 Thanks everybody for joining us this afternoon for the September NDSU extension agribusiness agricultural market situation outlook webinar Glad you could make it after our hiatus unplanned hiatus last month Got a lot to cover today. So I'm going to hand it right over to Brian Parman egg finance specialist. Thanks Thanks Dave. So today I'm going to give the presentation that I was going to do before but we had to have a hiatus as Dave said a brief period of transition and so today I'm going to talk about I'm going to get my screen sharing going the USDA's land values report and some in the land values report that we kind of put together in a little bit of comparison with that and after that Frayn Olson has a pre-recorded webinar that he's doing for today that I'll be showing he had Another speaking engagement. He couldn't be here, but he he did put a presentation together that we'll be showing after mine All right, so this is the map that's put together by USDA and this report comes out in august every year And so the USDA does a national cropland and pastureland price Change and and then the price per acre of every single state. So these are statewide And you see up top USDA came out and said in august that north dakota's cropland prices were up 14 14.1 percent. So just over 14 percent Compared to 2021 Not the highest jump That honor belongs to states like Iowa in Nebraska up 21 and 20 percent apiece. So But certainly not the lowest So basically averaging statewide around 23 150 dollars per acre for cropland as per their report. So a pretty big increase Pastureland values up as well As per the USDA's report north dakota's almost to a thousand dollars an acre on average for pastureland right now Sitting around 930 dollars per acre as a state Again, not not some of the more expensive That that typically is in the southeast where the stocking rates are a lot higher and whatnot But pastureland prices as per the USDA's report coming up around 10.7 percent And so one of the things I want to say is The USDA's report for north dakota and the one that we put out Comes from Essentially the same data source, but the way it's put together. We put it into regions Okay, we take the counties and put it into regions and then and then it's weighted It's a weighted average So the weighting factor and the fact that we put it together in regions Will show slight different a bit of a difference from what the USDA's value is and it's and again It's similar source. It's just the way it's put together So one of the things if we look at national average prices So here's pastureland values in the u.s 2008 through 2022 This 11 and a half percent jump nationally is the biggest jump since 2013 to 2014 and if we recall that 2014 years the year, you know calves approached three dollars A pound for feeder calves and bread heifers were super, you know expensive $2,500 in some cases $3,000 At auction in 2014. So that was a 10.3 percent jump This year though or from last year to this year 11 and a half percent The highest certainly in about the last couple of decades for pastureland values And then you look at cropland values nationally The biggest jump prior to this year was that 2012 to 13 remember that Corn prices were up in that six to eight dollar a bushel range soybeans approaching, you know 15 bucks Wheat prices strong That was a 13.7 percent jump 12 to 13 21 to 22 14.2 percent So the largest Single year increase in the last couple of decades for for cropland as well And one of the things that kind of facilitated this when we look at net farm incomes from 2020 and 2021 Both years well above average, but not nearly as high As they were in the years that we had those big Jump in cropland and pastureland values back when that happened in you know that 11 12 13 14 region net cash farm income and Net farm income were actually higher than well above average and higher than they were when adjusted for inflation From even in 2021 and the projected number for 2022 So it's interesting to think that We had a much larger jump in land prices than we did Well, I won't see much larger but larger than we did before And yet net farm incomes and net cash farm incomes were not nearly as high or not nearly as much above average As they were back then so a bigger jump But lower net farm incomes and net cash incomes when adjusted for inflation And so when we look at what we put out for North Dakota, we came up with 10.9 percent cropland prices statewide Increase I'll just flip back real quick. The USDA said 14.1. And again, that's because ours is weighted okay, so what that essentially means is if a attractive land for instance, that's Let's say a section, you know, 600 plus acres or whatever of cropland cells And you look at the price per acre If you and then and then another area of field cells and it's 80 acres and you say well, this one was $5,000 an acre of the 600 or Yeah, 600 acre field and this 80 acre field was uh, $3,000 an acre in some cases You'll just take a simple average between the two Well, when we weight it we say that the 600 acre field has more weight and more impact on the Average price across the state because it was more acres that sold if that makes sense So it had it carries more weight in when you calculate the average hence the reason that we see some differences And what we calculate versus the USDA's but 10.9 percent Most expensive land again in the in the state is south red river valley Approaching 5,400 to 5,000 an acre pretty much up across the board north valley 3400 This is kind of what we found and you can find this report Um, if you if you search through land values north dakota n dsu This was put out in a news release if you want more detail on it statewide pasture land values up 11 and a half percent that was closer to the national average You'll notice the grayed out areas. That's because there isn't much pasture land in the north valley or the south valley in the northeast but Pretty much universally up across the board In pasture land values as well and one of the first times since I've been putting this together that that was actually seen What that implies is it's not just data noise this these land prices were were indeed increased From last year to this year and it's 11 and a half percent plus up across the board You know, something definitely did happen. There was a big increase So this is put this chart is put together by a farm bureau using usda data and NAS data and this is on rents and you'll notice While land values were up double digits in terms of percentage change from 21 to 22 rents were not rents were closer for Crop land whether irrigated or non irrigated around 5 percent four and a half to five and a half percent pasture land rents up considerably up seven and a half seven and a half percent almost Now in north dakota, we found virtually no difference in pasture land rental rates From last year to this year I believe a big reason for that was the big drought that we had If there's not a lot of forage heading into 2022 because of last year's drought. It's awfully tough to Ask for an increase in pasture land rents when when there's not as much forages available Compared to an average