Net farm income in the United States is expected to shrink this year, dropping a large 25.5 percent from 2023. Net farm income for 2024 is now estimated at $116.1 billion, a year-to-year decline of $40 billion. This is on top of a $30 billion decline in income in 2023 from the record high returns in 2022. The loss of government payments and growing commodity supplies are the main reasons for the loss of income.

Rising expenditures are also behind the drop in net farm income estimates for 2024. The cost of production for U.S. farmers is expected to increase 5.2 percent in 2024 on top of the 5 percent increase that was seen in 2022. The greatest increase in expenses is forecast for livestock producers.

Over the past several weeks we have seen Brazilian production estimates scaled back, but one firm has made a significant increase to estimated corn production. Several firms claim recent weather and poor returns will trim Brazil’s safrinha crop from initial projections, including CONAB, the Brazilian version of the USDA. Ag Rural has released a safrinha crop estimate of 91.2 million metric tons, up from their previous guess of 86.3 mmt. CONAB has the crop at 88 mmt. Ag Rural claims the rapid soybean harvest has opened a wider window for safrinha planting, and the early seeding will allow more of the crop to avoid late season weather stress.

Ag Rural also bumped up planted acres on the safrinha crop from 39.2 million to 40.4 million. While this is down 4.7 percent from last year’s safrinha acreage, it is less than the initial decrease projection of 9.4 percent. This added production will put Brazil’s total corn crop closer to the USDA’s estimate of 124 mmt than those expecting 120 mmt or less.

Poland and Ukraine have been at odds on commodity flow since the European Union agreed to help the country with exports following the closing of the Black Sea shipping lanes. Poland has been accusing Ukraine of dumping cheap grain into its domestic market, which hurts Poland’s own farmers. A new dispute between the two centers on grain quality. Some export buyers have rejected Ukrainian grain stating it is too poor to use. This grain is then stuck in Poland. Polish officials claim they will now be inspecting Ukraine grain when it enters the country, and any suspect shipments will be turned away at the border with Ukraine.

The Chinese Lunar New Year celebration has ended, and we are starting to collect data from the week-long holiday. Travel in China was up as expected during the week, climbing 34 percent from last year and up 19 percent from 2019. Restaurant demand was up 30 percent from 2023 which is where attention had been focused. Consumer spending in China for the week was up a large 47 percent on the year, but only up 8 percent from 2019, which is a slower than hoped for growth rate. This data shows us China’s economy is not rebounding as fast as economists had predicted.

The Climate Prediction Center has released a statement that they expect a return of La Nina weather conditions. The CPC is predicting El Nino conditions will turn neutral by April and remain this way until June. They then state there is a 55 percent chance of a La Nina returning from June to August. There is no accurate way to determine how strong this event may be at this stage.

A La Nina was responsible for the major drought in Argentina last year and tends to bring drought to parts of the U.S. as well, mainly the southern regions.

OPEC has released its world crude oil demand forecast for the next two years. For 2024, OPEC believes global crude oil demand will average 2.2 million barrels per day. This is forecast to decline to 1.825 million barrels in 2025. Non-OPEC crude oil demand is expected to hold steady at 1.2 million barrels per day. OPEC is also predicting global economic growth of 2.7 percent this year and 2.9 percent in 2025.

The United States is seeing demand for its grain and soybeans slow as global commodity trade quiets. Marketing year-to-date corn export loadings currently total 812.2 million bu, an increase of 34.5 percent from last year. Soybean exports total 1.26 billion bu and are down 20 percent from last year. Cumulative wheat exports stand at 476 mbu, a yearly reduction of 17 percent. To reach current USDA yearly projections, exports need to average 49.5 mbu on corn, 18 mbu on soybeans, and 21 mbu for wheat. While we have seen numbers this high, in recent weeks we have fallen well short of needed export volumes.

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