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Corn+Soybean Digest

Profits Squeezed in 2009

As 2008 came to an end, the pendulum in agricultural prices swung too far to the downside — just as it swung too far to the upside in June 2008. As a result, it's my feeling that agricultural incomes will be more positive in 2009 than many are projecting. Here are some specific thoughts:

  1. GRAIN PRICES WILL be steady, at least throughout the first quarter and possibly the first half of the year. February's prices are the most important of the year because for the first time ever, many farmers are waiting to make their planting decisions based on the average prices recorded in February, which determines crop revenue payments. If corn prices are high (over $5 in December futures) in February, then acreage will be up and prices will be down by harvest. If prices are low (average under $4), then acreage will be down and prices will be higher going into harvest. The year's trend will hinge on February average prices.

  2. LIVESTOCK PRICES WILL be strong. For the first time in my life, poultry production will actually decline in 2009, as will beef and pork production. Protein demand worldwide will stay strong — just not growing in leaps and bounds like it has in the last three years. As a result of better-than-expected demand and lower supplies, this will be a good year for live-stock producers.

  3. COTTON PRICES WILL also continue higher. The world recession has already been discounted into cotton prices.

  4. INPUT PRICES WILL be sharply lower. Fertilizer has already dropped by more than 50%.

  5. FARMLAND VALUES WILL level off. From the peak in June, most areas have already declined by 10-15%. That's all you will likely see. Debt levels are low and consequently land prices will stay strong.

  6. MANAGEMENT AND marketing will suddenly become hotter topics. This past year has proven to everyone (or at least it should have) the importance of making sound marketing decisions. From the top to the bottom in corn ($4.50/bu.) on a 2,000-acre farm that raises 200 bu./acre, the loss in income was $1.8 million dollars. This would get my attention.

There will be some very good marketing opportunities in 2009. Just have your marketing gun loaded and be ready to pull the trigger. February sets the stage for the year.

Richard Brock is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report. For a trial subscription and information on Brock services, call 800-558-3431 or visit

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