Published: Apr 20, 2023

Prices easing

Friday March 31:

An inflation gauge the Federal Reserve follows closely rose slightly less than anticipated in February, providing some hope that interest rate hikes are helping ease price increases.

The personal consumption expenditures price index excluding food and energy increased 0.3% for the month, the Commerce Department reported Friday. That was below the 0.4% Dow Jones estimate and lower than the 0.5% January increase.

Ag outlook report

How do abnormal weather conditions, animal health outbreaks and global conflict impact U.S. agricultural markets? The Food and Agricultural Policy Research Institute at the University of Missouri (FAPRI-MU) has just released its annual U.S. Baseline Outlook report. The report includes projections for agricultural and biofuel markets, and serves as a point of reference for evaluating alternative scenarios for agricultural policy.

“What goes up, generally comes back down in agricultural markets,” FAPRI-MU director Pat Westhoff said. “Projected prices for most crops, poultry and dairy products all retreat in 2023 from recent peaks, and so do some production expenses.”

Based on projections from the report, Westhoff believes that after atypical conditions, a return to normalcy will impact producers and consumers alike.

“Net farm income is likely to fall back from the record levels of 2022 and consumer food price inflation is also likely to slow in 2023,” Westhoff said.  

The below findings are included in the report:

If weather conditions allow crop yields to return to trend-line levels in 2023, prices for corn, soybeans, wheat, cotton and many other crops are likely to fall. Over the next ten years, average nominal crop prices are much lower than they have been in 2022/23, but they remain above the average of 2017/18 to 2021/22.

Higher fertilizer, fuel and feed costs contributed to a very sharp increase in farm production expenses in 2022. A smaller increase is projected in 2023, and lower prices for some inputs result in a reduction in production costs in 2024 and 2025.

Cattle, hog, poultry and milk prices all increased in 2022. High feed costs, drought and avian influenza limited supplies, and consumer demand generally continued to be strong. In 2023, most projected livestock sector prices fall as supplies rebound and demand growth slows. The one major exception is cattle, where drought-reduced inventories reduce the number of animals available for slaughter.

Federal spending on farm-related programs was above the historical norm between 2019 and 2022, largely because of short-term, ad hoc programs. Crop insurance accounts for 45% of projected spending on major farm-related programs over the next decade. Commodity program spending associated with Title I of the farm bill is relatively low in FY 2023 and 2024, but rebound in later years given projected changes in commodity prices and program payment triggers under the price loss coverage (PLC) and agriculture risk coverage (ARC) programs.

Farm asset values have increased with land prices in recent years, and another increase is projected for 2023. Given assumptions of the outlook, lower farm income and high interest rates restrict further increases in farm real estate values in subsequent years.

Consumer food price inflation jumped to 9.9% in 2022 as farm commodity prices rose, labor and other costs increased, supply chain problems continued, and consumer demand was strong. Price increases have slowed in recent months, and the projected annual increase in consumer food prices is 4.4% in 2023 and under 2% in 2024.

-March 9,2023-

 

from California Farm Bureau

Considering the waning profitability of almonds and walnuts, pistachio growers are upbeat about prospects for the state’s current “it” crop.

More rainfall this season has eased the multiyear drought, with improved water allocations for farms. The colder winter has also provided adequate chilling hours for pistachio trees to produce flowers and fruit. With more pistachio trees coming online this year, growers appear on pace to produce a record crop that could top 1.2 billion pounds, according to Richard Matoian, president of the American Pistachio Growers.

“On the surface, the outlook appears to be positive,” he said, though he warned “a lot can happen and has happened in the past between what we believe and where we end up.”

At the association’s annual conference in Carlsbad last week, Matoian shared his thoughts on the state of the industry, highlighting what helps growers sleep at night and what keeps them up.

On the rosy side, there’s less inventory this year due to the lighter crop in 2022, when production hit more than 878,000 pounds. 2022 was considered an “off” year in the trees’ alternate-bearing cycle and was preceded by two previous bountiful crops, yields of which reached more than 1 billion pounds. The record 2021 crop produced more than 1.15 billion pounds.

After two years of port congestion that led to delayed and stranded shipments of agricultural exports, Matoian noted those problems have largely been resolved. The quality of U.S. pistachios remains a “major selling point worldwide,” he said, as are the nut’s health benefits. Pistachio marketers continue to make inroads with consumers, who have become more familiar with the nut, he added.

