Agricultural Markets and Situation Outlook Webinar: September 17, 2026

We'll go and get started. I'd like to welcome everyone to the September 2026 edition of the agricultural market situation and outlook webinar series uh hosted by uh the agrous farm business management group at NDSU extension. Uh this is a regular program of NDSU extension uh where we cover various uh current topics events that impact agriculture uh in North Dakota. Uh we have a full docket for today. Uh there'll be five of us speaking and I will I I don't know if I've ever done this before. Stay till the end. Um because there is some there is some big news and if if I don't impress upon you the importance of it, I failed. Um but but do stay till the end or or or pick up pick up the notes from somebody else uh afterwards. Uh we uh will have a series of presenters as always. Uh you're welcome to ask questions. You're encouraged to ask questions. Um we'll cover those at the end. um you please use either the Q&A or the chat tool and we'll moderate uh each of those uh once everyone's had a chance to speak. Uh we'll go through the the series of presenters in the usual order. So we will begin with uh uh Brian Parmman, egg finance specialist. >> All right. So uh for today's um a lot of us are reporting on the latest uh uh reports from our federal government USDAs and WA was and stuff and so I'm going to also uh uh talk about what happened this week in kind of the macro economy. Uh the Federal Reserve uh had their September meeting uh this week, last couple of days. Um, I just wanted to remind everyone that we have a new Federal Reserve chairman who was sworn in in uh May of 20 uh May of this year. Uh, in each term is up for up to four years. So, uh, if this new chair sticks out at least one term, it would be uh 20 2030 before uh, uh, it would be up for reappointment or whatever. Um this uh again this this current Fed chair, the new one served on the uh the B board of governors uh previously during the actual financial crisis 2008 2009. He was on the board from ' 06 to 2011. And the big news from the meeting really was that the Federal Reserve for the first time in about 3 years uh decided to increase the benchmark federal funds rate 25 basis points from 3.5 to 3.75% to 3.75 to 4%. Uh and the big reason for that uh rate increase has been uh the persistence of inflation. And so this chart here just shows uh inflation since 2020 up through now. Uh of course we had the big inflationary period from roughly mid 2021 uh through the the early part of 2023 where annualized average inflation rose to up over 8% for a period of time. Obviously we're not we're not anywhere near that high now. And one of the big criticisms that that folks had for the then Fed chairman Jerome Pal was their reluctance to raise rates earlier and possibly could they have prevented inflation from going so high. They did wait uh a period of time as inflation continued to rise uh before they began incre a series of uh rate hikes to get interest rates higher to sort of slow down that rate of inflation. they did finally get to greater or lesser degree out in front of it and we saw that inflation rate come down as as interest rates went up and but you know it's and you can see it took a long time before we ever started getting down close. Now the the Fed's target inflation rate again is uh 2%. We never ever since the uh the most recent big spike you know 3 or 4 years ago. Uh we haven't gotten down to that 2% mark yet. We we never really did. it was close to 2 and 1/2 bouncing between 2 and 1/2 and 3. Uh but then you can see at the beginning part of 2026, inflation started going back up again. Uh going up over 3%. Uh a lot of that having to do with the conflict with Iran and and what's going on in in the Middle East. Um a big portion being energy prices. We've seen inflation come down a bit, but it's been really stuck there at at comfortably above 3%. And so it appears as though this this current Federal Reserve Board and the chairman uh they they they're not going to wait. They're not going to wait and see if inflation goes up to four or 5% before they start raising rates to get out in front of it. They don't want to see it go up to 9% again. Hence the reason for the rate hike. And the other thing that they watch closely is of course unemployment. you know, because the kind of the theory on this is that as interest rates go up up, so too does unemployment, which um concerns about unemployment tends to curb spending, which helps bring that inflation rate down. But we can see from this chart from the Bureau of Labor Statistics that we this is the big COVID spike for uh you know, a quarter where we had high inflation. It really hasn't been that high. Kind of 4.5 to 5% is sort of the threshold that they'd like to stay at or below. And right now, the last few months, it's been just a touch over 4%. So infl or unemployment isn't really a concern right now uh that the Federal Reserve has. They're not worried about a there this rate hike uh spiking unemployment or that unemployment's trending in the wrong direction. So they felt pretty comfortable about doing this uh and not really having a big uh concern that unemployment is suddenly going to get into a an area that they'd like it not to be. So then we look at the impact on actual interest rates and what's happened when the Federal Reserve it's it's it's a lot of times like uh when they make these announcements on if they're going to increase rates or not. Most of the time, it's been my experience, the market for the for the most part knows, you know, weeks in advance kind of what they're going to do because we they know that they base it off of a set of data, some of which I already showed, uh, GDP growth, things like that. So, the market knows that information, too, and what they're looking at, and they they, you know, the Fed doesn't they'll make comments in between meetings at times that kind of maybe signals which direction they're going to go. So, the market's been increasing the So, here's the 10-year yield and the 2-year Treasury yield. These are some benchmarks for what uh interest rates are doing. You can see really since August when we started having these high these persistently higher inflation reports and unemploy low unemployment reports, the 10-year yield started moving on its own before the Fed did anything. This is the market basically believing that the Federal Reserve is going to hike rates. So, then what happens? bond prices fall, which makes yields go up. And we saw that with both the 10-year and the 2-year. And really, for the first time in uh several years, the 10-year yield is now going up over 5%. Uh the last time that happened, I believe, was in 2023, but uh that's that's kind of where it's sat as of uh yesterday and earlier today with the 5-year um just kind of approaching just over 4.6%. So, uh, also a non-inverted yield curve as you can see there. So, what's the impact on on just consumer lending rates? This is, uh, the Freddy Mack, they do a survey, average weekly survey. This was as of 9:10. The new one won't come out, um, until tomorrow. Uh, then we'll see it. But I expect this will be up a few just a few percentage point, you know, not a few percentage points, not like 6 to 8, but I mean a few hundreds, maybe 6.8, 6.9. But we've been seeing really this since April uh consumer mortgage rates and lending rates increasing month over month. Uh and this is again an anticipation that the Fed was going to hike rates and we see those moving up uh at the same time. And then the other thing and while it's not the mandate of the Federal Reserve to keep the stock market high, uh you can also see though that even though that expectation the expectations for a rate hike, you did see some decline in in equity markets, but not a massive decline and really up substantially on the year. You come back here to uh January uh December of 2012, January of 2026, markets are in a really strong position. And I'm just showing all this to show that the Fed was really comfortable with doing the rake rate hike that they that they just did. Um because everything is really in a good place and with the concern with inflation, there