Hot Button Issues
Last ARM newsletter, we touched on the historic drop in Net Farm Income (NFI). Since then, new research has been released, and there’s been an upward revision to NFI, which is largely thanks to livestock. On the surface, when revieing the revised report, it might seem like 2024 won’t be as tough as originally expected. This prompted the Senate Ag Committee to create their own report, detailing how dire conditions truly are. Not all sectors will be hit as hard as others, the full research and graphics can be found here – [2024-09-09] A False Positive: USDA’s Farm Income Projection | Senate…
- Grains were hit the hardest:
- Wheat is down 48%
- Soybeans are down 38%
- Corn is down 36%
- Cotton, other crops, and specialty crops saw declines, though not as steep:
- Cotton is down 26%
- Other and specialty crops are down 9-21%
- Livestock:
- Hogs stand out here, posting the second lowest NFI in over 15 years (adjusted for inflation).
- The outlook on production costs doesn’t offer much relief either. Costs aren’t expected to drop in 2025, and they’re now 20-31% higher than they were before the last upward price cycle.
Quick Commodity Price Chat
- The cash price of corn (based on the board) is hovering around $4. As of today, December corn futures (CZ) are about $0.50 lower than they were three months ago.
- According to feedback from our team at ARM, there’s still a lot of stored and un-marketed grain, particularly corn. Many farmers are holding out for a price increase, but how big of a bump will it take for them to start moving that grain?
If you’re waiting for prices to rise, make sure you have a specific number in mind and act when it hits. Just because prices are trending up doesn’t mean they’ll keep climbing. Stay on top of the market, and check out the chart here: https://www.barchart.com/futures/quotes/ZCZ24/overview
From the Boots on the Ground at ARM
Let’s get started in the South.
Unfortunately, God did not bless Texas with his own hand this year. There are a few pockets of “good” crops, but overall, yields aren’t looking great for dryland farmers. Irrigated fields with good water supplies should still see solid yields, especially for cotton, but overall prices have fallen. Many farmers didn’t take the chance to lock in cotton prices when they were in the 80s over the summer, and now, with declining prices and lackluster yields, there’s a lot of concern.
Now to the North.
Let’s chat about our cheesy friends in Wisconsin. Cheesy…get it? Harvest is starting across much of the upper Midwest, and early yield reports are promising, but we’re still waiting to see the late-planted acres come in. Buyers are offering some tough basis terms ahead of harvest, so producers will want to keep an eye on the cost of carry and watch for ways to manage that potential basis hit. The typically steady drum beat from suppliers to prepay for inputs in the fall seems to be a bit quieter this year. This will certainly be a year to price multiple options for fertilizer, chemicals, and likely seed as well.
Let’s now move over to Ohio – Unfortunately, it’s not a great story here. Harvest has begun, but 22 counties have already been declared disaster areas due to drought. It’s been the driest summer since 2000, and crop insurance claims are rolling in, with more expected. For many, 2024 will be a year to remember, but not in a good way.