October 20, 2017 at 4:51 p.m.
Revenue per acre will be down
Revenue per acre will be down
From about 2006 through ’13, prices soared for both corn and soybeans, resulting in record income for farmers.
Since then, they have had to deal with ever-decreasing margins.
That will be the case again for the 2017 crop, and perhaps a couple more, a Purdue University agricultural economist projects.
Chris Hurt, who has been part of the Purdue agriculture department for 36 years, said price and yield projections forecast revenue per acre for this year’s crop to be down by 14 percent for soybeans and 7 percent for corn.
“Part of this is last year was a very good yielding crop and prices look like they’re a little better than this year,” he said. “Margins have been very tight since the 2014 crop. This crop year, 2017, is now the fourth year in a row of tight margins. And margins will be tighter for this year’s crop than they were last year’s crop.”
A United States Department of Agriculture crop report for Indiana released Monday shows that as of Oct. 13 more than half (56 percent) of the state’s soybean crop has already been harvested. That is ahead of the 2016 pace.
Meanwhile, about 31 percent of Indiana’s corn had been harvested, which is less than at the same time last year.
Since then, they have had to deal with ever-decreasing margins.
That will be the case again for the 2017 crop, and perhaps a couple more, a Purdue University agricultural economist projects.
Chris Hurt, who has been part of the Purdue agriculture department for 36 years, said price and yield projections forecast revenue per acre for this year’s crop to be down by 14 percent for soybeans and 7 percent for corn.
“Part of this is last year was a very good yielding crop and prices look like they’re a little better than this year,” he said. “Margins have been very tight since the 2014 crop. This crop year, 2017, is now the fourth year in a row of tight margins. And margins will be tighter for this year’s crop than they were last year’s crop.”
A United States Department of Agriculture crop report for Indiana released Monday shows that as of Oct. 13 more than half (56 percent) of the state’s soybean crop has already been harvested. That is ahead of the 2016 pace.
Meanwhile, about 31 percent of Indiana’s corn had been harvested, which is less than at the same time last year.
Crop yields project to be about average, Hurt said, with corn coming in at 165 bushels per acre and soybeans at 52.5 bushels per acre. Those numbers are down from last year’s marks — 169.8 and 59.5 respectively — but still better than the 2015 crops that were hurt by early-summer flooding.
Wet weather threatened farmers early in the growing season this year, but the end of the year was mostly dry and temperatures were mild. (Jay County didn’t see the mercury climb to 90 degrees until late September.)
“Most of us in northern Indiana were overly blessed for moisture in the springtime,” said Hurt, adding that avoiding an early frost gave time for crops to reach their full maturity. “Given the wet start that we had this spring, probably most producers would feel pretty positive to get back to about average. … We really had a lot of moisture early on in the season.”
In addition to yields being down from 2016, prices are expected to continue their downward trend.
Wet weather threatened farmers early in the growing season this year, but the end of the year was mostly dry and temperatures were mild. (Jay County didn’t see the mercury climb to 90 degrees until late September.)
“Most of us in northern Indiana were overly blessed for moisture in the springtime,” said Hurt, adding that avoiding an early frost gave time for crops to reach their full maturity. “Given the wet start that we had this spring, probably most producers would feel pretty positive to get back to about average. … We really had a lot of moisture early on in the season.”
In addition to yields being down from 2016, prices are expected to continue their downward trend.
Hurt noted projections that show $3.45 per bushel for the 2017 corn crop and $9.50 per bushel for soybeans. Those numbers are down by 15 and 20 cents respectively.
The combination of those two factors will lead to another tight year for farmers, who Hurt said will continue to employ tactics in an effort to keep their costs down. Those include spending less on “inputs” such as fertilizer and equipment.
“All of them, I think, have made adjustments already, and they will continue to work on what they can influence,” he said.
He noted that prices are down 23 percent for corn and 27 percent for soybeans from 2013. “They obviously will look for any cost savings they can get. They’re going to be very cautious about capital expenditures.
“One of the things that happens is that when margins get tight, people do adjust. They learn to live and operate on more narrow margins.
“After now four years, this becomes more the norm.
The combination of those two factors will lead to another tight year for farmers, who Hurt said will continue to employ tactics in an effort to keep their costs down. Those include spending less on “inputs” such as fertilizer and equipment.
“All of them, I think, have made adjustments already, and they will continue to work on what they can influence,” he said.
He noted that prices are down 23 percent for corn and 27 percent for soybeans from 2013. “They obviously will look for any cost savings they can get. They’re going to be very cautious about capital expenditures.
“One of the things that happens is that when margins get tight, people do adjust. They learn to live and operate on more narrow margins.
“After now four years, this becomes more the norm.
“This is kind of the way it is in farming. Most of the years I’ve been around farming … there’s a lot more years when margins are tight than when they’re abundant.”
Another possibility for corn and soybean producers is to store their crops in hopes of better prices down the road. Those prospects are modest — maybe 20- to 25-cent increases for corn and 50 to 75 cents on soybeans — but could provide some relief.
“There are good premiums being bid for storing corn and soybeans and marketing them on into next spring or summer,” Hurt said.
Because of the lower grain prices, which lead to lower costs on feed, continued growth in supplies are expected in the livestock sector. It has been expanding since 2014, rebounding from a reduction in meat supplies during the previous eight years.
Finished cattle and hog prices per 100 pounds are expected to come in at $119 and $51 respectively for 2017 and drop next year, Hurt said. Meanwhile, milk and egg prices — $17.65 per 100 pounds and 88 cents a dozen, respectively — should see slight increases in 2018.
The hope for grain producers is that the downward adjustment in prices could be coming to a close within the next couple of years. Worldwide inventories — the largest producers outside the U.S. are China, Brazil, India and Argentina — are beginning to come down, which would help boost prices.
But Hurt suggested that farmers be prepared for at least one or two more years of modest prices and slim margins.
“We see the big global picture starting to show a little bit of turn around,” he said. ““We’re probably two-thirds of the way through that adjustment, but not quite there yet.”
Another possibility for corn and soybean producers is to store their crops in hopes of better prices down the road. Those prospects are modest — maybe 20- to 25-cent increases for corn and 50 to 75 cents on soybeans — but could provide some relief.
“There are good premiums being bid for storing corn and soybeans and marketing them on into next spring or summer,” Hurt said.
Because of the lower grain prices, which lead to lower costs on feed, continued growth in supplies are expected in the livestock sector. It has been expanding since 2014, rebounding from a reduction in meat supplies during the previous eight years.
Finished cattle and hog prices per 100 pounds are expected to come in at $119 and $51 respectively for 2017 and drop next year, Hurt said. Meanwhile, milk and egg prices — $17.65 per 100 pounds and 88 cents a dozen, respectively — should see slight increases in 2018.
The hope for grain producers is that the downward adjustment in prices could be coming to a close within the next couple of years. Worldwide inventories — the largest producers outside the U.S. are China, Brazil, India and Argentina — are beginning to come down, which would help boost prices.
But Hurt suggested that farmers be prepared for at least one or two more years of modest prices and slim margins.
“We see the big global picture starting to show a little bit of turn around,” he said. ““We’re probably two-thirds of the way through that adjustment, but not quite there yet.”
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