By Dr. Steve Amosson
There’s a big bear sitting on all the agriculture markets right now, according to Dr. Steve Amosson, Texas A&M AgriLife Extension Service economist in Amarillo.
Amosson was only one person who talked about 2016 commodity markets during the recent Amarillo Farm and Ranch Show, but the message was the same, regardless of meeting or speaker.
Abundant carryover stocks, both domestically and globally, along with a flat demand due to dependence on exports and the strength of the dollar currently were the basis of the expected lower prices, the speakers said.
Dr. John Anderson, American Farm Bureau deputy chief economist from Washington, D.C., said the markets are in a transition phase.
“The foreign markets have slowed down and production has caught up,” Anderson said. “We’ve been on the positive side and now we are going through the negative – it’s a challenging time.”
Anderson said the net farm income is down more than 50 percent from two years ago, requiring a big adjustment and one that must take place in a different policy environment.
His outlook: feed grains and wheat are not good and probably getting worse over the next year; cotton is not good and while it is getting better, it is improving too slowly to matter.
Amosson said world wheat production has generally been moving up, but the last three years have been record production years. The European Union and the former Soviet Union have both had excellent crops and are major competitors to U.S. wheat in the export market.
“There are a lot of people in this game besides us and with the dollar so strong, it is making it hard for us to compete,” he said.
Australia and India are looking dry, so that might help as they are big producers, if their crop is limited, Amosson said.
He advised producers that the farm bill payment might be triggered, helping offset the low price, and this may be the year where haying and grazing of wheat might be more attractive alternatives than harvesting grain. But, this decision should be made as late as possible when more is known about the relative prices of each alternative.
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