Farm outlook is optimistic: Cattle prices strong, grain prices weak
Despite loss of meat exports to Japan, continued strong demand for red meat is keeping U.S. cattle prices strong.
According to Keith Collins, chief economist for the United States Department of Agriculture, strong worldwide consumer demand for meat protein, improving restaurant and hotel business, more diversity and improved quality of meat products, and a better world economy all have contributed to higher live animal and retail meat prices.
Prices may decline slightly in 2005 after the border is opened to beef imports from Canada.
Grain
Record-high levels of grain production were achieved in 2004. That has led to lower prices compared to a year ago.
According to Mike Thomas, manager of Marion Cooperative Grain and Supply, grain prices closed Friday with wheat down 24 cents from a year ago, milo down 47 cents, beans down $3.28, and corn down 99 cents.
Thomas said fertilizer costs have increased $15 to $20 a ton and seed prices are higher. The cost of diesel fuel to run farm equipment also continues to escalate.
Economist Collins expects rising government payments to offset loss of income from low grain prices and produce a higher cash flow for those involved in the farm program.
He predicts lower feed costs and high feeder animal prices will help keep total farm production expenses in check.
Land
The price of land in Kansas, including grassland and farmland, rose sharply in 2004. Land in Marion County that sold for $600 to $700 an acre just two or three years ago sold as high as $1,200. Collins predicts overall land prices may rise by as much as 4.5 percent in 2005.
"We noticed a real trend toward selling land at auction," said Kevin Fruechting, president of Central National Bank in Marion. "It seemed landowners were getting better prices at auction."
Fruechting noted paying for the land may be problematic, especially for young farmers with little equity.
"It may be difficult at best for that land to have the productive value to pay for itself," he said.
Many variables will effect the overall profitability of farms in 2005. If the U.S. and foreign economies continue to grow as they did in 2004 and no unforeseen disasters occur, farmers should have another good year.
