By Nikki Chamberlain, Vice President of Lending Strategies
It is spring and planting season is here! As of April 10, corn planting in Missouri is about 10% complete and should hit about 80% in the next 30 days. Drought across the state has decreased, but there are still parts of the state dealing with severe dry conditions. The 2024 Planting Report showed that corn acres are going to be down about 3.6 million from last year while soybean acres increase about 4 million. Total planted acres decrease slightly in 2024.
The April World Agricultural Supply and Demand Estimates (WASDE) Report was released April 11, 2024, and showed little change from March. Ending corn stocks are quite a bit higher than they were last year which has helped push the corn prices down 28% from this time in 2023. Soybeans follow the same story with higher ending stocks and prices that are 12% lower than last year. Markets have reset with ending stocks being rebuilt. Right now, there is no compelling story to drive prices higher. Most likely any movement in prices from now until November will be driven by weather events.
The WASDE report held South American corn and soybean production mostly unchanged keeping Brazil’s levels unchanged from last month. This was a surprise to the market because CONAB, Brazil’s equivalent of the USDA, made cuts to their domestic corn and soybean crop estimates due to hot, dry weather impacting yields. Brazil’s bean harvest is about 80% complete and their second corn crop is nearly planted. All eyes will continue to be on Brazil as they finish harvest.
Cattle remain a bright spot in Missouri. The week ending March 22, 2024, showed some of the highest cattle market prices across the state although prices have been weaker in the last two weeks. Cattle on-feed numbers remain higher than last year but supplies outside the feedyards continue to decline and herd size is thought to be about 4.5% lower than last year. This tight supply could be felt more in the second half of the year when the number of on-feed cattle starts to decline, which should help keep cattle prices at a higher level.
While highly pathogenic avian influenza virus (HPAI) has been detected in some dairy cows, Missouri cattle have not been impacted. As of April 12, 2024, the USDA has confirmed HPAI in eight states: Texas, New Mexico, Kansas, Michigan, Idaho, North Carolina, Ohio and South Dakota. The USDA has not issued federal quarantine orders at this time, but 17 states have restricted importations from states where the virus has been detected. Unlike chickens and poultry where the whole flock is depopulated, the infected cows are isolated until they have recovered and can be returned to the herd. At this point, it is unclear whether this outbreak will affect exports of dairy products but there could be concerns outside the US about quality of the products.
Gross Farm Income is expected to be lower this year due to lower grain commodity prices but still above the 20-year trend line. We are coming off three years of strong earnings that have increased land values and allowed farmers to build working capital and equity, so most farmers are in a position to withstand some adversity. Crop inputs remain at higher levels which means 2024 is going to be all about monitoring those margins.
Nikki Chamberlain is the Vice President of Lending Strategies for the FCS Financial Credit department. She has more than 20 years of credit experience at FCS Financial and Capital Farm Credit in Texas.
