For use in local newspapers, week of September 29, 2014:
While the grain harvest is over here in Louisiana, it’s just beginning for the Midwest and like every year, we’re starting to see the effect on the markets for everyone.
Drought persists in some areas, but ideal weather elsewhere has fields brimming with life and ripe for harvest. The farm-prices forecast, on the other hand, is less sunny. The bountiful harvest is putting pressure on crop prices: USDA projects mid-point pricing of $3.50 per bushel for corn and $10 per bushel for soybeans. These would be the lowest prices we’ve seen since 2009-10, possibly the lowest since 2006-07. With production costs higher than when we last saw prices at this level, USDA projects net farm income will drop 14 percent.
America’s farmers aren’t the only ones with big harvests this year. Commodity production abroad has been higher than usual to keep up with the demands of the global market.
Just as one harvest can vary widely from the last, the prospects for some sectors of agriculture are much brighter due to the tsunami of grain we are about to see. This year’s big harvest adds up to good news for farmers and ranchers feeding livestock and rebuilding herds after a long dry spell. After several challenging years, the outlook is good. Cattle prices even hit a record high earlier this year. Lower feed costs will give livestock and poultry producers a chance to regroup and rebuild.
The crop price forecast is not as ideal as the weather, but most farmers I know would rather have a bumper crop in their fields.
American farmers have worked together time and again to support public policy that allows agriculture to succeed, but our ability to address some challenges is limited. An example is the current rail congestion in the upper Midwest, where a booming energy industry is creating high demand for rail cars. Booming industry sounds like a good problem, if you had to choose one. But the infrastructure in the region is groaning under the weight of all the extra cargo, and farmers are the ones at risk of being left behind as they look for the most efficient way to get their crops to market.
With rail shipments already backlogged from a harsh winter, farmers will be hard-pressed to find adequate storage as they wait for the bottleneck to clear. As our bins and county elevators fill up, some of the grain will pile up outside, exposed to the elements and at risk of spoiling.
Like crop prices, rail congestion is a market-driven issue, but we’re keeping an eye on it. Farm Bureau is monitoring the latest Surface Transportation Board reports and keeping in communication with the rail companies as they work to resolve the backlog and meet the region’s shipping demands.
Farmers will weather their share of storms this fall, but there is much to be grateful for with an abundant harvest. America’s farmers and ranchers will persevere, even as they face the constant challenges of competing in an inconstant marketplace.