Market News & Headlines >> Brock Consultant Katie Hancock's Blog: My Main 2015 Fall Harvest Concerns
Insights from Brock Associates Consultant Katie Hancock
Farmers in my area of southwest Kentucky and northwest Tennessee are optimistic regarding corn yields. Actual yields reports are still questionable as harvest has taken a slow start, but corn will be above average. It will probably not be above the 2014 yields, but people here are optimistic from a production standpoint. Yields aside, I do see the potential for other issues during this harvest season.
Here are my 4 main concerns in fall of 2015:
Stalk strength. Southern rust has been found in many southern states including Kentucky. Hopefully it was late enough to prevent direct yield damage, but it could cause stalk rot. There are also root issues in many fields relating to heavy rainfall and flooding. It will not take much to blow over significant acres of corn this year. Further cool and wet weather will cause more risk.
Bullish storage strategies. Old-crop corn is flooding the local market. Last year, I made a basis premium selling early corn, but this year you couldn’t give the stuff away in August, much less September. Many producers will store just as much of 2015’s new crop—either in commercial or on-farm storage. USDA will be slow to adjust final numbers, and it will be late in the season before those who stored significant amounts of grain will know if they’re correct in such a strategy.
Net income. The August USDA farm income forecast was down nearly 21% from USDA’s February estimate—a 36% decline in net farm income versus 2014. Even with the crop issues I’ve mentioned, a grain price rally will have to be very significant to counter these estimates.
Economic pressure. Pessimism regarding the global economy, a strong dollar, and slow demand won’t help commodities rebound. It will take a drastic unexpected change of events to help profitability.
Though we’re not in control of the potential upcoming challenges, we can prepare for them by being realistic. Accepting a realistic price outlook, yield potential, and net income, will help make the best decisions possible. This is a time to be conservative and prepare for risks.
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