages and the and and the ability basically offers wheat a very similar type of wheat at a lower price so a lot of that North African business has shifted away from the United States and into the Black Sea region in particular Russia so they basically become the dominant exporter in that region the same as the case for the Middle East a lot of people don't think about the Middle East as being big wheat buyers but culturally and ethnically wheat is part of their base and again United States has never been very dominant in the Middle East market but we have had a presence and again a lot of that now has dissipated because of the of the the the pricing pressure that Russia has been putting on in that region now fortunately for us in the U.S. the South Asia market is still one of those dominant markets for us in particular the Philippines Philippines is a big wheat buyer especially a spring wheat buyer so we do have a still a strong presence in South Asia South Asia markets again we need to try and maintain those as we move forward our number two buyer of wheat from the United States for United States is Japan and number three or excuse me number two buyers Mexico and number three buyers Japan so both the Mexican and Japanese markets are very very important to U.S. wheat and U.S. wheat prices now both Mexico and Japan when it comes to wheat have been very nice stable markets we that's it's not necessarily being a big growth market but it hasn't necessarily been beat up as bad by the competition from in particular that Black Sea region that we saw the loss of the North African market so with that I'd be happy to try and answer some questions as we finish things up but I'll now pass things on to Tim Petrie oh excuse me to Ron Hogan I'm sorry yeah thank you Frank yeah Ron Hogan extension for management specialist I'm going to talk about the PPP flexibility act today just a short presentation so my first slide I want to quickly talk about some CFAP stats just to keep you updated so far the programs rolled out 16.15 million to North Dakota non-specialty crops in effect field crops seven little over 7 million 1200 applications one specialty application so far for a specialty crop livestock almost 8 million 1100 applications 11 applications for dairy I have a couple notes as well there's been 30 million paid out in North Dakota for the whip plus program and that's an ongoing program as well and we've been getting some questions for CFAP CFAP yes silage and hay are eligible for CFAP payments and you need to convert the tons or pounds to bushels so the next slide recently passed June 5th the payroll protection program flexibility act now this is the fourth time they've changed the rules now and maybe we'll change them again and as always we get some of the basics and then there's more guidance coming in future days so I'm going to present what we know today and it might change tomorrow as usual it seems so as of today then there is still 145 billion left in the PPP front and and you can still apply for PPP loans so next I wanted to talk about some of the aspects of the changes with this flexibility act the extension of the loan maturity loan repayment terms have been extended to five years it previously was two years okay so if you've gotten a two-year PPP loan you can discuss it with your lender and try maybe extend that for five years if you're so inclined there was no change in the interest rate it's still at 1% for the old loans and the new loans my next slide I want to talk about the extension of the loan period now remember that was that eight-week eight-week covered period that ended June 30th well they've extended that now so the language says it's 24 weeks or December 31st the end of the year then whichever is earlier okay but if you have a PPP loan prior to this passage of this act prior to June 5th you can elect to just retain your eight-week forgiveness covered period and and just continue on that way next I'm gonna talk a little bit more of forgiveness now this is a big deal most people were very happy with these changes I think there was a lot of pushback from people with PPP loans and and Congress acted on this everyone is very happy with these changes and one of one of the things was the forgiveness change remember it was 75% of these proceeds must have been used for payroll they reduced that now to 60% okay in order to receive forgiveness if you use less than 60% for payroll you're still eligible for a partial loan forgiveness next the deferral period there was six months now it's to the date that the the forgiveness is remitted to the lender the federal government will eventually give money to the lender as as forgiveness and so that's the that's the end of the deferral period for for that now they changed that next there is a rehire worker deadline that's changed it was June 30th and they changed that to the end of the year you don't have to rehire your workers until the end of the year next there is a delay employer payroll taxes remember that you didn't have to pay half of your payroll taxes you got a deferral and but if you got your loan forgiven then you were not eligible for that deferral well they eliminated that rule completely you are eligible for that deferral whether you have forgiveness or not on your pvp loan in my last slide there's an exemption here okay and so it appears that they're trying to make most of these loans forgivable in many different ways okay so I'll just kind of read this to you it's easier just to read it from the February 15th to the end of the year then forgiveness is to determine without regard to any proportional reduction in employees because there's a lot of businesses that aren't going to be