Good morning. This is Bob Bragg. Welcome to the March 3rd edition of Farm News & Views
Drought conditions are intensifying in the western U.S.,with the Four Corners Region having the largest area of extreme drought. California’s snowpack is at 46% of normal, which is concerning because the Sierra Nevada mountains provide about one third of state’s water supply and when storms don’t come from California, the Four Corners Region is usually shot of snow. This is borne out by the latest SnoTel Report, which indicates that the Dolores, San Juan and Animas River watersheds are less about 90% of normal. However, snowfall during March often adds significant moisture, and the National Weather Service long range forecast indicates that there is some chance of more normal precipitation over the next 30 days both in California and the Four Corners Region.
Grocery shoppers have seen low prices for chicken recently, mainly because large chicken companies increased production, which created a glut of chicken in the market place. Egg sets and chick placements are trending 4% higher than last year, and the U.S. Department of Agriculture report that the country is set to produce a record 45.3 billion pounds of broiler meat in 2020. According to Joe Sanderson Jr., chief executive officer of Sanderson Farms Incorporated, most of the increased production will be consumed by the chicken sandwich craze that’s sweeping the United States, and he predicts that chicken sandwich wars between fast food companies will bailout the oversupplied poultry industry, while also providing good value for shoppers.
Yesterday, the New Your Stock Exchange recovered some of the losses from last week’s plunge, but concerns about the Coronavirus continues to affect commodity futures markets. Wheat and feeder cattle, two commodities important to the Four Corners Region took a took a hit last week. March wheat ended the week down 38 cents from the opening bids on Monday morning, and feeder cattle lost $9 per hundred weigh over the same time period, sparked by concerns about domestic demand for beef, and lost exports to Japan and South Korea, two of the top buyers of U.S. beef. While cash prices are what farmers and ranchers receive when they sell grain at a local elevator or cattle at a sale barn, futures market prices influence cash prices at the local level.
Futures contracts are usually traded on organized exchanges that set standardized terms for the contracts, for example 5,000 bushels of wheat. When farmers plant their winter wheat crops in the fall, they don’t know what the price of wheat will be at harvest in July, but the futures market provides both indications about what wheat prices are expected to be in the following July and the opportunity to hedge the price of wheat when they harvest their crops by selling a contract based on the July futures price offered on the exchange. Wheat prices on the futures market go up and down based on factors like weather conditions around the world, demand from consumers and export markets. Because futures contracts have a delivery clause, most contracts are offset by the holder buying back the contract before the contract expires, because the delivery point is usually not close to where the wheat is produced. This delivery clause ensures that futures prices and cash prices will converge at the end of the contract period, and in turn, provides local elevators with the value of wheat that farmers deliver to the facility for sale. Local elevators hedge their purchases by buying futures contracts that they will hold until the wheat is delivered on up the marketing chain some time in the future. Although speculators are often seen as the bad guys in the process, in reality, they take on the risks associated with the market and help to provide price stability. If farmers don’t hedge their crop, they become speculators at the mercy of supply and demand factors over which they have no control.
Colorado is the only state that has announced that all of the feral pigs in the state have been eradicated, according to Travis Black, deputy regional manager for the Southeast Region for Colorado Parks and Wildlife. Wildlife agencies consider feral pigs an invasive species on steroids, wreaking havoc on endangered species, disrupting indigenous wildlife, harboring diseases that affect domestic pigs, and damaging crop fields and pastures in 38 states. While populations of feral pigs have existed in the deep south since the introduction of pigs to the continent in the 17th Century, over the past three decades, the destructive animals have moved north with help from people who wanted to hunt them. Black points out that there’s no doubt that the Colorado pigs were illegally brought into southeastern Colorado about 20 years ago, and it’s taken two decades to eliminate the population, because feral swine can adapt to most habitats and they have relatively high reproductive rates.
Mark Twain wrote, I am an old man and have known a great many troubles, but most of them never happened.