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Looking back & looking ahead
The first week of January is a good time to take stock on the success or failures of the previous year and finalize plans for the coming growing season.
To say that 2012 was an unusual year would be a gross understatement. Just the fact that cash corn prices were over $8 and cash soybean prices were over $17 for brief periods was enough to qualify as unusual. In fact both grains set records before suffering from down trends by the end of the year. Making sales in a year of record drought was more frustrating than normal for a dry year.
In doing some house-cleaning this week, I found some marketing publications from a year ago. Comparing predictions for the 2012 growing season to what actually happened, it is obvious that farmers were not the only group that was fooled by price action. The market first assumed that a huge corn crop was going to be produced. Later positive price action reflected growing conditions that were among the worst in history.
When the crop was in, most farmers that I talked to were pleasantly surprised that yields were not any worse than they were. Recent discussion on Agriculture.com indicates that crop insurance payments are not going to be as large as originally thought. This would indicate that yields might have been better also. The government crop report scheduled to be released on Friday, January 11 should clear up some of the production uncertainties. In previous years that report has sometimes been a market mover. When the numbers come out larger or smaller than the trade is anticipating, market action can be exciting. I hope that the excitement is in a positive direction. Many times it is just the opposite
My big fear at this time is that the moisture deficit from the 2012 crop has not been made up in recent months. There was enough subsoil moisture to produce a partial crop last year. That reserve is not present in the soil now in the Western Corn Belt. Conditions now remind me of 1977. That year dry subsoil resulted in a nearly total failure of the corn crop on my farm. Experience that year sticks in my mind when considering forward pricing for the 2013 crop year.
This is the time when market analysts start talking about the possibility of acreage shifts. Some areas saw corn yields relatively better than soybean yields. Therefore they are predicting more acres of corn and fewer acres of soybeans in the coming growing season. Experience in my farming career is that shifts brought on by relative prices of the two grains seldom amount to much. Some areas with reliable moisture will see soybean planting reduced in favor of corn. However, most of us that deal with precipitation shortages during the growing season stay with a two or three way rotation. The yield drag on continuous corn is just too big of a price to pay.
Planting of the 2013 crop should be very quick because of the dry weather mentioned above. At my farm there has been some precipitation since harvest. It will be enough to at least germinate the seeds. What happens from there on will depend on temperature and whether or not rain falls soon enough. I feel for those farmers who have dust mixed with snow on their farms. That condition does not make for an optimistic outlook for the coming year.