Davin Althoff, Director of Marketing and Communications for the Missouri Farm Bureau Federation, gave a presentation on Agriculture Market Outlook at the annual meeting of Atchison County Farm Bureau. (Submitted photo)

Submitted by Matt Schlueter

The Atchison County Farm Bureau members held their annual meeting Wednesday, September 4, at the Velma Houts Building in Rock Port, Missouri.

After enjoying a pulled pork dinner prepared by the Farm Bureau and served by the Rock Port FFA, members participated in a brief business meeting to approve annual financial reports, approve the appointment of officers and board members, and to vote on policy resolutions to forward on to the upcoming state annual meeting in December.

The main program for the evening was a presentation on “Agriculture Market Outlook” by Davin Althoff, Director of Marketing and Communications for the Missouri Farm Bureau Federation. Davin and his family live near California, Missouri, where they operate Althoff Farms, a cow/calf and stocker/backgrounding operation in addition to row crop farming. Prior to joining Farm Bureau in April of 2022, Davin’s career included tenure with the Missouri Beef Industry Council, the Missouri Department of Economic Development and the Missouri Department of Agriculture.

Davin’s presentation outlined some of the factors affecting our current market situation and presented data and trends that gave some insight into where the next couple years could take us

He began by noting the impact of weather, more specifically the drought much of the U.S. has been experiencing since 2022 and 2023. This drought has affected row crop farms, but has also had a severe impact on the beef industry, causing a steep decline in cow herds and feeder population. Fortunately, most of Missouri and other neighboring states in the Midwest were out of drought conditions by July 1 of this year, though much of the US still remains in some level of drought.

Production costs have had the most impact on agriculture of the past few years. After high cash receipts and increased production costs in 2022, many operations have seen cash receipts decline, but production costs have remained high. Inflation and higher interest rates have placed a burden on operations and producers try to manage operating loans, higher input costs and lower revenues. Also impacting the markets and interest rates are the results of higher monetary supply from Covid and changes in energy policy that have caused higher energy costs.

Though much of the Midwest has experienced some level of drought for the past few years, 2023 was a record corn crop and a large, but on trend soybean crop.

For corn, 2024 is expected to be another high yielding crop which will have a significant impact on ending stocks and carryout into next year. Lower and flattening export demand and increasing South American grain production has also affected domestic markets. Ethanol usage over the next ten years is expected to decrease as more EV vehicles enter the market, which will leave more corn to find a market for. Feed usage is also down due to liquidation in the cattle, swine and poultry industry due to drought and higher input costs over the past few years. Higher grain and forage prices have been a factor in liquidation.

Soybeans will have a large crop in 2024 due to increased planted acres. Pressure from South American production also affects domestic soybean markets and export demand. A large ending stocks prediction for 2024 provides additional market pressure for soybeans. Over the past 40 years, the US world market share in soybeans has decreased from 78% to 35%, providing increased incentive and need for other uses such as feed alternatives, biodiesel and sustainable aviation fuel.

The cost of production has also reduced herd inventory in the swine industry since 2020. However, producers have been able to increase pigs per litter over that time, relieving some demand pressure, even with a lower breeding herd. Currently pork prices are lower that 2022 and 2023 with expectations for an upward trend soon. Many in the market are watching to see what impact California’s Proposition 12 (which went into effect in early 2024) will have on the market. This proposition outlines specific growing requirements for meat marketed to and consumed in California, which accounts for 15% of U.S. pork consumption.

Cattle are also experiencing low herd populations, currently the lowest since 1962. The impact of drought conditions, inflation and increased input costs have put pressure on producers. On the bright side, product continues to be available as producers are able to continuously improve production efficiently with a lower herd inventory. Providing more product for packers, per head has been a trend for over a decade. Currently, the beef herd is not expected to see an increase until 2026, due to a low feeder cattle supply. This reduced supply is a result of producers decreasing their herds by culling cows and placing heifers on feed while production costs are high.

In these times, Davin stressed the importance of paying close attention to your business plan. Producers have to know the break-even costs within their operations. He said that with the current costs of production, he revised his break-even spreadsheet on a monthly basis within his cattle operation.

He also stressed the importance of managing risk through using risk management tools, finance incentives, production contracts and the like. Knowing what variables you can control and making decisions around them are important. We can’t control the weather or the markets, but can control when we upgrade equipment and accrue expenditures that are not essential to our operations.