year because of the Following the drought So this may in fact increase more This year that we got some water but again with pasture You know it can take more than a year to recover from a drought And as a result we we may have to see some increases later on down the line His pasture land attempts to catch up with maybe where the market thinks it should be based on available forage And then going to pasture land Crop land rents. I'm sorry up 1% versus an increase in Land values well over double digits and I and the same thing with rents rents are virtually unchanged But I already explained pasture land now one of the things with crop land. It's important to remember When rental rates were being negotiated this last spring Production costs were really high especially with respect to fertilizer And so when folks were thinking about what they're going to pay for rent Yes commodity prices were high but fertilizer, you know anhydrous was over $1,500 a ton and urea was approaching $1,000 a ton Phosphorus price is high potash price is effectively tripled And machinery costs up. So as a result past rents did not jump at the rate that Land prices did the other thing was A lot of those programs that had happened in 2020 and then kind of residual into 21 as well as mfp Those were all paid out in cash And so the cash reserves that were that some folks had that were floating around a little bit A lot of that went into a land purchase that wouldn't necessarily be something that somebody would use to justify increasing rent Okay, it makes sense to use it for a purchase to these folks But not to pay a higher rental rate Hence rental rates were a little bit muted as far as their their increase relative to values And if we look at North Dakota's rental rate Crop land rental rate, it did increase again 2021 to 2022 But for the most part, it's been kind of steady from 15 all the way through 21 With a bit of an increase up getting up over 70 bucks an acre statewide So the last portion I want to go over with this Talking about land prices is what's going on with interest rates. So here's the 30 year fixed mortgage rate average in the u.s Going back to 2017 and these 30 year rates are approaching 6% now For for most loans. Okay, so I pulled this when I was when we were talking about doing this in august This was the 30 year, uh, according to freddy mac 30 year Rate of mortgage was about 5.1. Okay, so this was a month ago approximately 15 years four and a half and then five one arms at 4.4 roughly. So this was today So 30 year went from 5.1 to 6 in a month and then the 15 year increased Not quite a percentage point, but but quite a bit in the five one arm increased, you know, not quite a Not quite a percentage point, but about five half a percent So with the inflation information that came out at the end of august Through august with with the latest report. It was down slightly But still historically high still in that 8% range and this has caused the federal reserve Or a lot of folks believing that the federal reserve is going to continue to increase The federal funds rate and I just want to put it into his historical perspective While 6% if we go back here 6% 6% would be right here A lot higher than it's been. I mean you got to go back to the Mid two thousands roughly to see a an interest rate is high a mortgage rate as high as they are now But in historical terms still not all that high. I mean basically you're At 6% you're kind of where roughly the the 90s And early parts of the the two thousands So The federal reserve tracks What the market thinks the interest rates are going to be okay so in this case the way to read this is that the Most folks think in the september meeting that Interest rates the federal funds rate is going to go from its current two and a quarter to two and a half percent That's the range it's in right now and go to Two to two hundred seventy five basis points or three hundred which is two point two and three quarters to three percent Or three percent three and a quarter now. This was pulled last month Now if I go to today Because of the inflation report that came out it it shifted everything shifted And now 78 percent think it's going to be in that three to three and a quarter and 22 percent Or even now saying that it's three and a quarter to three and a half so And the reason I bring all that up is because I think that the increase in interest rates over Last year is going to halt Some of the upward momentum that land prices have had simply because borrowing is going to be more expensive Folks are going to have to start really considering interest. You start getting in that six seven eight percent range It's been along quite a while since anyone has had to finance anything at that rate Uh And so that's probably going to halt some of the upward momentum not only that But you wonder how much of the cash that was that was received from some of these programs has already been spent And and utilized on new land purchases already So I think I I don't think it's going to go backwards I don't think I'm not trying to say land prices are going to go down And and I'm also not saying that they won't increase a bit But I do think that we're probably not going to see a big massive jump from 22 to 23 or at least as big as we saw for 21 to 22 probably in the Mid-ish mid-high single digits would be my my expectation I would be surprised if it was much higher again because of the fact that a lot of purchases have already happened And because of the increase in interest rates that anyone financing this Is going to going to encounter higher rates And the other fact is that uh equipment costs have have gone up pretty remarkably as well I don't have any slides on that But you know if folks are trying to decide that they need to trade off equipment and buy new again At higher interest rates to finance it and the fact that those costs have gone up Doesn't leave as much available capital for uh new land purchases So with that I believe we are doing the Uh question and answer at the end So I'm going to stop my screen share real quick and I'm going to get ready to pull up Frayne Olson's presentation Here in just a second Hello, I'm Frayne Olson crop economist and marketing specialist with NDSU extension Today I'm going to try and provide a brief overview of the information that we got in the september USDA WASD the world agricultural supply and demand estimates And kind of that the impact it's had then on the crop markets and also provide a brief brief update on some of the new information We're getting about the railroad union negotiations that are going on right now Before I begin again, I want to apologize for not being with you in person today I had a scheduling conflict and so um, this is the best alternative was to try and record my presentation And then provide it during our webinar So again, if you have any questions or think of something later on that you'd like to ask or want to contact me Here's my contact information. I'd be happy to visit with you So first let's go to uh the Kind of the the big buzz or big information that came out on monday This is the thing that impacted the markets the most Uh an