When it comes to 2019 commodity prices, bigger would be better of course.
“It would be a lot better if we saw a 4 in front of the corn prices, instead of a 3.5,” said eastern Iowa farmer Robb Ewoldt.
With a lot of market volatility and uncertainty, Ewoldt said he is focusing on what he can control moving forward.
“The things I’m looking ahead to are trying to cut costs. I don’t see our income side getting any better,” he said. “That’s the biggest thing that I can kind of control. As we saw this year, you can’t control the markets.”
With trade and political uncertainty still grabbing headlines, John Kruse, a University of Missouri specialist in ag business and policy, said corn should hit higher prices with good export demand.
“Anytime you are in the 2.4 billion bushel range, that’s good news,” Kruse said. “We’ve had good export demand strength. We think for 2018/19 that’s going to give us a stronger season-average corn price. We think there are going to be opportunities for farmers to price their grain somewhere close to that $3.90, maybe even $4 per bushel range.”
However, Kruse echoed the idea of maintaining efficiency on the farm, saying that farmers he’s talked with in Missouri are estimating production costs from $3.25 per bushel to $3.75/bu. for corn.
With corn demand more certain than soybeans, there are concerns about a shift in acreage in 2019.
“We are still looking probably at around 92 million acres (of corn), which is an increase. Thankfully it’s not more than that,” said Curt Mether, president of the Iowa Corn Growers Association. “We hope it won’t be too much more than that. (In Iowa,) we are a corn/soybean rotation state; everyone has their rotation and they kind of like to stick with it. They’ll make little adjustments but not big percentages.”
The worry is if farmers switch more soybean to corn acres than what has been projected, that could lead to oversupply of corn and drive prices down further.
“We used a lot of corn, but we could grow a lot too if everybody says they aren’t going to grow beans,” Ewoldt said. “I’m not changing anything. I’m keeping my rotation the same.”
In the world of soybeans, the future is less certain. With Chinese imports of U.S. beans falling during 2018 and U.S. bins filling up, farmers are waiting for a trade deal to bring back some of the demand.
Martyn Foreman, an agricultural and applied economics professor at the University of Missouri, said while the U.S. is trying to craft a deal with China, simply finding other countries to buy American beans won’t solve the issue.
“We’ve got a large supply and some trade issues, so that combination is not what you would hope for as a farmer,” Foreman said. “If we are able to capture some market share in other places … then that’s clearly a positive. When you are talking about essentially losing half your export market, it’s a pretty big chore. It doesn’t happen overnight.”
Many eyes will also turn to the general economy, which dealt with a downturn in the final weeks of 2018.
Kirk Leeds, CEO of the Iowa Soybeans Association, said the uneasiness of U.S. politics is impacting agriculture “because of the disruptions of trade and perhaps because of what some people anticipate is going to be a very rocky political year between the White House and the Democrats in the U.S. house.”
“(But) certainly, if you look at unemployment and overall economic reports at this point, it’s a pretty positive story,” Leeds said.
Kruse noted that if farmers see soybean prices hit $9.80 or $9.90, he would expect many to start locking in their prices.
While those prices may bring a profit to some, 2019 is still likely to bring multiple financial pressures.
“I think we are sitting not yet in a 1980s situation by any means, but we are starting to get into a period where there is going to be financial stress and we are going to start losing some farmers who are susceptible,” Kruse said.