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Farm Prices, China and Weather Outlooks

Update for April 16, 2020

The Food and Agricultural Policy Research Institute (FAPRI) has released their grim “early snapshot” for net farm income loss from COVID-19. In an interview with Brownfield Ag News, Pat Westhoff said FAPRI has estimated a -$20 Billion dollar reduction in net farm income and expects the livestock industry will take the biggest hit. “A more than a 10% drop in cattle prices and nearly as large of an impact on pork, chicken and milk prices in our analysis. And some people think it’s even more than that.” In regards to crop prices Westhoff said, “We saw corn and cotton as being two commodities that were hit particularly hard. In the case of corn, a lot of the problem is what’s happening in the ethanol industry.” He said the forecasts given include the promised Phase 1 purchases from China but doesn’t factor in any government funds that have been allocated to farmers to help with the financial fall-out caused from the Coronavirus. Findings from the FAPRI report have been sent to the USDA for the agency to use as framework when determining the proper division of stimulus money between the various ag sectors.


A recent study conducted by Iowa State University on COVID-19 impacts show that Iowa agriculture will be especially hard-hit. Ethanol and pork are forecast to see the most significant impacts, expectations are both sectors should prepare for losses of $2 billion each. Specific estimates breakdown the yearly cost to each sector:


  • Corn -$788 million

  • Soybeans -$213 million

  • Ethanol -$2.5 billion

  • Fed Cattle -$658 million

  • Calves and feeder cattle -$34 million

  • Hogs -$2.1 billion

INTL FCStone released information from a study that looked at new crop December corn contract moves off the mid-April lows. There data showed the smallest move from the April low was 16 cents in 2014 and the largest rally was during the La Niña drought in 2012 when we saw a rally of $3.17. The agency determined that the average rally over the 14-years that were studied was 98 cents. When they looked specifically at the last 7 years of data the average rally off the April-low was 45 cents. While industry experts use these averages to assist in determining potential outcomes, the issues facing agriculture are unprecedented and forecasting price movement will be complicated.

While we wait for a final plan from the USDA, one analysis of the coronavirus relief funds has estimated that the federal government could provide 40% of U.S. farm income this year. President Trump has said that at least $16 billion will be available to the farm sector “very quickly”. This coincides with comments from Agriculture Secretary Sonny Perdue last week…$9.5 billion has been designated by Congress for the farm sector due to the coronavirus with an additional $6 billion from the “USDA’s bank” the Commodity Credit Corp (CCC). Additional funding of $14 billion has also been approved for the CCC but those funds will not be available until June 30th. Perdue told Fox Business, “We want to purchase as much of this milk, or other protein products, hams and pork products, and move them into where they can be utilized in our food banks, or possibly even into international humanitarian aid.” Perdue noted he wants to include direct financial assistance to farmers with this aid plan and said final details of the plan may be announced yet this week.

An unprecedented cut to oil output was agreed to last week following a meeting between the U.S., Saudi Arabia, and Russia. Oil prices crashed during the month- long dispute between Russia and Saudi Arabia and accelerated with the loss of demand caused by the coronavirus. The deal includes 23 countries which all committed to collectively withhold 9.7 million barrels of oil per day from global markets. Additionally the U.S., Canada and Mexico pledged to hold back 3.7 million barrels per day.

Ron Lamberty, an ethanol expert with the American Coalition for Ethanol told Brownfield Ag that the biggest threat to U.S. ethanol is not the over production of oil but instead it comes from the drop in demand. With the presence of the coronavirus, Americans have reduced all unnecessary travel which has cut the demand for motor fuel. He also pointed out that it is possible that the oil price war and the coronavirus may eventually lead to more gasoline and ethanol use and less air travel.

Following the signing of the Phase 1 trade deal with China we began to learn of a rampant coronavirus within the country. Almost immediately fears increased that China would further delay the start of importing the $36.5 billion in U.S. ag products agreed to for this year. Customs data reveals though that during the first 3 months of this year China imported $5.05 billion in U.S. farm products which is a 110% increase over 2019. Soybean sales to China increased by 210% raising the total to 7.81 MMT ($3.10 billion) in the first quarter of 2020. U.S. pork exports also saw a significant upsurge as well during the first 3 months, with a 640% ($430 million) over the previous year.


We’ve now learned that the Chinese government withheld vital information regarding the outbreak and severity of COVID-19 which delayed the response time the rest of the world had to prepare for the virus. Now officials within the Trump administration, along with several lawmakers and industry officials are calling for a full review of this matter. As a result of the outbreak many shortcomings have surfaced regarding the inability of the U.S. to supply key health care items because most of it is imported from China. This realization has led to plans for many of these vital medical supplies like face masks, ventilators and prescription medications to be made here in the U.S. While these changes need to be made and China needs to be held accountable for their actions, the fallout could mean new tensions between our nation’s and concerns for the future of U.S. agriculture exports once again.


Brazil exported a record-setting amount of corn in 2019 and as a result the countries chicken and pork processors will likely need to import more corn in the coming months. During the first 2 months of 2020 processors have already imported 283,730 MMT of corn, a 235% increase from a year ago. While Brazil has imported corn from the U.S. in the past the weakening of Brazil’s currency vs the U.S. Dollar makes our product less attractive than corn from neighboring Argentina and Paraguay.

U.S. snow cover this season was down 70% from last year, sharply reducing the likelihood of widespread flooding this spring. Drier weather into April and warming temps have prompted Jon David, chief meteorologist at Riskpulse to forecast a normal start to the 2020 planting season for farmers in the Midwest. In addition, since the Polar Vortex stayed much further north through the winter he expects no major frost or freeze events to damage fragile crops throughout the Northern Hemisphere. Due to a clash between warm and cold air masses he expects farmers from Arkansas to southern Ohio will face some early planting delays but anticipates the steady flow of rainfall over the region will diminish by late April or early May. Riskpulse has not yet issued their summer forecast and plans to watch ocean temperatures over the next several weeks before making their predictions. At this time models are indicating ocean temps are cooling at a faster rate than expected raising the potential for a more rapid development of a La Niña weather pattern than earlier thought. The maps below show the expected temperature and precipitation outlook for next week. The temperature outlook is improving, the blue area of below normal temps is moving further north across the eastern Corn Belt.

Temperature Probability


Precipitation Probability

The 30-day forecast for May was just released today and shown in the maps below.

OFFICIAL 30-Day

Forecasts Issued: April 16, 2020


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