What the hay! With feed prices down,will food prices follow?

Key animal feed crops from soybeans to corn and hay to oats are all down nearly 25% this summer. Likewise for that other critical grain -wheat- the stuff we break bread for.The yearly market price trend for these hugely important ag commodities is strikingly similar -all heading down.

Abundant supplies as well as worldwide competition has helped nudge prices lower.

Soybeans are a huge world crop. You might connect soy to making tofu or soy milk or even biodiesel. But 75% of the crop goes to feed animals, including poultry, pigs and cattle. Grown on 87.5 million acres in the US, soybean prices have dropped about 26% in the past year and stand at four-year low.

An even bigger crop that covers much of the Midwest, is corn not only converted into your morning Cornflakes but more importantly – 40% of the crop is fed to animals.Ethanol manufacturers also use about 40 percent of the U.S. corn crop for ethanol fuel and related co-products.The majority of the ethanol is consumed in the domestic transportation fuel market.Here again the price of corn has dropped over 22% in the past year to $3.84 a bushel this week in the futures market – falling from $8 dollars a bushel in 2022.USDA projected corn acres to rise about 2.4 million acres, to 91 million, with production boosted by a larger area planted.

Corn futures are reaching a low not seen since October 2020, driven by an improved supply outlook and lackluster demand, according to one analysis.

The other big grain crop – wheat – was selling for over $7 dollars a bushel a year ago and is down to $5.16 today.Wheat is the second largest grain worldwide based on grain acreage and second largest based on total production volume. Wheat is the best of the cereal foods and provides more nourishment for humans than any other food source. Wheat is a major diet component because of the wheat plant’s agronomic adaptability, ease of grain storage and ease of converting grain into flour for making edible, palatable, interesting and satisfying foods .Wheat is grown on 49.5 million acres in the US.

California’s top ag industry- dairy -depends on feed to keep it running. Today, dairymen are breathing a little easier when it comes to their feed – not just because corn prices are down but alfalfa hay prices too. Alfalfa hay prices have dropped this summer. In May California premium hay sold for $320 a ton compared to $280 in May 2024 and $240 as of late July 2024, another feed ingredient registering about a 25% drop

Godsend?
Dairymen will tell you they have plenty of other challenges that are driving up their costs including tough regulation and labor costs.Still one popular dairy magazine’s cover story this month reports ” Declining Grain Prices: A Godsend for Dairy Producers.”
And lower feed price isn’t the only factor affecting what you pay at the market for meat for example. While the cost of feeding poultry may be down this year,poultry prices have declined only 4% according to the Trading Economics website.

Beef has decreased 12.74% since the beginning of 2024.

Now what?What will all this mean to food prices as the Fed considers lower interest rates?
Now a new report by the U.S Department of Agriculture indicates that the price of food will continue to decelerate throughout the year.

In 2024, prices for all food are predicted to increase 2.2%, with food-at-home prices projected to go up just 1%.

Looking beyond this year, the U.S. Department of Agriculture is forecasting the price for all food to increase 2% in 2025. Food-at-home prices could increase 0.7%.

Then there is the impact on fuel prices based on a 23% decline in corn prices. This is already happening with ethanol blended with gasoline wholesaling at $2.40 a gallon a year ago today down to $1.76. That’s a 27% decline. At the same time the gasoline it is blended with has dropped $.50 wholesale since April.

Lower transportation costs will mean truck deliveries to the grocery store will cost less as well as your trip to the grocery store.

One more benefit of lower oil prices translates into lower fertilizer cost for farmers.One report says anhydrous fertilizer costs less than half of what it did in 2022, as the nitrogen fertilizer’s average retail price continues its summer shrinkage.

Oil turmoilBut as of July 31 oil prices jumped on fear of war in the Middle East and supply disruptions.One factor holding down oil prices is reduced demand from China with their fuel imports down 11% in the first half of 2024.

At deadline oil analyst Tom Kloza writes that “Petroleum price disinflation on full view as July 2024 ends. OPIS/AAA average gas price of $3.492/gal is 26.5cts (-5.9%) below the same day last year. Diesel value of $3.815/gal is 22.1cts/gal beneath 2023. Even more disinflation for jet fuel prices.”

