Market Movers to Watch for the Week of May 27th 2024

May 24, 2024

Economic growth in 2024 will slow compared to 2023

By Devin Lashley
Farms.com Risk Management Intern

1. U.S. First Quarter Gross domestic Product (GDP) figures are to be released Thursday May 30th and will likely show a slowdown in economic activity. The U.S. consumer is tapped out due to affordability as incomes are not keeping up with inflation.

The Fed anticipates that economic growth in 2024 will slow compared to 2023, but will still exceed the long-term potential growth estimate, projecting a range of 2% to 2.4%. In this scenario, payroll and premium growth would likely decelerate due to a combination of slower employment and softer wage growth. A number greater than +1.6% would be viewed by markets in a positive way.

2. Keep an eye on wheat futures. The Institute for Agricultural Market Studies (IKAR) has been lowering the 2024 Russian whaet crop from 93 to 83.5 mmt - down 9.5 mmt. If the weather remains cold and dry next week look for wheat to trade another leg higher. Its a race to the bottom as to how low production will go. Look out for any headline news about a Russian wheat export ban like 2010 that sent wheat futures surging for 23 months. It would be very friendly 2024 wheat futures.

3. The USDA Crop progress report will be released Tuesday May 28th and will likely show continued issues with the 2024 U.S. planting progress, as it remains wet into the coming weekend. With 30 million acres of corn left to be planted and 650% of soybeans insurance dates of May 25th coming and going again. Can trendline yields in U.S. soybeans and corn produce at 52 and 181 bpa respectively? The first crop condition report from the USADA in the 1st week of June, it could show crop condition issues.

4. The U.S. Drought Monitor will be released Thursday May 30th and will likely show continued erasure of droughts across growing regions in the Midwest. Continued rains that have delayed planting progress are positive signs for droughts across Iowa, Missouri, Kentucky, and Wisconsin. Severe droughts have been eliminated across the Midwest with more improvement expected, with only small pockets of moderate droughts remaining in states like Iowa and Wisconsin. However, in the past decade in wet years farmers produce smaller crops, and in dry years farmers tend to do much better.

5. The Personal Consumption Expenditures (PCE) Price Index will be released next week on Friday May 31st and will likely show a decrease in inflation. The index broadly measuring inflation sat at 2.8% last report and will likely show a decrease to 2.6%, this is still above the U.S. Feds required 2.0% to cut rates, but it will provide a better picture as to when we can expect rate cuts and should the PCE continue dropping at that rate we should be able to expect cuts by the end of the summer.

For daily information and updates on agriculture commodity marketing and price risk management for North American farmers, producers, and agribusiness visit the Farms.com Risk Management Website to subscribe to the program.

Video: The 15-Year Bet Behind Every New Variety!

Canada is trying to decide how much agricultural research capacity it can afford to lose. Brian Rossnagel believes the better question is whether the country can afford to rebuild it.

The longtime barley and oat breeder makes the case with a simple fact about his profession: the consequences of today’s decisions may not become visible for 10 or 15 years.

“Pick the right parents. That’s the biggest thing,” Rossnagel says. “If you pick the wrong parents, you’re not going to get anywhere—and you don’t know that until 10 years, 15 years later.”

That warning carries particular weight as Agriculture and Agri-Food Canada moves to reduce spending and streamline parts of its science operations. The department’s 2026–27 plan anticipates the loss of approximately 665 positions by 2028–29 and says some research will be reduced where capacity exists in academia or industry. AAFC says the changes will make its science operations more cost-effective over the long term.

For Canada’s seed industry, Rossnagel’s career illustrates what is at stake.

This fall, the retired University of Saskatchewan breeder will be inducted into the Canadian Agricultural Hall of Fame. During his 35-year career at the Crop Development Centre, he helped develop more than 100 barley and oat varieties, including CDC Austenson—one of Western Canada’s most widely grown feed barleys. His induction recognizes not only those varieties, but the collaboration and research system that made them possible.

Rossnagel is quick to emphasize that none of it was the work of one person.

“The first thing I thought about was all the other people who contributed to whatever success I and my program had over the years,” he says. “We know that it’s not an individual who does this. It’s a group—a team.”

That team extends well beyond the breeder whose name appears beside a variety. It includes technicians, pathologists, quality specialists, statisticians, regional testing sites, seed growers and industry partners. It also includes the breeders who came before and those who will carry the germplasm forward.

CDC Fraser barley, for example, moved through three breeding careers. Its parents came from Brian Harvey’s program. Rossnagel advanced the material after Harvey retired, and Aaron Beattie later guided it through registration and release.

That kind of handoff is normal in plant breeding. The person who makes the original cross may never see the resulting variety reach farmers.

It also explains why lost research capacity cannot simply be switched back on when budgets improve.

“If you shut it off, it’s very, very difficult—and particularly costly—to start it up again,” Rossnagel says. “If you have to start from scratch, it’s going to be at least 10 years before anybody notices whether you’re getting anything done or not.”

The concern is not simply how many experimental lines Canada can process. Modern equipment, statistical tools and genetic technologies allow today’s breeding programs to evaluate tens of thousands of lines—far more than Rossnagel could handle when he entered the field in the early 1970s.

But efficiency and automation do not generate every idea.

“If you pare back down, and instead of having six or seven individual scientists concentrating on wheat breeding, you go down and say three people could handle all this, well, that’s half the ideas gone,” he says. “Particularly if you happen to lose the three people who had the really neat and innovative ideas, boy, that’s a problem.”

It is a timely distinction for Canadian agriculture. Consolidating programs may preserve the volume of material moving through a system, at least initially. It may not preserve the diversity of thinking, regional knowledge or willingness to pursue unconventional crosses.

That regional knowledge matters because Canadian agriculture is not one uniform production environment. A variety suited to southern Alberta may face different disease, moisture and maturity pressures than one grown in Manitoba, Ontario or Atlantic Canada.

“Agriculture is applied biology,” Rossnagel says. “Biology, all around the Earth, moves from the poles to the equator. It does not move from Newfoundland to B.C. like politics do.”