Navigating the Uncertainties of Agricultural Projections
What Happened
On that specific date, the USDA provided a wealth of information through the Agricultural Projections report. The data showcases a projected decline in planted corn acreage from 94.6 million to 88.5 million over the years. However, this is accompanied by a significant increase in yield, rising from 177.3 bushels per acre to 198 bushels per acre. This leads to an overall growth in corn production, from 15.341 billion bushels to 16.060 billion. For soybeans, the planted acres are set to gradually increase from 83.6 million to 86.5 million. The yield is also expected to rise, from 50.6 bushels per acre to 56.5 bushels per acre, resulting in a substantial increase in production from 4.162 billion bushels to 4.835 billion. Most of the new soybean acres are expected to come from corn acres. These projections paint a vivid picture of the changes in the agricultural landscape.
The implications of these projections are far-reaching. They suggest that corn prices could be highly volatile in the coming years. With a higher yield needed to meet demand while farming fewer acres, there is little margin for error. Even a minor disruptive weather event could quickly lead to price hikes. The same holds true for soybeans, where growing demand and the need for increased production indicate potential high price volatility.
Why This Is Important
The old adage "They’re not making any more acres" holds true in the agricultural world. From a production perspective, it becomes crucial to focus on increasing yield to ensure an adequate supply of corn for consumers. The USDA tables clearly illustrate this trend, highlighting the need for farmers to adopt innovative farming techniques and utilize advanced technologies to achieve higher yields. The projected changes in soybean acreage and yield also have significant implications for the market. As more soybean acres are added and yield increases, it will impact the overall supply and demand dynamics of the soybean market.
Understanding these projections is essential for stakeholders in the agricultural industry. It allows them to make informed decisions and prepare for the future. Farmers can adjust their planting strategies, invest in new technologies, and manage their risks more effectively. Market participants can also anticipate price movements and make appropriate investment decisions.
What Can You Do?
Preparation is key when it comes to dealing with the uncertainties presented by these agricultural projections. Prices tend to fall quickly after a rally, and this is because of the remarkable achievements of farmers and the advancements in technology. It is important to set price targets and stick to them, even when market prices get close. Covering sales with call options can be a valuable strategy, especially in a year where prices continue to climb and short supplies become a reality. Additionally, considering purchasing puts can establish a price floor and provide a safety net.
A balanced marketing approach involves combining strong cash sales covered with call options and protecting unpriced bushels with puts. This helps to manage risks and optimize returns. Working with a professional can help you find the strategy or strategies that are best suited for your operation. Communication is crucial during this process. Asking critical questions and gaining a full understanding of the consequences and potential rewards will enable you to make better decisions.
Find What Works for You
Each farm operation is unique, and what works for one may not work for another. It is essential to work with a professional who can assess your specific situation and recommend the most appropriate strategies. A senior market advisor like Bryan Doherty, with his 30 years of experience at Total Farm Marketing and a wide network across the Grain Belt, can provide valuable insights and guidance. By listening to your needs and communicating clearly, he can help you make decisions that are in the best interest of your operation.
Remember, emotions should not drive your decisions in the dynamic market. Instead, focus on making rational choices based on a thorough understanding of the market and your own goals. With the right strategies and professional advice, you can navigate the uncertainties of the agricultural market and achieve long-term success.
Editor’s Note: If you have any questions on this Perspective, feel free to contact Bryan Doherty at Total Farm Marketing: 800-334-9779.
Disclaimer: The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Examples of seasonal price moves or extreme market conditions are not meant to imply that such moves or conditions are common occurrences or likely to occur. Futures prices have already factored in the seasonal aspects of supply and demand. No representation is being made that scenario planning, strategy, or discipline will guarantee success or profits. Any decisions you may make to buy, sell, or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of the National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc. Presented for solicitation.
Symptoms and Recovery in Dairy Cows
Some dairy cows have tested positive for HPAI even without showing symptoms. According to the USDA, in most cases, dairy cattle exhibit symptoms such as a drop in milk production, loss of appetite, and changes in manure consistency. The Kansas Department of Agriculture has listed these symptoms. It's important to note that while HPAI is usually fatal for poultry and turkey, dairy cows generally recover within about two weeks with proper treatment. A Reuters report confirmed that cows infected with bird flu have been culled or died in five of the 15 U.S. states with confirmed cases.What the USDA is Doing
The USDA's Animal and Plant Health Inspection Service (APHIS) has taken significant steps. They released 239 genetic sequences found in the recent H5N1 and HPAI influenza viruses in dairy cattle and poultry for interested researchers. APHIS is also urging dairy cattle producers and those in the industry to share epidemiological information from affected farms, even if they aren't planning to move cattle interstate. The USDA emphasized the CDC's assessment that humans are at low risk of contracting the disease. As of September 9, thirteen people in Texas, Colorado, and Michigan have tested positive for contracting H5N1. Most recently, a patient in Missouri was reported to be sick with the bird flu despite no known contact with cattle or poultry. On August 28, at a farm show in Iowa, Vilsack announced that the USDA has approved field testing on an H5N1 vaccine for cattle.AABP's Decision on Disease Naming