update in the yield forecasts Now technically usd made small revisions downward Cut a small reduction in both planted and harvested acreage for both corn and soybeans As well as a reduction in the yield now the yield numbers captured most of the press But the the uh, there was also some some minor acre deductions. So Let's just really quickly review the blue line on top Is the average trade estimate Again, a lot of the news companies will do a survey of of the private forecast and say what do you expect To see in the report and this really becomes the basis for comparison So the blue line on top is what the trade was expecting to see kind of what the average guess was We also next line down is the highest trade estimate The lowest trade estimate and then what we got last month from the august wasd The red line on the very bottom, of course, is the numbers that we did receive From the report. So let's let's kind of compare the the blue line versus the red line when we look at yield The yield numbers were actually very very close to what the trade was expecting But the reduction the kind of the surprise was the reduction in production The total bushels produced again because of that minor adjustment in the in the planted and acreage yield numbers On the soybean side, that's really where the shock value was So the trade was expecting a national average yield of about 51.5 as a forecast coming out of usda We actually got 50.5 a bushel drop in soybean yield is a pretty significant drop, especially in one month period um Part of that again is the the reduction in production when you look at the production numbers was was because of the planted acreage But a large portion of that was because of the yield numbers So again, we want to make sure that we understand what did usda do what it was the change this month from what they had previously Obviously another month worth of information is transpired We got a better idea from a sampling standpoint what that crop might look like But in september The september report usd realized on farmer survey information They survey farmers and say what do you expect to see on your farm? They use satellite imagery or what they call remote sensing to try and also estimate and get a better picture on a larger scale of what's happening But in september for both corn and soybeans. They also Hire enumerators they hire people to actually go out into a randomly chosen fields and do spot checks They actually do yield estimates very similar to what a crop insurance adjuster would do So they combine the information from these three sources To try and come up with what would they expect to see for a national average yield? So again as we move through time, we're going to get better and better information probably more reliable forecasts I do think one of the reasons my personal opinion one of the reasons that both corn and soybean yields dropped as far as they did Especially soybean yields is because of some of the drier conditions in the western corn belt in particular nebraska south dakota Parts of southern minnesota and parts of western iowa It's not that they're going to have major yield drops But I do think because of the drier conditions the test weights might be showing up a little bit lighter than what we had first expected So when we translate that into what does that mean for bottom line when we when we try and forecast or predict How much grain are we going to have in reserve at the end of the marketing year? So about 12 months from now The red line on the bottom is the information that we got in the report on monday The blue line on top is what the trade was expecting to see Now as usda cuts their production numbers They have to make some adjustments in the usage numbers the consumption numbers Now there were very little changes in the wheat balance sheet There was a few minor adjustments, but very small changes on the corn side There were again some minor reductions because we saw some changes in the in the production side So again, we don't have as many bushels We expect prices to go up to help ration that usage a little bit Most of the change was a small reduction in feed the forecast for feed consumption and a small reduction in ethanol But again relatively minor changes the big shift of course was on the soybean side So the reductions in soybeans almost all of not quite but almost all of those reductions came in the form of reduced forecast for exports So right now the current forecast is that the domestic crushing will be larger than our export values last month They were about equal So almost all of this reduction in yield and capacity has come at the expense of our exports and export possibilities At least again, that's the current forecast So I want to shift back into the the yield information just a little bit to again put put things in perspective for everybody So the red line that bounces around is the national average yield going back historically from 1991 through 2001 That's the time period that usda uses typically about a 30 year time period To project at this trend line yield, which is the blue line So think about the trend line yield as the average yield that we've seen in the u.s adjusted for Technology for essentially better farming practices So really what we're looking at is think about the the blue line as average And then the red line being the actual forecast, especially the dot on the far dotted line on the far right hand side So based on what we know today and the the current forecast expectations coming out of usda's projections We're looking at slightly below average yield Nothing dramatic very similar to what we saw in 2019 as far as a differential between What we what the average and what we actually received But nowhere near the kind of reduction we saw back in 2012, which is that large v that you see So yes, it's going to be a little bit Yields are going to be a little bit lower than average, but not really a train wreck All right, let's shift to soybeans So for a long time now we've been looking at a trend line for soybeans above average And the the current forecast now have basically brought us down to that average so that that usda forecast about 50.5 bushels is really about trend lines So we're looking at kind of an average soybean year Again, we'll wait to see how the weather progresses and what kind of harvest yields We get as we move into the the combines running in the field. We get some verification But right now this is kind of the numbers that the trade is looking for So what does that mean for crop pricing? And I pulled these charts about eight o'clock this morning So it was during that break that overnight between the overnight trade and the and the day trade So this is really before the great day tray started gives you a general idea of kind of what's happening Now for corn we've seen a general uptrend a general upward movement in corn prices since you know about july When we started looking at that there were areas in the core corn belt in particular the western corn But that was starting to have some troubles So we are seeing some bouncing around there's some daily volatility But in general our prices have been