The USMEF Feedgrain and Oilseed Caucus met Nov. 5 at the USMEF Strategic Planning Conference in Tucson, Arizona. The caucus examined and discussed the outlook for the U.S. grain and livestock industries, the value of marketing corn-fed beef in the Japanese market and the potential benefits of the Trans-Pacific Partnership (TPP). The caucus also heard from members who attended USMEF events in China and received an update on USMEF activities in Mexico and the ASEAN region.

An economic update highlighted this year’s strong corn and soybean yields but cautioned that world stocks of soybeans are growing and could pressure the market in the next few years. Domestic consumption of soybean meal for feed is expected to increase over the next year. High protein soybean meal has provided 70 percent or more of soybean processors’ revenue for the last two years.

John Anderson, deputy chief economist with American Farm Bureau Federation, told the caucus that the agriculture markets are in a period of uncertainty.

“It seems like things are really unsettled right now across the board,” said Anderson. “Corn, soybeans, cattle and hogs each have their own challenges.”

Global demand for corn is flat and global stocks of all grains – especially soybeans – are very high.

“There are a lot of soybeans out there in the world, especially in Brazil and Argentina,” Anderson said.

As he noted at our previous (May 2015) meeting in San Antonio, Anderson said farmers in Argentina sat on a lot of soybeans waiting for the October election. These farmers pay heavy tariffs, and a new government could mean a lowering of tariffs and large stocks of soybeans being sold – if the tariffs remain high, the farmers may still dump their stocks. The impact on the global soybean market will most certainly be substantial, he predicted.

The combination of rising world soybean stocks and increased U.S. soybean production has experts forecasting an 11.5 percent stock-to-use ratio by the end of 2016, Anderson said. Corn appears to be in a somewhat better position, with estimates indicating that some acreage in the U.S. will be shifted out of corn next year. Meanwhile, corn usage is expected to remain steady in the livestock sector and in the ethanol industry.

Anderson called the cattle market “very strange” and pointed to changes that have taken place over the course of the past year.

“The real question is where we are going to go from here, and I don’t know that anyone can say,” said Anderson.

The hog market is much more stable, with prices remaining steady, even as production numbers rise.

Phil Karsting, Administrator of the USDA Foreign Agricultural service (FAS), gave the caucus an update on FAS’s work. He also highlighted TPP and the opportunities that come with it.

“The question isn’t if there are going to be new rules to trade, it’s who is going to write those new rules,” said Karsting. “I think we have an exceptional opportunity here [with TPP] to do it in a way that adheres to scientific standards, adheres to transparency, that moves the needle on all kinds of things that are consistent with America’s vision and with our values.”

Gary Marshall of the Missouri Corn Merchandising Council told the caucus about a recent trade mission to Japan. USMEF led the Heartland Team, a delegation of agricultural leaders from several Midwestern states, to meet with Japanese importers, distributors, retailers and processors. The team also participated in a food blogger event and a U.S. meat trade seminar designed to promote U.S. beef and pork and build stronger business relationships with key members of the Japanese industry.

“As those of us on the Heartland Team discovered, the Japanese market continues to get bigger and people there continue to appreciate U.S. meat,” said Marshall. “As a population, a lot of what is happening in Japan mirrors what has happened in the U.S. And that is good news, from a marketing standpoint, for U.S. grain and livestock producers.”

R.J. Campbell of the Nebraska Soybean Board showed the caucus a video that promoted U.S. pork producers in Japan. The video describes soybeans’ role in pork production in the United States.

“The idea of the video is to educate people, potential customers of our products, and let them know we care at the grass roots level,” he said. “Farmers in the U.S. care about the food we produce, and that means a lot to them.”

Chad Russell, USMEF regional director in Mexico, discussed the situation in that country. Mexico is the largest market for U.S. pork by volume and the second largest market by value.

“Mexico is the engine pulling the train in recent years, as far as growth in exports of U.S. pork goes,” he said. “The situation now is that domestic pork production in Mexico is growing every year, but demand and consumption are also growing. That combination provides opportunities for the U.S. to fill the gaps.”

Russell listed ongoing and new projects in Mexico to help keep U.S. pork in the game. They include working with retailers and HRI partners to promote pork, along with seminars and educational trainings to offer Mexican foodservice providers new and fresh ways to utilize U.S. pork.

John Hagenbuch of the Illinois Soybean Association talked about his participation in the U.S.-China Swine Industry Symposium, which was co-sponsored by USMEF.

“I learned a lot about the Chinese swine industry, and that the challenges pork producers face in China are similar to the ones we face here in the U.S.,” said Hagenbuch, who was invited to share a presentation on his Illinois farm with symposium attendees. “It was a great experience, and I thank USMEF for helping put it together.”

Sabrina Yin, USMEF ASEAN director, presented the caucus with a look at key markets within the ASEAN region, highlighting USMEF’s activities to promote U.S. red meat and the challenges and opportunities that exist.

“There is a larger non-meat eating population in areas of the region, and we also have competition from grass-fed beef from Australia and New Zealand, which are geographically very close,” Yin explained. “Australia also continues to do well sending pork into the region, so that is a challenge.”

But interest in U.S. red meat is growing in promising markets such as Vietnam, which is very positive news for the region.

Lou Lamoreux briefly touched on a recent trade mission to Cuba sponsored by the Illinois Corn Marketing Board. Talk about the mission took place for years, but it finally happened in 2015.

The trade team was able to meet with several Cuban officials, including the ministers of commerce, agriculture and trade.

Lou Lamoreux is a corn producer from Lanark, Illinois, who also raises cattle, soybeans, oats and hay. John Hagenbuch is a soybean and pork producer from Utica, Illinois. They serve on the USMEF Executive Committee and co-chair the USMEF Feedgrain and Oilseed Caucus.