Droughts, heavy rainfall and a variety of other conditions plagued farmers in 2015. Now, producers heading into planting for 2016 are already researching and making decisions hoping to make this growing season better than the last.
Max Runge, an Ag Extension economist, said farmers throughout the Southeast have experienced production highs and lows in recent years due to a range of weather issues, often affecting areas of the region in different ways.
“Planning for the upcoming year is going to depend on the financial position after the past three years,” Runge said. “Some producers have experienced setbacks and almost three years of less-than-desirable yields, while others are in a position to start this year on the right foot.”
Market Prices
Runge said market prices are steady compared to years past, but still said ‘steady’ is a relative term in the agricultural sector. With any market there are both increases and decreases, but countries—like China—with stockpiles of cotton and other products have a weighty hand on the market price.
The 2014 Farm Bill reference prices were set during high price years, expecting crop prices to stay well above the line in the future. As market prices teeter closely to the farm bill’s bottom dollar, Runge said he thinks producers are safe from prices that drop any further.
The World Agricultural Supply and Demand Estimates Report projects an average corn price of $3.65/bushel. Soybeans, cotton and wheat are expected to bring $8.90/bushel, .59/pound and $5.00/bushel, respectively.
“Intentionally or not, those reference prices set in the farm bill could influence market prices, but I don’t foresee the prices coming down past the farm bill reference,” he said. “Ironically they were set during high price years and no one expected them to be this low again any time soon.”
Long-term Perspectives
Following a year of uncertainties in the agricultural sector, and looking forward to a year with many of the same obstacles already in place, Runge said producers should have a long-term perspective.
“What has made you successful in the past? Good management, rotations, building up soil and working towards efficiency are all part of looking for ways to be profitable in the long run,” he said.
Input prices are steady because Ag supply companies are feeling the effects of low commodity prices and working to operate within the confines of a low-priced market.
Runge said American agriculture is efficient and resilient. While planted acreage may be down in 2016, Runge predicts the numbers will not be down permanently because of the drive and determination of the American farmer.
Source:aces.edu