coming back up not nearly at the levels that we saw this last spring I really don't my personal opinion I don't expect him to get back to those levels because a lot of that high price that we saw at that point Was because of the risk premium due to delayed planting and some weather issues So we are in the that range right now coming into harvest where we have some very strong pricing Coming into the harvest time period When we look at soybeans a lot more volatility It's still a general uptrend if you all were to draw a trend line You know, I would probably start down here and move a trend line upward Diagonally, but it's kind of a weak trend line. I wouldn't put a lot of emphasis on it So one way of thinking about it is we're also kind of have this really wide trading range And I do think we'll be bouncing around within that trading range I think soybeans in my opinion will have the most price volatility So when we see day-to-day movements upwards and downwards Or weekly movements I think soybeans will be kind of the leader on that front because our our ending stocks are the tightest And there's some new information now coming to the marketplace about what might be happening in south america and the size of the south american crop Which i'll talk about in in some of our future webinars For wheat especially for spring wheat We've been kind of in this trading range between about 860 and about 960 for You know most of the summer and I my opinion again I don't think we're going to really break out of that trading range until Either we get through the end of corn harvest or if we start to hear some things that might change this the Kind of the psychology in the corn market. So I think for the next probably a couple months We're going to see wheat the wheat complex not just spring wheat But also the wheat complex kind of follow what's going on in corn Now there are some wild cards obviously something that happens in russia. Ukraine can make a difference as well But right now kind of shorter term the the things on the horizon that might change the psychology or opinions of the marketplace I think are really going to be driven by the corn market Some last final comments just a brief update on what we've learned so far about the the uh contract negotiations between the unions The railway unions and the railroad I'm just going to read these off and try and provide some context So as of this morning, we have a tentative agreement now This is a verbal agreement kind of a handshake thing Between the major railroads including up a union pacific bnsf burlington, northerns, santa fe csx Norfolk southern and kansas city southern railroads. So those all those are big class one railroads There are three unions that represent about 115 000 workers That were under negotiation and there was this friday One minute past midnight deadline that that everybody had for coming to some kind of resolution Well because of a very long marathon sessions of negotiation There is a tentative agreement now to bring back to the union members for approval So even though that the union leaders and the railroads have kind of agreed in principle The union members still have to vote on this And and and to finalize it to have to actually confirm it Now if the union votes fail, so let's you know worst case scenario this thing fails And we got to go back and kind of reconsider. There's still another cooling off period We don't know the exact length It's usually two to three weeks in length because when when these kind of tentative agreements are put in place The the the terms of that usually have some kind of cooling off period to allow Not only time for the voting, but then if there's any kind of adjustments or refinements They need to make to get approval from the union members They have time to do that without being under pressure for additional strikes So just because one of the unions or several of the unions reject this there is still time To be able to work through some of those negotiations So the moral of the story is this friday deadline this friday at one minute past midnight on friday For a a shutdown either a possible strike by the unions or a lockout by the railroads has been removed So that we've we've got a couple more weeks now to see if we can get this resolved and hopefully keep the system running Just again a little bit more context these negotiations have really been going on for about two years There's 12 different railroad unions that that we're negotiating with the class one railways Nine of them already have contracts in place. They've been able to renegotiate those contracts and have them in place. There were three And these were relatively large unions that were still kind of in negotiations or weren't able to come to some kind of agreement And the thing that made everybody concerned Was okay, what does this do to rail shipments in particular as we're coming into harvest the the corn and soybean harvest And norfolk southern had actually announced that they were going to halt unit train shipments of bulk commodities like light grain like whole today But again, that now has all been put on put on hold. That's been that's been kind of sidelined We're in the in the process now of kind of waiting to see what the unions were doing One more little piece of background information So if there is no agreement if again, we wait these couple of weeks. There's no agreement There's still three possible outcomes So the parties can still negotiate and keep everything going without any kind of a strike by the unions or lock out by the railways The unions could strike or the railroads could lock out the workers, which again would really come to a screeching halt Or congress can intervene it to either mandate extended talks or actually establish an agreement Now again, congress is relatively slow unless they're really really pushed to do something And then they can move care very quickly if necessary. So these are kind of the fallback positions if agreements aren't made My personal opinion is I think we're going to get to an agreement Just because the political as well as the economic impacts for not having some kind of an agreement are just far too large They're just far too extensive So with that, I'll conclude my remarks. Again, I appreciate your patience. If you do have any more questions Feel free to contact me at any time. Thank you very much Okay So I'm going to stop sharing and as you can see a frame isn't available for the for the questions this This this webinar so our next speaker is tim who is He'll be talking about livestock and with that, I think I've shut off my screen sharing. Yes Good afternoon everybody Uh, I wish I had an hour to talk to you because there's so much going on in the of livestock with all the different market classes and so on and And I'm just going to get some highlights for cattle and We'll start off with weather here's which is really really important for cattle And uh has both short and rock bottom on the implications that we don't see in the mid This is the drought monitor day Basically you see west of the Mississippi river a lot of drought and particularly in carol country and Thank you We