But challenges remain on the trade front. Retaliatory tariffs in China from the Trump-era trade war remain, elevating the price of U.S. pistachios. The strong dollar has added to the pain, making the product even more expensive. The potential for a worldwide recession could further wreck sales, Matoian said.

Even though port traffic has improved, not all shipping issues have gone away, Matoian said. Any number of supply chain problems could strain the availability of pesticides, fertilizers and other materials, hurting pistachio production and sales.

The U.S. remains the world’s top pistachio producer, a title it has held for more than a decade. About 99% of the crop is grown in California, with 2023 bearing acres at just fewer than 454,000. Total state acreage stands at about 590,000, including 135,000 nonbearing acres.

-March 9,2023-

The March 2022-23 Valencia orange forecast is 16.2 million cartons, down about a million cartons from last year.Growers have pulled about 1000 acres year over year.

The season experienced scattered precipitation in some areas which caused a rainy start to the growing season. Survey data indicated an average fruit set per tree of 616, a 13.9% increase from the previous year and 12.2% above the five-year average of 549. The average March 1 diameter was 2.391 inches, down 2.8% from the previous year and 5.1% below the five-year average of 2.520.

Valencia orange production statistics show a general decline over the past seven years with over 22 million cartons produced in 2015/16. The decline is based on lower acreage of this juicy orange – down 5000 acres since 2016 to 25,000 acres in the state. There were 40,000 bearing acres in 2012.

The reduction in the availability of this fresh dose of Vitamin C comes as Florida’s juice orange supply has been collapsing, providing an opportunity for California growers to reverse course and perhaps do some new plantings of this flavor filled orange variety.

Look on the sunny side- up! 

-March 2,2023-

People have been crying in their expreso about inflation over the past year and rightly so.  But now, maybe it’s time to look on the sunnyside. Prices for a number of key commodities are heading down including that important breakfast item – eggs!

If you want to fight inflation – breakfast is a good way to start.

Egg Anxiety

Consumers were complaining just a few months ago about $12 a carton for cage-free, with a typical but elevated price at stores a month ago of around $8 a dozen. That is enough to put a crimp in your omelette.

The culprit has been bird flu that has decimated the flock of egg laying chickens although some observers are putting the blame on  California’s Prop 12 which gives the birds a chance to spread their wings

This last week USDA reported California egg prices dropped another 21 cents in a week with large eggs selling for $4.40 a dozen. Then check out Trader Joe’s this week, selling California cage-free eggs for $2.99 a dozen – just like the good ol’ days!

In the past month there has been a steady drop in price on the wholesale level across the country as the egg market returns to a more normal level.

In 2023, wholesale egg prices will fall 26.8%, USDA Chief Economist Seth Meyer said in a presentation at the annual USDA Agricultural Outlook Forum in Virginia last week.

The agency has attributed high egg prices to historic outbreaks of avian flu, which have killed more than 58 million backyard and commercial chickens and turkeys since February 2022.

The bottom line -eggs are cheaper and getting more so ( see USDA egg price chart as of March 3) It’s getting there.

Jitters over Coffee

How about that cup of java- no decent breakfast would be complete without it. 

The price of wholesale coffee, mostly from South America, has been sky high at $2.40 a pound last summer. Today the wholesale price is down to $1.86/lb based on better rainfall in Brazil .The price fell from last summer but climbed since October based on, can you believe it, too much rain.

At the store a good buy on a gourmet coffee at Trader Joe’s is $8.99 for 14 ounces of “Wake Up Blend”.

Milk & Butter

Essential breakfast staples include milk and butter- not just on toast and in your cereal but in all baked items and as ingredients in other foods.

The year 2022 saw record prices for wholesale milk and butter but they have also been trending down in the past few months.

Butter has dropped to $2.35/lb in February from $3.20 last summer. CME milk has dropped to $17.86 per cwt in February from $22 in November.

Ahh… bacon!

As for bacon, pork prices are down 30% from last summer. Target is selling a pound of bacon for $4.39 this week and it’s $4.98 at Walmart, although these may be specails. But look for deals and you will find them.

Don’t forget your oats

For you breakfast oatmeal eaters out there – it’s time you catch a break too. Oats are a worldwide commodity too and it is now half the price it was last summer. Your oat cereal maker ought to be passing on the savings.

A case of gas

Perhaps the biggest disinflationary commodity going forward is a product you use every day to make breakfast, heat your home and that utilities use to make electricity – natural gas.

