Market Matters Blog

A Full Notebook

Sometimes when I get on a roll with a project (or two), I lose focus on my regular tasks, like keeping the blog fresh. I'm lucky some of my colleagues have stepped up to help fill this space over the past few weeks.

My whole focus lately has been on putting together a feature for The Progressive Farmer's mid-November special issue on marketing and writing the article on DTN/The Progressive Farmer's Agriculture Confidence Index, which will be published on Monday morning. My notebook is beyond full, and here are a just a few snippets of what I've been asking farmers about lately.

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One Iowa farmer I spoke with said he anticipates expanding his soybean acres from 30% of his land this year to 60% of his land next year. Beans require fewer inputs, and he figures he'll only lose $15 per acre on beans compared to $75 per acre on corn.

This is one of the major trends I've picked up in my interviews over the past couple of weeks. Farmers are seriously thinking about how to cut back on their costs without sacrificing yields. Most, all actually, said they'll postpone new equipment purchases. Some have mentioned switching more acres to beans. One Missouri farmer, who had cattle and hogs in his younger days but was forced to sell out, said he'd switch some row crop land back to hay production.

Shortly after that conversation, this moved across the Dow Jones Newswires: "The much-improved financial picture for U.S. livestock producers could prompt some farmers to switch to using land for raising animals rather than growing crops, says Purdue economist Chris Hurt. Grain prices have fallen sharply from their 2012 highs and livestock supplies have tightened, helping growers of pigs, cattle and chickens boost profit margins. "If the years from 2007 to 2013 could be described as the 'Grain Era' in which crop-sector incomes had an extraordinary run, the coming period may be described as the 'Animal Era' when producers of animal products have strong returns," Hurt writes. Moving from cash crops to livestock "will be most predominant" in the central and western Great Plains, where land for crop use is "marginal," he predicts.

Farmers in Oklahoma and other parts of the southwest have told DTN reporters they'll be paying much more attention to the livestock portions of their business. And the Missouri farmer who left the livestock industry, isn't alone. DTN Livestock Analyst John Harrington said it's hard for people forced out of the business, and often into retirement, to return. But a growing industry needs more suppliers. During the grain market's boom years, producers turned a lot of grass and pasture ground into fields of corn. Some of that marginal crop ground may be shifted back into pasture during the 'Animal Era.'

Stay tuned. There's plenty more in my notebook to share.

(AG/CZ)

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