Harvesting the Headlines: Week Ending January 27
Between the 24/7 demands of running an agricultural operation and the blinding pace of our world today, there is little time to sift through all the headlines. The good news is that you no longer have to!
Our goal is to point you to some of the most important headlines in agriculture, so you can stay informed on the forces shaping your livelihoods.
To save you time, here are the week's top links and news items:
Per acre rents are at all-time highs. However, there are other ways to consider overall land costs. This link takes a look at rents on a per-bushel basis and as a percentage of gross farm income.
Both measures suggest that overall cash rents are not at historical highs, due to productivity gains and strong commodity prices.
Does this mean that there are further increases in store for producers?
Watch for commodity prices to continue to be the strongest influence on the cash rent market.
2. Heifers on Feed Indicate Long-Term Liquidation Still Occuring
The size of the beef herd decreased in 2022 due to drought conditions and strong demand for beef.
During periods of contraction producers sell more heifer calves. This increases the producer's income today, but contributes to further shrinking of the beef herd.
With fewer cows, we will have fewer feeder cattle, and lower total beef production. This is supportive to beef prices going forward.
This link combines the historical quarterly percentage of heifers on feed and cattle inventory report to show where herd numbers are heading.
3. Egg Prices Have Soared 60% in a Year. Here Is Why They Are So Expensive
The single greatest factor contributing to higher egg prices is avian influenza. The current outbreak is the deadliest of all time, leading to egg inventories 29% lower than a year ago.
Despite increased biosecurity measures, avian flu has been difficult to prevent due to the wild birds that spread the virus as they migrate.
However, we can expect consumers to see high prices after the outbreak due to other contributing factors, such as inflation and higher input costs for producers.
4. New Year's Resolution: Good Grain Marketing Habits
The last two years have rewarded producers who have waited to market their crop until the following year.
History suggests that this is not the best method to sell at market highs. In 7 out of the 10 previous crop years, the highest prices were found when selling in the spring or summer before harvest.
Selling a crop before the bushels are in the bin can be uncomfortable. However, history suggests that commodity prices typically hover close to the cost of production.
Accordingly, this link asks producers to consider whether it is more likely for prices to increase or decrease.
This link utilizes a series of nice graphics to provide an overview of the cow/calf sector. As of the most recent Ag Census, there are approximately 729,000 operations running 31.7 million cows.
While the vast majority of operations manage fewer than 200 cows, the majority of cows are found in larger operations.
Smaller operations also tend to have a much higher reliance on off-farm income and higher likelihood of exiting the business within the next five years. The data point to the conclusion that there is a wide disparity in the goals of cow/calf producers.
Because of this, industry leaders and legislators have a tremendous challenge in implementing policy to promote the cow/calf sector.
Get in touch
If you have any links you'd like to share or have any questions, please contact Travis Carlstrom, Sr. Ag Credit Analyst at FBN.
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