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Serving: United States

Closing out 2020 with cautious optimism for the future

12-29 goals in 2021.jpg
There is certainly a renewed sense of hope that agriculture has turned the corner.

In an attempt to return to normal, we took some time off to visit family and friends last week. In true 2020 style, you won’t find any evidence on social media. Nevertheless, it was a good week, we had fun.

As we close out the year, there is one major highlight: the market rally. It is a rare event when commodity prices rise during harvest. While on ‘vacation’ I had the opportunity to flip through a few farm magazines. It is apparent that optimism is out there. We long to see the American farmer turn the page that we’ve been stuck on for several years.

Rally realities

One thing that those outside agriculture (even close family and landlords) don’t understand is that an upturn in the market doesn’t necessarily have an immediate impact on farmers. Often times market plans and cash flows are made months in advance in an attempt to mediate risk. If you’ve already sold the beans at $9.50 in order to make the rent payment, you don’t get to sell them again at $10, $12, or even $13!

When media reports $13 beans or $4.50 corn, that is also misleading to many. Those values are only at a specific point in time; often that is only for prompt delivery (of unpriced bushels in the bin or stored at the elevator).

Right now, as we budget for 2021, bean prices for the 2021 crop are in the $10.70-10.80 price range. Corn prices are in the $4.20- $4.30 range. So, while the it feels good to say thirteen dollar beans, at the current time, the 2021 cash flow projection is realistically using a $10.75 price. Also don’t forget we have no idea what yields the 2021 weather will allow.

I’m not trying to downplay the turn in the market. It has definitely been a welcome feature in a year with few bright spots. As always when I write, it is my goal to provide perspective and insight into the area of agriculture that I call home. Rightfully, as we welcome 2021, there is certainly a renewed sense of hope that agriculture has turned the corner.

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