was probably in their minds no reason not to uh right now try to get out in front of it. This is a little bit dated the the survey for the second quarter on a lending rates across our district, the Federal uh Reserve Bank of Minneapolis. Uh, so I got quarter one on the chart of this year. Uh, quarter 2's survey probably won't be out for another few weeks for me to update this, but I would expect that we'll see uh maybe a couple of ten increase in interest rates across the second quarter for uh, a lending rates this year in our region. And then we're probably going to see a bigger increase in in quarter three because that's really when rates have started to increase because it really was kind of that July August time frame when some of this data was concerning about uh inflation and the direction it was going. Fed hinting that they're uh that they're going to increase rates at the meeting that they just had uh for the last couple of days. So there's two more meetings left uh this year. There's one in October and then there's one in December. there is no meeting in November. Uh right now the market is about is evenly split 5050 50% think there will not be a rate increase in October and 50% think that there will be another 25 basis points or a quarter of a percentage point increase at the October meeting. October rate increases or decreases for that matter are a little bit controversial at times because in an election year because of the belief that you know higher rates can swing you know depending on who's in office now or whatever can can swing votes or I don't know but what I do know is that's what the that's what the market is kind of expecting. Then you go to the December meeting, the vast majority, you know, over 85% that think there will be at least a 25 uh basis point or a quarter of a percentage point increase by December and 35% or at least just over a third think there'll be a half a percent increase uh late by later on this year by that December meeting. So that would be, you know, if this were to hold true, that would be a threequarters of a percentage point increase in about three months if if the 35%'s correct. If the majority are correct, it should be at least another 25 basis point increase. And that's what uh the market's kind of in uh that's what their expectations are for what's going to happen. And as you get closer to those dates, uh, it tends to be they tend to narrow in and be correct, but that's still there's still several reports to come out between now and then. A lot of things can happen in in in a few months. So, it's it's really a wait and see, but that's kind of what what folks are baking in there. And then what pressure is that going to put on interest rates heading into this fall? Are they how long how long will rates stay higher? and how is that going to impact lending and interest costs heading into 2027? Uh, we're going to have to wait and see because as I've said in many of the presentations I've given on the Federal Reserve's actions, it's not one for one. Just because they increase rates 3/4 of a percent, let's say, by the end of the year, doesn't mean we'll have a 3/4% increase on all the other rates. It could be less depending on how the market digests at it. And actually, it could be more. Um, that's that's just kind of the way this goes. And so it'll have to be kind of a wait and see uh from that perspective. So with that, uh you know, just wanted to give an update on what's going on with rates um heading into this fall. Uh if you have any questions or or anything that you that maybe I didn't cover that you'd like to uh have me comment on, feel free. And I'll go ahead and stop sharing now and turn this over to Dr. Olsen. >> All right. Thank you. So Fray Olson, crop economist, marketing specialist, uh NDSU extension. We're going to be talking a little bit about September WASD numbers, uh which again has really been digested in the marketplace. They came out last Friday. Uh there's already been a lot of discussion, but I will show you the numbers and give you a brief update and assessment. I do want to talk a little bit about some of the trade um not necessarily trade issues but how the futures markets now are responding to energy prices some of the geopolitical issues. So just as a real quick summary September was and the production report together were considered neutral for corn and wheat slightly negative for soybeans mainly because of some of the stuff happening internationally. um grain uh the Iranian war, the expansion into Saudi Arabia and I'll show you some maps in just a minute is impacting energy prices uh not only crude oil but also diesel fuel prices and indirectly impacting grain prices. So today I'm going to try and go through kind of what is that linkage between not only just the psychological linkage but actual the the speculative uh linkage between the energy prices and and grain prices. Um, again, as we've been talking about before, Ukraine and Russia, they continue to bomb uh using drones and other other military equipment to damage not only the vessels, but also port facilities. They're now also expanding into some of their uh key industrial areas and and there's been some refineries that have been hit. There's some infrastructure potentially for the electrical system um in those countries that are also being being damaged. So this is not only creating the shipping challenges at the port uh areas uh but also again the vessels are being attacked directly. So that's having the impact on both grain and energy prices because Russia was exporting a considerable amount of diesel fuel and I know that's part of the reason the diesel food prices have gone up. Just also a heads up very quick for those that have uh spring wheat, Durham, uh barley and oats. On September 30, the USDA will be releasing their small grain summary, which is kind of the last official numbers for production and consumption of our of our small grains. Again, uh would be wheat, spring wheat, winter wheat, uh Durham, uh barley, oats, etc. So that's on the the end of the month. Uh what did USDA tell us? First of the production report. So the as as usual the blue lines on or the blue row on top is the average trade estimate. These are the numbers that on average the traders were expecting to see. Uh the black line towards the bottom uh black row excuse me is the number from last month. And again the red row is what we actually got. So just going through this very quickly from a yield standpoint. the trade was a expecting a little bit larger decrease in yields, but definitely within the range of what the trade was expecting. Uh you bring the yields down, we're going to see a a uh actually there was a slight increase in total production, excuse me, from what what they were expecting, mainly because of a small adjustment in the planted area. For soybeans, again, yields didn't drop as as actually the yield for soybeans went up just a little bit, which was the surprise. they were expecting a small cut. Um, as a result, we saw a slight increase in our total production. Thus, the reason it was somewhat negative for soybeans, uh, basically neutral for corn and for wheat. Now, this is old crop. So, this is for we've already closed out the old crop marketing year for for wheat, for the small grains. Uh, we're still working on the 2025 crop of corn and soybeans. that won't end until um well technically it's it'll be end end on um August 31. Uh September 1 is is the start of the new marketing year, but we don't have the official numbers yet from that close out. So, we're not expecting big changes from these numbers. Uh but we we will be watching that to make sure that they they don't make any major adjustments. I don't expect them to do that. Again, there really wasn't any big news within the corn or soybean complex. Uh the corn numbers uh the reason that went uh changed was a a a small change in both imports and exports. Uh on the soybean side, there was really no change in any of the numbers for 2627. So this is new crop now. Um again from the the wheat perspective, there was no change. There's nothing on the production, nothing on the consumption side. for corn, there really