North American Agribusiness Review October 2021

This periodical update provides a market outlook for dairy, cattle, wheat, and other key commodities, and gives an overview of what developments to watch in the upcoming months in North America.

picture of various US food & agribusiness products

Report summary

  • -In addition to the spread of the Delta variant, the economic recovery from Covid-19 remains challenged by various supply-side constraints. Meanwhile, the business sector is struggling with labor shortages.

  • -As much as we talk about port congestion, container imbalance, and labor shortages, the US has achieved new highs in terms of imports and exports. Shippers, carriers, and port operators are still able to move goods at record rates and in challenging supply chain situations.

  • -Food inflation shot up on the back of an elevated general CPI index (peaking 5.4% above a year earlier in September), mostly driven by energy prices, labor, and supply chain constraints. We are beginning to see costs being passed on from manufacturers to retailers and ultimately to consumers.

  • -Cutout and slowly tightening cattle supplies support fed cattle prices. Although market-ready fed cattle supplies are still historically high relative to operational packing capacity, second only to 2020, exceptional beef prices have supported a counter-seasonal fed cattle market through the traditionally weak late summer market.

  • -Sanctions, geopolitics, export limitations, and weather have collided with elevated commodity prices to create an almost unprecedented environment for growers. Higher seed pricing and pesticide pricing, as well as land and machinery pricing, will likely put pressure on farmers’ wallets. Further price increases of fertilizers cannot be ruled out between now and spring 2022.

  • -The USDA has increased US 2021 soybean production, yield, and stocks – all pointing to more plentiful supplies. In addition, projections of another record crop in Brazil will add downward pressure to the soybean market. However, the demand side of the balance sheet continues to be strong on a global basis and even in the US, despite USDA projections.
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