able to hire back their same employees or find the same quality or with the same skills that they had before so there's two there's two things that you need to document if you want an exemption it's the if you have the inability to rehire the the the the same employees in the same number as you had on February 15th and and you have the inability to rehire qualified employees to for your on fill positions till the end of the year or the second part is you have the inability to return to the same level of business activities and I think that's that's probably the case for a lot of businesses especially restaurants that they're probably only going to operate on half of their half of their customers now because of various various things so if you if your business activity has changed uh since February 15th due to compliance with regulations and and and guidance for COVID you uh you should uh you you are exempt and and then you probably can get it forgiven okay so that concludes what I have for you today we're going to move on with Tim well thank you good afternoon everybody Tim Petrie extension livestock marketing economists to forgo to my first slide I'm going to just update some things that I've been talking with you in some cases several weeks and a new report came out and also kind of an update on cattle prices the usd risk management agency just announced another change to a livestock risk protection program and we discussed that last week and so more on that in a minute you will recall for cattle and hogs the subsidy rate for many many years was 13 percent and then last year on july 1st of 19 they increased those rates as shown there in the blue to depending on your coverage level 20 to 35 percent now usd just announced this week that as of july 1st and and a crop year for lrp is is july 1st to uh june 30th they're increasing the rates for the 80 to 100 coverage another 5 so going up 25 on the higher coverage as listed there and then another big change that i think affects both producers and lenders and makes it much more palatable and maybe usable for producers and from a lender's standpoint as well is for most crop insurance crop insurance premiums are due at maturity but on lrp they have been due in advance you have to pay for your premium and then the insurance agent submits the your lrp and they are going to change that as of july 1st as well to now you do not have to pay in advance and and so again a lot of our calves we sell in the fall november but here it is in june and so we got to dig up money and it just made it a little bit more difficult for i think producers to use and and so that's a welcome change so we go to my next slide last week i talked to you about a marketing plan and actually to refresh your memory and those of you that might be new on the call two weeks ago uh frame did a very good job of explaining marketing plans to you and and and then last week i took that on and and came up with a what a fairly simple calf marketing plan that i explained to you and so i'm not going to re-explain that if you want to see frames you that go just go to the historic two weeks ago and then my explanation of this last week if you want more but again one of the things that one of the characteristics that frane said of a good marketing plan is that you have to modify it when needed and so that is kind of the case here you know i recall that i said we were just going to use livestock risk protection as a way to pre-price 50 percent of our calves that we have to sell on just picked october 29th and actually going to do a fourth and a fourth and again go back to my last weeks to explain that but i you know a good marketing plan has both a price objective and a time deadline and so i said if steers get to 155 on lrp let's do it whenever they do if they don't get there our time deadline is june 30th so again we're modifying this plan now i just said instead of a time deadline of June 30th for that first fourth that we're going to price let's change that to july 1st for those reasons i just talked about one you're going to get in one day you're going to get another five percent reduction your premium and instead of paying in advance you won't have to get the money until you sell the cattle at the end and so maybe make it easier on a cash flow basis so go to the next slide you know a lot of a lot of consternation in the cattle industry and so on and that prices seem low and so on and of course you know we've got an unprecedented pandemic we've got an unprecedented decline in the domestic economy as brian talked about we have unprecedented social unrest any one of those what calls volatility and could cause a lower cattle prices but in spite of that it's kind of interesting that cattle prices in north dakota are not much different than they were a year ago now you can argue a year ago wasn't the best year ever be it wasn't the best year because it was lower than the last several years but still you know i started off with these webinars saying our expectation was for prices to go down 20 after the pandemic hit and they for the most part did that but we've seen recovery and again there's a seasonal issue that goes on with each of the market classes but interestingly enough we're about the same on all our important market classes of cattle than we were last year starting in the upper left hand corner with 550 to 600 pound calves and again we don't have a lot of them to sell right now except some fall-born calves but you know last week they averaged 164 a year ago 161 and so we're three dollars better right now three dollars better than we were last year in spite of everything being unprecedented with the pandemic and social unrest and domestic