Friday, February 23, 2024

Markets And Farmer Sentiment

The U.S. Department of Agriculture says 93% of the U.S. corn crop was harvested by Nov. 19. Mark Welch, Texas AgriLife Extension economist says drought continues to be a factor to consider.

“Looking at the North Central Drought Monitor to gauge prospects for growing conditions for the 2024 crop, persistent drought is still widespread across eastern Iowa. The drought severity index is better than November but still above average,” he says in the Feed Grain Outlook newsletter.

In the Grain Consuming Animal Unit calculation for 2023, USDA shows an increase of 392,000 after three years of decline, back up to just over 100 million. The cattle sector is down 38,000, hogs down 92,000, and poultry up 523,000. The chicken layer inventory of 389 million shows recovery from the impact of Avian Influenza a year ago, up 3%, and is 1% higher than the five-year average.

As for pricing, Welch says it follows a seasonal price pattern with the best pricing prospects in the first half of the year, peaking in June, then prices falling below average, 0.50 on the index, in mid-July and bottoming out late September/early October. There was no post-harvest bounce.

Farmer Sentiment Improved

Despite the lack of a bright spark in the markets, the Purdue University-Center for Commercial Agriculture Group Ag Economy Barometer says a modest improvement in farmer sentiment is the result of their improved perspective on current conditions on their farms as well as their expectations for the future.

According to Purdue’s report, the Index of Current Conditions rose 3 points to 101 while the Index of Future Expectations rose 5 points to 114. Farmers in this month’s survey were a bit less concerned about the risk of lower prices for crops and livestock and felt somewhat better about their farms’ financial situation than a month earlier.

“Farmers’ more sanguine view of their farms’ financial situation was reflected in the Farm Financial Performance Index, which rose 6 points in October compared to September. This month’s index value of 92 was the highest farm financial performance reading since April and pushed the index 7% above a year ago. The index’s rise stood in contrast to USDA’s’ forecast for 2023 net farm income to fall below 2022’s income level. Reports of higher-than-expected corn and soybean yields in some Corn Belt locations, along with a modest rally in corn prices, likely contributed to this month’s rise in the financial conditions index,” says the report.

Response To Shifting Weather Patterns

The survey also asked corn and soybean producers if they have made any changes in their farming operation in response to changes in long-term weather patterns in their area.

“Nearly one out of four corn/soybean farmers (24%) in the October survey indicated they implemented changes in their farm operations to better deal with shifting weather patterns. A follow-up question posed only to farmers who said they’ve made changes, asked them to identify the biggest operational changes they’ve made to date. Responses indicated farmers are choosing from among a broad mix of technologies to adapt to changing weather patterns. The top choice, made by 25% of respondents was ‘increased use of no-till’ followed by ‘changed mix of crops planted,’ chosen by 23% of farmers in this month’s survey. One out of five farmers who made changes said they planted more drought-resistant varieties. Finally, a smaller subset of farmers indicated they’ve made capital investments to better prepare for shifting weather patterns. Nine percent of farmers said they installed tile drainage with another 9% of respondents indicating they installed irrigation.” CS

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