A recent article from the Federal Reserve Bank of Minneapolis discussed the downward economic trajectory that has impacted the U.S. farm economy in recent years. Secretary of Agriculture Sonny Perdue, in remarks this week to USDA employees, noted that trade is an area that could help provide relief for surplus stocks. News reports yesterday indicated that President Trump could sign an executive action withdrawing the United States from the North American Free Trade Agreement; since NAFTA's implementation, U.S. agricultural trade has grown significantly. However, subsequent news developments explained that Trump had decided not to pull out of NAFTA. Many in the agricultural sector are already anxious about U.S. trade policy, yesterday's executive branch actions on trade may not alleviate ongoing concerns.
Associated Press writer Blake Nicholson reported on Saturday that, “Drought in North Dakota is laying waste to fields of normally bountiful food and hay crops and searing pastures that typically would be home to multitudes of grazing cattle.
Some longtime farmers and ranchers say it’s the worst conditions they’ve seen in decades — possibly their lifetimes — and simple survival has become their goal as a dry summer drags on without a raincloud in sight.
The AP article explained that, “The drought’s impact likely will be felt not just by farmers but also consumers, state Agriculture Commissioner Doug Goehring said. Agriculture in North Dakota is an $11 billion a year industry, and the state leads the nation in the production of nearly a dozen crops.”
With respect to drought conditions and wheat production issues, the USDA’s Economic Research Service (ERS) indicated on Friday in its Wheat Outlook report that, “Challenging growing conditions for Other Spring and Durum wheat in the Northern Plains are reflected in lower yield projections, cutting 2017/18 U.S. production by 64 million bushels this month, to 1,760 million. As a result, U.S. wheat exports are projected down 25 million bushels from June, to 975 million, and imports are raised 10 million bushels to 14 million.
Foreign wheat supplies are projected higher, and a shift in the export shares of major exporters is likely. Russia is projected to become the top world wheat exporter for the first time in history.
Jennifer Bond explained in the Wheat Outlook report that, “As recently as early May, the USDA’s Crop Weather Bulletin noted that the vast majority of the Northern Plains was experiencing mild weather conditions, which encouraged spring wheat planning and other field work that had been delayed due to earlier wet conditions.”
However, the ERS report pointed out that, “On July 12, USDA-NASS’s Crop Production report provided the first survey-based data on the yield- sapping effects of the poor weather in the Northern Plains. Yields in the Dakotas and Montana are all down significantly year-to-year; however, no State is projected to reach record-low yields at this time. The lowest projected yields in the region are expected in Montana (26 bushels per acre), and while they are below average, they are not unprecedented. Montana experienced several years of sub-25 bushel yields in the early 2000s.”
Friday’s ERS report added that, “Expectations of relatively low production of high-protein HRS [Hard Red Spring] have helped to rally futures and cash prices for spring wheat in recent weeks and support this month’s 50 cent increase in the 2017/18 all wheat price.”
Also on Friday, ERS included a special article in its Feed Outlook report titled, “Hay and Forage Situation: The Dakotas and Montana, Early July 2017.”
The article stated that, “Demand for hay in the United States has increased substantially in the last several weeks as drought has rapidly worsened in South Dakota, North Dakota, and Montana. However, hay supplies are tight for two reasons. First is the time frame, as producers are cutting or just finishing early cuttings and putting up the hay, not selling it. Second is the presumed poor yields because of the drought.”
The ERS article cautioned that:
If rains do not resume soon, many producers will need to liquidate herds, move cattle to other regions, or buy hay (or other supplemental feeds) from distant locations at high cost.
The article in Friday’s Feed Outlook report added that, “All three States depend heavily on cattle ranching. South Dakota has the largest herd. As of January 2017, its inventory is ranked eighth nationally. Montana is ranked eleventh, and North Dakota is ranked sixteenth. Cattle inventories in 2017 are about unchanged in Montana and South Dakota from 2016 but are up 6 percent in North Dakota, which is facing the most serious drought among the three States.”
In addition, the article noted that, “Pasture and range conditions have deteriorated sharply in recent weeks. The figures that follow illustrate the current situation compared with early July conditions for the previous 5 years.”
“That’s what Scott Stahl, of Emery [S.D.] has heard countless times from his dad, uncle and many other ‘old-timers’ who’ve seen the worst of the worst drought conditions.
“For Stahl, who farms with his dad and uncle near the Bridgewater-Emery area, this year could be devastating as the brutal July heat scorches this year’s corn crop.”
The article noted that, “But these next two weeks aren’t looking good for South Dakota farmers.
“According to Laura Edwards, the state climatologist, it’s ‘going to be tough’ as the next two weeks are projected to likely be above average temperatures and drier than average.
‘It’s kind of a slow-moving disaster, and you’re watching it unfold in front of you,’ Edwards said. ‘You know there’s some tough situations coming and there’s not a lot we can do to add water.’
And Nick Lowrey reported last week at the Capital Journal (Pierre, S.D.) Online that, “Farmers and ranchers won’t be the only South Dakotans hit hard by the drought conditions found throughout the state. Hunters, too, likely will feel the pinch this fall.
“While it is hard for the state’s wildgame managers to say just how big a problem the drought will be for pheasants, deer and grouse, similar conditions have led to population declines in past years. The northcentral portion of the state in particular may be in rough shape when October rolls around. The spring of 2017 was the sixth driest on record for the region.”