TA Truck Stop planned for Hwy 99/Tipton

County administrator Mike Washam says plans for TA Truck Stop have been filed to locate at the Ave 120 and Rd 124 on the eastside of Highway 99 near Tipton.

“They are doing civil works now” to locate the multi pump station with a convenience store, showers and a restaurant. The site was formerly an old cotton gin.

TA has Hwy 99 locations near Bakersfield and in Madera.

Owned by TravelCenters of America LLC, it is the largest publicly traded full-service truck stop and travel center company in the United States. The company operates full service centers, convenience stores, and restaurants under the TravelCenters of America, TA, Petro Stopping Centers, TA Express, GOASIS brands.

TravelCenters of America is headquartered in Westlake, Ohio, operates in 44 U.S. states, and employs nearly 20,000 people, as of 2021.

In May 2023,British owned oil company BP Products North America Inc., a wholly-owned indirect subsidiary of BP plc acquired the company.

Stations are typically large at 10,000 sft. In terms of the number of pumps, if it will be similar to their Buttonwillow store, there are 20 pumps for gasoline and 20 pumps for diesel.

The new Highway 99 truck stop will compete directly with two major players including Loves and Flying J, both in Tulare as well as the new Mavericks station at Cartmill under construction and Valero gas station on Caldwell and several in Goshen. There’s a new truckstop south of this site as well near Earlimart called Akal Travel Center.

Ave 120 is at the north end of Tipton, just a few miles from Tulare.It is also the location of the Cal Dairies plant.

Central Valley home building drops in the first half of 2024

Mortgage rates head lower

Homebuilders constructed almost 30% fewer single-family homes in the Central Valley in the first half of 2024. As of July 25 builders constructed 2178 homes in Madera, Fresno, Tulare and Kings counties compared to 2986 in the same period and 2023. Statistics are from Construction Monitor.For the same time frame in 2022 builders permitted 2917 new homes.

Builders and homebuyers alike have been constrained by high interest rates that have only started to fall in the past four months.

30 year mortgage rates

Now they are dropping more this week.

As of April of this year the average rate for a 30-year fixed mortgage was 7.05 in April compared to 6.31% today(July 31) according to Zillow. With the Fed expected to reduce interest rates for the first time this fall, mortgage rates should continue to drop, experts say.

Below 6% Percent

Thirty-year fixed mortgage rates parallel the 10-year Treasury yield which has dropped from 4.70 in late April to 3.79 this week .

On Saturday Aug 3 Zillow said ” The current average 30-year fixed mortgage rate fell 7 basis points from 6.03% to 5.96% on Saturday.”

With a new direct freeway link, Tulare’s AgriCenter plans major expansion

Cool idea: Horse arena, hotels and new convention center would all be climate controlled

AgriCenter CEO Jerry Sinift has been CEO of the world’s largest farm show for 25 years and says it has always been a dream to expand the 700-acre Tulare AgriCenter grounds that already attract a surprising number of venues throughout the year. To do that you have to cool down the enclosed spaces when you plan new facilities.

“”When you have heat like this” you need to air condition buildings in order to attract business through the summer months beyond the famous February World Ag Expo.This weekend the temperature in Tulare is expected to be a torrid 107f.

To become a world-class destination for all kinds of events you have to put people in something besides giant circus tents. How about adding a comfortable hotel and high end restaurant?

This week AgriCenter officials met with the City of Tulare to present their new master plan for the grounds that includes millions of dollars of new facilities, annexation of more land, a new 120,000sf convention center, major hotels and restaurants and a top wish- a new equestrian center – all at the foot of a new freeway interchange.

Instead of being just a dream, the timetable to build these facilities is already ticking – given that the new interchange named the International Agri Center Interchange is planned to be completed next year – in 2025. This interchange is estimated to cost nearly $53 million and will include both north and southbound ramps, an overcrossing of SH 99 and new or improved intersections with Blackstone and Paige.

It will be connected to a new 4-lane street called International Agri-Center Way under a master plan that accommodates new development, laying out where they can build new facilities and how they will be connected to needed infrastructure. Today the center is adjacent to Highway 99 but access is not near. The new interchange will make a huge difference.

