Outlook Briefs
Corn Market Situation. December corn futures are trying to form seasonal bottom as harvest swing into gear in the Midwest. The huge crop coming to market and going into storage is going to make any post harvest rally difficult to mount. Farmers need to keep an eye both the cash market and the Loan Deficiency Payment or Producer Option Payment to maximize their income from their corn crop. Remember, LDPs or POPs will be at a maximum when the market is at its lowest. Good strategy would be to accept the POP while it is high and wait for the market to provide a higher selling price from the crop.
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Outlook
Soybean Market Situation. November soybean futures have held onto most of the late summer rally that tacked 50 cents per bushel onto prices. Rumors of mixed yields have some traders questioning the last USDA supply report. Yields will still be large enough to provide more crop that we will use in the coming marketing year forcing ending stocks to rise. Look for the market to trend sideways to slightly lower over the next month. Consider selling your crop at harvest, claim the POP and purchase a call option in the July, 2001 contract to replace your position to capture any winter/spring rally. This strategy will provide a greater net return than storage while limiting your downside risk.
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Outlook
Wheat Market Situation. July, 2001 wheat futures continue to trend downward making new life-of-contract lows near the $2.85 level. These prices indicate traders don't foresee a need for increased soft red winter wheat production at this point in time. U.S. exports have been better than most of our competitors and these prices levels sure help sales. But that is what we need, strong demand to reduce the carry over stocks that have pressured our markets so low.
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Outlook
Dairy Outlook. Congress must hammer out differences between House and Senate agricultural appropriations bills before than head home for campaigning. Both House and Senate versions of ag funding bill would extend dairy support at $9.90. Senate bill includes $443 million in direct dairy payments, prohibits use of dried ultra filtered milk for cheese.
August milk production was up 4 percent while Georgia production is probably down one percent. 89,000 more cows (+1.1 percent) in the top 20 milk production states this August, and cows produced 2.9 percent more milk. California was up 3.6 percent; Wisconsin, +2.5. Year-to-date milk flow is up 4.3 percent.
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Outlook
Farm Equipment Sales Outlook. The forecast for the U.S. retail sales of farm tractors, self-propelled combines, farm field machinery and farmstead equipment is more positive for 2000 than it was in 1999, and forecasts for 2001 are predicted to be even brighter. Farm equipment indicating a positive sales growth forecast for 2000 and 20001 includes: two-wheel-drive tractors under 40-hp, round balers, all planters, mower conditioners, field cultivators, farm loaders, chisel plows, and beef mechanization equipment. Dairy mechanization equipment, including milking machines, is not predicted to fare well in either 2000 of 2001.
The factors that would influence the sales of new equipment vary by year, but are from a list of 20 factors that have emerged as key influences on new equipment sales. For 2000, the key influences are beef and hog prices, government payments and credit availability. For 20001, the key influences are anticipated hog and beef prices, credit availability, and planting intentions.
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Outlook
Last Days of Congress Hold Options for Farmers. The year 2000 session of Congress is working toward adjournment sometime in mid-October. A host of members want to get home to campaign for re-election. The next few days will see a lot of work on the agricultural appropriations bill.
The members are aware of the farm economic problems. But Congress authorized $5.5 billion in direct payments this past May for farmers nationwide to help compensate for low prices of basic commodities. These funds were scheduled to be paid in September. Most of these funds in Georgia are for cotton producers. Lesser amounts are for grain producers.
Still on the congressional agenda is a consideration to raise the payment limitation for Market Loan Gains and LDP's per entity for a crop year. Another provision to provide funds for emergency assistance for livestock producers and dairy farmers is on the agenda. The Senate earlier passed a provision that would provide some funds for emergency crop loss assistance.
More disaster aid for the south and southwest will likely be added to the agenda. Congressional members from areas where dry conditions have damaged or destroyed crops have heard pleas for relief. But it is anyone's guess regarding how much assistance will be appropriated.
Many look at any government assistance to farmers as helping them stay in business. But farmer spending spreads over a large area. Many banks, a vital part of our economy, have survived the past three years of distress in the farm economy due in part to federal farm assistance. Many farm enterprises are currently economic break-even ventures, at best. Farmers have repaid operating loans with funds received from off the farm.
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