were okay, but uh Normally dry most of the state now with even some d1 setting in but May oh Compared to last year the tone of the plane is dry in the whole west on the bottom There uh the dark green in our major all-caf areas in the later green more more minor ones It's on a colony basis, but then the red a drought will relate on top of that So the important thing is in the purple circle down in the bottom left hand side 55 percent of our beef collard is an area of drought and so that has A lot of ramifications particularly in the southern plains where it's a dry We've had early movement of the gas and we're forced to liquidating cows We're to the quarter we probably didn't force liquidate many cows this year because uh, you know, thank goodness We had rain and and we had bad but from the overall u.s situation Uh beef cow slaughter So far this year is up almost 14 percent and last year it was up nine percent And so that has a lot of ramifications So this uh slide i was actually going to show you last time in the report came out towards the end of july but this is the Uh july 1st in the report usd does to the inventory report to your january 1st in january 1st report is much more in-depth state-by-state in the july one is only uh for the u.s but uh Uh gives us some kind of mid-year picture of what we can expect for the rest of the year and and beef production and so on So a couple of key points. We did go down again this year So this is the fourth year of liquidation of our beef cow herd on july 1st Uh, we had about 30.35 million beef cows And I think you know, uh brian earlier in his talk mentioned back at that 2014 time period when we had record high cattle prices and what happened to ransom and so on. So we're uh Our our low point in beef cow numbers cyclically You know for a long time here was back in 2014 when we had 29.75 million on july 1st of the 14 And and we're down to 30.35 and that now and you know just above that and so You know, that's certainly going to be supportive to prices in the future and then the big question mark is What's going to happen next year and that all depends on the weather and of course, we still got a lot of drought and we're hoping for more rain and so on Uh, you know the last cycle back there in 2010 11 12 A in the 13 13 admission because the report was severe southern plain drought and now was setting up Similar to what it was back then and so that's one of the reasons why we had those record high prices We're getting down close to those numbers and it doesn't look like we're going to rebuild Next year on the bottom our heifers held his beef cow replacements And so you see there we are in the bottom right hand corner Uh As of july 1st were what uh producers in the u.s and canada to keep for the beef power replacements And that's the lowest number since we started keeping july 1st replacement heifer record from 1973 So we've got a lot fewer replacement heifers and it's still dry and so the likelihood Oh, but for sure by the january report, we will be down again and again very supportive to the price of soap Where are all those heifers obviously, uh, they're not replacement heifers So we some into the feed yards and so a lot of questions i'm getting is why can cattle and feed numbers Stay relatively high when you know similar to last year and even history when we've got a smaller Coward if you're in the answer to that is well, it's twofold one the gulf is forcing later We cattle in in the southern plains and the feed lots Lighter than they would stay on grass which is deeper and then the other big thing is we've got the most on a percentage basis heifers Out of the percentage of total cattle on feed the highest percentage of heifers that we have on this chart all the way back to 2010 so all those heifers in the feed yard means more beef now Uh, so that's a holding crisis a little bit on the fed cattle side But in the future it's even more price supportive because you know, we're killing them and instead of Got some more questions. So I thought I just quickly get this on why the big difference in in calf prices in the southern plains versus the northern plains and again These are average prices for the northern plains. So it's in Nebraska, South Dakota, North Dakota Montana and Minnesota and they're aware, uh, you know prices Are higher in the brass and salt program here. So these would be higher than north Dakota It's a northern plains and then compare that in the bottom to the southern plains, which is the texas Oklahoma, Missouri, Kansas, and big states out there. So yeah, you see a 26 dollar difference from uh, these from the usd a standpoint the same weight and weight of calves And again, drought is part of that and and and they always are lower in the southern plains than up here But it's it's intensified by the drought and they're selling a lot of calves down there And actually in North Dakota, we haven't started selling many calves yet But they're always lower to me because there is kind of a quality issue down there And then corny is usually higher down there in the southern plains because they're deficit You might have a a positive 50 cent to even in some extreme cases depends on a dollar plus basis when when typically we would have a negative basis up here so corn might be a dollar or more higher down there affects their feeder cattle prices and uh, so uh, those are all things there but it's it's quite a big difference and uh, then in normal and and that's the reason drought plus the other reason so let's just go to the prices here by market class and move along here's fed steer prices again the two most important things that affect feeder cattle prices are fed steer prices and corn I'll just end up a little bit on a coronary but you know we're uh that cyclically declining cow herd is definitely showing up on fed steer prices kind of interesting on uh on beef production actually we have record beef production of this year and of course it's intensified by the big calcule we have as well we've got record beef production and yet our prices are quite a bit higher than they were last year last year at this time about 125 and for you know on the average 143 or higher in the northern plains and that again this is the U.S. average so you know we're 20 dollars higher there and and uh and even though beef production is record high but we have fewer numbers and demand is all hit that in a minute who is is holding there and so expect prices to continue up that at least the future is there those red squares uh you know up to 150 by the end of the year and then next year again with that declining cow herd and beef production is going to fall off next year quite likely because we can't uh maintain their level at least hopefully we have now and we will have less so by next year probably you know close to a 155 average going across their lease based on the futures market at that time will be this year's expense so there are better times you know price supportive because of supplies are sure going on there and uh what are you know talking about demand are in spite of pretty high prices there the domestic demand has held fairly good but uh kind of interesting uh