2011-10 PAER: Agricultural Outlook for 2012

October 15, 2011

2012 Agricultural Outlook

The Indiana agricultural economy remains strong in 2011. Even though yields were sharply reduced by a spring that was too wet and a summer that was too hot and dry, prices for corn and soybeans will be high enough to provide near record revenues for the state’s two major crops. The driving demand forces for crop agriculture are expected to remain favorable for 2012. These include: the continued growth in corn use for ethanol; the continued expansion in soybean purchases by China; and a general weakness of the U.S. dollar, which tends to strengthen commodity prices. The biggest concerns will arise from the struggling economies in the U.S., Europe, and Japan. The collapse of world economic growth in late 2008-2009 sent commodity prices into a tailspin. For that reason we open with a discussion of the potential for a double-dip recession in the U.S. in the coming year. Weak economic growth is a formidable threat to high commodity prices.

The bottom line for the crop sector is that high incomes are being bid into land values and cash rents. We see that trend continuing for 2012. Thus, not only are crop farm incomes high, but equity increases from land appreciation are large as well. The Indiana livestock sector generally had a positive financial year in 2011 as they reduced per capita supplies sufficiently to garner higher prices for their animal products. Early indications of a modest 2012 expansion in animal output puts those returns in jeopardy, depending on how high feed costs are.

  • U.S. Economy: Are Opportunities Greater Than Threats?
  • Farm Policy
  • Record Agricultural Trade
  • Food Prices Keep Moving Higher
  • Beef Cattle Numbers Keep Dropping
  • Hog Profits Depend on Corn Price?
  • Butter Softens the Squeeze of Dairy Farm Margins
  • Crop Input Prices Surge
  • What to Plant in 2012? More Corn!
  • Small Corn Crop Means High Prices
  • Soybeans Supplies Tighten
  • Cash Rents Head Upward
  • Farmland Values Have Strong Base

Articles in this Publication:

2012 Agricultural Outlook

U.S. Economy: Are Opportunities Greater Than Threats?

Farm Policy

Record Agricultural Trade

Food Prices Keep Moving Higher

Beef Cattle Numbers Keep Dropping

Hog Profits Depend on Corn Price?

Butter Softens the Squeeze of Dairy Farms Margins

Crop Input Prices Surge

What to Plant in 2012?—More Corn!

Small Corn Crop Means High Prices

Soybeans Supplies Tighten

Cash Rents Head Upward

Farmland Values Have a Strong Base

Latest Articles:

Indiana Farmland Prices Grow at Record Pace in 2022

August 10, 2022

Indiana farmland prices grew at a record pace between June 2021 and June 2022, according to the recent Indiana Farmland Value and Cash Rent Survey. Statewide, the average per acre price for top quality farmland increased by 30.9% to $12,808; average quality farmland increased by 30.1% to $10,598; poor quality farmland prices increased 34.0% to $8,631. Across all quality grades, farmland prices exceeded the previous highs set in 2021.

READ MORE

Trends in Farmland Price to Rent Ratios in Indiana

August 10, 2022

A standard measure of financial performance most commonly used for stocks is the price to earnings ratio (P/E). A high P/E ratio sometimes indicates that investors think an investment has good growth opportunities, relatively safe earnings, a low capitalization rate, or a combination of these factors. However, a high P/E ratio may also indicate that an investment is less attractive because the price has already been bid up to reflect these positive attributes. This paper computes a ratio equivalent to P/E ratio for farmland, the farmland price to cash rent ratio (P/rent), and discusses trends in the P/rent ratio.

READ MORE

Farmer optimism about short-term US farmland values weakens

August 10, 2022

Farmers purchase the majority of US farmland. The 2017 USDA Census of Agriculture reports more than 60% of farmland is owned by farmers. Farmers’ farmland value expectations are an important driver of farmland prices.

READ MORE

Delivered right to your inbox

The Purdue Agricultural Economics Report is a quarterly publication written by faculty and staff from the Department Agricultural Economics at Purdue University.

By joining this mailing list, you will receive an email when a new publication is released. This mailing list is kept solely for the purpose of sharing the report and is not used for any other purposes.