Hosted by Sutton Bank at the Attica Fairgrounds and presented by Ohio State University Extension and OSU’s Department of Agricultural, Environmental and Development Economics, the meeting also featured a farm bill update and information about China’s role in the agricultural economy.
During his overview of the corn, soybean and wheat markets, Roberts said the need for soybeans is greater than the need for corn in the next growing season. That’s the cause of soybean futures prices in the $10-per-bushel range.
“Corn can afford to lose a few acres because we’ve got a buffer,” he said.
Corn prices are being driven by demand from the ethanol industry, he said.
However, higher-than-usual wheat prices are different story.
“There’s a fundamental difference in what’s driving the markets,” Roberts said. “Corn and soybeans are being pushed by demand. Wheat is being pushed by supply.”
Poor growing seasons in several wheat-growing countries have resulted in less wheat being available.
While farmers right now are enjoying a higher income than normal, he said it won’t last forever. Within five years, he said income levels will stabilize and revert to those of past years because the price of inputs will catch up with higher profits.
“There’s at least another year or two to build a better balance sheet,” he said, before the economy adjusts.
As for marketing this year’s crops, Roberts recommended watching prices this winter.
“Prices tend to peak in February, maybe early March, and decline after that,” he said.
But he recommended not contracting too far into the future.
“Your biggest worry is you don’t about (the future cost of) your inputs,” Roberts said.
During his farm bill update, OSU ag economist Carl Zulauf said there’s a 75 percent chance Congress will pass a new farm bill before April 1 and a 25 percent chance the old farm bill will get a two-year extension.
“The earliest that the farm bill could be passed is January, more likely March,” Zulauf said. “A presidential veto is a possibility for both funding and farm bill program reasons. The odds are higher than normal that that will in fact happen.”
The House passed its farm bill in July and Zulauf said the Senate version was still stalled.
However, later in the week after Zulauf’s update, Senate committees broke their month-long gridlock over amendments and moved the farm bill to the Senate floor.
At last report, voting was to begin Tuesday.
After the Senate passes its version, there must be a conference between the House and Senate to work out their differences.
Zulauf said the House version is similar to the current farm bill with some changes, while the Senate seems to be rethinking the whole process.
He said similarities between the House and Senate versions include:
* Spending increases for feeding programs, conservation, bioenergy, fruits and vegetables, sugar and dairy.
* Farmers would get to choose among two types of support programs - price based or revenue based.
* The elimination of advanced payments.
* Payments limits, depending on income levels.
* More prominent crop insurance provisions.
* Provisions about organic farming and programs for beginning and socially disadvantaged farmers.
* Little attention to issues suggested by the World Trade Organization.
Zulauf said a few of the differences include:
* The role of the Environmental Quality Incentive Program versus a working land program (similar to the Conservation Security Program).
* Non-traditional forms of disaster assistance in the Senate version.
* Types of revenue programs. The House version includes supports similar to the current counter-cyclical program, but the Senate is favoring the Average Crop Revenue program, an entirely new approach originally proposed by Zulauf.
Ian Sheldon, an Andersons professor who has been studying the Chinese economy, reviewed his work regarding China’s role in the U.S. trade deficit.
“China could surpass the U.S. as the largest economy within the next 15-20 years,” he said.
The Chinese economy has been growing by 10 percent each year since 1978, which he described as “a phenomenal rate.” The country is now the fourth-largest world economy and the third-largest trader.
Sheldon said there’s concern the Chinese leadership is manipulating its form of currency, the yuan, to prevent it from gaining the value is should have in relation to the dollar.
“However, revaluation of yuan would probably benefit China more than the U.S.,” he said.
Despite its growth, Sheldon said the Chinese economy is not balanced. Wages still are depressed and there is a great inequality in income between the rich and the poor. There also is regional inequality, with most growth happening on the coast, and the large industrial base is damaging the environment.