weren't any big changes on the corn, I mean the corn production area, but there was a small cut in the feed. So, when we look at what happened to the bottom line, our ending stocks went up just uh went down, excuse me, just a little bit uh mainly because again there's an adjustment in the production side, but a corresponding adjustment in the feed as well. Soybeans uh very similar to what the trade was expecting. We saw a slight decrease and that was just because the e exports number for new crop went up just a smidge just a little bit. When we look at crop progress uh on the corn side this is as of the 13th a few days ago or actually um yes this yesterday came out um the maturity we're looking about halfway through maturity. They're just starting some of the harvest down in the deep south. Uh when we look at crop condition ratings, so this would be the what percent is rated good to excellent in 2026 versus the last several years. We're definitely behind the last two years, we're a little bit ahead of what we were several years ago. So um when we look at yield and yield forecast and kind of changes from trend line, the USDA numbers and the the trade expectations are are pretty much right in line with what we would have seen historically. Looking at soy, the soybean again similar on the on the good to excellent ratings. Um, very similar to 2022, a little bit below what we had in 25 and 24. We are we haven't now in North Dakota, we've seen a few fields in the east coming off. Um, I' I've been talking to some of the elevator managers and and we're getting a few soybeans coming into the pipeline. Um, nationally, we're starting to basically drop leaves. So, if we get additional rainfall at this point, it likely will not have a big impact on yields. And so, we'll have to, you know, have to be watching that. So, let's talk about what's going on in the Middle East. Um, this is a map. This is from Bloomberg. I stole it from from their uh one of their daily uh updates. Um, and and basically what's happening, we're really concerned about this straight down here. So Saudi Arabia now is starting to uh both Yemen and Saudi Arabia are starting to shoot at each other and and the reason that becomes important is because we do have some additional shipping of both oil products as well as agricultural products that come through the Red Sea. This is the Suez Canal up here. We've been spending a lot of time talking about the straight of Hormuz and what that means for for uh oil shipments. Um, you can see on this map they have the ports listed for in in gold where Saudi Arabia has their major port facilities. There is this pipeline that they're able to push some of that crude oil from central and western eastern excuse me Saudi Arabia into the Red Sea region to be able to load it on vessels there. Um, and and even though this is a little safer, there's still the concerns about the Houthis and and those attacks on some of those oil vessels. So this has now become one of the major al alternative routes that Saudi Arabia is using. Um they do have um in Riyad uh which is one of the major cities they have some uh refining capacity. So that refiner can go either direction. The point being is now not only is the straight of Hormuz having some issues, there is some additional concerns coming up with what is going to happen with the strait here and and given the the escalation in the conflict between Saudi Arabia and Yemen, what does that really mean for for energy prices and more importantly the ability to be able to ship uh product? So why is that important? Well, there is this connection between what happens in the in the energy markets and what happens in the grain markets. Typically, we think of that as being through the form of ethanol or biodiesel. And I know uh Dave is going to talk about some of the these connections later on, but a lot of the direct connection or indirect connection if you will is through the investment commuters. So, a lot of a lot of folks are talking about the hedge funds and what are the hedge funds doing. So, let's understand exactly what's happening. So when energy prices are going up and the stock market's falling, these stock market traders that aren't typically involved in commodities like energy, they're looking at diversified portfolios. They're looking at a portfolio of of of of companies. They say, "Look, when the stock market drops, energy prices going up, I'm going to pull out some money out of the stock portfolio and put it into a a commodity index." Now, this is the S&P uh Goldman Sachs commodity index. So, this is a really common one. I just put together what is the composition of that index. So, if I'm pulling money out of the stock market and I want to buy this S&P uh commodity index as a way to be able to get a prepackaged portfolio of investments, commodities, this is a really nice one. So I can and it and when you're doing the um Goldman Sachs one, you're what you're doing is buying a certain dollar amount. Okay. So So how many dollars of this index do you want to try and purchase? The point is when you look at that composition, the people that are buying these these prepackaged commodity indexes are really going after the the gain in energy. And if you'll notice for this Goldman Sachs one, a little over 50% is in the energy complex. So we got West Texas intermediate crude, Brent crude, arb which is the refined gasoline, we've got natural gas, heating oil is the proxy we use for uh diesel fuel. And about 17% is agricultural. Now these are primarily the grains. So you got Chicago wheat, Kansas wheat, corn, soybeans, coffee, uh sugar, cocoa, and cotton. So again, it's very diversified. So when you come in and start buying this commodity index looking for the energy, you automatically get this prepackaged portion of agricultural products. You also get some industrial metals, you get some livestock, both live cattle, feeder cattle and lean hogs and then the precious metals. So as you start getting more buying interest in this commodity index, they re return into those core commodity futures markets and start buying the appropriate amount of dollar value of those commodities. My point being is that this flow of money into and out of these commodity indexes can be very very quick. It can be and it depends upon what is happening in the energy market. our energies going up and down is our volatility as well as what's happening within the stock market and so again these are the kinds of traders that we're talking about and I know it c it causes some frustration for farmers and especially in trying to put marketing plans together but when we look at the volatility of of of of grains the daily volatility now I'm being very specific about the daily volatilities what happens from day to day to Okay, this is going to increase the volatility. There's been all kinds of research done. Does it really fundamentally shift? Does it put a bias into the the pricing system? And the short answer is no. We haven't been able to detect that, but it has increased the volatility. So, if we look at December corn futures, now I pulled this at about 12:45 this morning. So, we're looking at December corn. We're still in this upper trading range. And I know a lot of farmers are breathing a little easier right now with these higher commodity prices knowing that your costs and expenses are going up. Now we're in a in a trading range here from about four about 525 to about 550. The question becomes so what's going to either drop us below that or push us above that? And for right now we're in this trading range and a lot of things can happen that might cause that to to to see those shifts. Looking at soybeans again, similar kind of pattern. We're seeing this underlying strength. A lot of that is from the fundamentals. We're looking at a smaller corn and soybean crop than we first anticipated. President Trump and President G will be meeting on September 24th to discuss a lot of things including agricultural trade. So, I know there's a lot of people kind of crossing their fingers hoping that we get uh some additional purchases or agreement for Chinese purchases. We'll have to wait to see. So, there are fundamental