Home News Crop and Animal Ag Profit Pictures Doing a Flip Flop

Crop and Animal Ag Profit Pictures Doing a Flip Flop

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Hurt June 14 outlook

Chris Hurt-14 TourThe coming years should solidify a flipping from great row crop profitability to great animal agriculture profitability, according to Dr. Chris Hurt, Purdue Extension ag economist. Hurt provided an updated outlook at the conclusion of this week’s Purdue Farm Management Tour in Spencer County. He said the last 6 to 8 years have been great for crop farmers while livestock profits have been depressed.

“Now what we’re seeing is a transition moving from those high grain prices, high feed prices, back to more moderate prices,” he told HAT. “What that means is feed prices come down at a time when we have liquidated a lot of our animals, we have low inventories on cattle, our pork we’re seeing PEDv problems there to reduce the population of hogs, and relatively small broiler supplies.”

Hurt projects big profits in animal ag not just this year, but for multiple years, effectively ushering in a new era. This new era could include below $4 corn in Purdue models based on the most recent USDA crop ratings.

“That would project out on our models to about 168 bushel corn. I think that’s why we’re seeing the futures market so weak for new crop Chris Hurt Outlookcorn, and as we look back historically we’ve seen corn futures here in the last year get down in the range of the lower four dollars. I think if we continue to see this crop come on we will be seeing some numbers of new crop bids starting in that high 3 dollar range.”

But he adds it’s too early for the market to be convinced of that kind of crop coming in since we haven’t yet seen what kind of summer weather adversity might set in. Soybean prices are also facing the prospect of a huge 2014 crop.

“We’ve got beans that have had new crop futures up around the $12 mark, a little over $12. Those could very quickly I think move on down towards the $11 mark, or at least $11 cash bids as we get into the fall. I think probably those who don’t have as many new crop beans sold as they wish still have an opportunity to do some catch up, but that could fade pretty quickly if this crop looks favorable.”

Hurt says the old crop futures could also tumble down to the $11 range.

Hear more in the HAT video above.