“We need a conditional use permit from the city to move the project forward,” says Sinift, having just signed an agreement to build a connecting road in the past few weeks.

“When fully coordinated, these components will allow for efficient private investments, the proper sequencing of public works projects and the prioritization of Agri-Center resources,” says a report.

“We are having discussions with developers, adjacent property owners and organizations” who are all interested in how they may fit into the picture, says Sinift.

Because the freeway construction project is moving forward quickly,the new master plan sets out some ambitious timetables to start improvements.

Moving beyond tents at the TulareAgriCenter

Equestrian Center

The AgriCenter may be where farm equipment is marketed but it is also where farm animals are celebrated, everything from cowboy heroes to FAA youth showing their young farm calves,pigs and sheep. But horses will take the spotlight under the new plan.

While many people know only that the AgriCenter is a place for the February World Ag Expo featuring the latest technology and equipment used for farming. But there are hundreds of events during the year including this August when the California Youth Ag Expo comes to town with over 2000 animals that will be shown by youth and attended by approximately 3000 people, Sinift says. There are about 300 events a year at the AgriCenter, not just ag events either but concerts and meetings that all could benefit from the improved facilities, including the planned high-end hotel and restaurants.

One of the first major projects is construction of a first class Equestrian Center (Arena A) that will be an air-conditioned complex with 7000 permanent seats and 3000 temporary seats.The arena will be able to support both equestrian and cattle events as well as indoor concerts and meetingsThe complex will include an event office with overall square footage at 350,000 sf.The new arena will also include barn space for up to 500 horses. Also a full service 50000sf restaurant will be developed within the Equestrian Center.

Construction of Arena A is projected to be completed in 2025, says the report. Arena B will be the second phase of the Equestrian Center and will provide for a second arena with no seating.

A major focus of the Agr Center is to improve the equestrian facilities on the property that already attract up to 500 for horses at some events and some 20 competitive horse events including barrel racing. A goal of the equestrian improvements at the Agri Center is to attract the Professional Bull Riders group who do not have a West Coast facility, but could utilize Tulare once this first class facility is built,figuring if you build it, they will come.

A new Convention Center will be constructed with approximately 120,000 square feet. It will include an exhibition hall, meeting rooms and kitchen facilities. The facility will be planned to house trade shows, conferences, conventions, meetings, concerts and will provide additional space
during the World Ag Expo. It will also replace the existing Pavilion A, Pavilion B and the Social Hall. It is anticipated that the capacity of the facility will be approximately 10,000 attendees.The Convention Center will be second priority in the Agri-Center development program. It might be tied to the first hotel, but will be subject to the issuance of a request for proposals from a partner developer. It is anticipated that this facility will also be a joint venture project with a
private developer with construction completed in 2027.

Hotels are planned as part of the Convention Center Complex. Currently, 2 hotels at 400 rooms each are planned for the Agri-Center site. The location of the hotels is
integrated into the Convention Center facility to provide up to 800 rooms in support of the facility.

Other improvements

-Solar Farm will be deployed as both rooftop solar and parking shade structure solar.

–Recreational Vehicle Park will be developed as a key support feature of the campus. Featuring 300 stalls intended to provide on-campus service for the
Equestrian Center, the Agri-Center and on-campus events.

–Cattle pens will be constructed with approximately 40,000 square feet of covered space. These pens will be located adjacent to but south of the Arenas. This location will minimize
the interface with the residential neighborhood north of International Agri Center Way. The pens will include pens/corrals, chutes and care facilities along with
connectors to the arenas.

Visalia Kia plans remodeled dealership

Korean-made automobiles continue to move higher in sales in California.
The Visalia Kia dealership is owned by Dwight Nelson who also owns the Selma Auto Mall. Dwight’s daughter Amber Nelson Billingsley, who is Director of Marketing for Visalia Kia says sales are trending higher for all Korean brands including Kia and Hyundai, parent company of Kia. The Nelson family markets both lines in Selma.
Now plans have been filed to remodel the Visalia Kia dealership at 825 South Ben Maddox with a new showroom adding 9600sft to the dealership and taking the total size to 16,300sft.
Amber says they hope to start construction on the remodeled dealership by the end of this year.
Amber adds that Kia is popular with “a wide range of demographics” and adds the car” features advanced technology, as well as offering sleek style and comfortable” seating.