economy switch over to the upper right hand side for the heavier weight 750 to 800 pounders they were 138 last week but 141 a year ago so they're down three from a year ago and you know which again is you know is something somewhat of a feat i suppose that they would be about the same down three and calves were up three good down to the bottom left then our slaughter steers our five area price there last week averaged 112 39 last year 113 76 so down just a dollar 37 over what they were a year ago now however i realize you know we've got slaughter backed up and for you producers trying to sell fed cattle if your packing plant is struggling with COVID and so on and you're not getting bids a price similar to last year doesn't mean much because you're having to hold the cattle and try to find a place to sell them so we're all well aware of that but from a strict price standpoint right just a dollar off from where they were last year at this time and then go over to the call call prices kind of a similar story there had a you know a big decline in prices as the others down 20 percent but back up and we don't have call prices reported by usd and earth dakota so i just take the average of the montana south dakota where they're reported but last week averaged and again a wide range in call prices these are lean but you've got cutters and canners and and and premium whites and so there's a wide wide range and just like in calf prices are in call price but last week for this series 57 compared to 61 last year so down about four dollars and so again very similar prices go on to the next slide one of the reasons why prices probably are as as good as they have been or or at least similar to last year not necessarily good in some of our eyes i guess is that our uh you know we were wondering the this week the er s economic research service put out the new livestock and meat trade data for april again we're about a month and a half behind her so there because the time it takes to tabulate originally this year again we were expecting record beef pork and exports for sure and but we were expecting them to fall off in april for a couple reasons one because of higher prices for meat and then secondly because of the all the problems with with uh covid not only in the u.s but in other countries and and so on and so starting in the upper left um beef exports did fall off somewhat in april just a little bit below only two percent below last year but still quite a bit above the average and still on an annual basis we'd be close to a record but you know i think we're we're struggling now in may two and so we probably won't set a record and usd is saying that now for 2020 but still be pretty good compared to a history standpoint and so there's good news that meat is still moving more on a country by country basis in a minute but let's uh go over to pork pork again we started off there in october of last year just going gangbusters on exports and we kept that off a little kept that going a little bit off in april not much but but still compared to last year and the average record pork exports down on the broiler side on the lower left hand corner again we have a seasonal pattern there they're usually up in march and off in april so that was the case this year had a really really good market in march did fall off in april still above last year given all all the problems we're having and uh and above the average and then over onto the milk side we did better on our milk and cream exports again we don't export a lot and it's to our nearby canada in mexico the the main reason why milk went up is because prices went down unlike the others were in the meat side prices went up that helped to back off prices a little bit or exports a little bit because prices were higher on the milk side milk prices plummeted so it made it a little bit better uh deal for our customers so go to the next slide i'm going to follow up then on uh similar to what frayne was talking about and uh look at kind of some country country basis there start off with beef again japan is usually our best customer than korea than mexico and canada and uh last year korea and mexico were very very close but because we didn't have a trade agreement with japan and we had pulled out of tpp but now as of january 1st we're back with a trade agreement similar to our competitors so exports uh really really nice and actually we're up in april to japan second highest ever exports just compared to mid 2018 so a really really good market on japan for us and then uh mexico the blue line down there you see they dropped off to fourth place and uh and frayne mentioned some of the problems with mexico a couple things here on the on the beef exports to mexico one of course is our prices went up and mexico likes to buy cheaper things and then the peso is declined and so that further makes our meat more expensive to them and so that's kind of the reason why our mexico dropped off but again our exports did quite well particularly to japan go down to the pork side again on the our best customers historically have been mexico japan and then canada and korea tied for third place and then china fifth but now china has wet skyrocketed up into first place and set an all-time record high in april of of pork exports to china because of their deficits so go to the next slide kind of to wrap things up one of the questions we're getting and you know you see the top line there is live hog prices in china the bottom line is blue is us hog prices again they're both on a us dollar per pound basis so one of the reasons for all our exports to china has simply been that you know their production is down 25 to 40 they have sky high prices