Ag Management Group

The USDA kicked off this production year with their Ag Outlook forum on February 23-24. Here are a few observations according to a USDA climatologist and economist:

🌱 Drought continues to be a significant factor for approximately 65% of the United States and is expected to continue during the 2023 production year.

🌱 Nationally, farm income reached record levels in 2022, although the South Plains and Texas cotton region experienced one of the worst production seasons in years.

🌱 Farm income is expected to decrease in 2023 due to lower expected yields and decreasing commodity prices.

🌱 The outlook for cotton is mixed. Positively, worldwide inventory is expected to decrease while production is expected to increase over 2022. Exports are expected to increase and demand overall is expected to increase. Conversely, interest rates will most likely increase again, the U.S. dollar will remain strong, and inflation will continue to influence overall consumer demand.

See the articles linked below for in-depth coverage.

https://www.agweb.com/news/policy/politics/top-10-charts-kickoff-usdas-ag-outlook-forum

https://www.agfax.com/2023/02/24/the-2023-outlook-for-u-s-agriculture-from-usdas-chief-economist/

https://www.agfax.com/2023/02/27/thompson-on-cotton-watching-paint-dry/

Call Bart or Tracy for help with any of your financial needs, including cash flow projections, loan renewal preparation, or day-to-day financial questions.

The economics of agriculture have always been difficult.

Margins are always tight, weather can play the spoiler or the savior, and domestic and international politics seem to play an ever-changing role in the financial success of any agricultural enterprise.

As any farmer or rancher will attest, financial success is never easy. The outlook for 2023 follows this historic reality. See the article linked below from Agweb for a review of the headwinds and opportunities for 2023.

https://www.agweb.com/markets/world-markets/4-macro-factors-impacting-agricultural-economy

If your operation needs more financial expertise to prepare for the continuing economic pressures, call Bart or Tracy at Ag Financial Solutions or visit us at https://agmanagement.net for more information!

As we start a new year and a new production season there are several different headwinds that could affect your operation during 2023!

🌱 The South Plains of Texas have continued to be dry and that seems to be the current forecast. The lack of moisture in 2022 had a devastating effect and now is threatening the 2023 crop. Spring moisture will be critical as you prepare for planting.

🌱Input costs will most likely continue to increase. Seed, chemicals, and fertilizer are all expected to reach higher prices. Fortunately, fuel prices have moderated a bit, but that can change quickly as political and international events change.

🌱 As interest rates continue to rise this will have the direct effect of increasing your borrowing costs. Maybe more importantly, as interest rates rise, this will put upward pressure on the value of the U.S. dollar. Historically, agriculture commodity prices suffer when the dollar is strengthening, putting downward pressure on your selling price.

🌱 Finally, Congress will continue discussions about the farm bill. There will be pressure to reduce government spending on agricultural programs.

How should you respond to and plan for these risks?
Spend less, borrow less, and plan for an average yield.

Let Ag Financial Solutions help you plan your financial future! Call Tracy or Bart today!

Ag Financial Solutions We are a team of Ag and Finance professionals with diverse knowledge and expertise in both crop and animal production agriculture. We provide solutions to all agriculture challenges while working with you to drive improvements in your operation.

As planting season approaches, we are mindful of the unfavorable drought conditions and prayerful that rain will soon quench our dry land.

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