READ the NAFB’s National Ag News for Monday, July 19th

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Rural Mainstreet Index Stays in Growth Territory

Creighton University’s Rural Mainstreet Index stayed above growth neutral for the seventh month in a row. The monthly survey of bank CEOs in areas that rely on agriculture and energy shows that the June index fell to a still strong 70.0 from May’s record high of 78.8. The index ranges from 0 to 100, with growth neutral at 50.0. Almost half of the bank CEOs say their local economy expanded between May and June. Dr. Ernie Goss, Mainstreet Index chief, says, “Strong grain prices, the Federal Reserve’s record-low interest rates, and growing exports have underpinned the Rural Mainstreet economy. Even so, current rural economic activity remains below pre-pandemic levels.” While the index number is still solid, several bank CEOs raised future concerns this month. Steve Simon of South Story Bank in Iowa says, “Continued dry conditions will start to affect markets and crops soon.” Bankers were asked to list what they thought would be the greatest threat to 2021-2022 bank operations. Approximately one quarter said a downturn in farm income, and another one-in-four named rising government regulation. For the ninth straight month, the farmland price index also advanced significantly above growth neutral, coming in at 75.9 in June.

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Interest Rates for Operating Loans Rise Slightly

Interest rates on agricultural loans made by commercial banks increased slightly for some types of lending. However, the Federal Reserve of Kansas City says rates stayed historically low through the first half of this year. The average rate on non-real estate loans was about 30 basis points higher than the all-time low reached at the end of 2020. The rise was largely consistent across all types of loans. In contrast, the average rates on farm real estate loans continued to decline and marked another historic low. Rates also remain comparatively low at the largest commercial banks, and those lenders offered a sizable discount for the lowest-risk loans, while the smaller lenders continued to provide similar accommodation regardless of the risk. The Fed’s report says despite the slight increase in rates for operating loans, the historically-low-interest rate environment and muted demand for agricultural lending suggest that interest expenses have remained low relative to recent years. Profitability in the sector also continued to be supported by strong prices for most major commodities. The slight decline in financing costs for farm real estate may also provide ongoing support to farmland values.

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Germany Discovers ASF in Domestic Hogs

Late last week, the first cases of African Swine Fever in domestic hogs appeared in Germany. Reuters says the ASF discovery could make negotiations about lifting existing import bans with China and other major buyers more difficult. However, experts predict no major impact will hit the German pork market right away. The disease was confirmed last Friday on two small farms in the same location where more than 1,200 cases have been found in wild boar. It likely won’t have a major impact on the country’s pork market because Germany’s exports are already subject to bans from many countries outside of the European Union. China and many other pork buyers banned German pork imports back in September of 2020 after the first ASF case was confirmed in wild animals, but German pork sales to other members of the EU continued. “The discovery of ASF on a German farm doesn’t change the overall situation that much with import bans already in place by China and other importers,” says Justin Sherrard, Global Strategist for Animal Protein at Rabobank. “They cannot restrict trade any further when trade is already stopped by other countries.”

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Groups Ask USTR to Not Threaten Vietnam with Tariffs

The American Soybean Association and 70 other business groups expressed concern to U.S. Trade Representative Katherine Tai regarding proposed tariffs on Vietnam. The imposed tariffs would respond to a pair of Section 301 investigations initiated under the Trump administration, alleging “currency manipulation” and “illegal timber practices.’ In a letter sent last week to the ambassador, the organizations strongly urged the USTR not to use tariffs in response to either of those investigations. The letter cited the U.S. Treasury Department’s congressionally mandated “Report on Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States,” which says there is “insufficient evidence” that Vietnam manipulates its exchange rate. Concerning Vietnam’s questioned logging practices, the groups feel an investigation by the Animal and Plant Health Inspection Service under the Lacey Act would be the most appropriate tool to use and not a Section 301 investigation. Vietnam is a top ten market for U.S. soy exports and would be a potential target for retaliation from Vietnam.

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Corn and Soybean Export Sales Drop

The USDA says export sales of corn and soybeans both plunged, while wheat sales rose during the week ending on July 8. Corn sales during the week totaled 138,800 metric tons, a 20 percent drop from the previous week. Still, that’s a 31 percent improvement from the prior four-week average. Japan was the biggest corn buyer at 191,500 metric tons. Sales for the 2021-2022 marketing year that begins on September 1 totaled just over 133,000 metric tons. Exports for the week dropped 18 percent to 1.06 million tons. Soybean sales dropped 66 percent to 21,700 metric tons during the week ending July 8. That’s also down 76 percent from the previous average. Indonesia was the top soybean buyer at 61,500 metric tons. Sales for the next marketing year came in at almost 291,000 metric tons, while exports dropped 11 percent to 197,700 metric tons. Wheat sales were the more positive number, rising 46 percent week-to-week and 44 percent from the five-year average. Unknown countries were the top buyers at 132,700 metric tons of wheat. Exports for the week dropped five percent week-to-week to almost 366,000 metric tons.

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NCBA Making Free Trade Show Admission Available for FFA Members

The yearly Cattle Industry Convention and NCBA Trade Show bring together producers and their families from across the country. This year’s event is August 10-12 in Nashville, Tennessee, and it will also provide an opportunity for the industry’s youth to gather, learn, and share ideas. To encourage young people to participate, Culver’s is sponsoring “FFA Day” at the NCBA Trade Show on Thursday, August 12. The first 250 FFA members to register will get complimentary NCBA Trade Show admission, courtesy of Culvers. The restaurant chain will also share their custard during a “blue jacket social” for FFA members and alumni on August 12. “The future of the industry depends on the next generation, so we encourage FFA members to join us in Nashville,” says Kristin Torres, NCBA executive director of meetings and events. “The NCBA Trade Show offers so many educational and networking opportunities that it is important for young people to attend and gain valuable experience.” FFA members should use the code “FFACULVERS” to get free admission. Those members who don’t get a chance at the free tickets can still get a significantly discounted rate of $30 per person.

SOURCE: NAFB News Service

By Brian Allmer - The BARN

Tucker Allmer & the BARN are members of the National Association of Farm Broadcasting (NAFB), the Colorado FFA Foundation, the Colorado 4H Foundation, the Colorado Farm Show Marketing Committee, 1867 Club Board Member, Denver Ag & Livestock Club Member, the Weld County Fair Board, the Briggsdale FFA Advisory Council, Briggsdale 4H Club Beef Leader & Founder / Coordinator of the Briggsdale Classic Open Jackpot Show.