Markets Now: 5 Factors To Watch In The Coming Months

October 19, 2018 05:40 PM
 
 As we enter the fourth quarter of 2018, three economists say farmers should keep any eye on the following factors.

The agriculture market has been full of uncertainty the past few months. With all the noise, it can be hard to know where to focus your attention. As we enter the fourth quarter of 2018, three economists say farmers should keep any eye on the following factors:

  1. Working Capital – According to Purdue University’s Center for Commercial Agriculture director Jim Mintert, farmers need to pay extra attention to their capital expenditures. “I think a lot of people have already moved into that camp,” he told U.S. Farm Report host Tyne Morgan. “But I think that continues to be the watchword going forward, preserving working capital is going to be key.”
     
  2. Basis – When it comes to marketing, Mintert says farmers should keep their eyes on basis. “There's going to be some opportunities to turn some positive returns and make things look better than they do at the moment,” he says. “Combine that with the subsidy payments coming out of the market facilitation program and things won't be quite as bad as they look right now, perhaps.”

     
     
  3. Farmland Values – According to Mintert, who authors the Purdue Ag Barometer survey, one of the best indicators of how the ag economy is doing as a whole is farmland values. “In this last survey, I think two thirds of the respondents said they expected to see cash rents this coming year go down,” he says. “That's going to be a battleground this fall because landlords are going to resist that. So, there's going to [have to] be some give and take, but there's a lot of pressure on both farmland values and on cash rental rates.”
     
  4. Exports – The U.S. is likely to replace half of the exports lost to China with other countries, according to Wally Tyner, an ag economist at Purdue University. “I hope we're right that at least it will be replaced that much, but we need to watch those exports. Are we going to gain exports that Brazil and Argentina and other exporters have given up in other countries?” he asks. “If we do, then the damage won't be as bad as it could have been.”
     
  5. Global policies about technology – The EU has great export market potential for the U.S., but they recently announced they would not purchase crops produced using gene editing technology. “It certainly is a barrier,” Jayson Lusk tells Morgan. “I think one of the frustrating things is the EU’s recent stance on gene edited crops. It looks like they're going to treat those the same as genetically engineered crops, even though it's a very different kind of technology,” he says. “I don't know if there are any easy solutions to that, but it's, again, another barrier.”

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