but everybody's asking since we're exporting record high amounts to china why hasn't that helped our price here and which is a very good question there are two reasons for this and frane kind of alluded to the phase one with china and so on we do have a phase one agreement with china but one of the problems was that the it did phase one did not return remove the retaliatory tariffs so we've got a 60 percent tariff on carcass pork and a 70 percent tariff on pork cuts and we're yeah we're sending a record amount there but when it gets to china it's expensive because of that tariff and then the other thing is here we have the backlog in the pork industry and slaughter backed up and packing plants can't handle it all although we're back to this week it looks like we're going to be back to about 94 percent of where we were last year but this time seasonally pork slaughter does usually drop off and so but we're back to similar to what we were last year but that's the reason we haven't been helped is be mainly because of the tariffs 60 70 tariff if those tariffs were removed tomorrow our prices would would would go up quite a bit here in the u.s. so with that let's go to dave and talk energy very thanks tim dave ripplinger bio products bioenergy economic specialists i'm going to talk today about the director's cut for those of you might not be familiar so lin helms who's the director of the department of mineral resources in north dakota has a monthly webinar happens to be this afternoon at two o'clock so just after this one typically has some really important stuff and i just wanted to kind of first of all bring it to your attention and then also kind of give you some background information or kind of frame it in case you might watch or hear the things that come out of it a month ago it kind of created some additional news is as director helms spoke about shutting in wells and the like and what was meaning for production and so again we're kind of looking to see if there's any hints of what might be happening in the industry a couple of thoughts on why this is important of course you know north dakota is an energy state but you know even more broadly than that you know energy is important because it's both an indicator of you know what's going on because a lot of our economy requires significant amounts of energy particularly crude oil and petroleum products to to operate and then also there's a whole lot of economic activity associated with oil development and production and so it's a great number and of course right now production in the country is down significantly you know i've reported on that the last couple of weeks the other thing to bring up to you know in terms of its role more on the state level you know in terms of jobs you know north dakota jobs wealth creation for whoever might have royalties or be involved in those businesses and then last tax revenue generation which primarily flows through the state but a lot of that does come back to to local government just some quick stats from north dakota job service about what was what's been going on in the the mining and development industry specifically so if we go back to the first three weeks of april which is when that industry was really hit hard there was more than a thousand jobless claims each week right now that sector has the highest number of claims out of all of them was 6400 uh which is about about a fourth of what's out there and similarly in terms of actual unemployment payments via that from the state so just traditional state unemployment that three and a half million dollars for the last week is also about 25 percent of what we're paying out uh just to talk about some of the definitions which is things you might just want to know being a north dakotan or you know having some relationship with energy it's to understand what completion is or what a completed well is uh you know there's a there's a big difference between a well that's been drilled and a well that's been completed because those those completion activities casing cementing fracking and the like everything it takes to actually get producing oil uh is significant both in terms of the effort and possibly the economic activity associated with that and then finally actually generating oil uh you know for production and use as well as all of the the royalties and the like generated from that uh differentiating really important uh between a shut-in or inactive well and an abandoned well this really came to a head two months ago and there's a lot of news about that when the industrial commission allowed for wells to be inactive for more than a year and so kind of leading from that so this inactive well is one that that's not currently producing but could uh could be uh with some some quick work as opposed to an abandoned well which is permanently plugged everything is taken away from the surface and there might be some remediation if necessary uh two really big differences and then again in the last two months we've seen a number of wells at least a third of them uh shut in and the question is how many more have there been and that's one of the things you might hear from uh director helms this afternoon uh the other big thing to to to touch on and i know i've mentioned it before uh is the concept of the depletion rate which is essentially that that rate at which production declines and it's really different for for shale oil tight oil than it is for conventional uh oil and here's just a a chart that i grabbed from a academic publication that shows what it looks like in the bocking for example versus a conventional uh uh oil well and really what you see in general the state states that you lose about half of your