December 2017
Ag Insight

Ag Insight

Steer Weights Running Lower

Steer weights in 2017 are lower than a year ago, driven by an aggressive marketing of slaughter-ready animals in feedlots, especially compared to a year ago, due to greater profit margins for retail meat packers than in 2016.

Still, steer weights remain above their 10-year average, a period when 2011-13 corn prices averaged over $6 per bushel.

Seasonality of steer dressed weights is largely determined by biological factors and weather-related impacts on animal growth. Seasonally, steer weights tend to increase from the spring months then decline from late-fall into the early-spring months.

The long-term trend, previously marked by sustained growth in dressed weights, is due to improvements in cattle genetics through selective breeding and the implementation of modern production systems.

For steers, several factors interact to influence year-to-year changes in carcass weights, including producer response to market prices of outputs and inputs (feed and feeder animals); weights and age at which animals are placed into feedlots; and animals’ biological responses to abnormal weather.

 

Apples First in Total Fruit Consumption

 

Americans consumed an average of 115.4 pounds of fresh and processed fruit per person in 2015, the most recent period for which full-year data is available.

The data takes per capita supplies of food available for human consumption and adjusts for some of the spoilage, plate waste and other losses in eating places, grocery stores and homes to more closely approximate consumption.

Apple juice consumption at 14 pounds (1.6 gallons) per person in 2015, combined with fresh apples (10.7 pounds per person) and canned, dried and frozen apples (3.3 pounds per person), puts apples in the No. 1 spot for total fruit consumption.

While orange juice leads juice consumption at 23.7 pounds (2.7 gallons), total orange consumption, including juice and fresh, came in second.

Americans consumed 11.3 pounds of fresh bananas per person in 2015, almost a pound more than fresh apple consumption. Consumption of grapes reached 7.9 pounds per person, and strawberries, watermelon and pineapple rounded out the list of the nation’s top fruit choices.

 

Sub-Saharan Africa Increasing Rice Consumption

After 10-15 years of economic, social and demographic transformations, Sub-Saharan Africa appears to be poised for major changes in its dietary preferences.

Among the poorest regions in the world, the area still faces major political and economic challenges, and low food security. However, it has a young, fast-growing population and prospects for economic growth.

Expanding urbanization and a rising middle class with higher incomes are driving changes in consumption patterns and preferences away from traditional staples and toward rice and other commodities.

Rice consumption has expanded in the diets of many SSA consumers at the expense of sorghum, millet, and roots and tubers. On a per capita basis, West African nations, collectively known as the Economic Community of West African States, have seen the largest increases in rice consumption.

Excluding Nigeria, which reduced its rice consumption because of declining oil revenue and limited foreign exchange reserves, the remaining ECOWAS countries recently surpassed the global per capita rice-consumption average. These countries are projected to increase their rice consumption further to nearly 70 kilograms per person by 2026.

If the projections are realized, SSA, as a whole, has the potential to become the world’s leading rice importer.

 

Federal Indemnity Payments Closely Tied to Drought

 

For farmers and ranchers in most parts of the nation, it comes as no surprise that drought has been the largest individual driver of federal indemnity payments and disaster assistance for over four decades.

At any given time, some portion of the country faces drought conditions. In recent years, large areas of the United States have experienced prolonged drought, with significant impacts across entire agricultural sectors.

A major drought can reduce crop yields, lead farmers to cut back planted or harvested acreage, reduce livestock productivity and increase costs of production inputs such as animal feed or irrigation water.

Since the Dust Bowl in the 1930s, drought has been an important focus of U.S. farm policy. Early federal policy mitigated farmers’ hardships primarily by providing ad hoc disaster assistance in response to a drought.

With changes to the federal crop insurance program in the 1990s, the emphasis of farm programs shifted from ad hoc disaster assistance to risk management, with a greater reliance on crop insurance to compensate farmers for drought losses.

 

Wheat Price Discovery is Shifting

The United States has led the world in the pricing and trade of wheat, but that dominance is shifting somewhat.

Over time, a substantial share of world wheat exports has shifted to Russia and Ukraine (collectively, the Black Sea region) and the European Union. At the same time, U.S. wheat futures (contracts for the purchase/sale of wheat at a given price on a future date) prices are being supplanted by new price benchmarks that more closely track supply and demand conditions in the Black Sea region and the European Union.

While the Chicago Mercantile Exchange Soft Red Winter Wheat futures contract is the most active wheat futures market in the world, futures trading volume has grown substantially for the Euronext Milling Wheat contract traded in Paris. Rising volume indicates a market may be more important for price discovery, the process by which markets determine the value of wheat through trades between willing buyers and sellers.

Findings from a new study by economists at USDA’s Economic Research Service and Montana State University suggest that, while U.S. futures markets remain dominant in wheat price discovery, the Paris futures market has gained influence since 2010, moving from a 9-percent share of price discovery to nearly 25 percent.

 

Rural Veterans Earn More Than Non-vets

 

Veterans tend to have higher earnings compared to nonveterans and that reality also applies in most rural-based industries.

In 2015, rural veterans, who were full-time wage and salary workers, had median earnings of about $50,000; $11,000 more than the median earnings of their nonveteran counterparts.

Earnings for veterans and nonveterans varied by industry, however. For example, compared to nonveterans, the median earnings for veterans was $29,000 higher in financial services, $20,000 higher in education and health, and $11,500 higher in transportation and utilities.

Differences in median earnings by industry between veterans and nonveterans generally track closely with educational attainment. However, in 2015, even in industries where fewer veteran than nonveteran earners had a college degree, the median income for veterans was near or greater than that of nonveterans.

This may be explained by a variety of factors, including differences in demographic composition and job skills. For example, veterans tend to be older and are predominantly male, and thus on average more likely to have higher earnings than the general population.