reasons that we're seeing prices go up, but this increased volatility within that trading range is a lot of that is driven by what's happening in the news and what's happening in the energy markets for spring wheat. And again, we're we're getting towards the end of spring wheat harvest now. Um basis levels so far are holding up pretty well, but I I know for a fact that once we get into corn and soybean harvest, especially for those elevators in the east, they're going to start pushing their spring wheat bases lower to try and prevent you or discourage you from delivering wheat in the middle of corn and soybean harvest. Now, you get to western North Dakota, it changes a little bit, but I know in the east, we we tend to see this pattern starting to appear. So, just be careful and watch pretty closely. You can lock in the futures price, but just watch those basis levels for spring wheat specifically. Looking at canola again, canola is following the oil seed complex pretty closely. Um, all of this investment capital is influencing soybeans and spilling over into the soybean oil market. So, we need to be a little careful. We can add some additional volatility. Even though canola is not part of that commodity index composition, it can still have this ripple effect or this echo effect, if you will, between what's happening in the soybean market and what's happening in the canola market. So, we have this underlying strength in a lot of the grain complex right now. We're in a sideways pattern waiting to get more information not only about the energy but also about fundamentally what is our crop going to actually look like. So, with that, I will stop sharing. I just wanted to provide a quick summary. I'd be happy to try and answer questions later on. I'll hand things over to Tim. >> Good afternoon everybody. Well, it's been two months since I talked to you. So, a lot of things going on. And so, that's what I'm going to kind of refer to is two months ago since we missed our last meeting. to begin with uh at at our July meeting, we were just ready to come out, USDA was just ready on uh July 24th to come out with the midyear inventory report, which I would have done a month ago, but we didn't have that. So, just a little update. I know it's old news now, but just to refresh your mind and as we go along what happened. And on the top, then you see the July 1st inventory report. uh as expected when I I I told you some expectation before that we thought probably be down a little bit 1% or something but maybe up on uh uh beef cow heer replacements and that's exactly what happened. The cow herd on July 1st was down 200,000 head uh from you know from from a year ago from 28.65 million down to 28.45 million. So it continued down again very very dry. Show you the drought monitor in a minute and herd rebuilding just having a really tough time getting going. Although on the bottom we did have a few more replacement heers uh about 3% more replacement heers July 1st than a year ago. And so at least some people said well you know that's an indication maybe of some herd rebuilding. Well, I it was kind of an indication maybe of some interest, but you know from the whole scope of things remembering back to our last cycle in 2014 and 15 when we increased the herd so much quickly and then our prices went down quickly. So everybody's wondering is that going to happen again? Look at there go back to 2014 we had 4.5 million head of replacement heers and then by 15 up to 4.8 8 million and still even though we went up here uh this year we're still down there quite a bit on replacement efforts so we just don't have them to uh cause a big increase in the beef cow herd. So uh here's the drought monitor just came out this morning and again all pretty much all of cattle country is dry. We're even appro the epicenter of drought over this 8-year decline was really in 2022 drought conditions were worse and we're actually now uh approaching that again. And so uh those of you in North Dakota, Minnesota are listening know how dry it is here. But you know the big cow calf states, North Dakota is number eight and we just go down to the bottom. Texas, Oklahoma, Missouri right on up we're number eight. Uh all of them are are very very dry. I just uh had uh three meetings at Big Iron, our big iron show out here this week on Tuesday, Wednesday, Thursday. I talked to producers all the way from Grassy but North Dakota to north of PUM and every one of them said they're dry. So, you know, and I just talked to my counterparts uh of my job down in in Texas and Oklahoma this week, and you see how dry it is down there. The only one that had any good news was over in Kentucky. Kentucky is the ninth largest cow cap state behind behind us. And, you know, they're in an okay situation there. Florida, Florida's number 10, and they're dry, too. So, you know, that's putting the lid on on interest in herd rebuilding for sure. And we just got to have rain rain by spring for, you know, any uh you know, measurable herd rebuilding likely to start. So, again, it's been a while since we looked at the prices. Here's here's Fed Steer prices. When I when we talked in July, just go up from July, we were a week in and we'd already started, you know, coming down seasonally a little bit there, which, you know, is is not unusual. If you go down to the go down to the purple line there in 2024, you know, we we see some peeking out about this time and and go down. Last year, of course, the market kept generally going up even till October before we saw some weakness. But so anyway, a lot of things have happened in the fed cattle market and continued to bring it down since our last uh meeting uh around $30. But there are so many things going on in the affecting the market now that's uh you know causing consternation. And from a supply standpoint, we still have a short supply. You saw that on the cattle inventory, but demand is struggling and uh some a little bit. Again, we're still at I'll show you the cutout value in a minute, but we're still at pretty real high prices at the retail level, but uh frame did a good job and and Brian talking about energy prices and so that's really a double-edged sword for the cattle industry because uh you know, one high diesel and so on brings our input costs up, but on the other hand, on the consumer side, they got to pay more for gas and so on and and and pay for getting their kids to daycare or school and then get to work themselves and fill up the gas tank and what's left, you know, goes into their food budget. And so when you have higher priced items like beef, even though there is strong demand and strong interest and interest in high protein, that has been affecting us. And then you throw in all the other noise that has been occurring here in the last couple months. uh you know like the announcement of uh letting more beef imports in and of course the Mexican border opened up at one place there on on uh on August 24th and uh the futures market got really you know after the the feeder cattle futures went up $15 last week when we're more benign and none of these announcement and we had a pretty strong um cash market in places but uh you know uh now uh Secretary Rollins is in New Mexico opening up another border thing and so like Frame said those funds don't know as much about it maybe for sure as we do and so they see you're opening up a northern but border crossing and you know bail cattle and so is down heavy and so on and and then we've had you know beef packing closures and labor strikes and you are now spatting with Canada and uh trying to redo the USMCA and those are big beef customers on the export market. So our export you market you know headwinds. So put all those those things together and it's just uh you know brought the market down. We're still historically at pretty good prices. We are under last year and you know there's the red are the futures out into October and December and usually it does market goes up in December and we're still last at near last year's record highs but you know we're off where we were for sure at the at the at the be you know towards the uh last time we talked and and mid year there and but you know here's