Priebe looks at impacts of commodity prices on cattle, farm productionWritten by Saige Albert
Worland – “With the price of cattle going up, the business model has changed for our area. There was less corn grown and more demand for feeding, so we are importing, instead of exporting, a lot of corn in this area,” said Scott Priebe of Wyoming Ag Marketing during the Feb. 3 lunch session of WESTI Ag Days.
Changes in commodity prices across the board have brought about changes in the industry.
Wyoming Ag Marketing is a grain elevator in Riverton and purchases corn, wheat, barley and soybeans from growers across central and northern Wyoming.
“For growers, corn markets are tight in our area right now,” Priebe added. “However, demand for corn is still there, and feeding cattle is still profitable.”
He also noted that as corn prices have dropped, farmers are searching for other, more profitable crops.
“Malt barley has also changed,” said Priebe. “Malt barley prices are really strong, compared to other grains. Barley is a profitable solution for this growing season.”
Wyoming Ag Marketing is also exploring new crops for the area to produce.
“We have done some soybean trials, and they were successful,” he continued. “We had about 40 acres on several farms, and it worked. Soybeans give growers a great legume option to rotate on their farm. With soybeans being RoundUp Ready, it is also a great weed control option.”
Priebe, however, stressed that he does not recommend planting a whole farm in soybeans. Rather, it may be an interesting time to test soybeans on a small scale.
“Markets are working back up, which we tend to see in February and March,” Priebe said of the current climate.
He also added that, according to Economist Bob Utterback, the market dynamic today is remarkably similar to the cycle of 1973-80, using 2008 as the start of the current cycle.
“During the 80s, grain prices were historically pretty strong, coming off the 70s,” he said. “The value of the dollar increased, interest rates rose, and it was monetary policy that had a greater impact on the farm than traditional supply/demand fundamentals. It made the farm economy difficult.”
There have also been similar weather patterns to those of the late 70s. The closest historical pattern to the summer of 2014 was 1978.
“There are a lot of similar market dynamics to the late-70s and 1980,” he noted.
Priebe noted that it will also be important to monitor the political climate, including the 2016 presidential election, which will guide monetary policy moving forward.
“Oil industry activities and monetary policy are very similar to what we saw in 1979-80,” he continued. “We are keeping our eyes open toward that.”
“When everything is working normally, it flows smoothly,” said Priebe of markets. “If we see a disruption in the markets, everything flows in different directions. We can account for one market dynamic, but multiple changes at the same time can be difficult to navigate.”
For example, if the energy industry sees a downturn and fewer flatbed trucks are importing oilfield tools, there may be fewer trucks to export hay out of Wyoming.
However, this year’s climate and weather patterns created a challenging environment.
“We had sprout damage in malt barley,” Priebe explained. “Then we had damage in wheat. Then, we had a hard freeze, which wasn’t abnormally early, but the cold June slowed corn plant development.”
“We can plan and tell ourselves that if one these happens, we can move to plan B,” he continued. “It is difficult to plan for multiple weather events in the same 30-day period.”
Priebe is very optimistic for the 2015 growing season and looks forward to Wyoming growers producing a bountiful crop.