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Kohl: Market Looks 'Cautiously Optimist' Despite Lower Prices
Wisconsin Ag Connection - 01/30/2015

Growers of farm commodities such as corn, wheat and soybeans have a lot of things to evaluate as they come out of the latest 'Super Cycle,' as Dr. David Kohl likes to call it. The former Virginia Tech professor and world-renowned economist told producers at the Wisconsin Corn/Soy Expo in Wisconsin Dells on Thursday that many of them have made more money in the past seven years than their counterparts did during last four decades.

"In the past century, we have witnessed four super-cycles in the crop production industry, including the one we just experienced between 2007 and 2012," Kohl said. "But there are still plenty of reasons to be 'cautiously optimistic' in the foreseeable future if you manage your risk and keep an eye on several strategic areas."

For example, Kohl says all producers should notice that many of the emerging markets overseas are starting to see a slowdown in their economies, including countries that have been top export destinations for American-grown crops. Uncertainty with biofuel mandates and unpredictable weather patterns are also key areas to watch when making long-term decisions on the farm.

He spent a lot of time talking about Europe, which he claims is heading toward a recession, and China for its massive influence in the marketplace.

"I know that many find this comment to be controversial, but I tell people 'don't bet the farm on China,'" he warned. "They are the type of customer that can giveth in the market, but they can also taketh away. If they do something we don't like and the United States imposes sanctions on them, the first thing they do to retaliate is cancel their American imports. [Vladimir] Putin of Russia does it, too."

Back here at home, Kohl said things are looking up in our economy as interest rates are expected to start rising later this year and the gross domestic product is seeing improvements. He also touched on the topic of land rent values. Dr. Kohl says 2016 will likely be the 'D-Day' for many landlords if they are not willing to renegotiate their rent prices since crop values have taken a downward spiral.

Attendees also heard from Willie Vogt of Farm Progress Publications, who discussed how newer technologies like drones and cloud computing are becoming commonplace on many farms.

"The FAA is now allowing drones for agricultural purposes in certain states," Vogt said. "Can you image how valuable it would be to know exactly what your corn yields are going to be three or four weeks before you harvest your crop?"

Meanwhile, the expo held its annual Taste of Elegance competition last night. Chef Mitchel Weber won the contest with his Azzimato Maiale. He is the main cook at LaCrosse Restaurant, Piggy's Restaurant and Blues Lounge. Chef AJ Hurst of the Vintage Brewing Company in Madison was the runner-up.

The convention is made up of members from the Wisconsin Corn Growers Association, Wisconsin Soybean Association and Wisconsin Pork Association. The Corn/Soy Expo continues through Friday with an equipment market outlook presentation by 'Machinery Pete' Greg Peterson and a live radio broadcast by Brian Hefty of Agronomic Answers and Ag Ph. D.

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