China’s record setting buys in January carried strong old-crop corn and soybean prices into February. That has farmers, analysts and economists all wondering if these prices can hold and for how long.
The latest muscle-bound flex in export sales has created a net of demand. Whether these sales actually ship, will likely determine if that net unravels or lifts markets to new sustained highs.
The Changing Landscape
All of that will ultimately factor into farmer’s bottom lines in 2021. Which, in its latest forecast, USDA projects net farm income will fall more than 8% to $111.4 billion compared to 2020. Several things are contributing to the drop in net income including higher expected production expenses such the costs of feed, fertilizer and labor. Total production expenses are expected to rise 2.5% this year.
The other factor likely to change in 2021 is the government payment safety net. USDA forecasts lower direct government farm payments of $25.3 billion in 2021, which would be about 45% less than a year ago. What’s still unknown is whether there will be any weather-related disaster aid although, if the last few years are any indication, all signs point to yes.
Time to Persevere
These three “nets” will be working together to draw a rough outline of 2021’s final frame. How this season ultimately ends is still anyone’s guess but there is optimism, once again, that the year will be kind to American agriculture. As your operation steps into its starting gate bindings, remember your training. There’s no doubt the ability to be nimble and quick will pair well with perseverance and resolve.
If 2020 taught us anything, it’s to expect disruption. In 2021, plan for it, prepare to overcome it and stay focused on maximizing your catch and filling your nets.