the cutout here's what Packers can sell B4 and again it's hanging right in there at relatively high levels again. Yeah, last year at this time of the year it really really did spike up there for the holiday demand. It was strong and you know consumer buying and we're a little off of that but again it it right after the holiday buying it came down and so uh you know beef it's not like beef is backing up and it's not being sold. It is being sold and and uh so you know that's good news. Now, uh, I just want to go back to this chart here that I showed you on our July 11th webinar. Look across the top there, and that's on YouTube if you want to go back and watch it. And I urge you to do it if you want to for some of the things I'm going to say now. I went back and watched it myself because I said, you know, prices could be cyclally higher this year. That's on a year-to-year basis, but they could be seasonally lower. And so let's go down to the bottom chart there. And uh that's our 550 to six weight calves. And we were at at that webinar in June, we were up there at 494. And I said, you know, let's uh last year we kept on going up. But everything that could go right went right with calves. And I had that long list of things there. We had strong fed cattle price, short supply, the border was closed. We were retaining more heers. You saw our heer uh were up on July 1st. We had excellent winter wheat conditions, new feed lot capacity, corn prices were low and lower than they are now. The cornbell buyers were a after the calves and Canadian buyers. We had a a market report out of Montana said the Canadian buyers, the winter wheat buyers, and the cornbell buyers are all fighting it out. And I said, "What happened if some of those did not come through this year?" And I had a question mark there. And so I had that red dash line there. We could I said back then maybe we could see uh weakness, seasonal weakness like we usually do. The purple line there is 2024. So just keep that in mind. It was a warning. I said it may not happen. But what if it does? But lo and behold, then here's the actual thing. And uh you know just what I warned about unfortunately did come through in that we still have as you saw strong fed cattle prices but they're not as strong as they were and they're down $30 or so obviously we still have short supply. The Mexican border is open. uh likely although we had more heers on July 1st uh again as dry as it is that's going to mute uh heer retention as well cuz we don't have hay you know those people that I just talked to at big iron their hay crop was short it really hot this spring and headed out early and everybody is short of hay although we with uh Ron's going to talk about uh LFP and and and some that kind of thing a minute we were able to emergency CRP. Hey hay, but we're you short on feed. Winter wheat conditions now, I again I talked to my counterpart down in Oklahoma, Texas. The winter wheat conditions now are dust and we're hardly seating any winter wheat. I think about only about 10% of the winter wheat has been planted. So that's out for now. Now, if we if it starts pouring rain down in Oklahoma and in winter wheat country, we'll see a $10 pop in feeder cattle immediately on lightweight feeder cattle because they'll be after them. But as of now, you know, that's that's not the case. And then, of course, corn prices went up. So, because of that, uh, it went down. Maybe not unexpected because I said that could happen. And seasonally, again, if you go down to that 2024 chart, uh you know, it's typical this time of the year as as as numbers pick up at the markets, even though we're have a short supply, that could happen. So, you know, Frank talked about corn prices and so I, you know, did a very good job there. But I'm just telling you here, I like to use Omaha corn prices because that's where the feed lots are that buy our cattle. And you know, corn prices have what 90 cents or something down there. And there's the old adage change corn tits a bushel change fall cap prices a buck in the opposite direction. So uh you know frame said we got to watch corn and and and that's cattle producers are going to need to watch uh corn. What what is corn going to do? Does it stay in that trading range that talked about or do we find more corn or less or whatever? So then here's the se uh the 750 the 800 yearling type of cattle. Kind of the same thing happened. All of a sudden though, last week we did see a nice spike in northern plains prices up in some cases $10 to $20 over where they had but none had really been selling up until now. And then now you know there's a big sale at Napoleon today and Dickinson had this last week and it was the same thing. Aberdine had a big sale last week and uh and Torington, Wyoming and Billings, Montana. And so, you know, we did see a a spike on these heavier weight feeder cattle mainly because uh they're in short supply and uh as showed you even, you know, there there isn't a terrible corn crop. There's still corn around and the Nebraska feeders put corn into high moisture corn into their bunkers and so on. So there's still a demand for these cattle. So uh uh you know we did see a spark in price but we got to see what what continues on here and and you know what what happens with corn and so on but we do have a short supply. So you know the other thing about it is everybody the the price been going down on the right hand side like you know it's never happened before or whatever but actually the same thing happened last October after going up all year then we had some of these noise in the market you know about about beef prices and so on. So we have almost an identical situation that just got through happening just a little bit early. Last year didn't start till October. This time started in July. We were up on the CME cash index about the same uh prices there up around 375 and 80 and then they went down. Didn't go down as far this time and then you know the futures were up there around 370 or whatever. October feeder cattle futures again. They were in July and they went down not quite as much as they did. They did rebound last time. So, a lot of things can happen. Will they rebound? Well, we've got all these factors affecting the market. They did it before, so they could, but that doesn't mean that they have to. So, again, it's just, you know, do we get rain? Do some of these outside influences level off and so on? And and uh, you know, you know, rain mentioned the funds very well. It's the same thing jumping in and out. But this is not unheard of because it happened last year and it happened again this year. Just go to call c call prices. Again, a very seasonal thing. Again, we've had high call cow prices because the demand for hamburger and so on is is uh you know very strong, but we always have this seasonal pattern. Uh pregnancy checking is going on earlier this year because of the drought and they're looking for those open cows to get rid of them. So, uh, we're selling more cows and again, go down to that purple 2024 line. It's, you know, cow prices go down this time of the year and down and now, yeah, just down about where they were last year. And, you know, I suspect, you know, some continued uh, weakness there, you know, through the fall like uh, always happens just because, you know, those those open cows are going to market because we don't have the the feed for them. So, just finish up on lambs. Again, kind of the same thing on lambs that were so high back there in April. Have fallen off a little bit, but lamb prices are still historically relatively, you know, good and above last year uh by some and good demand for lamb and the export market and so on into those um um the Bahamas and those resort areas up there on top. Just on Monday, we sold a truckload of lambs out of North Dakota here on the electronic market. Brought 29650. So again, the lamb market just is hanging in there very well. So with that, we're going to talk about uh drought and and LFP and so on with Ron. Okay. Uh I got a couple things to talk about today. Um, first of all, I got an announcement and we're going to talk about uh LFP. There is been an announcement. There is going to