View From The Cab

By David Tollefson, Columnist

From the January 2024 issue of Farm Journal by Tyne Morgan (host of the weekly “US Farm Report”).  The subtitle is “From a recession in China to $4 corn, time will tell.”

Since the January issue of FJ came out, to today as I write this, the price of corn in Glenwood has dropped from an average of $4.09 to an average for February of $3.86.  In late February, the price dropped to $3.65, but rebounded a bit since.

Here is Tyne’s column:

From the election to world trade, ag economists think the coming year is poised for several surprises that could have a direct impact on farmers across the U.S.

The December Ag Economists Monthly Monitor, a survey conducted by the University of Missouri and Farm Journal, asked: “What news headline would you not be surprised to read in 2024? – Ag economists said:

*China falls into big recession.

*Farm bill is extended for a second time.

*Corn prices test $4 again (going down-it was $6 a year ago).

*Inflation supports managed money returning to the commodities again.

*World ends, poor hurt worst.

*Record beef imports.

*National corn yield >190 bu. per acre; U.S. embargoes ag exports to China.

*End to Russia/Ukraine war bumps global food grain supplies and cuts prices.

*2024 planted acres across all crops similar to 2023.

*Economic woes unfold for U.S. agriculture as input costs remain high and farm prices falter.

BIGGEST ECONOMIC CONCERNS

Ag economists were also asked what they are most concerned about when it comes to the ag economy. Geopolitical issues and the U.S. presidential election rose to the top of their concerns. Specific responses from ag economists included:

*Geopolitical factors, including war and disruption, and global competition.

*Domestic politics, including the 2024 election and policy detrimental to biofuels use, and government debt leading to rising interest rates and finance costs.

*Crop prices could fall further, adding to a price-cost squeeze for many crop producers.  “Such a development would of course, help the livestock sector.  We could be entering a period where the fortunes of crop and livestock producers diverge,” one economist said.

*South American competition as well as authoritarian governments in places like Argentina, the Netherlands and possibly the U.S., responded another economist.

SOFT LANDING OR RECESSION?

The U.S. avoided a recession in 2023, and the majority of ag economists think that will be the case again this year. The Federal Reserve hinted about interest rate cuts in 2024, but some economists think an increase is possible.

While one economist warned of the impacts if the Fed were to cut rates too soon, economists pointed out the economy has been resilient.

“It now looks like a fairly soft landing,” said one economist regarding the outlook for interest rates and if the U.S. will enter into a recession next year.

“There are certainly risks, but the odds of ‘muddling through’ appear to be rising,” one economist said. “With inflation declining, the Fed might be able to relax interest-rate policies in late 2024.”

However, not all economists are in the camp the Federal Reserve will cut interest rates next year.

“It may be a mild one if it occurs.  If it doesn’t occur, that suggests risk of higher interest rates,” an economist said.

“There are mixed signals,” pointed out another economist. “GDP is growing, inflation is cooling off, unemployment is low and the stock market is growing- all positive. Higher interest rates and credit card balances are negatives.”

OPTIMISM FOR 2024

There is also optimism for the year ahead, which is sprouting from the possibility for drought improvement and new demand. Ag economists were asked what they’re most optimistic about when it comes to the ag economy:

*Demand opportunities from domestic soybean crushing, renewable fuel, SAF and global oilseed.

*Robust domestic consumption and opportunity for competitive pricing of U.S. commodities in global markets.

*Improved farm-level conditions related to efficiency, moisture conditions and farm income above historical averages (if a recession is avoided and input costs come down); many ag producers still have a strong balance sheet.

* * * * * * * * * * * * *

I recently received the monthly weather summary from Heidi Olson-Manska at the West Central Research and Outreach Center (WCROC) at Morris.

The mean temperature (like average) temperature for February was 30.2 degrees, 17.1 degrees above the average of 13.1 degrees (1886-2023).

The high temperature for the month was 63 on Feb. 27, which broke the old record for highest temperature recorded in February, 1886-2023.  The previous highest temperature was 60 on Feb. 25, 1902.

The low temperature for the month was -4, and interestingly, occurred one day after the record high temperature, Feb. 28. The lowest temperature recorded historically was -41, on Feb. 16, 1936.

At my farm south of Starbuck, I recorded only 3 inches of snow for the entire month. That occurred on Feb. 14.

On the day I write this, 24 years ago the temperature at my farm was 70 degrees, and there was not a speck of snow visible anywhere. People were trapping pocket gophers that day.

As I may have mentioned before in this space, my neighboring farmers are attempting to trap pocket gophers in every month of the year. In fact, rather than trading amounts of rain as it occurs, we are trading pocket gopher stories.

In looking back a year ago, I recorded 6 inches of snow in February, as well as .6 inches of rain. In March of 2023 I recorded 15 inches of snow (the total snow from the whole year ago was around 40 inches, and going into March the entire landscape was totally covered, even the hills). What a contrast to this year!

* * * * * * * * * * * * *

Please contact David Tollefson with thoughts or comments on this or future columns at: adtollef@hcinet.net