Updated look and more space for Visalia Kia on Ben Maddox.

Both Hyundai and Kia are offering more electric car lines that are also selling well. Year to date Hyundai electric car sales are up 66% and Kia electric car sales are up 72% from the first half of 2023.
The California New Car Dealers Assn says second quarter sales of the Kia brand are up 5.1% versus the same time in 2023 Hyundai sales are also up 9.7%.
Bakersfield car dealer Patrick Beck who owns Visalia Hyundai has said he plans to build a new dealership off Plaza Drive in Visalia relocating from their current Ben Maddox site.

Around the region

Adventist Health to get naming right to new Tulare Amphitheatre

The City of Tulare has approved a Naming Rights Agreement with Adventist Health Tulare. In that agreement the City is obligated to provide several benefits and services along with exclusive naming rights in exchange for Adventist providing an annual fee of $100,000.Tulare will use the funds to help maintain Zumwalt Park where the new amphitheater will be built.

July 2024 was the hottest month ever recorded

NWS Hanford says with July now over, we can take a look at how the heat over the past month has affected records across the San Joaquin Valley. Based on mean average temperature (daily average temperature averaged across the entire month), July 2024 was the hottest month ever recorded for Merced, Madera, Fresno, and Bakersfield while being the second hottest month for Hanford. Climate records go back to 1893 in Bakersfield, 1887 in Fresno, 1899 in Merced, 1928 in Madera, and 1899 in Hanford.

Gasoline prices down in US

Mortgage Rates Fall

As of Friday Aug 11 Zillow says 30 year mortgage rates have dropped to 6.06 percent.

Around Visalia

The Visalia Planning Commission will take up a request from Costco to approve a Conditional Use Permit for their new northside warehouse putting the big project closer to construction. The meeting will be July 22 at 7 PM at the city council chambers. The new 159,000 sf Costco will also include a car wash and gas station located on the corner of Riggin and Shirk.The gas station Will feature 30 pumping stations. This second Costco warehouse in Visalia is expected to open in 2025.

CarMax to open in Visalia early next year: Publicly-traded CarMax, a national used vehicle retailer, will open in Visalia in early 2025 says spokesperson Jillian, after breaking ground on their new dealership site west of Plaza Drive in May. The Virginia-based company has about 240 locations in the US including in Fresno, and in Bakersfield.

A typical CarMax store is approximately 59,000 square feet and carries an inventory of 300–400 vehicles. It turns its inventory over eight to ten times a year. On average, a CarMax location employs 40 sales associates. Each car goes through a thorough 125-point inspection process, beyond any state-required inspections, and includes a 90-day warranty, three days to change the financing for free, and a 30-day money-back guarantee.

The company was founded by retailer Circuit City in 1981 – now outliving its electronic retail parent.

In Visalia, representatives of Carmax tried to convince the Visalia City Council in 2020 to allow them to locate one of their stores on Mooney Boulevard at the south end of town.But council decided to keep the land available for traditional retailers.The location is where a potential Sam’s Club may now be built. At the time some council members encouraged CarMax to look at the Plaza Drive auto district where several new car dealers were already located. Now they have taken their advice.

In 2022 the City Council opened the Visalia Auto Plaza area to used cars along with new car sales.CarMax then picked a 5.9 acre site adjacent to the other car dealerships but has not moved forward until now likely because COVID has disrupted the sales economy for several years.

CarMax, like the entire used car industry the company,has faced financial pressure recently.

The company reported a 33% fall in first-quarter profit in late June , as lower margins from vehicles sold continued to impact the used-vehicle industry.CarMax reported a net income of $152.4 million, or 97 cents per share, in the quarter ended May 31, down from $228.3 million, or $1.44, per share a year ago.

AAA says gas prices are down as of July 11 in the Visalia metro region despite an uptick in state taxes.California’s gas tax increased by 2 cents starting July 1. Prices are 17 cents cheaper than a month ago and 9 cents less than a year ago. Tulare County stations are the cheapest in the state, says GasBuddy, including the Fastrip station in Lindsay selling regular for $3.49 today.

