Ag economy forecast looks favorable
Ag’s future may not stay rosy forever but short-term predictions by crop, livestock and land experts are upbeat.
About 18 people gathered at the Monsanto Learning Center Monday afternoon for one of nine Cornhusker Economics Outlook meetings offered across the state.Although corn prices have fallen since harvest because of the large crop in 2013, an Extension crop specialist said new crop corn demand has returned and appears strong.
However Cory Walters said crop markets are not just about supply and demand but also about what’s happening with buying and selling by traders.
In the soybean market, Walters said prices have strengthened over the past month and demand appears strong with about a 7% increase over last year.
Expectations for soybean exports are also strong, he said.
Winter wheat conditions are not the greatest, Walters said, noting that 40% of the state’s crop is in good condition and 54% fair to poor.
Drought conditions throughout the United States and Nebraska improved in 2013 but some areas of the state are still suffering, according to Extension livestock marketing specialist Kathleen Brooks.
“Mother Nature will be a big factor in getting grasses to rebuild,” Brooks said.
Still, she said several factors contributed to a profitable near-term future.
Those include stabilization of herd liquidation which was driven by drought, declining grain and forage prices, record-high cattle prices and wholesale and retail prices.
Brooks said there’s also demand for beef domestically and overseas, especially to Japan and Mexico.
For hog producers, she said a porcine epidemic diarrhea virus epidemic that showed up last spring has impacted the market as the disease is often fatal for baby pigs.
PEDV cannot be transmitted to humans nor contaminate the food supply.
Platte County Extension educator Allan Vyhnalek noted that for the first time in history, agricultural land sales have topped the $3,000 per acre mark.
Vyhnalek said 49% of those sales statewide were in cash and 47% used mortgages.
Interestingly, he said. 81% of active farmers and ranchers bought the property with only 2% of the sales involving an out-of-state buyer.
Even with a 3.3% yearly increase in value, Vyhnalek said land is currently a better investment than gold.
There’s still more demand for ag land than supply which Vyhnalek said is partially because it’s being tightly held and often has sentimental value.
Cash rent for both cropland and pasture is still relatively high but those could drop in a year, Vyhnalek said, noting that the quality and condition of the ground should drive leases.
The last speaker, Bradley Lubben, talked about ag policy and the 2014 Farm Bill.
Lubben, an Extension assistant professor and policy specialist, said the bill transforms the program from income support toward risk management.
“The bill was written in a time of record farm income and record federal budget deficits,” he explained. “That dynamic created a focus on reforming farm programs and cutting support levels within a larger effort to cut overall spending.”
The University of Nebraska-Lincoln Extension and the Department of Agricultural Economics employees presented at the meetings.