PRIMGHAR, Iowa — Much has been written about the present COVID-19 pandemic, and its impact upon global and U.S. economies. This article will not repeat those facts (other than encouraging all readers to be acting upon the many good suggestions for healthy living), but focus in light of the pandemic, directly upon its impact to agriculture and farm management decision-making.
Markets
The most recent WASDE reports were published on April 9. Corn demand/use was generally bearish due to a fairly significant reduction to ethanol production which followed an already-weak demand caused by (a) the collapse of crude oil prices and (b) a decline in domestic and world travel. Nearby weekly exports are showing improvement (especially China toward Phase I trade deal = $12.5B and $19.5B Ag purchases, respectively in 2020 and 2021), and U.S. corn is the cheapest corn on the world market. Feed-use of corn was positive with the adjustments away from DDG in rations. Overall, the 2019/20 USDA price projection was lowered 20 cents to $3.60/bushel, considering this overall demand outlook, following earlier projections to the year-over-year 2020 planted acres increase.
For soybeans, the ethanol downside is an upside for soybean meal, as a replacement for DDG in feed rations. The export pace shows improvement, but still looks to be below initial USDA projections. South America soya competition is viewed bullish with their current harvest lower ending stock estimates, and coronavirus adversities effecting grain movement and logistics. Like corn, the USDA did lower the marketing year average price to $8.65.
When evaluating the impact from trade, current global uncertainties tend to cause a fleeing to the stability of the U.S. dollar, and when stronger, makes U.S. products more expensive. The trade is not welcoming much improvement to prices for the 2020/21 marketing year; however, it is incredibly important to not forget that once we get beyond this market disruption, there is reason for optimism again! To those producers with 2019/20 commodities still in the bin, and looking for capital sources, sealing of grain might be something to consider due to present prices and historically low interest rates. One caution here is the hangover from our very wet 2019 fall harvest, and a need to be carefully monitoring and taking proactive steps, if quality shows to be a problem.
COVID-19
Over the approximately four years since I re-joined Iowa State University Extension and Outreach as the Farm Management Specialist in Northwest Iowa, a theme that I often revisit is striving to proactively focus our attention upon the controllable factors and letting these influence most of our good farm management decisions (vs. the uncontrollable, e.g. weather, world economies, etc.). Due largely to market price erosion (see previous section) to ag commodities, and the related financial crunch, up-to-date by-enterprise recordkeeping is critical. Though undoubtedly CY 2020 planting preparations will now take precedence, the expert’s alone-time recommendation (due to the virus) also lends itself well to revisiting recordkeeping methods and tools. Reliable records, then lead to better decisions.
Though ISU Extension and Outreach county and campus offices are mostly closed for public traffic, several ISU Extension and Outreach farm management resources continue to be ready to assist (albeit adhering to social distancing markers):
- Farm Financial Associates – individual producer financial analysis and planning;
- Ag Decision Maker – online enterprise budgeting and decision-making;
- Integrated Crop Management – website for research-based, science/agronomy help;
- Iowa Concern Hotline – Human Sciences resources ready to listen.
Please feel free to contact me for assistance or if any feedback or questions related to this writing (712-223-1574; gdwright@iastate.edu). In any event, have a safe Spring and planting season!
— Gary Wright, Farm Management Specialist
Iowa State University Extension and Outreach
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