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CoBank releases quarterly research report on rural industries

by Wyoming Livestock Roundup

CoBank, a part of the Farm Credit System, was formed in 1916 by Congress and provides a quarterly research report offering a broad view of rural industries. 

CoBank’s latest research report, “Higher for Longer – A Drag on Rural Economy,” published Oct. 11, discusses how rural economies are hurting as they battle inflation, interest rates and the surging U.S. dollar. 

Economic outlook

“Higher for longer is now the trending catchphrase among market watchers,” states Rob Fox, CoBank director of the Knowledge Exchange research division. “The average new 30-year fixed-rate mortgage is currently sitting at 7.4 percent, the highest since President Bill Clinton was in office.”

Federal Reserve Bank of Boston President Susan Collins reports, “Rates may have to stay higher and for longer than previous projections had suggested, and further tightening is certainly not off the table.”

The September Federal Open Market Committee reports, while federal committee members view rates as being at or near their cyclical peak, they believe rates will remain plateaued above four percent into 2025.

“The events which occurred during 2020-22 resulted in a historic situation where commodity prices and the U.S. dollar were both moving upward in tandem,” Fox continues. “As those events fade as market drivers, an inverse relationship between commodities and the U.S. dollar returns.”

Fox explains, “A strong dollar makes U.S. exports more expensive and imports cheaper – hurting both rural economies, including agriculture, durable goods manufacturing, mining and forest products.”

Crop commodities

remain steady

Tanner Ehmke, CoBank’s lead grain and oilseeds economist, reports grain and oilseed processing margins remain strong and are expected to end 2023 above average.

The U.S. Department of Agriculture (USDA) estimates the 2023-24 U.S. corn crop at 15.134  billion bushels, up 10.2 percent year-over-year but absent from the U.S. corn export sales is China, where sales are down 64.8 percent year-over-year.

The USDA also reported U.S. corn inventories were at 1.361 billion bushels as of Sept. 1 and are lower than market expectations.

“Soybean export sales are also sluggish in the absence of Chinese demand, with outstanding sales at the start of the new crop year, down 36 percent year-over-year, with Chinese sales down 48 percent year-over-year,” he notes. “Smaller exports are expected due to a smaller harvest this fall, with the U.S. soybean crop pegged at 4.146 million bushels, down three percent year-to-year following a season of prolonged heat and drought in the Midwest.” 

At the end of the 2022-23 marketing year, on Sept. 1, soybean inventories totaled 268 million bushels, down 2.2 percent year-to-year and wheat stocks totaled 1.780 billion bushels, up 0.1 percent year-over-year, reports USDA.

“Texas’ drought is continuing to support cotton prices in the face of falling global demand,” Ehmke explains. “The U.S. rice harvest is muting market volatility, spurred by India’s rice export ban.”

He concludes, “Sugarbeet production is expected to rise 1.1 percent to 5.223 million short tons, raw value, with key states benefiting from ideal growing conditions, but a slowing economy has impacted sugar consumption in the U.S.”

Livestock update

CoBank Lead Animal Protein Economist Brian Earnest reports beef demand is still strong, but the pork industry continues to struggle.

“At the beginning of the summer, the El Niño pattern suggested feed and forage conditions would improve for livestock producers. However, temperatures reached record highs this summer and drought deepened in some areas, limiting feed supply and feed conversion,” he states.

According to the U.S. Bureau of Labor Statistics (BLS), higher overall input costs sent the producer price index for meat to record levels in August, up 11 percent year-over-year. 

Earnest notes, “While costs rose by 11 percent, the consumer price index for meat at retail was up just four percent in August, and beef prices set new all-time records this summer.” 

“But, there were some exceptions. Pork struggled during the third quarter with the Supreme Court’s decision to uphold California’s Proposition 12, but the pork market did encounter a rally as pork prices dropped, encouraging consumers to buy pork,” he adds. “But, prices for chicken breast meat were heavily discounted to stave off inventory accumulation.”

As a result of production outpacing demand, at least six primary poultry processing plants will close this year, which will unquestionably hinder growth.

USDA estimates the 2023 U.S. beef total output will be down five percent and expects an additional seven percent decline in 2024. 

“This staggering decline comes amid ongoing – and incredibly robust – consumer demand for beef,” Earnest adds.

Dairy outlook

Corey Geiger, CoBank’s lead dairy economist, states, “Dairy could rebound from summer setbacks as USDA economists revised and lowered their 2023 all-milk price projections by a whopping $2.05 per hundredweight by mid-year.”

“With cheese output booming and ample supplies of milk, Midwest Class III spot prices dropped to $6.50 to $8.50 under federal order values as these low spot prices traditionally take place in late winter and spring, this year’s swoon was well below the five-year average,” he adds. “Midwest Class III spot milk prices eventually turned positive in early August, largely lifted by slowing milk production in both July and August.”

As fluid milk sales continue to spiral down and as record beef prices continue to climb, it triggered dairy farmers to send more cows to packing plants.

Geiger notes, “In mid-September, 2.1 million cows were slaughtered, up 108,000 head over last year, but the pace of culling should back off with an improved milk price outlook.”

“Futures markets indicate the final quarter of the year could be much better than the summer with a projected $17.30 Class III and a stronger $19.70 Class IV price,” he concludes. “The biggest wild card for milk prices is China, the world’s leading dairy-product importer.”

Food and beverage spending 

BLS states, “With food spending increasing by 10 percent and hitting a record high in 2022, coupled with a 4.3 percent increase in 2023, consumers are responding by purchasing lower-cost items as needed.” 

CoBank Senior Analyst for Food and Beverage Billy Roberts states, “Spending trends reflect a consumer who is interested in an eating experience which saves time and money, and these behaviors are expected to continue as inflation rises and difficult economic conditions persist.”

“Consumers do not necessarily appear to be eating less. However, their reduction of purchases from frozen and shelf-stable products suggests they are not stocking up or refilling pantries and freezers, but rather are seeking lower-cost items on more of an as-needed basis,” he continues. “Typically, higher-priced categories have felt the impact. Products bearing organic claims have shown notable declines, as have sales of plant-based meat alternatives.”

Stay up-to-date with CoBank’s quarterly research reports featured in future editions of Wyoming Livestock Roundup.

Melissa Anderson is the editor of the Wyoming Livestock Roundup. Send comments on this article to

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