2011 Ag Year In Review
Category: Farm Management
As we reach the end of the year, it is a good time to reflect on what happened agriculturally in the region in 2011. Following are some highlights regarding crop production, grain prices, crop input costs, and livestock profits for 2011 ……
Crop Production --- 2011 will be remembered as a crop year with weather extremes and highly variable crop conditions in many areas of Minnesota. The year started out with later than normal corn planting in most of the State, with little or no corn planted in April in many areas. Cooler than normal temperatures, and above normal rainfall, existed during the early portions of the growing season. The last half of the growing season saw above normal temperatures, and way below normal precipitation levels in most areas. The very warm, dry weather pattern lead to rapid development, maturity, and dry-down of the 2011 corn and soybean crop. Many areas of Southern and Western Minnesota were impacted by the early killing frost that occurred on September 15.
In most areas of Southern Minnesota, the 2011 harvest was highly variable, mainly due to the erratic weather conditions during the growing season. Whole field corn yields generally ranged from 140-180 bushels per acre, while whole-field soybean yields were mostly in a range from 35-50 bushels per acre, with large variations occurring, sometimes on the same farm, or in the same township. Some whole-field yield levels were even lower in areas that were hard-hit by late Spring planting, severe storms, the very dry late season weather pattern, or the September frost. Some higher yields existed in Southeast Minnesota, which had a bit more favorable growing conditions late in the growing season.
The good news with the 2011 corn harvest was the dryness of the corn and the quality of the corn at harvest. Most of the corn harvested in Southern Minnesota in October was at 13-17 percent moisture, meaning it could go directly to farm grain bins without additional drying, or could be hauled to grain warehouses with little or no price dockage for excess kernel moisture. Most of the 2011 corn crop was harvested with a test weight of 57-60 pounds per bushel, which is above the standard test weight of 56 pounds per bushel. Based on the latest Crop Report, USDA is estimating the 2011 corn yield in Minnesota at 160 bushels per acre, which is well below Minnesota’s record average corn yield of 177 bushels per acre in 2010. USDA is estimating the 2011 Minnesota soybean yield at 40 bushels per acre, which is also well below the State record soybean yield of 45 bushels per acre, set in 2010.
Very Dry Conditions --- Most of Southwest and South Central Minnesota are now listed as being in a “Severe Drought”, with nearly the entire State categorized as “Abnormally Dry”. The University of Minnesota Research Center at Waseca only received 2.52 inches of rainfall in the four-month period from August to November, 2011, compared to a normal precipitation amount of 12.59 inches during that period, which is among the driest in history. Many areas of the region received less than two inches of rainfall from late July until the end of November, and some locations received less than an inch of precipitation in that period. The very dry soil conditions during and after harvest season lead to difficulties for primary Fall tillage, and resulted in some growers suspending Fall nitrogen applications, due to concern over nitrogen loss. The lack of rainfall in the late Summer and Fall months has resulted in less than three inches of stored soil moisture in the top five feet of soil, which is the lowest in several years, and is about 25-35 percent of maximum capacity. This could become a concern as we head into the 2012 growing season.
Grain Prices --- Grain prices have been highly volatile, but quite strong, during most of 2011, with a fairly significant decline in corn and soybean prices during the last three months of the year. On December 16, nearby CBOT corn futures closed at $5.83 per bushel, compared to $5.96 per bushel a year ago, and January CBOT soybean futures closed at $11.30 per bushel, compared to $12.98 per bushel in mid-December, 2010. The near-term CBOT prices on September 12 were $7.45 per bushel for December corn futures, and $13.96 per bushel for November soybean futures. The rise in corn and soybean prices during the first 9 months of 2011 were driven by steady domestic grain demand for the renewable fuel industry and for livestock feed needs, along with very strong export demand. The fairly sharp decline in grain prices since mid-September is due to slightly increasing grain stocks, financial uncertainty in the U.S. and abroad, and a softening of export markets.
Local cash bid prices for corn in Southern Minnesota were near or above $6.00 per bushel at many locations throughout much of 2011, until the past couple of months, reaching $7.00 per bushel on several occasions during the Summer months. However, local corn prices have now declined to near $5.60 per bushel, as of December 16. Cash soybean prices stayed near or above $13.00 per bushel until mid-September, and have declined ever since down to the current level of about $10.85 per bushel. By comparison, at this same time in recent years, local cash corn prices were near $5.50 per bushel in 2010, $3.50 per bushel in 2009 and 2008, and around $4.00 per bushel in 2007. Local cash soybean prices were about $12.70 per bushel in mid-December of 2010, $9.80 per bushel in 2009, $8.25 per bushel in 2008, and $10.85 per bushel in 2007.
The higher level of grain prices during much of 2011 has helped most crop producers have a fairly profitable year in 2011. Many producers had forward priced a significant portion of their 2011 corn and soybean crop prior to the price drop this past Fall. Grain farmers were also able to capture some very favorable prices on their remaining 2010 corn and soybeans that were stored after harvest, and sold during 2011.
Crop Input Costs --- Crop input costs in 2011 increased moderately, compared to 2010, with fairly significant increases in expenses for seed, fertilizer, and fuel. For the second year in a row, many producers had very limited corn drying costs, due to the early maturity of the corn and the much warmer weather pattern this past Fall. Land rental rates increased significantly in many areas in 2011, and are likely to have another significant increase for the 2012 growing season. Agriculture interest rates, both for operating loans and longer term loans, remain quite low, which is a trend that is likely to continue in 2012.
Livestock --- The livestock industry finally had a fairly profitable year in 2011, following a somewhat stable year in 2010, which was preceded by the serious financial difficulties and negative profit margins in 2009 and 2008. Pork and beef producers experienced fairly strong market price levels throughout most of 2011, which resulted in some nice profit margins, even with the very high feed costs that existed throughout most of the year. The dairy industry also rebounded nicely in 2011, with some higher fluid milk prices and improved profitability. Profit prospects for the livestock sector in 2012 continue to look quite favorable with a good market price outlook, lower feed costs early in the year, and strong product demand, both in the U.S. and abroad.