A weak dollar and high demand are creating a cushion for area grain producers.
But livestock farmers will have to weather tough times into next year.
These were the market projections shared by Iowa State University specialists at a ProAg Outlook meeting Thursday evening at the Webster County ISU Extension office.
"This is a very challenging time for livestock producers," said John Lawrence, director of the Iowa Beef Center and an ISU professor of agriculture. "The higher grain prices hurt them last year, and the recession has hit them hard this year."
The beef industry has been affected by decreased consumer spending.
"People are eating out less or they're trying to be economical," Lawrence said. "Instead of buying a 12-ounce rib-eye steak for dinner, they're buying a Schwan's lasagna."
The recovery of the beef industry is tied to the end of the recession, Lawrence said, because as people become employed and begin spending more, the industry should turn around.
Lawrence said since 2007 hog producers have suffered losses that could continue into April and May of 2010. The factor to keep an eye on is China, Lawrence told the group.
"Watch exports," Lawrence said. "China just announced it will remove their H1N1 restriction and begin buying U.S. pork again. We'll see how quickly the trade rebuilds."
China is also buying a lot of soybeans from the U.S. right now, said Chad Hart, an assistant professor of agricultural economics at ISU.
"China used to import 30 to 35 percent of U.S. soybeans," Hart said. "Now they're importing 60 to 65 percent."
Hart said part of the reason for this increase is that the dollar is weakening and China holds quite a bit of U.S. debt. Buying soybeans is a way to "hedge their bets against the declining value of the dollar."
This is also the first year the U.S. has exported more soybeans than corn.
However, Hart said, the future's market is "screaming for corn next year," and production costs shouldn't reach last year's numbers.
Corn production costs last year were at $4.48 per bushel, Hart said. This year they were at $3.60, and futures are predicting the average price next season to be at $3.75 to $3.85. Farmers could break even if the numbers hold, he said.
Soybean production was at $9.82 per bushel and has since dropped to $8.75.
"What we've seen the future prices do is jump up and they're floating around $4 on corn and $10 for soybeans," Hart said. "And the costs are racing to catch up."
The big question right now, as in other sectors, is the recession, which, according to numbers, looks like it will be long and slow, Hart said.
He predicts corn and soybeans will continue to pull resources from other crops, especially in the southern U.S. as demand for both products is expected to increase.
Contact Lindsey Mutchler at (515) 573-2141 or lindsey@messengernews.net