Ag Review For 2004
As we reach the end of the year, it is a good time to reflect on what happened agriculturally in the area in 2004. The 2004 crop year was the third year of the current Farm Bill and most producers are becoming fairly familiar with the commodity program provisions of this Farm Bill. Corn producers received a counter-cyclical payment (CCP) of 7.7 cents per bushel on their 2003 corn crop in fall 2003. The 12-month national average corn price was high enough by August 31, 2004, that no CCP was earned on the 2003 corn crop. So, the amount of the advance 2003 CCP was deducted from 2004 payments this past fall. In Fall 2004, producers received advance CCP payments on their 2004 crops of 14¢/bu. for corn and 9.1¢/bu. for soybeans, based on projected national average prices through August 31, 2005. We will be following price movements in the coming months to see if there will be an additional advance CCP payment in February, 2005, on the 2004 corn and soybean crop. Any final CCP payment on the 2004 corn and soybean crop, or any repayment of the advance CCP that has already been paid, will be determined after the 12-month marketing period is completed on August 31, 2005. A reminder to farm operators that they must sign-up for the DCP Program each year at County Farm Service Agency Offices (FSA), and they must sign-up now before they can receive the first half of their guaranteed direct payments for 2005. The first half of the 2005 direct payment can be made to eligible producers by County FSA Offices in either December, 2004, or after January 1, 2005, at the choice of the producer.
The commodity prices for corn and soybeans brought mixed news in 2004. Soybean prices were above $8.00 per bushel until early summer, allowing for some good opportunities to sell the remainder of the 2003 soybeans that were in storage. Many growers also took advantage of new-crop prices above $6/bu. until July to forward-price some of their 2004 soybeans. The corn price for 2003 corn and the “new-crop” price were also strong until mid-Summer, with the local corn price for both being near $2.50/bu. until late June. By harvest time, cash prices for corn and soybeans had dropped below CCC loan level; however, the soybean prices have rebounded somewhat in recent weeks. Local cash prices on December 20 were $5.33/bu. for soybeans and $1.62/bu. for corn.
Profits in the livestock sector have been fairly good in 2004. Beef feedlot operators and cow/calf producers recovered nicely from the BSE situation early in the year, and have benefited from the continued strong consumer preference for high protein diets. Swine producers have also benefited from the strong consumer demand and very good pork exports, resulting in hog prices that were higher than expected for most of the year. Dairy producers also saw strong milk prices and fairly good profitability in 2004.
Editors note: Kent Thiesse is a former University of Minnesota Extension educator and now is Vice President of MinnStar Bank, Lake Crystal, MN. You can contact him at 507-726-2137 or via e-mail at [email protected].