December 18, 2019

2019-12 PAER: 2020 Agricultural Outlook Issue

by Jayson Lusk, Larry DeBoer, Russell Hillberry, Roman Keeney, Michael Langemeier, Craig Dobbins, James Mintert, Mindy Mallory, Todd Kuethe, Nicole Olynk Widmar, Kami Goodwin, and Linda Klotz.

Welcome to our annual outlook issue of the Purdue Ag Econ Report (PAER), where we look back at last year and ahead at economic conditions for agriculture in 2020.

The past year brought a number of challenges for Indiana agriculture, weather being at the top of the
list. Rain and flooding impacted the ability to get into fields, and led to difficult decisions about whether to delay planting or take prevented planting insurance. These delays then led to a late harvest. While weather had significant effects in different parts of the state; nationwide, there were only modest improvements in commodity prices .

Looking ahead, there continues to be uncertainty in trade policy and the macroeconomic environment. African Swine Fever in China is having, and will likely continue to have, major impacts in global markets. As a result of this and other factors, global food prices are on the rise, although domestic food price inflation is projected to remain low.

In the following PAER articles, Agricultural Economics Faculty at Purdue provide insight on these and other issues, including land values, rental rates, and agricultural policy.

– Jayson Lusk
Distinguished Professor and Head of the Department of Agricultural Economics

ARTICLES WITHIN PUBLICATION:

Our Long, Slow, Steady Expansion Should Continue

December 18, 2019

By Larry DoBoer | That’s a lot of good news. Yet 2019 had its concerns. Real output growth fell back to a disappointing 2 percent, its average during this expansion, after near 3 percent growth in 2018. Recession signals flashed warnings. Manufacturing employment declined. Financial markets were unsettled. The yield curve inverted.

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Trade and trade policy outlook for 2020

December 18, 2019

By Russell Hillberry | A review on trade as well as a discussion on the President’s efforts to depart from the rules-based international trading system that has come to serve U.S. agriculture so well.

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2020 Outlook: Farm Policy

December 18, 2019

By Roman Keeney | Farm policy was once again dominated by ongoing trade disputes. Beginning in 2018, increased tariffs and reduced demand for export agriculture have exacerbated financial conditions in the sector and prompted a series of ad hoc transfers to farm operations based on expected damage from the trade war.

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Food Price Inflation is on the Rise Globally but Steady at Home

December 18, 2019

By Jayson Lusk | It has been more than two years since prices rose at this pace. The recent global food price spike is primarily caused by rising meat prices, which have increased more than 10% in each of the last two moths relative to the same months in 2018.

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Farmland Market Outlook for 2020

December 18, 2019

By Todd Kuethe & Craig Dobbins | Despite the high uncertainty related to farm returns and interest rates, many still see farmland as a good long-term investment. Optimists point toward the long-run earning (revenues minus costs) potential for farmland as a way to justify higher expected farmland prices.

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Increase in Indiana cash rent seems unlikely in 2020

December 18, 2019

By Craig Dobbins & Todd Kuethe | Since the significant decline in ethanol production growth and a downward adjustment in cash rents from 2014 to 2016, Indiana’s cash rent market has remained fairly stable (2016 to 2019) across all three farmland qualities, as shown in the following figure. While cash rents have been fairly stable, variations in other items have provided producers continued challenges.

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More milk, consolidation continues, but still an improved 2020 price outlook

December 18, 2019

By Nicole Olynk Widmar | Given the challenging market situation facing dairy producers, the ending stocks for dairy products have been closely monitored and heavily reported on in 2019. September ending stocks (as reported in November) were significantly (159 million pounds on a milk-fat basis) higher for 2019 than they were a year earlier (Sept 2018).

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2020 Purdue Crop Cost & Return Guide (Late November Comments)

December 18, 2019

By Michael Langemeier & Craig Dobbins | The 2020 Purdue Crop Cost and Return Guide gives estimated costs for planting, growing and harvesting a variety of crops, as well as estimated contribution margins and earnings. Margins will be tight again in 2020, increasing the importance of carefully scrutinizing input and crop decisions.

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2020 Corn Price Outlook

December 18, 2019

By James Mintert & Mindy Mallory | An early look at crop budgets for 2020 indicate a shift back towards corn is likely, suggesting that we will push U.S. corn acreage back above 90 million acres. Combined with a return to trend line yields for 2020 this implies a substantial boost to U.S. and world corn supplies is likely, pushing the corn carryover up substantially and putting pressure on prices.

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2020 Soybean Price Outlook

December 18, 2019

By James Mintert & Mindy Mallory | Looking ahead to 2020, look for a large increase in acreage compared to 2019, assuming a return to more typical weather. A return to a trend line national average yield of about 48 bushels per acre combined with a planted acreage of 85 million acres would boost 2020 production by approximately 500 million bushels compared to this year.

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RELATED RESOURCES

Fall 2020 Crop Outlook Webinar

September 11, 2020

Recorded September 11, 2020 | Purdue agricultural economists Michael Langemeier and James Mintert discussed USDA’s September Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports.

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Conventional and Organic Enterprise Net Returns

September 2, 2020

This article uses FINBIN data from 2015 to 2019, to compare crop yields, gross revenue, total expense, and net returns for conventional and organic alfalfa, corn, oats, soybeans, and winter wheat.

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Pork Export Strength Reliant on China

August 21, 2020

World pork markets have been disrupted the last couple of years, first by African Swine Fever (ASF) in China followed by a U.S.-China trade dispute and then, in 2020, by the coronavirus.

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UPCOMING EVENTS

October Corn & Soybean Outlook Update

Join us Friday, October 9 at 3:30 p.m. (EDT) for an updated corn and soybean outlook immediately following release of USDA’s October Crop Production and World Agricultural Supply and Demand (WASDE) reports. Registration is free but necessary to receive the link to join live or get notice of the webinar recording.

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Financial Management – Statements & Analysis

September 23, 2020

A series of financial management articles that examine financial statements and financial analysis. Articles in this series discuss the balance sheet, the income statement, the sources and uses of fund statements, a statement of owner’s equity, and benchmarking. A case farm in west central Indiana is used to illustrate and describe these financial management statements and analysis.

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2020-07 Purdue Agricultural Economics Report (PAER)

July 23, 2020

The 2020 Purdue Farmland Value and Cash Rents Survey suggests that farmland prices across Indiana improved since the June 2019 survey; however, many of those gains occurred between June and December 2019. Since then farmland prices have declined modestly.

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Coronavirus Food Assistance Program Application Details

May 27, 2020

USDA’s Farm Service Agency is accepting applications for the Coronavirus Food Assistance Program (CFAP) from producers who have suffered losses. Indiana FSA Director Steve Brown and staff join Jim Mintert for a discussion on eligibility requirements, payment rates and application details of the 2020 CFAP program.

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