Harvesting the Headlines: Week Ending February 24
Feb. 24, 2023
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:
Top news
1. From FBN®: Crop Insurance Outlook and Tools
This webinar explores some of the key considerations when finalizing your crop insurance coverage for 2023.
SCO/ECO endorsements are discussed as options to increase your coverage level.
FBN economist Kevin McNew discusses key market forces and drivers in the farm economy.
Keep watching to find out how FBN's approach to crop insurance differs from many providers today.
2. Why Do I Need Working Capital?
Having sufficient working capital allows a farming operation to adjust to events like drought, low commodity prices and opportunities to make large purchases.
The "right" amount of working capital depends on the size, type, age and goals of your operation.
This link looks at two different ways to measure working capital:
Working capital to gross returns
Working capital to operating expenses
General benchmarks to shoot for according to this article are 30% for working capital to gross returns and 50% for working capital to operating expenses.
A farm should measure their working capital at the same point every year.
3. Growth in Farmland Value Continues, but Higher Rates Temper the Outlook
This link uses some great graphics to illustrate the current condition of the farm economy.
Despite the rapid rise in rates, the value of farmland has continued to increase, but at a more tempered pace than earlier in the year.
Interest rates on farm loans reached the highest levels since 2007, putting considerable upward pressure on financing costs for some producers.
Cash rents also continued to increase and showed less pronounced signs of softening than farmland values.
Farmers accounted for more than 75% of farmland purchases in 2022, a slightly higher share than in 2021.
Corn yields in the U.S. were flat for 70 years from 1866 into the 1930s.
This was remarkable because crop breeding must run ever faster just to stay even because diseases and pests adapt.
Science, rising input levels, and management improvements have allowed the U.S. to increase corn yields by about 2 bushels/year for over 60 years.
A major question under debate is whether a third production boom started in the mid-1990's due to genetically modified traits.
Some research suggests that recent corn yield gains were primarily due to better than average weather instead of a dramatic jump in the genetic yield potential of corn.
5. Beef Cow Herd to Shrink For Years to Come
The key factors to watch for short-term supplies of beef are the number of cattle on feed, placements of cattle into feedlots, and marketings of cattle.
The key factors for long-term supplies of beef are beef cow numbers, heifers for beef cow replacement, and the calf crop.
The 2022 U.S. calf crop was 34.465 million head, down 2.0% from the 2021 calf crop. Fewer calves means less beef is coming.
Compounding this is the persistent drought in cattle producing areas which has impacted pasture conditions and hay production.
Most analysts suggest that meaningful rebuilding of the cow herd may not materialize until 2025.
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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Feb. 24, 2023