KEOKUK, Feb 20, 2011 (The Hawk Eye - McClatchy-Tribune Information Services via COMTEX) -- The goal of the inaugural Tri-State Agriculture Summit was to provide area farmers with as much useful information as possible at Wednesday morning's gathering at the Holiday Inn Express in Keokuk. Grain markets, land values, and technology were among the subjects covered by the event organized by the Extension services at Iowa State University, Western Illinois University, University of Illinois and the University of Missouri.
The morning was kicked off by Melvin Brees, a University of Missouri Extension agricultural economist, who addressed the factors driving the volatile grain prices of recent years.
The first question was whether a supply-driven market or demand-driven market was the reason behind high corn and soybean prices. The ethanol industry's demand for corn and a strong export demand for soybeans in China were examples of why the market may be driven by demand.
"Demand markets tend to be longer lasting," said Brees. "Normal supply has a hard time keeping up with demand." In both instances, corn and soybeans, the amount of crop carried over to the next year has dwindled. When the carryover is small, the market worries and prices tend to go down, Brees said. The corn carryover is at its lowest point since 1995 and 1996.
"Strong demand kept chipping away at the carryover," he said.
Many other factors determine the rise and fall of corn and soybean prices. A stronger U.S. dollar tends to weaken grain prices, while a weaker dollar usually makes grain prices go up. Grain prices also tend to be good when energy prices are strong.
Another indicator for grain prices hasn't followed its usual pattern in recent years.
"The stock market and commodity market tend to move in opposite directions," said Brees.
However, since 2008, both markets have been climbing up.
"We've tended to track together," said Brees of the two markets.
Competition is another motivating factor in the commodities market. South America is the U.S.'s largest competitor, and at the moment Brazil and Argentina are in the middle of their harvest season.
Brazil is expected to reap a good soybean crop this year with 2.5 billion bushel. Argentina had a drought early in the growing season, but late rains helped revive the crop. Argentina should harvest 1.8 billion bushel of soybeans. Such yields can stifle or even lower prices in the U.S. for awhile, Brees said. Combined, Brazil and Argentina produce more soybeans than the U.S.
With grain prices sitting so high, farmers would like to plant more acres of corn and soybeans. Some of those acres will be the ones that weren't planted in 2010 due to extremely wet weather. Farmers may sacrifice other crops in order to get more corn and soybeans into the ground.
"We have places where we can gain acres," said Brees. "There are a lot of decisions to be made on what crops to plant." At the moment, the United States Department of Agriculture is projecting 91 to 92 million acres of corn will be planted in spring 2011. On the soybean front, 77 million acres are estimated to be planted this year.
If corn farmers average 162.4 bushels per acre in the fall, the U.S. will produce 13.6 billion bushel. Use of corn should reach 13.2 billion, which should result in a slight carryover. The average price for corn is projected in the $5 range for grain sold in December.
Soybean production is expected to reach 3.35 billion bushel in the fall, based on a 43.6 bushel per acre average. Demand should slightly exceed production, with 3.37 billion bushel of soybeans expected to be used. The USDA is projecting the average price of soybeans to be in the $12 range.
"We are in rare air," said Brees in terms of grain prices.
Selling corn and soybeans at the optimum time is always a tricky task for grain producers. Brees suggests farmers set a target price at which they'll sell their grain, preferably when the market is at its highest. But farmers should also have a downside target price set in case the market doesn't reach their optimum target.
"It is important to have discipline. Never sell everything all at once," said Brees. "The objective is to trail the market high." The other speakers at the Tri-State Agriculture Summit were Gordon Roskamp, a Western Illinois University faculty member; Mike Duffy, an ISU Extension economist; and Keith Fuller, the president of Fuller Fertilizer.
Roskamp's talk focused on new herbicides and weed resistance in order for farmers to make the most of crop input dollars.
Duffy covered land value trends and the factors driving the 20 percent increase in value for some Iowa counties.
Fuller explained how to interpret yield maps and how to utilize the data to maximize yields.
The conference room in the basement of Holiday Inn Express hosted 112 attendees, including a few members of local Future Farmers of America clubs. Bob Dodds, the regional director for ISU Extension in southeast Iowa, expects the summit to become an annual event and rotate between Missouri, Illinois and Iowa host cities. Next year's event is tentatively set to be held in Hannibal, Mo.
To see more of The Hawk Eye or to subscribe to the newspaper, go to http://www.thehawkeye.com . Copyright (c) 2011, The Hawk Eye, Burlington, Iowa Distributed by McClatchy-Tribune Information Services. For more information about the content services offered by McClatchy-Tribune Information Services (MCT), visit www.mctinfoservices.com.
Source:
No comments:
Post a Comment