Ag News

Farm incomes are down, livestock production increases

View the post and author information at its original source

Farmers and ranchers continue to deal with lower farm incomes in 2017. Management of all aspects of livestock and grain operations are important in years like this.

Dan Basse, president of AgResource Company, discussed farm income and market outlooks during the Feeding Quality Forum held in LaVista, Nebraska, Aug. 29. “Farm income in 2017 is half what it was in 2013. That is $61 billion versus $124 billion. All areas of agriculture have seen declines in gross revenue from 2016, except the dairy industry,” he said.

The dairy industry gross revenue is up $40 billion, as compared to a $7 to $8 billion drop in revenue in the beef sector.

 Besides farm incomes being lower, funds available for farm loans have decreased all across the United States for 2017.

Some good news is the U.S. will be a net exporter of crude oil by 2019, which Basse said is happening for the first time since the 1940s. The ethanol industry is starting to increase production in order to meet the export demand.

“The increase in ethanol production could mean the cattle business needs to look at covering their feed needs for the next nine months,” Basse said.

The 2017 growing season for corn has been challenging, as August has been the seventh coldest since 1895. Basse said parts of the Midwest could also see an early freeze, which wouldn’t help production.

“The current USDA corn yield estimate is 164 to 166 bushels per acre,” he said. “Argentine, Brazil and the Ukraine are becoming big competitors for corn exports globally and these countries are becoming better producers also.”

A smaller corn harvest leads to an expected price of $3.35 per bushel for a low and $3.75 per bushel for a high during September.

Annual cow-calf margins are expected to increase over the 2016 levels, but won’t be as high as the 2014 and 2015 margins. Feedlot producers will see profits again in 2017, which is the first time since 2003. Packer margins are currently at record highs.

 “Cattle slaughter has been higher in August, which is why cash cattle prices have been decreasing,” Basse said. “In 2017, U.S. beef production has overall been higher than 2016.”

Placements into feedlots have been large for January through July, but Basse expects lower placements in the fourth quarter, which should help bring prices back up.

Beef exports have been strong, but that is dependent on the value of the U.S. dollar and competition for the beef sector globally. If trade increases to China, an increase in markets could be seen. Producers will have to be able to meet the requirements set by China in order to fill that market.

Basse predicts a low for fed cattle at $100 to $104 per hundredweight for the fourth quarter of 2017 and an increase to $109 per hundred weight for the first quarter of 2018.

“We must remember the pork industry is knocking on the door for increasing exports globally,” said Basse. “With the increase in slaughter capacity, expansions are expected and some may look to pork for protein if beef is too costly.”

Jennifer Carrico can be reached at 515-833-2120 or jcarrico@hpj.com.

To Top