on the on the export side uh well last year was a record year for beef exports and this year we're going to have another record year for exports were always a couple of months behind in July numbers here just came out last week and and and again you see the red line there is always what I used for the for the current on those previous shirts in here were above last year and expect that to continue oh just kind of a caveat there you know one of the reasons why we have record exports is since the phase one agreement China has moved from basically uh taking no beef from us to now on the last year so they're our third best customer and again you know with their geopolitical things going on China and Taiwan are kind of a hot spot so you know in order to keep those exports high next year and in those kind of future for the hour we need to keep our exports going and so that would be kind of the same to a lot and we go to our cap prices again you know here's what they've done this year significantly higher than last year but uh you know we're going to have them um close to a million less calves this fall to sell and so the lower numbers are certainly supported even though we've been selling in the southern plains and and uh you know as Brian said you know back in 2014 we were still you know 70 dollars 80 dollars higher than necessarily our record level but quite a bit higher than last year uh just uh you know kind of an expectation here you see that purple arrow down there and usually in the middle of October the last three years attacked in 2018 aren't on here because they have too many lines but they were they're over low for the year there was October 15 too so you know we do that's the big run yes and again we we aren't selling hardly any calves yet but in another month you know the yearling sales are just heavily starting now for the next month or so and they're just kind of keep that in mind is right there in mid-october standard and so we're going to see weekly but by far you know we'll be supported at uh at places higher than unless there's some significant event higher than last year uh you know uh you know 190 to 200 for support maybe higher than that just kind of depends on how far this is so you know the smaller part is definitely showing up on cap prices then we go to the yearling prices kind of the the same story there you see uh um increase in and higher than last year and again on a year on your basis the futures are kind of struggling there are some with corn and so on and and we've had quite a positive basis this year over the futures and and we're seeing that now you know with the uh September futures there are around 180 or more about ten dollars higher than that that's kind of been that all year and again it's just kind of a signal you know you know we've got the higher quality cattle up here as well and we're getting short and and so that uh that gives us pretty supportive here and again the big thing I think we're looking more long term then are those bold uh squares on the top that's the futures market uh for next year again with the smaller supply so uh just end up here corn uh corn is the other part of the picture in feeder cattle prices and you know we're going to continue to see uh volatile uh uh prices I think particularly in the futures market and frame cover this in detail the green line there is corn and he talked about that but you see that opposite relationship between feeder cattle futures and corn and November feeder cattle are the black there and the dashed lines there and then the solid green line is corn he showed you the deep futures it was high in the end on but now they've improved so you know just go back to me there when we had you know a hundred and ninety two dollar feeder cattle futures and corn was out there about 580 and then the opposite as as uh corn went down feeder cattle went back up there with you know just 191 back in mid august but then uh corn going up down and even you know just just this week frame mentioned that but in monday the usd report uh came out we were up there uh you know 20 63 and friday monday then they dropped off two dollars after the report come out and you know the report didn't come out to whatever class we didn't have a lot of time there and then again on tuesday either down again hired with that corn but then you know uh you know uh yesterday and even today now today's is not here but this is yesterday's corn fell off so then that'll out feeder cattle come up the last i looked the same thing corn was was off a little bit to date and so particularly the distant feeder cattle so you see that opposite relationship so again we're going to have to watch corn so that's kind of my end of mine and we're going to turn it over to ron um i am going to talk uh today a little bit about the inflation reduction act you probably heard about this on the news um it's uh a lot of controversy on the name is it really going to help inflation most economists say well it could a little bit but probably it was just a good a good title to use um there is a lot of things in this bill a lot of things are going to be ironed out yet i'm just going to touch on some of the highlights as the agencies get get this bill and they'll they'll they will adjust and and do their do their thing and some of these numbers may change but here's a few of the highlights on there's a projection of 400 billion in tax getting extra tax income from putting a minimum 15 tax on corporations over a billion dollars spending for 369 billion in climate change um projections of reducing the budget uh the deficit by um by 300 billion um also hopefully um getting uh getting uh income from price uh price reform on drugs i'll get into that in a little bit um it also extends that uh uh the the healthcare subsidies for three years those were put in during the pandemic and uh actually if a person wanted health insurance and went on the exchange right now it's very reasonable health insurance and if those subsidies go away things would look a lot different uh there is money also for the for drought relief in in in the western states um first of all the healthcare part uh Medicare um this was they've been trying to do this for years and years and years and uh there's a lot of pressure from the pharmaceutical industry and uh but they do they are going to allow uh Medicare to negotiate drug prices but it's only certain drugs and it really won't start till 2026 okay and then the big thing here was the the insulin and of course we know this the diabetes has gotten to be a real problem in the in the nation and uh for medic these are for it's for Medicare participants only at one time it was for anybody taking insulin uh but they in the compromise of the bill it's it ended up $35 per month max just for medicare participants out of pocket uh capped at 2020 2000 uh for the medicare participants starting in 2025 it also sends and also as i mentioned extends the affordable care act subsidies for three years now the irs funding um about 80 billion going to the irs this is not this is just uh uh some new spending it's not to replace the normal budget for the irs okay and the funding is to remain