O'Brien County's Bell-Times-Courier -

Clippings from ISU Extension

Harvest, Markets and Pro Ag

 

November 29, 2018

Gary Wright

The crop year 2018 will soon end. As with the rest of this crop year, harvest weather has offered final challenges to Northwest Iowa producers.

The final 2018 crop size, customarily reported in January, at present offers a little something for the bulls and the bears. At present the 2018 domestic corn and soybean crop ending stocks projections show just short of a 20 percent decline to corn stocks, while the soybean ending supply is double of a year ago. This followed the November per acre USDA yield decreases, but still a 1.3 and 5.7 percent, respectively, increase for corn and soybeans, compared to 2017. The 2018 acre and yield projections are pointing to a fourth consecutive soybean production of 4-plus billion bushels, and the second-largest corn production on record. As I write this, world news is largely influenced by the Chinese substantial November increase to Chinese corn production, leaving 2018-19 world corn stocks up 55 percent! South America weather and progress toward planting are both a non-factor at present.

Corn demand continues to be strong for energy, feed and export. Exports for both corn, soybeans, and livestock are the wildcard. Corn demand has been growing over the last five years, but so has the world's supply competition, notwithstanding the recent Chinese supply update. For soybeans not surprising is the projected decline to US exports, most notably to China. However, overall 2018 soybean use is projected nearly flat (-28 billion bushels, < 1 percent). For the 2019 crop year, most recent USDA expected prices show slight improvements to both corn and soybeans. This takes into consideration the trade dispute with China and the not-finalized tariffs outside of the USMCA. Finally, overall world per capita economic growth, led by the United States, is positive for U.S. Ag exports, offset by expected tighter monetary policy, increasing interest rates and a strengthening dollar.

Despite the stronger 2018 crop per acre yield performance, total market prices leave the per acre production revenues lower, and very close to average production costs. With expectations holding firm for a finalized farm bill by year-end, government program payments offer at best short run relief. Only six counties in Iowa will receive 2017/18 ARC corn payments, and five counties will receive a soybean ARC payment (none in Northwest Iowa). PLC enrollees, representing less than 1 percent of the Iowa corn base acres, will show a corn payment for the third consecutive year, though nothing again for soybeans. The most significant government payment news is the Market Facilitation Program (MFP), especially for soybeans and pork. In light of tighter overall margins, it is very important for the producer to gain a sufficient understanding of MFP. While contacting the local county FSA office is important; this link might help with soybean decision-making: https://www.extension.iastate.edu/agdm/articles/johnson/JohOct18.html.

Research shows that long-range farm operations success is more likely when developing and following a marketing plan. The keen marketer is proactively watching and ready to capture the intermittent cash flow advantages from post-harvest price swings and basis movements. It is critical to first have in-hand, by-enterprise, knowledge of operating break evens. Consistent with on-farm storage capacities, the better marketer is also scrutinizing when the market is giving a price that repays expenses, including storage carrying costs.

Ag Decision Maker (https://www.extension.iastate.edu/agdm/) is a valuable resource. Call me, or your local Farm Management Specialist, if help is needed to fully use this resource.

Pro Ag Outlook and Management Seminars

ISU Extension and Outreach is again offering Pro Ag Outlook and Management seminars around the state (https://www.extension.iastate.edu/agdm/info/meetings.html). These seminars are designed to provide farm and agribusiness leaders a concise evaluation of market conditions, expected crop and livestock income trends and management implications. I encourage you to check out and attend one of the two offerings in Northwest Iowa on December 12. Registration is requested; please call or e-mail me at 712-223-1574, gdwright@iastate.edu, or contact the respective extension office for more information.

9:00 a.m. - Sheldon (Northwest Iowa Community College, Building A, Room 117)

Call 712-957-5045 to register.

2:00 p.m. - Storm Lake (Prairie Lakes AEA)

Call 712-732-5056 to register.

 

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