Ag outlook focuses on markets, weather and profit
SIOUX FALLS, S.D. -- Farmers learned more about the weather and market outlook for 2017, and ways to improve their profitability at the South Dakota Soybean Association's 13th annual Ag Outlook meeting in Sioux Fall, S.D.
SIOUX FALLS, S.D. - Farmers learned more about the weather and market outlook for 2017, and ways to improve their profitability at the South Dakota Soybean Association's 13th annual Ag Outlook meeting in Sioux Fall, S.D.
The goal of the event is to prepare farmers for the new year, said Jerry Schmitz, SDSA president and Vermillion, S.D.-area farmer. "There's concerns about price, concerns about weather and so we're trying to address those things for them and find out what they need for their toolbox going into next year," he said.
To arm farmers with information, Chief Forecaster for Weather Trends International Richard Woolley shared the weather forecast for the 2017 planting season. The biggest question is the impact LaNina will have on the 2017 growing season, both in the U.S. and South America.
"La Nina, especially the type of LaNina we're having this year, is a very weak one, a little more central-Pacific oriented than eastern-Pacific, that actually leads to a little bit more normal rainfall in Brazil." It's a scenario that is favorable for Brazil to grow corn and the record 102-million-metric-ton crop U.S. Department of Agriculture is forecasting.
The lingering effects of a weak LaNina are already being felt this winter, and could impact the planting season in the U.S.
"(There will be a) colder spring, colder March, colder April that, in turn, will lead to cooler soil temperatures going into planting season," Woolley said. "That, in turn, will lead to a slower germination period."
During the growing season, he said they are looking for slightly cooler temperatures than 2016, with a few exceptions. "We think early July is a hot potential period and again in late August is a hot potential period," he said. But, it will be drier in the 2017 growing season than last year. "So, we're going to see some drier conditions across parts of the Northern Plains, especially North Dakota, Montana, down into western South Dakota, down throughout most of Nebraska and much of the High Plains will be quite dry this summer, especially the mid-summer period."
Market analyst Sue Martin also shared her outlook for the markets in 2017. Martin, who owns Iowa-based Ag and Investment Services, said acreage intentions for the next growing season will have a big impact on the price forecast, and farmers are indicating they will plant more soybeans and less corn.
The early estimates show a nearly five-million-acre swing because the corn to soybean ratio is heavily favoring soybeans at current price levels.
"It looks like we're going to lose acres of corn, corn on corn will maybe go 50-50 in some areas like Minnesota, Iowa," she said. "The bean crop is fringe areas is definitely going to grow in acres there."
The other big key for price direction in 2017 for corn, and especially soybeans, will be how big the crop is in Brazil and Argentina. "It all comes back to South American weather and how well will they produce?" she said. If they have any sort of weather glitch, it could mean additional Chinese soybean purchases from the U.S. and that strong demand is why prices are currently as high as they are in the face of a 480-million-bushel ending stocks figure.
"China has a strong need for meal as their rapeseed crop this year was terrible," she said. With Malaysian palm oil production down, China is also buying more soybean oil, she added.
Martin is more optimistic about soybean prices in 2017 than last year. In fact, she is looking for an 84-year cycle low in soybeans by mid-January.
She advised producers to be making some new-crop sales. "When we look at new crop beans and we've had them up over $10.35, boy if that's the worst price you sell on the board you're going to have a way better year than last year," she said.
On the last trading day of December 2015, soybean prices closed around $8.70, she said. "So if you look at how much higher soybeans are, that's not too bad of a deal."
South Dakota Soybean Association Treasurer John Horter who farms near Andover said they hope that farmers will be able to take some of the advice provided at Ag Outlook to help them manage through the current low price cycle. "It's all about maximizing the return on the acres we have to make the best of it in these tougher times."