In current dollars ” ignoring the effects of inflation,” U.S. net farm income is forecast to exceed $122 billion in 2012 and net cash income is expected to exceed $139 billion, both record nominal values.
USDA's latest World Ag Supply & Demand Estimates (WASDE) on August 10 further confirmed what most farmers, dealers and equipment manufacturers already knew: 2012 will be a lousy year for crops, but fairly decent for farm incomes mostly due to rising commodity prices and the high use of crop insurance.
While opinions vary on the impact the drought will have on farm equipment sales for the rest of this year and next, most analysts agree the lower yields will result in higher commodity prices. This combined with the wider use of crop insurance is likely to blunt a major falloff in ag machinery sales in 2013.
Yesterday, USDA released its weekly Crop Progress report that showed that the lack of rain throughout most major agricultural regions continue to negatively impact U.S. crops. For the eighth consecutive week, USDA said that the condition of the U.S. corn crop was worse than it was during the previous week.
Corn futures, which topped $8 bushel for the first time, could yet spike above $10 a bushel, Morgan Stanley said, lifted by a "battle royal" between livestock producers for supplies.
As of May 6, 2012, 71 percent of the 2012 U.S. corn crop had been planted, compared with an average of 47 percent between 2007 and 2011 and 32 percent in 2011.
USDA expects corn plantings to reach nearly 96 million acres in 2012, the highest since 1937, and 4% higher than 2011 acreage. Soybean acres are expected to fall slightly (down 1%) and acres planted to wheat are forecast to rise by 3% in the year ahead vs. last year.
In this episode of On the Record, brought to you by Associated Equipment Distributors, we look at President Trump's tariff reduction on ag equipment, the latest dealer sales forecasts, and how high input costs are keeping farmer sentiment down.
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