be a ARC PLC signup coming up here. Uh, Brian and I were at an FSA meeting a couple days ago and there was a guy from FSA and he he thought, man, it's going to come pretty quick. And we were speculating, are we going to have a sign up this year or not? Well, he was definitely right. He must have known something. Uh the base update has been completed. Um and uh they've they've allocated that 30 million acres. Um and and what it was uh uh the the eligible acres exceeded the 30 million. Um so they're going to going to back it off. They're going to prorrate a reduction of 3.69% on all all new base acres. So nothing the producer needs to worry about. FSA will do do all that. Okay. Here's the new announcement from the secretary. Producers can make elections to enroll in a 26 year crop year from September 16th. It's already on. You can do it today, I guess. Uh and uh till December 11th. Okay. Then they also said you can enroll in the 27 crop year. Uh that'll be starting November 2nd and go into March 15th, the typical time where you would have the uh the time the deadline for the election. Okay. Uh producers who did not who did not submit uh by December 11th, their election remains the same as 2025. Uh but then the farm is ineligible for payments in 2026. So keep that in mind. Also FSA will be paying out payments uh coming here in October from the 2025 year. Uh they're paid in October of 2026 and they're going to be paying the higher of Arcer PLC. Now, that will be on the old base acres of the of your farm. This new stuff is the this new signups are for the new base acres. So, FSA has a lot of work. I don't know if they can get all this stuff done. They're kind of overwhelmed with the base update and then these two signups right after each other. So, uh we give them credit for if they can get this stuff done. Um, of course, uh, with this with the, uh, uh, uh, they they did change that so producers can add SEO and ECO on either a PLC or ARC election. So, that's uh, that simplifies things. Um, election considerations. Okay, you know, we're get we have a tough tough uh, situation here in North Dakota with uh with low yields probably because of the drought. Um but signing up for 26 because of the drought the the commodity prices have been increased. So most of the prices are above the reference price. So it doesn't really look like any big payments there. Uh but if you were in a county with a low yield um a arc may be a consideration because maybe that would kick in then if you had a lower yield. So that's a couple considerations on this late signup. Okay. From there, I'm going to move on to the livestock forage program, LFP. That's the acronym. Uh here's a drought monitor from two a week ago. There's been a new one, and I don't know that it changed a heck of a lot. Uh we did we of course we we all know we've gotten some rain now, which which will maybe slow this drought monitor down a little bit, but here's what it looks like so far. You can see the red is the really the the driest areas of the state. Okay. And we know then here are the here are the criteria. Uh, if if you're in D2 for four weeks, you get one month. Or seven of eight weeks, you get a a two-month payment. A D3 will get you three months of payment. A D3 for four weeks will get you four months. And a D4 will get you five months of payments. So, here's what it looks like right now. The USDA is always about a week behind, but I just updated this based on the 10th of September. Uh, these are the counties that are going to get payments. These are locked in. Even if we get 20 ines of rain, you are eligible for these payments in these counties right now. Uh you can see the biggest payments are in the southwest and then we've got some uh one payment counties kind of sprinkled throughout. All you have to do is go to FSA uh and and tell them uh tell them you want to pay uh sign up for it and they'll lead you through that. More more things for them to do. Okay. Uh I just got some uh details here of of the of just how the calculations are done. It's done for all these v various uh types of livestock. Beef is what we normally deal with. But if you have goats or sheep or ostrich or reindeer or anything, you can all you can also apply for it uh doing that. Um you the the you must be physically located in uh the the livestock must be physically located in the eligible county. Um, and you must have have have uh had been growing the livestock at least 60 days before the drought. Um, and uh you must have a timely a timely uh uh uh filing. You do not need to get things all done until January 30th of 2027. Uh you are still uh uh required to you have still have the adjusted gross income limitations of $900,000. Um other things may apply in the process. Now, we at NDSU have a calculator online. There's the link. Uh, it looks like this. It's pretty simple. You just fill in. This is one of our simplest calculators. You just fill in uh you you choose your state. We've got North Dakota, Montana, and South Dakota. You choose your county. You put in the number of head. Um, if you have livestock that are under 500 lb for beef, uh, you cannot include them. They've got to be 500 lb or or more. The non- adults. These rates here are are those are the ones that are set by the federal government and that's what you get. The simple example here for Billings North Billings County uh 100 head of adults and 20 uh for non- adults. And then you need to also put in your your acres of pasture whether it be native or approved. Um the the the the software will pull in your AUM. Um, and then you can see here under pre you could get $4,100 on the livestock or 3,800 on on the acres. And that you have to take the lesser of multiply by 60%. Um, and there's your payment. Uh, Billings has four uh four uh payments, four four monthly payments. Multiply that by four and then take a a small percentage off for se sequestration. $8,700. Uh, easy money. and that'll help out your your uh having to buy feed if necessary. So, and I'll take questions at the end. Just a quick run through that. Um, so we'll turn it over to uh David Riplinger to finish up today. >> All right. Thanks, R. All right. Um, >> good. >> Yeah. So, going to cover some of the same things that Frank did regarding what's going on in energy and then take it for a different spin. Uh I think this is one of those new stories that uh hits you in the face every time you drive by a a gas station. Um uh of course we're experiencing right now record diesel prices. We're also experiencing uh near record gasoline prices in the US. Um uh diesel prices been going up relatively quickly. Uh you know day over day we're seeing increases of 10 cents in some cases more. Uh this happens to be a bit more uh than uh Ron budgeted uh in February which is understandable. Uh at that time 255 was definitely quite reasonable. Um and now we're at a place where we don't know exactly how it's going to go. This is a really good example uh for people who've taken uh an economics course of an inelastic uh market. essentially just like farmers who are now looking to harvest their crop, you have folks who need uh to purchase diesel fuel in order for their business to operate. Uh and so obviously harvest is an issue. Uh we have uh freight, you know, transportation. And then of course we're also coming up on the heating season. Uh not here, but primarily in the northeast there's a lot of folks that run on what's essentially diesel fuel uh to to heat their homes in the winter. And this is about the time of year where where folks are buying and filling up their tanks for the first time to get ready for for that type of weather. Uh what might end up being uh a beneficial outcome of El Nino if we do have a milder winter that would mitigate some of that. Um you talked a little bit about the the geography. Uh you know it is very important and one of the things to differentiate as well is between crude and refined products. uh you know oftentimes we we gravitate towards crude when we talk about the petroleum industry uh but refined products uh you know are a separate but related product and here in the case of diesel you know you can see where there are these almost tremendous