Also getting a second location in town is Tulare County Federal Credit Union who has an office on Walnut Avenue and will now open a new million dollar location on Mooney and Shirk in North Visalia. The not -for-profit credit union has been part of Visalia since 1939 launched as the Tulare County Teachers Credit Union.The city is now approving a permit to begin construction of the new building.

Hangar 6 to house new squadron to be based at NAS Lemoore

F-35C :

Naval Air Station (NAS) Lemoore will hold a ribbon cutting for Hangar 6 – the second of two newly constructed hangars at the base designed to house the advanced F-35C squadrons currently based at NAS Lemoore, as well as additional squadrons that will be relocating from various military installations worldwide.

That includes an additional squadron coming from Japan that will be based in Lemoore later this summer, spokesperson Sarah Thrasher says.The base is already home to 16 Navy squadrons and will grow some more.

Captain Barrett “Farva” Smith, Commander of the Joint Strike Fighter Wing, emphasized the importance of Hangar 6 by stating, “The addition to the existing Hangar 6 will double the Navy’s F-35C Fleet capacity at NAS Lemoore, supporting the future growth of Joint Strike Fighter Wing and the Navy’s ability in providing additional 5th generation aircraft and capabilities to the nation’s deployable Carrier Air Wings.”

The first squadron to occupy Hangar 6 will be the VFA-115 Eagles, an acclaimed F/A-18E Super Hornet strike fighter squadron currently based at Marine Corps Air Station Iwakuni, Japan. The VFA-115 Eagles are set to begin their transition to the F-35C jets in late summer 2024, marking a significant milestone in their illustrious history and further strengthening mission readiness at NAS Lemoore.

Harper Construction was awarded the contract to build Hangar Six in August of 2021 for $101,741,289. The hangar was completed on schedule and budget.

A ribbon cutting ceremony for the newest mod of Hangar Six is set for 23 July at 0900

The architectural design of Hangar 6 thoughtfully blends with the surrounding airfield infrastructure while embodying the sophistication and technological advancements of the F-35C program. This state-of-the-art facility ensures that NAS Lemoore remains at the forefront of naval aviation, providing a world-class environment for U.S. service members and the installation’s mission.

Hangar 6 substantially enhances NAS Lemoore’s current aircraft capacity as existing squadrons transition to the advanced F-35C airframe and new squadrons arrive from other locations. The facility supports tenant readiness goals with a greater number of modules per squadron than previous hangars, demonstrating the Navy’s longstanding commitment to providing top-tier facilities that ensure operational success.

The new generation of jets first arrived at NAS Lemoore in 2017. Considered a multi-role joint strike fighter, the capabilities the F-35C provide go beyond the scope that was previously offered by the Navy’s legacy F/A-18 Hornet and F/A-18E/F Super Hornet platforms, say its designers.

“The fifth-generation capability of the F-35 stands apart from every other airplane in the world,” said Jeff Babione, executive vice president and general manager of the F-35 Lightning II program for Lockheed Martin. “The F-35 is able to penetrate previously inaccessible anti-access airspace, which gives pilots increased lethality, precision, and survivability.”

Tulare plant will make cheese while the sun shines and with batteries … at night too

Solar panels would be placed both north and south of the Lactalis Tulare plant along Highway 99.

Cheese maker Lactalis has filed plans with the City of Tulare to install 20MW of solar power at their Hwy 99 plant as well as 15MW of battery storage. This will enable the company to be mostly self-sufficient to power up its 24/7 hour operation.

The former Kraft Cheese manufacturing facility is surrounded by open space, allowing plenty of room for both ground and rooftop solar panels to connect to the plant directly. Power generated at the facility will not go into the grid but will be used to carry on its daily operation.

The big dairy plant sits on 169 acres and the solar project would take up about 85 acres of that.

The application for the project says the ground-mount solar is proposed to occupy vacant land north and south of the manufacturing facility. The canopy-mounted solar is proposed to be developed as shade structures located over the existing parking lots directly south of the facility. The project would generate electricity to support the existing dairy manufacturing facility and offset its electrical demand, which is considered a “behind the meter.”

The project proposes to further improve the existing Lactalis Heritage Dairy manufacturing facility with the addition of ground-mount and canopy-mounted photovoltaic (PV) solar equipment capable of generating up to 20 megawatts (MW) of renewable electrical energy, and a battery energy storage system (BESS) storing up to 15 MW per hour (MWhr).

