March 28, 2024

Farmers feel ag economy whiplash

It’s been a wild ride

WEST LAFAYETTE, Ind. — The past 18 months have been a roller-coaster in the ag economy, and farmers are feeling the whiplash.

David Widmar, agricultural economist at Purdue University, discussed the journey at a seminar hosted by Halderman Real Estate and Farm Management.

“Let’s turn the clock to January 2020,” he said. “There was a lot of optimism when we signed that ‘Phase 1’ trade agreement. And then we got to March and April. The pandemic took off. The USDA thought we would plant 97 million acres of corn. … We also had commodity prices across the board tumble. At the end of April, oil prices traded negative.”

Last summer, Chinese purchases were not just lackluster, they were abysmal, Widmar said. A year ago, December corn futures hit $3.20 a bushel.

But from the end of August to the end of September in 2020, things turned around dramatically.

“Commodity prices started to rally in September,” Widmar said. “The USDA started shaving off some bushels. CFAP2 payments hit. China started buying, and they bought big. The grain stock situation went from extremely burdensome to very tight.

“Not only did the farm economy have an improvement, the improvement went from very pessimistic to very optimistic. It was a wild shift, and it happened in a short period of time.”

Although no one knows what will happen next, Widmar said he is optimistic about the farm economy in 2021 and cautiously optimistic about 2022.

It’s important to balance being optimistic and enthusiastic and acknowledging that there’s an uncertain future, he said.

He encouraged farmers to think long term and be strategic with risk management, as well as deploying profits and pursuing “good deals.”

Ask yourself:

• What decisions can we make in 2021 that will improve our position in 2026?

• What decisions can we make in 2021 that will undermine our position in 2026?

For more information, visit www.aei.ag.

Erica Quinlan

Erica Quinlan

Field Editor