Ag Industry Receives 2 Hits

As you all know, our federal government has been on a shutdown since October 1st. This happened because members of Congress could not come to a budget agreement. The shutdown has forced about 800,000 federal employees off the job. So what impact does the government shutdown have on the agriculture industry?

Farmers are currently unable to access vital agriculture reports to make critical marketing decisions. The National Agriculture Statistics Service has stopped putting out new reports. These reports include information about supply and demand, prices, and exports. These reports are also used to set prices at the Chicago Mercantile Exchange. Feeder cattle are currently at a record high. According to the CME, live cattle and feeder cattle futures could be impacted. All website with past information have been taken down due to this government shutdown. Farmers are not able to track cattle auction prices as well. However, some USDA duties will continue through this shutdown such as meat and poultry inspections.

Since the United States Department of Agriculture is not operating, neither are local farm service agencies. This means farmers can not apply for loans, sign up for different governmental programs, or receive government checks from programs that are already enrolled in.

This shutdown occurred just at the same time our current farm bill expired. The combination of the two events will have short and long term impacts. This bill does a number of things including managing food stamps and regulating crop insurance. Many farm bill programs are funded through the whole year so the first major effects will take place at the beginning of 2014. Also, the farm bill expiration caused funding to expire for a few different conservation programs such as the Conservation Reserve Program and the Grassland Reserve Program.

The effects of the government shutdown will be different for each person and business involved in the agriculture industry. It is unclear how long this shutdown will continue. How long do you think this shutdown will continue? How is this government shutdown affecting you and your family?

The Drought Returns

Despite the record amount of rainfall Missouri has experienced this past spring, the recent heat and lack of precipitation has the area in a drought.  According to the United States Department of Agriculture, Iowa, Illinois, and Missouri are currently in a “flash drought.”  A flash drought is defined by high temperatures, cloudy days, low humidity, and high evapotranspiration rates along with lack of rainfall. This all coincides poorly with the stages of corn and soybeans.  Driving around it is obvious that these crops are nearing physiological maturity and this correlates with grain fill.  Lack of moisture at this crucial time simply means yield will be reduced.  This is ironic because of the growing conditions we had this spring which led farmers and speculators to foresee a record yields.  However, currently producers are becoming uneasy with the recent environmental factors and the current market prices.  Farmers don’t see the record yields that the speculators do and therefor believe that prices should be higher.  It is early to tell what yields will actually be, but some early reports are leaving some people optimistic.  I have heard of yields that range from 70 to 189 bushels per acre.  Not only is this a concern, but a lot of acres in Iowa didn’t get planted because of the rain.  This leads us back to the current flash drought and the effects it leaves on the acres were planted before the rains and had good growing conditions.  I find this interesting because we had an excess rainfall which led us to recoup moisture lost in the 2012 growing season. Flash forward to now and we are experiencing a lack of moisture when we really need it and what is funny is that this all happened in one growing season.   I am curious to see how the markets follow the yields as they come in this harvest season.  Do any of you have a prediction? Will the markets be volatile?

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