The biggest concern facing most regional farmers right now is prices. After a four-year high, which peaked in the summer of 2012, crop prices dropped, some by as much as 60 percent by this spring’s planting.
From peak prices to this spring’s planting, soybean prices dropped 50 percent, spring wheat prices dropped 44 percent and corn prices dropped 62 percent, said Frayne Olson, a North Dakota State University Extension crops economist and marketing specialist.
Lower grain prices are hard on growers, manufacturers and implement dealers, Olson said. But the industry as a whole does not suffer when crop prices fall.
“When we talk about agriculture as a whole, in this region we tend to think primarily about crops, but we can’t forget about the livestock sector, either, and they’re doing very well right now,” Olson said.
Travis Maddock, an agricultural and food consultant who also has a ranch in Benson County, N.D., said when grain prices decrease, the profitability of cattle feeding rises. And when cattle feeders are more profitable, they can spend more on feeder calves, increasing profits for cow/calf operations.
“Definitely a big part of some of the record prices we saw last year and this year is the reduction in grain prices,” he said.
Feeder cattle prices dropped from 2005 to 2009 as corn prices rose, said Tim Petry, NDSU Extension Livestock Marketing Economist. Due to the lower prices and drought in parts of the country, cattle producers downsized herds from 2006 to 2013.
Prices started rising again in 2010, and Petry said there were unprecedented price increases throughout 2014 due to the short supply, lower corn prices, and beef producers starting to increase herds again, meaning fewer cows were slaughtered.
One of the reasons crop prices are low, Olson said, is growers have produced a lot. On the plus side, he said that means companies like elevators, processors and exporters that buy product from farmers have more options.
Sinner Bros. & Bresnahan is a family-owned, large-scale agribusiness based in Casselton, N.D., that deals in crops, seed and cattle. Bob Sinner, the company’s owner partner and president, said there are things farmers can do to improve bottom line, such as producing specifically for the food industry, but that takes more time and attention to detail.
“When we came into this crop season, we were looking at large carryover stocks of most crops,” he said. “The only way that you’re going to see a big movement in price would be for somewhere, either in the United States or other parts of the planet, to have a disaster.”
Readers can reach Forum reporter Tracy Frank at (701) 241-5526 or tfrank@forumcomm.com.