differences in price where the price of oil is high the price of gasoline is high the price of diesel is extremely high and that's because for the most part even globally you know we're we're short of of crude oil But we're very short of diesel. Um, and that is in that's driven almost entirely by what's going on in the Middle East and Russia. Uh, and something that, you know, may see some sort of resolution in coming weeks and months or you now we're getting a point where there's like likely going to be structural changes uh as well. Uh, obviously conflict with Iran started in in February. Uh, varying periods of escalation. Uh probably one of the biggest events that's happened and just happened you know within the last week uh between the 9th and the 11th was the bombing of this east west pipeline uh in Saudi Arabia uh which did a couple of things. it disrupted uh you know that the supply of fuel to both export terminals and refineries you know on the Red Sea an issue one because you with with that not getting there it's not going to be uh you know exported delivered to destinations which were primarily Europe uh you're also going to see less uh refining because those refineries don't have fuel you know causing additional problems and resulting from that you know just in the last couple days, Saudi Arabia has notified its buyers that basically any any of the deliveries that were expected for the second half of September are either not going to happen or going to happen in November. And to me, that was was probably the bigger piece of news in all of this that helps support uh kind of this this vertical movement in prices we've seen the last few days. And again, this is not replacing, but again, just on top of everything else that's happening um uh in these markets. And of course, speaking of that, and why the way I did, if we can go back to Russia and what's been going on in Russia with UK Ukrainian strikes on refineries, uh their you know, their three of their largest refineries have been significantly impacted by that damage. It's going to take months at least to get them fully back online, which is causing issues. Um, if you did not catch it, uh, just earlier today slash yesterday, depending on on where you sit, Russia suspended diesel exports for the rest of the year. Uh, this is, you know, caused by the damage and this matches up with gasoline and jet fuel imports which had already been suspended. In this case, one of the rationale is just making sure that there's enough diesel domestically to uh complete harvest. Again, that large role that agriculture plays in Russia, you know, kind of drove that. Of course, we also see the refineries in the Middle East. Talked about that a little bit on the previous slide. Um, and then something to note too, and again, why, you know, we've seen this this this dramatic increase in prices in the last week or so, you know, exports from Russia, from the Middle East have been down by half since about the beginning of the year. And that's across it's it's relatively evenly spread across all of those nations. Um you can see those different colors might be a little bit tough to to read on your screen, but again this dramatic dip. Um and again what we've seen the last week or so is uh some individual pieces of news or individual events that kind of add on to it. It's also important to note too that EU the EU has not allowed uh Russian uh petroleum petroleum products in their nations for three years. Uh and they but they did only recently tighten up uh importing refined products that might be moving through other countries, Turkey, India. Um which which does kind of put the squeeze on themselves as as they're looking for a different product. Um couple things to watch for. It's a really interesting situation. uh if if you've followed what's going on in in petroleum and even refined product SMDs, a lot of things are kind of hidden. We've been drawing down our strategic petroleum reserve which has kind of muted uh any upward pressure on on prices of crude. At the same time, we really haven't been tremendously short crude in the region. So that's, you know, that's balanced out really nicely. But we have seen increased oil exports, increased refining, increased exports of refined products. And now we're at that point where Europe, other parts of the world have got to be looking and saying, how do we get through, you know, this these coming months and possibly beyond if they're, you know, managing this current disruption as it exists and possibly, you know, whatever it takes to recover if there's additional disruptions. You know, a lot of uncertainty in the market as well. you know, questions about how fast we're going to repair things. Uh, for example, the pipeline in Saudi Arabia, they figure they get back online may be back online now and fully operational within another few weeks. Some of these other repairs are going to be much more difficult to do, especially those refineries in Russia. you know, there are sanctions on Russia not allowing, you know, us to for for them to to import various technology that that they may need to to fully repair uh their refinery. So, that's an issue. Uh who knows when things will get normalized in terms of Middle Eastern relations. So, that trade in the the straight of Hormuz uh along the Red Sea will also be there. And just a possibility I know people talk about I I would be surprised if anything occurred. uh remember that, you know, we did limit not allow uh energy exports following uh the oil shocks in the 70s up until about 2015. And so that's that's another possibility. That's what Russia just did today uh to manage our domestic situation. Moving over or back to bofuels given it's by space. uh very positive impacts on the biodiesel renewable diesel markets because they're either close substitutes or almost perfect substitutes for diesel fuel. They are seeing record profits. Uh margins are fantastic. Uh because the the price of renewable diesel follows diesel almost perfectly in California. And as those prices have doubled, so have the prices of renewable diesel. And you can see a chart that I I pulled that Nestie put together. they're a large uh energy company uh with some data that they got from EIA. Uh also just looking at the where that revenue comes from. They're looking about $10 a gallon for revenue. some of that from the fuel, roughly just less than $6 from the fuel. And then you get all of these additional incentives or ways to to to capture value, be it something a rin with the RFS, uh, California credits and so forth. And again, the the actual cost of production for that is is probably half. So, I mean, it's a really profitable time to the point combined with things going on with the RFS I'm not going to go into today. Uh, they're they're run they're very much running at full bore and they they would love to find more uh vegetable oil or or whatever they could to to make uh biodiesel um to drive things. Right now, the big thing that I wanted to talk about and hopefully you take note and you'll be hearing about this uh maybe from me but most likely from one of my colleagues in the coming weeks uh last week uh IRS who's the regulator for 45Z uh announced that the Greek model has been updated and the the the key piece was that they basically took the USDA feed stock calculator in its entirety and just plugged it in And so now even though it hasn't been finalized, it'll it's still targeted to be finalized in November. I think we have a very clear if not complete picture of what things will look like uh in terms of the crops, in terms of the practices and in terms of the actual changes in CI. Um so again you can get to that dollar figure again. So the crops corn, soybeans, sorghum, canola and it's actually realized too. It's soybean oil and canola oil uh that would be used to make the fuel. Our different management practices, cover crops, tillage, uh uh uras inhibitors type technology and then manure. Um but that's all there very very close. Some of the details as always mentioned we don't know yet. Uh but essentially according to the lot would be crops used to make this these different clean fuels uh you know going back