In California natural gas prices skyrocketed in January based on a December spike in the wholesale price delivered by pipeline that pushed your gas and electricity bills higher in January by 2 to 5 times.  Regulators are investigating why this happened suspecting market manipulation even as nationwide natural gas prices plunged. 

Nationwide natural gas is suddenly a bargain and should help push inflation down going forward due to its importance to the economy.

A recent news report notes the futures price for nat gas has dropped five-fold.

“For the first time since September 2020, Henry Hub natural gas futures plunged below $2 per mmBtu this week before bouncing back to a more palatable level of $2.4/mmBtu.The combination of a relatively mild winter in key US consumption hubs and excess domestic volumes on the back of the Freeport LNG outage depressed gas futures that only six months ago were trading above $10/mmBtu.”

SoCalGas says that its customers can expect February bills to be about 68% lower compared with January, as there has been a decrease in the wholesale price that SoCalGas pays for natural gas.

If the price of breakfast is heading lower- can dinner be far behind?

-February 16,2023-

District grape crush is up in production and price

District 13 (Madera, Fresno, Alpine, Mono, Inyo Counties; and Kings and Tulare Counties north of Nevada Avenue (Avenue 192)), had the largest share of the state’s 2022 Grape Crush according to a new report issued in February.District 13 crush was 1,149,339 tons. The average price per ton in District 13 was $357.48.

Last year the crop was down year over year overall by a significant 11.3% with a total of 1,062,398 tons crushed -likely due to lack of water.The price in 2021 was lower as well -$337 last year.

Runoff expected to be more than double average

For all the South Valley Rivers the latest DWR Bulletin 120 predicts “For the Tulare Lake Basin (Kings River, Kaweah River, Tule River, and Kern River), the accumulated unimpaired runoff of 782 TAF is 215% of average.”

 

Delta Mendota canal next for subsidence fix

Land subsidence from pumping has not just reduced flows on the Friant Kern Canal and California Aqueduct, it is expected to reduce capacity by 44% along the Delta Mendota Canal that waters the westside down to Fresno County. A notice says currently, 30 out of the existing 115 bridges along the DMC are considered deficient because they do not have 1 foot of clearance above the Maximum Water Surface Elevation when the canal is operated at design flow. However, the number of deficient bridges is expected to reach 45 when taking into consideration future subsidence conditions. Deficient bridges would be partially submerged when the canal is operated at the design flow, resulting in safety risks.

The US Dept of Reclamation performed construction on the canal to remediate subsidence issues in 1969 and 1977. Farmers who complain the government is not moving enough water south won’t be able to move it if major repairs are not made. The 171-mile canal, built in 1951 — brings water as far south as Fresno County.Last year the state announced that the Delta-Mendota Canal was one of four projects that will receive funds as part of a $100 million initiative in the California Budget Act of 2021 to improve water conveyance systems in the San Joaquin Valley. DWR is also working on agreements for projects on the San Luis Canal and the California Aqueduct, and announced the release of funds for repairs of the Friant-Kern Canal with works underway now.Canal fixes are not cheap.Repairs to the 152-mile Friant-Kern Canal, which stretches from Millerton Lake to Kern Kern County, are estimated at $250 million to $500 million.

Focus on capturing stormwater

The state is promoting more stormwater capture and recharge
in the Valley including in the Pixley Irrigation District. Here
they will construct a new 5.5-mile-long canal to provide surface
water for irrigation to approximately 5,500 acres of land that
currently rely on groundwater as the only source of water. The
project will increase flood protection for downstream
infrastructure, crops and more than 1,000 residents of the
community of Alpaugh, while also capturing flood water when
available for recharge.

 

Florida citrus production just 16 mil boxes

CALIFORIA AT 46 MILLION BOXES

-February 10,2023-

USDA’s recent February report estimates Florida’s all orange production at 16 million boxes, down another 11% from last month. Fruit drop continues to be a problem with USDA noting “current droppage is above the maximum and projected to be above maximum at harvest.”

Early forecasts predicted the 2022-2023 Florida citrus season was going to be a struggle — even before the hurricanes struck. Now, if the latest numbers hold, it will be 61% less than last season’s final production.Besides hurricanes the Florida industry has been decimated by citrus greening disease.

Meanwhile, California’s all orange production continues to climb from last year when we produced 40 million boxes. This year the USDA estimate is 46 million boxes although the Valencia boxes are down to 8,100,000 boxes this year from 8,600,000 last season.