Hart: Exports, demand could result in better '17 prices

Chad Hart, an Iowa State University Extension and Outreach economist, speaks to the audience at the ag outlook session Dec. 13 at the Youth Development Center. (Photos by Pete Temple)

With the help of increased demand through exports, Chad Hart predicts prices have a chance to improve in 2017.
Pete Temple
Express Sports/Ag Editor

     Three themes emerged from the Ag Outlook forum, on Tuesday, Dec. 13.

     First, Iowa and the nation are seeing high supply, but also high demand, in most agricultural markets, and that demand may be improving.

     Second, that exports and trade will be significant factors in most markets in 2017.

     And third, that the outlook for prices has a chance to be better than it has been in recent years.

     “There is reason for optimism,” said Chad Hart, a crop markets specialist and economist for Iowa State University Extension and Outreach.

     “The marketplace sees that demand, it believes it’s got legs, it believes supplies will slow down enough to allow prices to improve a bit.”

     Hart’s presentation, with about 150 people in attendance was sponsored by Ohnward Bank & Trust and held at the Citizens State Bank Youth Development Center.

     After a luncheon, Hart began his segment by talking about corn, which has record supply but also record demand.

     The past four years, Hart said, have resulted in “the four largest corn crops this country has ever produced, and the four largest demand years as well.”

     In order for prices to come up from the 2016 projected average of $3.35 per bushel, Hart said there are two wild cards: exports, and the potential for a weather event that could reduce supply.

     Soybeans, he said, have a similar story. Hart said optimism exists in that market because three of the nation’s largest trading partners – Mexico, Canada and China – are reducing their production.

     China in particular is important, because it buys about 60 percent of Iowa’s soybean exports.

     “The China market is critical right now,” Hart said.

     He added that president-elect Donald Trump’s recent appointment of Iowa Gov. Terry Branstad as U.S. Ambassador to China is good news for farmers.

     “Trump picked the one ambassador that China is comfortable with,” Hart said.

     With beef cattle, Hart said, there is a similarity in that the country has seen record production. But like other markets, he said, “Good demand is starting to pull us out of the hole. The worst is probably behind us.

     “We’ve got plenty of supply, but we’ve got demand that continues to grow, and that’s helping to give us an outlook of higher prices.”

     With pork, Hart said, the storyline is similar.

     “We have really great supply, and really good demand,” he said. “Supply has been ahead of demand, but here we’re starting to slow things down as well.”

     Complicating the pork market is that producers have hit the slaughter capacity line.

     “We can overwhelm the slaughter places,” Hart said. “When you hit that, it can do some really bad things to the market.”

     He added, though, that the outlook is better than it could have been, because producers are spreading the slaughter out, and because of exports.

     “We’re moving that pork,” he said. “We have a place to put it. Demand is improving, especially international demand.”

     Regarding all markets, Hart showed a series of graphs indicating that even in a rough price year, there are times of year when prices spike, and farmers need to take advantage.

     “We don’t pre-harvest market enough,” Hart said. “You should be more aggressive because you’ve got (insurance) coverage. But not enough people are.”



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