The ground-mount solar is proposed to occupy vacant land north and south of the manufacturing facility. The canopy-mounted solar is proposed to be developed as shade structures located over the existing parking lots directly south of the facility. The project would generate electricity to support the existing dairy manufacturing facility and offset its electrical demand, which is considered a “behind the meter.”

The completed assembly of PV modules is mounted on a “tracker” framework structure that tracks the sun from east to west throughout the day.

The canopy and canopy-mounted solar panels will be installed in the existing parking lot and will be placed to allow for the continuation of existing parking and traffic patterns, while providing shade for employees.

Energy Storage

As proposed, the project includes a Battery Energy Storage System (BESS) that could be centrally located, or it would have one BESS on each solar facility site. The approximately 15 MW BESS would consist of a series of batteries housed within the inverter pads or in separate storage containers in a prefabricated metal container. The BESS unit would be installed on the project site and would have appropriate fire suppression systems built to applicable State and local code requirements.

Battery storage allows a company to continue to tap the energy after the sun sets.

Construction of the project is anticipated to last approximately eight to twelve months.

French-owned Lactalis completed the year-long process of purchasing three Kraft plants in November of 2021.The Tulare plant now includes the manufacturing of feta cheese with other varieties.

Monterey & Santa Barbara Counties 2023 Crop Report see a decline in values

Coastal counties so far are reporting a decline in crop value values in 2023 and much of the drop appears weather related.

Santa Barbara County farmers reported a gross production value of $1,875,978,000 which is a decrease of 2.8% or $54,467,000 from 2022.

Strawberries top crop

Once again, in 2023, strawberries held the top spot as the number one agricultural crop, with a gross production value of $775,282,000 even though it reported a decrease of 4.4% from 2022 primarily due to weather related factors.

Nursery Products moved up to the 2nd most valuable crop at $122,301,000 with an increase of 28% as a result of market demand, product stabilization, and increased production.

Wine Grapes remained as the 3rd most valuable crop at $98,562,000, a 2.3% increase from 2022. Broccoli moved up to the 4th spot with a value of $86,737,000. Cauliflower moved down to the 5th spot with a total value of $84,078,000, a decrease of 13%.

Although the 2023 Santa Barbara County Crop and Livestock Report includes figures on cannabis production, it is not factored into the total value of agricultural products but it tracks sales. The report says cannabis operators produced nearly 9.9 million pounds of packaged harvest weight with a total value of just under $329 million in 2023.

Adding in the value of seeds, clones and immature plants ,the total gross production value comes to a little more than $333 million. That is up from $260 million 2022.

Monterey Report

Monterey County is one the first major ag production counties in California to report crop values for 2023. The report reflects a production gross value of $4,353,338,000 – a decrease of 6.1% from 2022.

Major crops drop in value

Top valued commodities this year include Strawberries which maintain the top spot with a gross production value of $903,791,000, a 5.7% decrease from 2022. Leaf lettuce, including Romaine and other leaf lettuce varieties, continued to be the 2nd most valuable crop at $782,134,000 with a decrease of 7.2%, and Head lettuce as the 3rd most valuable crop at $493,464,000 with a decrease of 9.8%. Broccoli remained in the 4th place ranking with a 9.7% decrease to $468,871,000.

Overall, the Vegetable Crops category saw a decrease in value of 7.9% to $2,882,975,000. The Fruit and Nuts category had a decrease of 3.5% to $1,191,221,000.

Wet weather impact

Decreased production values in Monterey County were widespread among vegetable and fruit crops and can be attributed in part to a very wet winter that shortened the growing season, decreased production rates, and decreased growing acreage. Perennial crops such as wine grapes and seed crops that were less impacted by the increase in rain saw production values improve. Wine Grapes increased and ranked 5th in production value in 2023. Seed Crops and Livestock & Poultry also saw increases, while Field Crops remained steady.

Cannabis higher

One of the few counties that tracks cannabis as a crop, Monterey County reported $363 million in sales in 20223, up from $283 million in 2022. That value compares to $493 million in sales for head lettuce, one of the county’s top crops.