2008: One for the History Books

November 25, 2008 06:00 PM

Sara Muri, AgWeb Business & Crops Online Editor
The ride from the tractor seat during the 2008 crop season, many would say, was comparable to a bucking bull ride. This year will definitely go down in the record books as a whirlwind of ups and downs. As we park the combines for the winter and plan for next year, it's a good time to see what we can learn from the past season.
"It's been an historic year,” says Bob Utterback, president of Utterback Marketing and a columnist for Farm Journal and Top Producer magazines.
So, here's what happened.
A Roller Coaster in Production
The season started out wet and cold, says Roger Elmore, extension corn specialist at Iowa State University. The unsettled weather at the beginning of the season forced most planters to stay idle until June or later.
"We haven't planted corn this late for two decades or so,” Elmore says. He says the cool weather before and after planting slowed down grain development.
But that slowdown turned out to be helpful.
"Normally, late silking equals low yields,” Elmore says. But, since most of the Midwest saw a late frost, the corn had plenty of time to develop and fill. "Without a late frost, we would have been in trouble,” he says. "We couldn't have asked for a better end to a poor start.”
Additionally, little disease or insect pressure impacted corn fields.
Other challenges did arise for many farmers, Elmore says. For instance, many of the farmers in Iowa lost hundreds of acres to flooding.
And, harvest has been slow. "This is the latest and most drawn-out harvest in recent history,” he says. "But it's all adding up to the third-best yields in recorded history.”
Elmore says a growing season like 2008's is a perfect teaching experience. "If you want to learn, you put yourself through a year like 2008,” he says.
Elmore encourages farmers to be thankful as harvest finally draws to a close.
"At any point in time, our best guesses can be changed by tomorrow's weather,” he says. "Who would have thought beans and corn planted in June could outyield ones planted in April or May? What happened this year was the best possible option.”
Marketing Challenges Abound
On the marketing side, growing season 2008 will probably be a year to remember for those who did well and a year to forget for those who missed opportunities.
Utterback says the corn marketing range started around $4 in the fall of 2007, then went to an $8 high and has now made a new low at $3.77.
"This is the biggest price move in one year,” he says. "You'd have to go back to the ‘70s to get even close.”
What caused all these uncommon market moves?
Utterback attributes the market mayhem to emerging markets for U.S. commodities, which caused a significant demand growth, combined with the influence of non-ag markets.
"The grain markets have been a victim of outside markets,” he says. "We have been misjudging the general health of the worldwide economy.”
The recent downfall in the economy will take time to correct, Utterback says. "We have seen an economic event of historical proportions,” he says. "It's going to take some time to get out of this thing.”
On a global scale, many consumers will be cutting back on higher-quality food purchases, due to lower incomes. "We are going to find out if there really is an inelastic demand for ag products (meaning a price increase or decrease will not significantly alter demand for an item),” he says.
Utterback says that as farmers settle on production choices for next year, they will have big decisions to make. With many farmers at or below profit for 2008, he says, the question will be: How much risk do you take? "If a guy's got his debt paid off, it's going to be a beautiful time.”
Utterback says, for everyone else it will be a violent and volatile time next year. "It's going to be as tough as it gets,” he says.

You can e-mail Sara Muri at smuri@farmjournal.com.

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