Dan O’Brien Corn School

(Dan) I’m here contributing to speaking at the KSU Corn School held in Hesston here on the 9th of January, talking about outlook on one hand and profitability prospects on the other. Course, I think an overview of what the market holds kind of starts with the large record crop here in the U.S. and large crops overseas and by the time you look at the supply/demand balance of things that we’ve seen with growth and supplies, still decent demand but quite a growth…with large supply numbers we’ve seen prices now in cash markets, fall below $4 dollars. A lot of it we’ll be talking about today has to do with what our cost of production is. And we’re at the place where cost of production probably four, four twenty five, something like that. Maybe 390 for highly efficient producers. And we’re seeing cash prices 360, 370, 380 something like that. At least at about the same level. So, and that’s where we stand right now. Prospects really for 2015 will be part of what we talk about today too. Futures prices is about 418, 420. By the time you look at what could happen with a little, with few less corn acres, a few more soybean acres next year we’re probably in the same 4-450 range for cash prices. So, I think by the time you bring that together, you’re probably looking at a break even year. With what we’d project and could understand right now for what could happen off into the fall of 2015. Of course, the world’s quite a volatile place right now. Energy markets up and down, down right now. International issues keep coming into play. Volatility in currency markets. Still uncertainty as to what the size of crops will be. But if you just shoot right down the middle, expect to have average production, no major big surprises, you’d be anticipating a year heading off into 2015 by the time we work through our fairly large crop, not as large as this year, but probably 13.3, 13.5 billion bushels for U.S. corn. You’re looking at about again, 420, 430 440 prices if that plays out. And again, just at or slightly above cost of production. And I don’t doubt that ag producers in their minds think, “OK. I hear what you’re saying. How does that affect me in terms of cash rent and profitability and finance?” Well, if you have basically a an at or slightly above cost break even year, you’re pretty much going… I think we would anticipate moving sideways. Not I guess an exemplary year for profits, but more one where we’re moving at level cash rents and land values off into the future. And waiting for what could happen to surprise us in the next two, three or four years. But as of right now, just betting the odds, looks like we’re looking for level profits and some challenges where ever we have a short crop heading out into 2015. Of course on our KSU ag manager website- www.agmanager.info we put out weekly summaries or grain markets for corn and grain sorghum and wheat and soybeans and try to monitor, stay in touch with where markets are going and where profitability prospects are. And of course, we have various radio outlets, AGam and others that we work with as well. So, probably the main place to go to find our ag econ related information would be on that
departmental website – agmanager.info.

No Comments Yet.

Leave a reply

You must be logged in to post a comment.