MT. JULIET, Tenn. (DTN) -- The rise of the COVID delta variant and persistent supply chain disruption have slowed down the pace of global recovery from a macroeconomic perspective, but other outcomes of the pandemic support strong fundamentals in the agriculture markets, said John Deere lead economist for agriculture Kanlaya Barr.
Consumer demand for meat and dairy products remains high, which, in turn, supports feed grain demand. Farmers may be paying more for diesel, gasoline and fertilizer, but high oil prices and long-term transitions to low-carbon fuels are keeping ethanol margins high all while spurring new demand for renewable diesel.
"To me, it's the most positive fundamentals in the long term that I've seen in the last five years," she said.
Barr will share the full details of her economic outlook at the DTN Ag Summit, which will be held Dec. 5-7 in Chicago. As one of three keynote speakers, she'll join former Iowa Governor and ambassador to China Terry Branstad and former Minnesota Viking linebacker, entrepreneur and farmer Chad Greenway in providing insights and motivation to Power Up Your Business, this year's theme.
Ag Summit will return in-person to the Fairmont Chicago Millennium Park hotel after going virtual in 2020. Anyone who registers before Nov. 26 can take advantage of a special early bird rate. You can find all the details, including the agenda, full speaker bios and travel details at www.dtn.com/agsummit.
If you are unable to attend Ag Summit in person, you can find a collection of all our news and video coverage, as well as details on a special series of post-event webinars as they become available, here: https://spotlights.dtnpf.com/….
Barr's presentation on the Monday afternoon of Ag Summit will bring together two themes that'll be explored earlier in the day: trade with China and the burgeoning carbon market.
"Agriculture has just not gotten a break since 2018. From the trade war with China to COVID to the weather," she said. "It's been really hard to forecast, and volatility will be the name of the game going forward."
While China may rely more heavily on Brazilian soybeans than it has in recent years, it'll still be a big U.S. customer, too. What Barr sees slowing down, or even stopping altogether, is the export of soybean oil.
As the global push to decarbonize the economy picks up speed, Barr sees big benefits for the ethanol and biodiesel sectors since switching to these types of fuels cuts greenhouse gas emissions by about 50% compared to fossil fuels.
For soybeans, she said renewable diesel has an especially long runway. With ethanol, you can only blend 10%, and in some cases 15%, without additional infrastructure like blending pumps. Renewable diesel, on the other hand, is chemically identical to diesel fuel made from petroleum.
"This is probably the first time that refineries and livestock are on the same page," she said, adding that higher soybean oil demand generates a larger, less expensive supply of meal.
Katie Dehlinger can be reached at email@example.com
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