available through the end of 2031 and there won't be 87 000 new irs agents with assault rifles going after you um here's the breakdown of of how it's how it's uh shaking out here um there will be quite a bit of money for enforcement um so that's where there the there's an assumption that they will collect some more tax revenue because that because of that there will be money going to operations support uh for taxpayer services a lot of people complain about the services and uh at the irs and and uh so they're getting some more money there and also their systems some of their systems are very outdated they're very in need of updating some of their their systems some of their systems are pretty modern but a lot of them are very outdated so there'll be money going for that so that's kind of the breakdown of the irs funding um as far as the climate and energy goes it extends or increases many of the renewable and zero emission credits including incentives for nuclear um it extends the bio fuel credits and create a creates a sustainable aviation fuel credit uh there's a clean hydrogen credit it extends and increases the efficient home energy credits and dr ripplinger may expand on some of these in a later session on some of these energy issues here um as far as the electric vehicle credits um uh many of the many of the provisions were expected going to affect after the end of the year and it will and will hopefully stay in in in effect until 2020 through to uh 2032 unless congress changes it we get a new congress you never know what happens um and for electric vehicles it's it's uh remains at 7500 tax credit at the point of sale there's also up to four uh four uh four thousand dollar credit for used of vehicles and it also removed that cap on on manufacturers if they sold 200 000 vehicles uh so they can sell more vehicles and still have the credit um in the in negotiation for the bill senator christin sim uh semina of uh arizona uh they had they had removed the carry carry carry the interest lou paul but she compromised in order to get her to go for the bill they put that loophole back in and in exchange they they created some exemptions some exemptions for uh depreciation deductions and they had this they added a 1 stock buyback excise tax and i'm not sure exactly what that's all about but but that's supposed to generate some money and kind of offset the carried interest now for those of you don't know what a carry carried interest is it's actually a loophole that that uh um people that manage equity and equity accounts and uh investment accounts not retirement accounts but other other non-retirement accounts they uh they when they get their compensation it's based on a percentage and they get paid uh they get paid uh in a lower capital gains rate and there's a lot there was been a lot of controversy on that uh should they get that loophole tax break but that's back in it on this bill um senator joel mansion west uh virginia uh the demands uh he demanded that there should be some cut to the deficit so basically uh the revenue from stricter enforcement of the irs uh irs rules and the and the more and the more more uh agents to enforce the rules would uh break that up also because of negotiating a medicare uh it would it would reduce uh it would uh make that a little cheaper so that would generate some some revenue um and they also what they also for the irs um they they for the new enforcement anybody anybody earning less than four hundred thousand dollars they weren't going to have a bigger percentage of audits for that for those incomes most of the enforcement and the higher and the higher audit percentage would probably be to the higher taxpayers higher income taxpayers now the egg funding there was some egg funding that was thrown in here and this is what i'm going to concentrate on about 44 billion uh 19 billion for uh 19.5 for farm bill conservation programs 13.3 for rural development 6 billion for fsa uh farm loans and uh 5 billion for forestry and here's how it breaks down about 45 percent then is for conservation and the next biggest percentage is for uh for the rural development um i'll quickly go through these charts uh the as you can see here it it doesn't all happen all just in one year uh most of it the rural development comes right away but some of the some of the conservation type programs will be spread out over over the years is um as as well as the the uh a little bit rural development gets spread out over the years but but so it kind of breaks down based on year um here's the percentages for the conservation program and all those acronyms there the equip program the conservation stewardship program and most of it actually goes to the equip program about 43 percent and they have the the egg conservation easement program there that would be the one that's in kind of the yellow color and then technical assistance and other just is about seven percent that's how the conservation money breaks down um as far as the rural development a lot of it a lot of it goes to rural electric co-ops probably for maybe be upgrading the the grid to some to some point and there's renewable energy loans the the the rural rural energy and i was trying to remember the rural energy what was that acronym i got my notes here uh the rural energy for america that's a program there's money for that and so anyway most of that is is up front in 2022 and 23 for fsa they've got some administrative money there most of it goes for distressed borrower assistance or discriminated fsa borrowers okay for forestry some administration there uh national forest system state and other governments get money regarding that so break breaking it down here on the conservation easements uh about 4.5 billion over the uh in budget authority uh plus another 1.4 billion in budget authority mainly going to focus on on uh reducing or avoiding uh uh reducing carbon dioxide and methane and nitrous oxide emissions and then the and then the um the rural conservation partnership program rcpp um there again five uh three billion plus 4.95 billion and then that's going to mainly focus on soil carbon improvement reduced nitrogen losses and uh so and reduce and and reduce carbon dioxide and methane so there are a lot a lot of conservation in uh uh program in in this bill so with that i will stop and i'll answer questions at the end and i'll turn it over to dr ricklander yeah so i'm going to talk just briefly about uh some things that are going on europe and how it impacts us agriculture we've already experienced this for the last 12 months in the form of higher fertilizer prices that and other issues are likely to persist and i thought that would be worthwhile to cover at least briefly uh this week uh so i'm more all familiar russia invaded ukraine earlier this year a little over six months ago uh things did not go as planned in many respects for russia or for the west uh everyone was expecting a quick resolution um but that's not what happened the the real expectation was that russia would be able to achieve their goals in short order with with little to no western involvement uh basically because there'd be a lack of time to respond again