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Bullish outlook & weather reversals
It's been a rough week for the grain markets as rains fall abroad (though not enough to boost crop conditions much, some experts say). That hasn't stopped experts from pegging farm incomes at high levels. They're a couple of the big stories in ag this week.
Crop profits look to continue well into the next year, according to a long-term outlook released by USDA officials earlier this week. And, if demand stays strong and the macroeconomy continues to strengthen, the strength could last even longer.
That bullish profit outlook comes on the heels of a year when the crop insurance paid out a record-high sum to farmers on account of drought. The industry's been able to handle the $14 billion load, leaders say, but it may take a concerted effort to prevent future crop insurance funding cuts by the federal government.
Crop insurance is just one sector of the overall farm policy arena that could come under fire as the political year advances, especially the effects of overall budget cuts on direct payments and other current farm programs.
Though it's raining a little in some key crop areas of the world, it's not enough to boost crop potential that much. But, in the absence of much other news to "feed the bulls," it's enough to slam the markets, Scott Shellady says this week.
So, what exactly is going on in some of those key crop regions? Rain is falling in Argentina, and that's taken a bite out of soybean and corn prices in the last week. But, is there a price reversal in store?
Though the rainfall may not be enough to restore conditions to 100% potential in parts of South America, there is some immense improvement in former Soviet Union (FSU) nations. As a result, there could be more corn in that region in the coming year, says one Ukrainian economist.
Back home in the U.S., new information out this week shows producers in the southern Plains -- the epicenter of last summer's drought and resulting slashes to the cow herd -- weren't the only ones to experience severe losses. But, for those in the eastern Corn Belt, last year's drought was far from the start.
On the crop front, it's warmed up in much of the Corn Belt this week, and that's stoking new concerns that mycotoxins in stored grain could be flaring up again. It's a good time to reacquaint yourself with the dangers the toxins pose and how to keep them at bay, one expert says.
This week, the epicenter of the farm machinery world is Louisville, Kentucky, home of the annual National Farm Machinery Show. Check out some of the new machinery and tools being unveiled at this year's show.
So, is the farmland price boom going to continue? That's been a hot topic this week in Marketing Talk on Agriculture.com. Is the current land price drive going to continue to be sustainable, or will it reach a tipping point soon? Farmers' opinions are all over the board.
It was a rough week for the grain markets, but the outlook's still bright for crop incomes.