Risk and Profit Conference

Session 1: 12:00-12:45 - Macroeconomy, Interest Rates, and Future Inflation  - Brian Briggeman
Since March 2020, the U.S. economy has been on a roller coaster ride. The shutdown slashed consumption and sent many to the unemployment line. In response, fiscal and monetary policy flooded the market to bolster a faltering economy. By the summer of 2020, the economy returned to somewhat better footing. Going forward, there are a number of questions/concerns such as, what are the prospects for future inflation? In this presentation, Dr. Brian Briggeman will share his thoughts on these topics. 

Session 1: 12:00-12:45 - Crop Share or Cash Rent: How Does Risk Affect the Decision?-Mykel Taylor, Chelsea Arnold
In this session, we analyze the choice people make between cash rent and crop share contracts using data from a survey of KFMA members. We find that risk attitudes of producers and landowners affect the choice and we will discuss those findings in the context of limited irrigation agreements that are likely to affect risk exposure in crop production. 

Session 2: 11:15-12:00 - Grain Market Outlook - Dan O'Brien
The outlook for grain market prices is volatile and uncertain for the remainder of 2020 and on into 2021.   While a number of factors have been affecting Kansas grain markets in recent weeks and months, the strength of corn, grain sorghum, hard red winter wheat, and soybean basis across the state is indicative of underlying grain market support.  This has occurred at a time when the broader grain futures market appears to be anticipating a “large crop – low price” scenario “across the board” moving into Fall 2020.   Domestic U.S. grain markets have been affected by the uncertainties in the U.S. economy caused by COVID-19 impacts and government / economic shut down oriented responses.   Concerning feedgrains and oilseeds, although 2020 U.S. corn and soybean acreage may be lower than anticipated – “spotty” yield prospects will be a market factor through fall harvest and especially through the September, October, November and January 2021 USDA production reports.  Bioenergy use of feedgrains and oilseeds, livestock feeding of feedgrains, and oilseed crush are all factors to watch closely as they impact U.S. supply-demand balances and prices in both futures and local cash markets.  Recent weakness in the U.S. dollar relative to foreign currencies is likely to support U.S. grain exports, as is more aggressive purchasing of U.S. crops by China and other countries – especially for grain sorghum.  Soybean exports hold promise, but will be affected by prospects for large South American crops.  U.S. Wheat markets have held up decently in 2020 in spite of large domestic and World stocks, with positive export prospects in particular providing support – although “World-Less-China” market perspectives are important to consider.   In summary, absent any major U.S. crop shortfalls in 2020, prospects for U.S. corn, grain sorghum, and soybean futures prices are for “moderate” price levels heading into fall, with perhaps more opportunities for marketing profits coming from managing local grain basis variability.  Again, surprises in terms of lower than anticipated 2020 crop production could markedly affect this scenario. For Kansas wheat, export market developments and Fall 2020 establishment of the hard red winter wheat crop in Kansas and other central and southern plains states will be major market factors.  To some degree, as goes the wheat crops in the Black Sea Region among major U.S. wheat competitors, so will go export prospects for the U.S. HRW wheat crop, and price prospects.

Session 4: 1:15-2:00 - Projections of Net Farm Income for 2020 and 2021 - Gregg Ibendahl
2020 has been a trying year for everyone and farmers are no exception. COVID-19 has disrupted supply changes and consumer demand resulting in a change in expected prices for farmers. On the input side, some inputs such as fuel and fertilizer have been decreasing during the year because of the virus. This presentation will present the results of our attempt to predict net farm income for this year and next. 2019 KFMA net farm income will be used as the baseline and revenue and expense projections will be used to adjust this baseline to make predictions about future net farm income. Wheat budgets for 2021 will be discussed and a new tool to calculate owned machinery costs per acre will also be shown.

Session 2: 12:45-1:30 - International Grain Market Trends and Factors - Guy Allen, Dan O'Brien
This session will examine the international grain market factors that are anticipated to affect U.S. grain markets through the remainder of year 2020 and on into 2021.   In succession World market trends in feedgrains, wheat and oilseeds will be examined by Allen and O’Brien.  The key roles of China, Brazil, Argentina, Russia, Ukraine, Australia, the European Union and other countries will be considered as they impact these World markets, as well as U.S. currency exchange rates.  This session will seek to provide a “framework of perspective” with which to view the relative importance of how developments in international markets are likely to impact U.S. grain exports and market price prospects.