Economic recovery remains fragile, but rural industries show signs of improvement

Although the U.S. economy has been improving since late spring, prog­ress has slowed measurably and will likely remain sluggish through the end of the year, according to the latest analysis by CoBank’s Knowledge Exchange division.

With COVID-19 cases stubbornly high—especially in rural areas—and cooler temperatures forewarning a return to the indoors, the quarterly report by CoBank indicates economic progress ahead will be slower than the gains already achieved.

However, essential rural industries are finding new ways to survive and even thrive, despite the pandemic, said Dan Kowalski, vice president of CoBank’s Knowledge Ex­change division.

“The good news, at least from an econom­ic standpoint, is that many rural industries have begun to turn the corner,” Kowalski said. “This is particu­larly true in agriculture. A weaker, steady dollar has supported a price recovery in most agricultural commodities.”

The U.S. ethanol sector continued to recover during the third quarter to a new baseline level equaling roughly 90% of pre- COVID demand. Recent developments surrounding E15, small refinery exemptions, federal relief and another delay on Brazilian import duties appear to be incremental positives for ethanol.

Large grain sales to China along with recent reductions in ending stocks and expected production have provided a rally for U.S. grain farmers. Strong export sales were a major driver of recent positive commodity price performance. However, China has a propensity to announce but not close grain purchases, so whether those imports will happen remains a lingering question.

Farm supply retailers navigated through a volatile, yet success­ful, growing season. Harvest has been strong despite crop damage and stress caused by extreme storm activity and dry weather. Direct government payments to agriculture producers throughout 2020 could result in higher prepayments to farm supply coop­eratives during the fourth quarter in advance of the spring 2021 planting season.

The U.S. beef complex ended the third quarter in a far better position than where it started. Over the last three months, boxed beef cutout has climbed 5%. This helped lift cattle prices by 10% since the low around Independence Day. Profitability for cattle feeders has improved to break-even levels on a cash basis, and packer margins have remained elevated.

Renewed optimism for trade is the bright spot for the U.S. pork sector after exports slowed significantly over the summer. Ger­many discovered African swine fever (ASF) in wild boars, leading many markets to ban pork exports from Germany. Lean hog futures have spiked on this news. Hog producers are expected to lose $7 per head in the coming quarter and see positive margins of $15 to $20 per head in the first half of 2021.

Dairy markets remained mired in volatility last quarter with milk and cheese prices ending on a strong note. The recovery in milk prices has already incentivized more dairy production on the farm. Federal programs also helped provide financial cushion for some struggling dairy producers last quarter.

The reopening of restaurants in the third quarter was welcome news for specialty crop producers and processors with food-ser­vice contracts, although the expected rise in COVID-19 cases this fall could cause greater uncertainty. Produce sales at retail grocery stores, however, remain above year-ago levels and are expected to remain higher than prior years for the foreseeable future.

Much more information is available in the full report at cobank.com. Each quarterly update covers key industries represented by CoBank, a $152 billion cooperative bank serving agribusinesses such as MFA Incorporated across rural America.

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Waste not, want not

The University of Missouri in Columbia has been awarded a grant of nearly $300,000 to expand anaerobic digester capacity in the state.

It’s part of an EPA-funded project to help reduce food loss and waste and divert it from land­fills. MU is among 12 universities and organizations nationwide to receive a total of $3 million in funding toward this effort.

Anaerobic digestion is a process in which micro-organisms break down organic materials, such as food scraps, manure and sewage sludge, all in the absence of oxygen. The process re­sults in the production of biogas, which can be captured and used for energy production, and “digestate,” a nutrient-rich product that can be used as fertilizer.

The MU project seeks to increase the use of anaerobic digestion and improve digestate man­agement by establishing partnership programs and trainings for farmers, schools, businesses and governments. The university team will be led by Dr. Zhiqiang Hu of the Civil and Environ­mental Engineering Department.

In the United States, food waste is estimated at between 30% and 40% of the food supply and is the single largest category of material placed in municipal landfills. According to the EPA, anaerobic digestion is preferable to incinerating or dumping food waste because the process reclaims valuable resources, such as fuel or fertilizer, and reduces environmental impacts.

For more information on anaerobic digestion, visit www.epa.gov/anaerobic-digestion.

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XtendFlex soybeans gain final regulatory approval

In late September, XtendFlex soybeans were approved by the European Union for food, feed, import and processing, a milestone represents the final key authorization for this new technology. 

With this approval in hand, Bayer expects a full launch of XtendFlex soybeans in the United States and Canada in 2021 and is positioned to supply 20 million U.S. soy acres when the selling season arrives. The soybean variety tolerates over-the-top applications of three herbicides—glyphosate, dicamba and glufosinate (Liberty)—giving growers additional flexibility to manage tough-to-control and resistant weeds.  

“We’ve seen great demand for XtendFlex soybeans from our customers,” said Lisa Streck, Bayer soybean launch lead. “Based on that demand, we’ve developed a supply plan to meet the market demand in 2021, across all maturities, Bayer brands and licensees. We expect the launch of XtendFlex to match the launch scale of Roundup Ready 2 Xtend soybeans, which were planted on 20 million acres in their first year of commercial availability.”

On Oct. 27, EPA approved new registrations for two “over-the-top” dicamba products—XtendiMax with VaporGrip Technology and Engenia Herbicide—and extended the registration for an additional dicamba product, Tavium Plus VaporGrip Technology. These registrations are only for use on dicamba-tolerant cotton and soybeans and will expire in 2025.

MFA’s MorSoy brand will have six varieties with XtendFlex technology available for the 2021 growing season. For more information on these and other seed options from MFA, visit seed.mfa-inc.com.

(This article has been updated since it was originally published in print on Oct. 19).

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