Ag Report: low commodity prices could spell lower incomes in 2016

ISU Extension says farmers need to take a serious look at their business

SIOUX CITY, Iowa - In 2015, farmers produced a near record harvest, but unfortunately, they're are also facing low commodity prices, which in turn means low farm income.  
 
According to Iowa State University Extension grain marketing specialist, Chad Hart, 2016 doesn't show much improvement .  Hart says farmers face some challenges for the year ahead, and they need to ask themselves some serious questions.
 
"What farmers are looking at right now is,...one, I'm going to say, you know, farmers are looking at their marketing plan.  Thinking about if we hold the crop, we have it in storage right now... My question to them is, ok then, do you have price floors put in place?  Have we hedged that crop using either the futures market?  Have we got the put options that maybe create a price floor, or what is our risk management strategy for that crop that's in the bin?"  
 
Hart says farmers will try to cut input costs as they plan for the year ahead.
 
"As farmers look at the price outlook there, I would say if we got the crop in the bin, that's a farmer that is looking at the potential holding on to this crop as we get into the spring time looking for those weather rallies that we tend to see right around planting time.  And then farmers are looking at how they can control their costs.  Looking at my fertilizer decision...my seed decision...as I look at building up that operating loan, how am I best applying that in order to keep my costs as low as I possibly can, given that prices are as low as they are today."
 
Hart does believe grain exports may pick up in 2016, which may give farmers some reason for optimism. He says even though exports have taken a step back, and although the dollar has been weaker, he believes the overall demand for grain is still strong, which in turn may give a boost to prices during the spring and heading into the summer.  
 
Iowa State University Extension has hosted several Crop Advantage meetings throughout northwest Iowa, and if farmers missed those, they have one more opportunity to attend.  The last Crop Advantage meeting is scheduled for next Tuesday, January 26 at the Le Mars Convention Center.
 

 


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