A majority of agribusiness leaders polled last week reported they are optimistic about their company's outlook in 2010 compared to 2009, with some asserting that they were "very optimistic" about the near future.
The poll, conducted by Agri Marketing magazine and AdFarm, a full-service communications firm exclusively serving agribusinesses, surveyed leading executives from a wide range of agricultural companies operating in U.S. markets.
"We didn't expect such a strong majority of positive responses" explained Lynn Henderson, publisher of Agri Marketing. "We surveyed quite a range of executives - from multinational corporations to small, privately held firms - and we expected, at best, a neutral outlook for 2010. But most of them foresee improvements around the corner for their business regardless of their outlook on the U.S. economy."
Overall, 12% of the respondents were very optimistic about their agribusiness, 45% were optimistic, 35% were neutral, 7% were somewhat negative and 2% were very negative. While 37% reported optimism about the general agricultural economy in 2010, 52% were neutral, 7% were somewhat negative and 4% were very negative. There was some difference in outlook among companies serving crop producers (of which 65% were optimistic) compared to those serving the livestock marketplace (of which only 40% were optimistic).
In fact, only one third (35%) of respondents held similarly optimistic views for the overall U.S. economy in 2010, despite recent statements by well known ag industry economists who predict a rebound in the economy over coming months. Expert predictions aside, Roger Reierson, managing partner of AdFarm, said it's even more reassuring to have forecasts of a recovery from this group of company leaders serving agriculture.
"When this group of corporate executives says there's going to be an increase in crop acres in 2010, I'm fairly certain that is what we are going to see," said Reierson. "It's as accurate as the financial forecasts of their companies. And like our firm, they must be tuned into agriculture to be successful."
Nearly half (48%) of respondents expect there will be an increase in corn acres for 2010 and 61% expect an increase in soybean acres. While the corn selling price is expected to average $3.30 since hitting highs of $8/bushel in 2008, the survey respondents forecast increases, with nearly a quarter of the executives expecting prices to reach above $4/bushel next year. Most expected soybean prices to remain steady at an average price around $9.50/bushel, but an optimistic 12% expected prices to rise next year, breaking the $10 mark.
Other forecasts from the survey:
- Cotton prices were expected to remain at historic lows with 41% expecting a decrease in overall cotton acreage,
- 77% expected hard red wheat prices to remain steady or increase from a 2009 average of $5.20/bushel,
- Continued slight decreases were expected in cow/calf and fed beef herds with majorities expecting steeper decreases in sows and hogs,
- More than 53% of respondents predicted the average price for milk would escalate to $15/lb or higher from the low average of $12.40/lb in 2009,
- 59% of executives from companies serving livestock predicted an increase in their company's revenues, while 70% of crops-focused companies expected higher earnings.
For a complete copy of the "2010 Agribusiness Leaders Outlook Poll, e-mail your request to AudreyE@AgriMarketing.com. There is no charge for the report.