November 24, 2020

Weather, exports trump farm bill

By Gene Lucht Iowa Farmer Today

A tentative agreement to renew the farm bill for one year likely will not make a big difference in the grain markets, but it could certainly affect dairy producers.

For corn and soybean growers, spring planting plans will not be affected much by the farm bill, says Karl Setzer, a grain market analyst with MaxYield Cooperative in West Bend. Those plans are more affected by production in South America and export demand than by government support.

But, he says dairy producers need the programs offered by the farm bill, and those producers are dealing with a difficult market situation right now.  “Dairy is in for a little bit of a tough time.”

It’s hard to make any similar prediction for the grain markets. The start of 2013 looks a lot like 2012 for grain producers, Setzer says.

The drought is still a concern, especially in the plains and the entire western Cornbelt. Supplies are tight worldwide, but one good bumper crop could alleviate that problem.

Usage, especially for soybeans, remains strong with the United States expected to essentially run out of export product by spring.

And so far that South American crop looks like a good one, though Argentina may be a weak spot. Weather conditions in Argentina could delay the harvest there and hurt the chances for farmers there hoping to plant a second crop.

Still, Setzer says if the weather is good in 2013, the world could produce a large crop and grain prices could fall. In the long run a little dip could help the market, he adds, explaining it would bring back some demand through better margins for livestock and ethanol producers.

Finally, one item that could affect the market in the short term is the state of shipping on the Mississippi. Low water levels have meant a shorter shipping season this winter, something that has some farmers worried. Setzer says the good news is if there is ever a good time for reduced shipping it is when the grain supply is reduced as well, as it is in this year’s drought season.

 

This story was originally posted to Iowa Farmer Today

 

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