production your daily production falls by about half in the first year others industry in this show that it's really closer to about uh at least two thirds of not three fourths and so this is really important for a number of reasons one you know in order to maintain production uh in in for shale plays in for shale formations like the bocking you need to have continual the investment you know continual activity in terms of developing these wells because uh production does fall off so quickly uh another trend that's used a lot is legacy well so that's any well that's been around for more than a month you know from the previous period on the other thing to talk about too is associated gas and so it's really important to if you think nationally about differences in some of the big fossil fuel plays so the bocking is an oil plate oil is the driver folks are drilling for oil and there's gas that's also produced at the same time you know since it's a co-product not the main product it's associated gas if you go to other parts of the country where there's natural gas plays so for example uh the marcellus and some of those other uh formations in appalachia you know natural gas is the product and so here we're going to call it associated gas for the bocking another place it's just uh you know just regular uh natural gas again just kind of bring this to your attention and you know definitely if you have some time this afternoon or later on because they are recorded just to listen in on on director helms it's a little bit technical which is why I covered some of these these things in case you do listen but again really just trying to hear you know what the actual final numbers were for the end of april again that was the first full month of of covid impacting the industry especially here in the state if we look back to that tail end of april when we had negative prices uh and of course those first three weeks when unemployment uh or first time employment or those initial claims were very very high so really just want to hear you know you know how many wells are actually producing and we can use that to calculate shut-ins and what production has been and of course the reports about a month ago is that they'd already fallen by about a third uh both in terms of well producing and production the numbers are likely significantly higher than that at least half or more and that's the number I would definitely be listening for the other thing too is just to know that there's comments beyond the data just beyond the the figures being reported and those types of things can be really really important to to understand uh other other information maybe a more current picture of what's going on versus numbers that are about six weeks old so that's what I had to present and so now we'll turn it over to q and a again we'd ask you to use the q and a tool to ask questions uh and and and we'll uh continue on from there I'm going to stop sharing and bring everybody else back up and so if anybody has any questions now is the time since there aren't any up already I just ask the panelists if there's any thoughts that came to mind after their presentation or things that they thought of while others were speaking say frame this is Ron why why was Australia on their wheat production so projected to increase so much from the previous okay so again the graphic that I showed was export volume so that wasn't production but what's the forecast for actual exportable stocks and and they had Australia had well really three consecutive years of of drought and and each year each consecutive year the drought of course built upon itself and got worse and worse and worse and so total wheat production was down three consecutive years in Australia and therefore exportable stocks was down pretty significantly and the current expectation the current current viewpoint is that both production as well as exports will actually rebound again back to levels that we've seen historically again Australia is starting to get some more rainfall you may have heard about uh some flooding that was actually going on because they had pretty heavy rains following the drought so soil moisture is now being recharged again planted acreage looks like it might be increasing slightly but the biggest part is is the rebound in the yields because they're getting rains again okay and we do have a question I might need a little bit of clarification but the question is going back to a WASDE graphic Frank could you talk about the shift from beans to corn okay um so when USDA in particular when they look at the uh that that graphic right there so when they when when USDA prepares the estimates for ending stocks okay again this will be the amount of grain we have in the bin just before harvest the the in the 2020 and 2021 forecast for the new crop forecast they use the March planting intentions report as the basis the starting point for how many acres of corn are going to be planted and from that of course they subtract out corn silage and they do the rest of the math well the surprise a bit of a shock value in the in the March planting intentions report was this the larger than expected increase in corn acres and a larger not as large an increase in the soybean acreage so the surprise number was the corn and again given the time period of the survey so this is a survey of farmers at the beginning March saying what are you intending to plant what are your plans as of today knowing that they can change later on well the real financial impact the price impact of COVID-19 didn't hit until after that survey was taken and so because of the drop in ethanol consumption and ethanol production as well as a whole bunch of other things