Tighter Ag Margins Expected for 2012

January 11, 2012 10:31 PM

This past year was the best year ever for Iowa ag despite floods, droughts and freezes. In December, futures prices projected 2011/12 season-average prices of $5.81 per bushel for corn and $11.20 for soybeans, making the Iowa corn crop the most valuable ever produced and the soybean crop the second most valuable, according to the December Iowa Farm Outlook & News from Iowa State University. The record or near-record values aren’t just occurring in Iowa.

Production costs are on the rise, however, after record levels in 2011. "Feed costs increased 23%, livestock purchases cost 18% more, fertilizer and lime went up 28% and fuel costs increased 27%. Thus, agricultural margins look to be tighter as we enter 2012," the report says.

One major issue is the general reduction in demand for U.S. corn and soybeans. USDA projections for demand show lower feed, ethanol, export and crush demand, the report states.

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