Gary Wright, Farm Management Specialist
The USDA Crop Progress report (dated 11/12/23) shows nearly completed corn and soybean harvests in Iowa. 94 percent of the corn and 99 percent of the soybeans are harvested, both nearly identical to one year ago.
The World Agricultural and Supply Estimates (WASDE) of November 9 reported the 2023 corn production will again exceed 15 million bushels (15.234). The 2023 soybean crop is estimated at 4.129 million bushels. If realized, the 2023 corn crop will exceed the 2016 record of the U.S. most-widely grown crop, and the projected soybean harvest will be the fourth largest, according to Farm Policy News Update (https://farmpolicynews.illinois.edu/2023/11/corn-futures-near-three-year-low-falling-around-32-so-far-in-2023).
For the 2023 Marketing Year (Sept 1, 2023, to Aug 31, 2024) corn carryover is projected at 2.2 million bushels, just short of 800 million bushels higher (58 percent) than one year ago. Soybean carryover is projected at 245 million, 23 million bushels lower (8 percent). The respective carryovers contributed to the USDA updates to the 2023 crop season-average price estimate of $4.85/bushel for corn ($1.69 lower, 26 percent; compared to 2022) and $12.90/bushel for soybeans ($1.30 lower; 9 percent compared to 2022).
Corn demand was higher by almost 700 million bushels (4 percent); soybean projected use is lower by 120 million bushels (2.8 percent). Corn export demand is ahead of the year ago pace by 25 percent; soybean export demand is below the year ago pace by 12 percent. The current 2023-24 corn and soybean breakeven prices are projected at $5.00/bushel (corn) and $12.00/bushel (soybeans); hence, both show operating margin pressure. We know likely the 2023 bottom-line will be lower when compared to some record net farm incomes in 2020-22.
Finally, Reuters reports unusually significant Chinese soybean activity (bookings) this and last week, some the largest in 3 months. Although identified as “flash sales,” following Brazil, Argentina and Chinese adverse weather reports, Chinese purchases by the world’s largest importer of soybeans, are reflected in increased market prices, some near the September highs. Some procrastinators believe these unusual soybean purchases (for this time of year), may reflect “soybean diplomacy” in front of U.S./Chinese meetings next week.
2024-25 Crop Outlook
Although limited reports of significantly wet grain going into farm storage, good to set in motion the plan to regularly monitor moisture levels in last year’s stored grain. Once harvest is concluded, management decisions will quickly begin focusing, if not fine-tuning, the 2024 respective crop enterprises. Ag Decision Maker (https://www.extension.iastate.edu/agdm/) will continue to be a key resource/tool for best analysis.
Earlier remarks were made on 2023 crop year breakeven prices. The 2024 production plan, whether lease signed or not, is the place to begin. Overall, production costs have increased an average of 7 percent per year in the last 20 years. Precision ag practices support regular soil tests (every 2-3 years) to direct the variable application of needed lime and fertilizer. Conservation practices not only afford better water quality management but offer the best short-term economics too.
From history, consensus is higher/lower commodity prices may point to some changes to direct production costs (e.g. fertilizer, seeds, weed control, etc.). From the record 2023 production costs, only modest declines are expected. Fertility costs are projected to show the greater decline, mainly following commodity and energy costs; however, all fertilizer retail prices have shown recent price increases, though P-N-K prices remain double-digit advantages to one year ago. Seed and weed/insect control costs likely will continue their annual 6-7 percent increases. Improvements to seed genetics are given credit for some greater-than expected production outcomes, when conditions are not totally favorable; however, it is important to compare the incremental benefit/costs when buying the newest seed technology (vs. a close comparison) or applying late-season crop pesticides or fungicides (https://farmdocdaily.illinois.edu/wp-content/uploads/2023/09/fdd092623.pdf).
The annual ISU Extension and Outreach surveys will again be conducted, beginning with farmland values survey (now underway), then (a) production costs; (b) custom farming; and (c) lease rates. However, any survey should only be used as a guideline to your own individual operation/enterprise analysis. Ag Decision Maker can provide some ready-to-use Excel templates to determine costs per bushel (or acre), based upon key assumptions.
Finally, it is important to complement the farm production/marketing plan with the family budget.
(https://agamerica.com/blog/managing-farm-family-living-expenses/).
2024 Farm Bill
The last 5-year farm bill ended with the 2023 crop. A one-year extension to the expiring farm bill has passed the House and eventual extension approval is expected; however even that will necessitate an analysis of prices and yields in front of the producer’s March 15 decisions due to the escalator provisions in the reference prices.
As always please contact me (712-223-1574, gdwright@iastate.edu) if you want to discuss any part of this article. Happy Holidays!