News Update
December 21, 2011
Producers Need to Watch Margins During Economic Uncertainty
Farmers will need to manage margins closely in 2012 as commodity prices fluctuate with U.S. and European economic developments, according to a Texas AgriLife Extension Service economist.
Jason Johnson, AgriLife Extension economist from Stephenville, told producers at the recent Texas Plant Protection Association conference in Bryan that fundamental data suggests strong prices for agricultural commodities in 2012.
Drought, which cut back storage stocks of many major commodities, coupled with rising demand for food to feed a growing global population, suggest a continued bull market for crop prices heading into the new year.
Johnson said U.S. corn stocks are the tightest since 1996.
“This bodes well for supportive prices going into 2012,” he said. “What happens is scarcity brings out the fear and greed factor in everyone. There’s high volatility right now with regards to the commodity.”
During 2011, Johnson said, the December corn futures contract price fluctuated from approximately $4 per bushel (bu.) to above $7 per bu.
“Managing that variability becomes the challenge,” he said.
To manage risk, Johnson said, the real safety net for farmers is crop insurance. Producers need to look at what is the guaranteed dollar per acre with various crop insurance alternatives and determine “the upside potential from there.”
“Managing input prices is so important since fertilizer prices have tripled over the last 10 years,” Johnson said. “You need to manage margins. Marketing the commodity is only half of the equation. Rising input costs can eat away any expected profits if equal attention is not paid to controlling them.”
Johnson also focused on the outlook for energy heading into 2012. He said West Texas Intermediate crude oil prices are projected at $98 per barrel and natural gas prices are forecast to increase by 3%.
“Ultimately, the forecast for agricultural commodity prices translates into real estate values,” he said.
Johnson said the Dallas Federal Reserve Bank conducts a survey of agricultural lenders. Recent data indicated Texas cropland increased by 5.3% compared to the previous year “in terms of value,” he said.
“There is lots of investment going into crop real estate,” he said. “Hedge funds are putting money into this because of increasing commodity prices and diversification away from other asset classes like bonds, stocks and precious metals.
“What I encourage is developing and sticking to a marketing plan. Pick some times of the year that would be advantageous to market insured crops to protect yourself from rising input costs and other variability in the marketplace.”
Beef 4 Battle Sends Beef Sticks
to Troops to Arrive for Christmas
Afghanistan troops will get a little extra this year for Christmas thanks to a newly formed Oklahoma coalition called Beef 4 Battle.
Oklahoma State University’s Robert M. Kerr Food & Agricultural Products Center is participating in the project of sending shelf-stable beef sticks to Afghanistan troops.
George Huggins, a retired engineer and World War II veteran, had the idea to provide something nutritious to eat for men and women of the Oklahoma National Guard unit deployed in Afghanistan.
“I recall my days in the military when something good to eat was not readily available,” Huggins said. “There were times when every soldier would have welcomed good meals or even snacks. These beef sticks sent to the troops would be placed in their backpacks to eat while on patrols in the region, which could last from one to five days.”
Although Huggins had the idea, he wanted the support of the FAPC to help move the project forward and solicited help from Jim Brooks, FAPC manager of business and marketing services.
After researching the history of the 45th Infantry Division and its many calls to combat, the name Beef 4 Battle was selected and a coalition was formed to help support the project.
The Beef 4 Battle Coalition includes Thad Doye with the Oklahoma Farm Bureau; Brooks with the FAPC; Burt Buitenhuis, owner of Chickasha Meat Co.; Larry Schwab with Schwab Meat Co.; and Huggins.
The coalition established a fund for donations through the Farm Bureau’s Oklahoma Farm Foundation, where farmers and ranchers can donate cattle for the beef sticks or monetary contributions can be made to support the manufacturing and shipping costs for the project.
The first shipment of Beef 4 Battle beef sticks was sent on Nov. 23 to arrive for Christmas.
For more information about the Beef 4 Battle Coalition or to donate, call Doye at 405-523-2307. Financial contributions also can be mailed to the Beef 4 Battle Coalition at 2501 N. Stiles, Oklahoma City, OK 73105.
Checkoff Publishes White Paper on Beef Tenderness
The beef checkoff recently published a white paper titled, “Animal Age, Physiological Maturity, and Associated Effects on Beef Tenderness,” by J. Daryl Tatum, Colorado State University.
The purpose of this review was to examine and summarize existing scientific information concerning production-level effects on physiological maturation processes in cattle and examine the relationships of these effects to the occurrence of advanced beef carcass maturity characteristics.
Click here to read the full white paper.
For more information about your beef checkoff, visit MyBeefCheckoff.com.
Former EPA Employee to Discuss Proposed Regulation
The U.S. Environmental Protection Agency (EPA) has proposed a rule that will enable the agency to regulate Concentrated Animal Feeding Operations (CAFOs) on a national level. Sally Shaver, former U.S. EPA associate counselor, will discuss the impact the new regulation may have on food prices and farm incomes at the Michigan Ag Commodities Educational Expo (MACEE) Jan. 26 in Lansing.
The proposed rule will enable the EPA to monitor manure quality, the transferring of manure, available acreage for land application and application of manure on a national scale, all of which is aimed at preventing water runoff and protecting water quality.
The EPA has proposed two options regarding which CAFOs would be required to submit information to the agency. Option one would require every CAFO to report the information to the EPA unless the state chooses to provide the information on behalf of the CAFO. Option two would require only CAFOs that fall within focus watersheds — areas that have been identified as having water quality concerns associated with CAFOs — would be required to report information to the EPA.
Option two would identify focus watersheds based on water quality. Water quality would be based on nutrients, pathogens, total suspended solids and organic enrichment.
Shaver’s presentation will be a part of a series of speakers including Michigan State University Extension specialists during the MACEE. A variety of agriculture topics will be discussed and professionals from all sectors of agriculture are invited to attend the one-day conference.
The Michigan Ag Commodity Educational Expo will take place from 9:30 a.m. to 3 p.m. Jan. 26, 2012, at the Lansing Center in Lansing, Mich. The registration fee is $75. You can register electronically by visiting http://bit.ly/MACEE, or you can register by contacting Megghan Honke at honkemeg@msu.edu or 517-353-3175, ext. 229.
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