past the beginning of the year. So then it would be well can I use this for old crop and the answer would be we'll see probably but you know you can use the calculator today and I did just a quick uh scenario pretending I was in Stzman County uh with no till and a cover crop which is you know definitely on the higher end of of doing things but a dramatic decrease in the carbon intensive you can see that 2500 uh grams of CO2 equivalent per bushel so less than half, you know, that's, you know, that's in the magnitude of 10, 20, 25 cents an acre, a bushel. So, I mean, this is significant funding, uh, which could be received by the refiner slash maybe paid back to the farmer if they have that chain of custody material that they need. Um, there will be, again, like I said, more forthcoming, but we're basically right at the finish line. Uh, and I would be surprised that there would be any fundamental changes to take anything away from what's been done. Um, that's the end of my comments. I will now move over to Q&A. I know we have at least one question. Um, our next webinar is on the 15th of October, uh, just after the next WASI. So, Frank, I think that you had a question if you want to feel that. >> Uh, yeah, the first one. Um, so hard red spring wheat in south southwest North Dakota is paying no premium or discount for protein. Um, do you see protein premiums coming back over the winter? Short answer, no. I I you know that we've seen protein premiums in even in the eastern part of the state disappear as well. Uh there's there's two primary reasons going on. Number one, we have a very tight winter wheat con supply. Uh we've got very adequate spring wheat supplies when you combine what not only what we have here in the US but what was produced in Canada both last year and this year um we've got comfortable stocks and carryover for spring wheat. We do not have comfortable stocks for hard red winter wheat. And of course there's a protein differential there. The other thing that we're seeing and hearing is that the protein content in the spring wheat we have this year is above average. Not dramatically above average but definitely above average. So the moral of the story then is we have plenty of high protein wheat and the high protein we wheat we do have in the former spring wheat is higher than typical. We have a short shortage of of hard red winter wheat. It's a hard wheat but it's lower protein. And so right now the marketplace and in particular wheat mills are looking around saying where can I find an 11 12 protein hard wheat that I can use for some of my flour and flour needs and a 14 or a 15 pro spring wheat is not a substitute for an 11 12 or 12 pro winter wheat and so we've got really adequate supplies. So the moral of the story is the market always wants what you can't find. Well, right now we can find really good protein spring wheat and they're not paying any kind of premiums or discounts for high protein. And I really don't expect that to change based on some analysis I did several years ago. We tend to see those premiums adjust very quickly right around harvest time period. Once we get out of harvest, the market knows what that distribution or what the range of proteins looks like and we stay at about those same levels the rest of the winter until next year when we have the next harvest. Um, what are your thoughts on spring wheat and Durham prices for near-term into the beginning of 2027? Um, so I my personal view is for spring wheat specifically, I I do think we're going to have some some support. I think the downside risk in spring wheat right now is relatively low. Um there might be some upside potential, but you got to realize also that spring wheat is a blend wheat. Okay, you're it's not the base wheat. So when we think about what's happening in Russia, what's happening in Ukraine, what's happening with global wheat prices, that would be equivalent to our hard red winter wheat. So the global wheat, it's a hard wheat, it's in that 11 to 12 protein range. And we use spring wheat as a blend wheat to try and get these high um special uh higher protein specialized kinds of flour and flour mixes. So as we see the global wheat prices come up, that will definitely put a lift into the spring wheat market. Do we see a premium or discount for spring wheat over winter wheat? Well, right now it's actually inverted. Winter wheat on the futures market is actually I checked it just before I came on 40 cents a bushel higher than spring wheat in the futures market. So Kansas City wheat futures is 40 cents above Minneapolis or MAK spring wheat. And again it comes back to what are we short of? We're short of hard red winter wheat. What do we have adequate supplies when you include the Canadian stocks? We've got lots of spring wheat around. So we we know that the spring wheat bushels in Canada are pretty good. They're about like we saw two years ago. Last year was a record year. Two years ago was a really good year. It looks like bushels are about the same. We're still trying to figure out exactly what that quality profile looks like. So we might see some some additional premiums coming into the US spring wheat because we do have we do have very good quality this year for protein as well as as as plump and hardness. So in my view the you know to translate all of that watch what's happening in the global markets because that will put the the floor underneath the spring wheat market. So I do think we will have some opportunities. Um they will likely not come from a from a wheat pricing standpoint and till probably uh Thanksgiving or thereabouts because then we'll have a better idea of what the winter wheat seedings are going to be like. Yeah, I was going to have that same question, but I'm hearing these squawks about it so wet north of the border and even along northern North Dakota affecting quality. >> There is there is there we know that there's going to be some quality issues. Uh again, when we think about the breakdown, how bad is it going to be? Obviously, the biggest quality concern is on the Durham side, not necessarily in the, you know, there's some on the spring springweight side, but the Durham side is really the one that's the most concerned. So, and and you asked about the the next question was a Canadian crop in bad shape for all um is it in bad shape all of a sudden? Well, again, what happens to the quality of Durham when you start getting rains in the middle of spring and in the middle of harvest? You can take a really high quality crop that looks fantastic and three or four rains later it looks like junk. Um and anybody that's grown Durham knows what I'm talking about. And and that's really the concern right now in the Canadian side is there are regions there are areas of of some parts in Alberta but mainly Saskatchewan where they're getting some rain showers and there's there's there is I'm getting more and more reports about some deteriorating quality. Thanks. Yeah, I don't see any other questions. Uh and I think that we've had more than enough time for people to ask. I was going to ask you, Frra, if you had any thoughts on the bankruptcy of Summit Brewing if you hadn't heard. Um, but >> I had I had not heard I had I had not heard that, but uh that that would be that's very interesting news. I had not heard that. >> Well, you have a month to compare your answer. >> Okay. and and the and uh last year they had a fantastic barley crop up in Calgary in that area and so they the feeders up there were really after a cas you heard anything about the barley crop up there. I I have not. I think that from what I can tell or from the last report I read, the the barley harvest was ahead of the spring wheat harvest or the durm harvest. And so I think my guess would be that the the barley crop came off a little sooner, should be in better shape. The majority of the Canadian barley is used for feed. >> The the you know about 70 75% of the Canadian barley goes into the feed market. There's about >> 25 to 30% that goes into malt. >> Yeah. grow feed varieties up there at Cal. Yep. Absolutely. So, I I don't anticipate any big quality problems. I think most of that harvest was completed before the rains came.