I'm in Seattle for the annual meeting of the American Farm Bureau Federation, where farmers say they're under siege by environmentalists who want to impose living standards on livestock and push cap and trade limits on carbon emissions. Farmers are also smarting from generally low food prices this year as consumers pulled back on eating out or buying meat.
Still, farmers will be the first to tell you that even though it's been a terrible year (no matter what year it is), they're always cautiously optimistic. They also have a pretty good sense of humor. The keynote speech on the crop outlook for 2010 started with a joke about Tiger Woods. I didn't hear the whole joke, something about a teacher asking kids who's the best golfer, and one boy bugged by some girls talking says something like, "I wish the girls would shut up," and the teacher says, "Exactly. Tiger Woods!" You know it's bad for Tiger Woods when he's being use to warm up a crowd of farmers.
2010 looks to be better for agriculture, especially if there's a global recovery. 2009 was actually pretty good, too, except for livestock. There's still too much milk, too much pork, and now the Russians have banned U.S. poultry. Overall, meat and dairy prices were below break even for the year, according to John Anderson at Mississippi State University. He says more thinning of herds will continue in 2010 to get supply in line with demand. "On a per capital basis, total meat availability in 2010 could be the smallest since 1997."
On the crop side, corn prices are up nearly 30 percent since September, though not anywhere near the $7 a bushel two years ago. What's strange is that prices are rising even though yields may reach a record, around 13 billion bushels. That may be partly due to the fact that about 600 million bushels of corn are still in the ground at this late date due to earlier weather problems.
The USDA will release its 2009 crop production report tomorrow. It's expected to show less corn than expected due to bad weather, further driving up corn prices. In 2010, more farmers may then switch from planting soybeans to corn, which should be good for fertilizer companies, as corn needs nitrogen.
This morning Sterne, Agee upgraded nitrogen supplier CF to a Buy. Morgan Stanley released a note saying, "We would buy Monsanto and Mosaic in 2010 as a new Ag cycle has begun."