being over within a few short weeks and also because in some respects europe's hands were tied or they were you know limited at least in thought due to their reliance on russian energy specifically natural gas but also oil um you know that's certainly not what happened covering things we already know both ukraine and russia are major exporters of a variety of grains and oil seeds talked specifically about weakness charts um basically you know they play a critical role in in providing food to to much of the world um same thing for for fertilizer focusing specifically on nitrogen fertilizer uh because it is almost entirely made of natural gas uh around the world russia both produces a lot of natural gas as well as nitrogen fertilizer including in urea which this chart shows of and again you can see that they're 14 percent of global urea exports in recent years uh now here's kind of getting cut into the chase um natural gas prices so actually converted these these are for the netherlands uh natural gas contract um pick this up earlier this week basically what we see is their price again so this would be the same measures we'd have here in the united states so us dollars per mmbtu uh what we've seen you know in just a little over the last year is prices increasing more than 10 fold uh and they still persisted at that level and that's uh wrecking havoc on industry and again it's a signal um to a variety of folks of what they need to do again they're they're tremendously short natural gas and they're trying to figure out how to prepare for that how to ration and the like um looking forward uh you know we're expecting natural gas prices in europe so this is taken on monday so this is the forward curve so basically all of the the upcoming futures contracts month that price taken on monday morning again for these prices to persist you know at even 25 dollars per deco term you know three four years from now and this is three times what it is in the united states and the reason it's it's that the united states price has followed this to some extent is because we have been exporting liquefied natural gas uh two year from rebalancing things out but again right now the price of natural gas in europe is is about eight times what it is in the united states and about 20 times of what it might be in in a in an average or normal period in united states uh with the exception of what's going on and again if you think about natural gas and the role it plays in heating uh processing and the like power generation it's it's really a big deal particularly to europe but again it extends to us especially when we think about fertilizer uh one thing just to note uh food security energy security is this idea that you have both physical access and the ability to pay for food or energy uh the europe is the united states is really the only food and energy secure country in the world uh the exception that might be russia um but the idea here is that you know europe was really put in a spot prior to the war and is still in a spot coming into this next winter and now we're starting to hear what the EU as a whole is planning for winter as as well as additional plans uh for individual countries uh caps on revenue for those in the utility business taxes on any windfall profits uh direct subsidies to households for heating and possibly for power rationing so specific limitations on how much power different users can can use in the next six months and then also lines of credit to me to make sure there's liquidity in the markets um kind of a joke here but things are serious kind of the first story in in what's going on so we're starting to see agribusinesses shut down processes shut down in this case it's it's a polish brewery um which is shut down uh when you can bottle a typical practice is you put a little co2 in the top and if you don't have that co2 to finish that bottling process you don't do it so this this coralsburg polska has stopped brewing beer um other brewers to follow suit again this is it's kind of funny but it's also semi serious because when we start messing with the food supply uh national stability actually does come into question i'm just looking at what this means for agriculture focusing first on your epidemic and just naturally think what it means for united states uh we we're seeing a lot of fertilizer plants shut down cf in in in great britain actually shut down last year about this time because of high natural gas prices and poor margins as of right now we have more than a fourth of the e u's nitrogen fertilizer production capacity uh currently mothball and we don't know exactly when they're going to come back uh looking towards the winter there's a lot of concern that there will not be power or natural gas for heat for a variety of food manufacturers including millers and bakers dairy processors vegetable processors and the like one thing to note is that right now that the story uh coming from europe uh and from the financial sectors that europe has enough natural gas to get through the winter to provide heat to households period hard stop you have a cold winter they're short if you actually want to use some of this for industry or power generation they're in trouble um so take that for what it's worth one of the questions i have kind of longer term is first we're seeing a shutdown but also i think there's implications for the the citing of future agribusinesses food manufacturers i can't imagine why anyone would be really excited to put a facility in europe uh when natural gas prices are going to be high supplies are unstable and the like um quote from food drink europe which is the large agribusiness food manufacturing industry group there uh their executive director last week provided the quote which i think is pretty pretty poignant which is no energy means no food um so those were my comments i've got a hard break so i'm going to hand it over to brian to to manage questions uh for the rest of the webinar thanks everybody for joining and we'll be back in a month um with that brian before it is yours all right thanks dave so uh dave has to log off so uh we have some time for ron or myself or tim to field any questions as i said uh frane had a previous engagement so he's he's uh off but you can contact him if you have any so are there any questions well while i'm waiting for anyone to type any questions in the uh chat or question and answer that they might have i can take this uh a moment to uh mention that we have a new member of our ag business and applied economics extension team uh dr john biermarker i believe his title is integrated livestock specialist and he may be joining our uh monthly webinar series with information that he will be presenting on the topics that he covers uh within within extension as well and he's on here uh kind of listening right now but i just want to let you all know that that happened and he's here now on campus and in the future we um we might be hearing from him on on these monthly webinars uh also hopefully you're finding a lot of value in these in these monthly webinars that we're putting on and uh thanks for thanks for watching and we'll uh i guess see you next month