revolved around COVID-19 the price relationships between corn and soybean shifted pretty dramatically and so right now the current thinking the marketplace is that we didn't get all of the 97 million acres that were originally forecasted planted this year that there was some of that shifted back into the soybean outside of the ledger not on the corn side now one of the things I forgot to mention or fail to mention in my discussion was on June 30th on June 30 USDA will release the acreage report so the acreage report is an update to that March planting intentions report so again they surveyed farmers in March saying what do you intend to plant and then they surveyed them about this time of the month now at the kind of in the middle of the month and saying how many acres did you actually plant and then that will be all compiled and reported at the end of June so June 30 we're going to get the acreage report which will be an update to say how many acres were actually planted and I am looking for some excitement I guess around those numbers we will get some information about what the the the trade is expecting again these private forecasters that are that are also trading in the marketplace on what they think the numbers will look like and so that I think will be in our next major USDA report that causes some some excitement in the marketplace so look for June 30 as as that date there is another question from Keith about for Ron will 11 page forgiveness PPP application get modified Ron boy I couldn't tell you I haven't heard anything that it would or wouldn't so I couldn't answer that great thanks Ron you guys see any other questions up on the board if not I want to think every maybe maybe this is Tim I think we're scheduled now for two more weeks on Friday but not on July 3rd so maybe if we could get some feedback whether participants would would be wanting us to go into July or or have we served our purpose that would be helpful us because we have to plan ahead and make reservations and so on so maybe some feedback there would be helpful for us yeah thanks Tim a great point and if you want to you could give that to us via the survey you know because that will open up as you close the window otherwise you could just let us know by email or give us a call one comment one comment I wanted to make at the end just for our participants is as I was thinking about this I think that and this is me going out on a limb a little bit which we economists really hate doing because you know we're wrong a lot but anyway I really think that we're only going to wind up having a recession for the first quarter and second quarter so to have a recession you have to have two consecutive negative growth quarters and I think that the second quarter is going to be so deep that we really have nowhere to go but up kind of a thing so it's going to look like maybe the recession was short-lived a two-month or deal because we already know that the first quarter was negative and we the second quarter is almost got to be negative but since it was so fast and so deep it's not going to be in other words if we go down to where hypothetically everyone's unemployed and then you start adding jobs even even at a trickle and the quarters that follow you will have growth and therefore you are out of the recession but that doesn't necessarily tell the whole story because this would this could be so deep by the time they tabulate the cost on everything that really we have nowhere to go but up from there is kind of a thing so I just went as you're hearing the news and things like that and you hear all well the recession's over because we had a couple of quarters of positive growth remember we might be starting from a really low period and so even though yes there's some growth and yes the recession is technically over we haven't recovered anywhere near what we've lost so I just want folks going forward to keep that in mind that it really depends on where you're starting from right so that that was all I had there thank you yeah thanks Ryan yeah and I actually heard yesterday from from an economist is that the recession may be over like as of today you know we might have already passed that technically speaking and I agree I mean we added we were adding jobs the number of people newly going on the unemployment roles is less than the new jobs that are the jobs that are returning that's what we're seeing that's why we've got the stabilization of weekly jobless claims or even decline in it but remember when you have 30 million 20 some million unemployed and yes the gains are higher than the losses it's still not a good place to be even though the recession because it's all definition it's all in the definition and that's one thing that or my part the participants need to understand and there's so many arguments about unemployment and how many are truly unemployed because you may have a perception in your mind on what that means but the definition and how the data is reported is different okay so again when they say recession over that doesn't mean we we regained everything that we lost that just means we stop digging and have actually started to crawl out and it could be a slow crawl or it could be a quick rebound that's the v shape recovery that remains to be seen on which one it'll turn and we could actually have a double dip I mean but considering how drastic the jobs cuts were in the spring it's hard to imagine um it being as bad or worse again uh that's that's all I'm saying I mean that cut was deep so thanks Ryan again want to thank all the panelists and everyone who uh chimed in this afternoon uh hope to to see you again next week and I hope you all have a great weekend thanks