In an open letter dated April 8, 2024, the American Association of Bovine Practitioners (AABP) presented a compelling argument. Since the disease in cattle doesn't cause high morbidity and mortality like in birds, they believe it shouldn't be referred to as "HPAI in cattle" or "bird flu in cattle." Instead, they will call it Bovine Influenza A Virus (BIAV) in their messaging and resources. The AABP encourages other organizations, state animal health officials, diagnostic labs, and state and federal agencies to use this name to better distinguish between the diseases in cattle and birds. They emphasize that it's crucial for the public to understand the difference to maintain confidence in the safety and accessibility of beef and dairy products.What the FDA is Doing
The FDA found particles of HPAI in samples of pasteurized milk. In a release, they stated that they have full confidence in the safety of milk sold in grocery stores. Based on available information, pasteurization is likely to inactivate the virus, but the process may not remove all viral particles.California at the Center of the Outbreak
In the last two months, California has become the state with the most cases of HPAI in cattle. Since the outbreak began in March 2024, APHIS has reported 233 confirmed cases of HPAI in dairy cattle in California. In just the last 30 days, California has confirmed 233 livestock herds with positive tests for H5N1. Human infections have also been on the rise in the state, with 16 of the 52 total confirmed bird flu cases in humans this year coming from California. California produces the most dairy products among all U.S. states.Outbreak Timeline
Successful Farming will continue to report on the HPAI/dairy cow situation. Here is an updated list of our coverage from 2024:NovemberOctoberSeptemberAugustJulyJuneJune 28: Two more Iowa dairy herds reported with avian fluJune 25: USDA: Expect more cases of bird flu in dairy cattleJune 25: Four states to begin voluntary testing for bird flu in dairy farm milk tanksJune 25: What can farmers learn from the current bird flu outbreak in dairy cows?June 17: Bird flu found in two more Iowa dairy herdsJune 14: Two dozen companies working to find bird flu vaccine for cows, U.S. agriculture secretary saysJune 14: H5N1 virus was spread by cattle, people, and shared equipmentJune 11: Iowa asks USDA to compensate farmers for cows culled due to H5N1 virusJune 10: Iowa identifies second dairy with bird flu and expands testingJune 7: Block sales of raw milk that may contain H5N1 virus, FDA asks statesJune 6: Bird flu infects dairy herd in Iowa, 10th state to be hitJune 6: Cows infected with bird flu have died in five U.S. statesJune 6: Bird flu outbreak reported in Minnesota dairy herd, the state's firstJune 4: USDA aims to isolate and exhaust H5N1 virus in dairy herdsJune 4: Bird flu's spread from poultry to cattle to humans provokes worry among feds and statesJune 3: Farmworkers face high-risk exposures to bird flu, but testing isn't reaching themMayAprilRediscovering the Charm of Livestock Auctions
My Connection with Livestock
My wife and I have been raising a few Jersey steers. Traditionally, we would sell them as halves and quarters of hanging beef to our loved ones. However, this fall, for reasons I can't quite put my finger on, I lacked the motivation to go through the usual process. Perhaps my recent cancer treatment had something to do with it. Regardless, our four steers had grown significantly and were thriving on our grain.Sharing this dilemma with our neighbors led to a surprising offer. They assured us that they could transport our steers to the nearest livestock auction barn.
I was understandably hesitant but was quickly put at ease. Their willingness to help was truly remarkable.
The Day of the Auction
On the appointed day, I locked the selected quartet of Jerseys in our barn. Neighbor Paul arrived promptly with his pickup and a stock trailer that seemed as large as a mobile home. There was more than enough space for our steers.Paul demonstrated remarkable precision as he backed up to our barn door. His skill was on par with docking two orbiting spacecraft. I, on the other hand, would have taken several attempts to achieve even half of his accuracy.
The steers walked into the stock trailer with an air of nonchalance, as if it were a daily routine for them. Paul and I then set off for the auction barn.
Arriving at the Auction Market
Upon reaching Pipestone Livestock Auction Market, we had to wait in a long line of pickups and stock trailers. But this wasn't a bad thing as Paul and I found plenty to talk about to pass the time.When our turn came, Paul backed up to the unloading chute with an astonishing level of precision. It was as if he could measure it in hundredths of an inch. If I had been in charge, I would have surely embarrassed myself in front of the other drivers.
The Auction Experience
The steers unloaded themselves with the same nonchalance as seasoned veterans. Paul and I decided to stay and watch how they would sell. We parked the trailer and entered the auction barn.The inside of the sale barn had a distinct smell that brought back memories. It was a combination of wood chips and fresh cattle manure. With some time to spare, we made our way to the cafeteria and I treated us to lunch.
The special that day was their hot beef commercial. It was simple comfort food at its best - two slices of whole wheat bread filled with fork-tender roast beef, topped with a scoop of mashed potatoes and smothered in rich, brown gravy. We both ordered the special and dug in. I was pleasantly surprised to finish the entire entree, which was a small victory for me as I had been struggling with my appetite due to my recovery.
Watching the Auction
Just as we finished eating, the auction was about to begin. Paul and I found seats in the bleachers and watched the parade of cattle making their way through the sale ring.We had a bit of fun guessing the weight of the cattle. Paul was quite accurate, but I was always off by at least 100 pounds compared to their actual weights. It was a testament to his experience raising beef cattle while I was more accustomed to dealing with little Jerseys.
When a dozen fattened Holstein steers were brought into the ring, they seemed enormous compared to our Jerseys. It was a sight to behold.
The Sale of Our Steers
I had a specific price in mind for our steers, but so did the cattle buyers. In the end, we likely reached a middle ground, which is the essence of a successful compromise.I picked up the cattle check and we made our way home. The day had been a truly pleasant experience.
The only thing that could have made it better would be enjoying another serving of that delicious hot beef sandwich.
Jerry's book, "Dear County Agent Guy" can be found at www.workman.com and in bookstores nationwide.