2012-12 PAER: Agricultural Outlook for 2013
December 1, 2012
The 2012 drought had very different impacts on incomes for crop versus animal producers. Corn yields for the state were down 39% from trend and soybeans were down 9%. But many crop farms were financially compensated for their production losses by much higher prices for what they did raise, and by record large indemnity payments from Crop Insurance.
Unfortunately, animal producers faced record high feed costs which thrust total costs above revenues resulting in heavy financial losses in the last-half of 2012 which will extend well into 2013.
Weather forecasts for early next year favor the Eastern Corn Belt for a return to more abundant moisture. At the same time those forecast keep the likelihood of dryness at a high level for Western Corn Belt states and the Great Plains. A return to more normal yields in 2013 will lower prices of major crops from their drought related highs, but those prices appear to be well above costs of production. This means the cropping sector can continue to look forward to strong returns in 2013 that will support even stronger land values and cash rents.
Lower corn, soybean meal, and forage prices will help the animal industries return to profitability as well once forages become more abundant next spring, and grain crops reach maturity next fall. While income prospects appear to be favorable once again in 2013 there are uncertainties and possibilities of a wide range of outcomes that you will discover as you read our outlook articles.