Tag: agribusiness

26 Apr 2022

How Grain Producers Continue to Expand with The Growing Population

The agriculture industry in the U.S. has continued to grow over the last century along with the world wide demand for U.S. agricultural products. While the typical consumer probably does not realize how big the American agriculture umbrella is, it is essential to acknowledge all the individuals that play a role in feeding the U.S. and the world. The U.S. agriculture industry employs over 20 million Americans and hundreds of millions of people worldwide. There are over 2 million farms across the U.S., ranging from small to thousands of acres, with the average American farm being 435 acres. While many areas of agriculture contribute to the U.S. GDP, about 1% of the U.S. GDP comes from farming.

1% of U.S GDP may sound small; however, in 2021, the U.S. exported $177 billion worth of U.S. farm and food products to the world. The U.S. farmer plays a vital role in feeding the world right now, and that role will continue to expand as the world population grows. For more interesting facts on the U.S. agriculture industry, click here.

Production in the U.S

The traditional area for the largest US agricultural product production is the Midwest for corn and soybeans; however, there are many other states that are highly productive for these same commodities, including the high plains of Kansas and Colorado and the vast prairie lands in the Dakotas.  The U.S also produces many specialty crops i.e Florida for oranges, Idaho potatoes, , etc. In addition, other commodities, like Cotton is grown across the south and into west Texas, while others like sunflowers are grown in the Dakotas and the famous lumber industry in the Pacific Northwest and east Texas. In total, top three U.S. farm products are cattle/calves, corn, and soybeans that span the country.

Thanks in large part to the excellent stewardship of the land as well as improvements already discussed in technology (link to equipment and fertilizer), it is no surprise that the U.S. has also significantly increased its exports over the last 20 years.   In fact, since 1950 the U.S. corn yields produced have increased by 360% and as a result it is no surprise that nearly 30% of all feed grain is now exported (https://grains.org/chart-of-note-u-s-exports-of-feed-grains-in-all-forms-giaf-end-marketing-year-at-nearly-101-million-metric-tons/).  In other words, the US truly feeds the world “today”! .

The U.S. vs. The World

While the U.S. is a significant cog in the world agriculture market machine, it is important to remember that we are only one big piece. Just because we are functioning at our highest level it does not mean that problems elsewhere won’t affect us. What happens in South America while it is winter here can have major impacts on prices in our markets. As we are seeing right now, Russia and Ukraine are both major players in the agriculture and energy markets. It is important to pay attention to production in other countries as they compete against the U.S. for exports in a global market. South America’s rapid rise in the soybean market over the last 20 years shows how vital global production is to watch even when we don’t have seeds.

As we mentioned previously in our What it Takes to Feed The World Series, the global population is expected to grow by 2+ billion people by 2050 — world farmers will need to grow 70% more food to feed the growing population. The U.S. will not be able to meet these needs by itself, so growth worldwide will be critical. The increase in corn yields can be seen below, and as you can see, the gains in recent decades will need to continue…is this even possible without more arable land?

 

Threats to U.S. Farmers

The U.S. has farms of all sizes that face unique challenges, but all face one similar challenge, mother nature. While the weather is different in all places, it is the most crucial thing in agriculture production, and unfortunately, it is one of the few things we have no control over. There is a reason you buy crop insurance to manage the risk of the uncontrollable, you can read more about that here, but it is also why there are so many types of insurance that relate to weather events.

Each farm faces its own unique challenge, but the ultimate goal is to stay profitable and farm for years to come. The price risk associated with farming changes every year and is different for each farm/producer as expenses, yields, and income needs are different. It is vital to understand this as cookie-cutter plans to marketing may work for one farm or one region but can lead to failure in others.

 

RCM Ag Services and Producers

RCM Ag Services is a full-service risk management and crop marketing advisory firm. Our team specializes in risk management strategies to help producers hedge their risk and maintain profitability. We discuss strategies that fit your marketing plan and fit within your risk profile to help maintain a comfortable relationship.

We help farmers with cash sales, hedging, breakeven and offer speculative trading accounts. We believe the farm operates best when you know that someone is keeping up with the market and lets you handle producing a great product. Working with people throughout the agriculture industry allows our team to stay plugged in to all areas of importance.

 

FEEDING THE WORLD IN THE FUTURE

Bringing awareness to how the agriculture industry is vital to feeding the rapidly growing world is pivotal as we continue to face unprecedented challenges in global food security. However, there is a silver lining. We already know what must be done; it is figuring out how to do it that could be problematic. The world must unite and understand that each of these areas highlighted in the infographic is very complex, employs millions of people worldwide, and is vital to the growth of the agriculture industry as well as producing the necessary food for the future.

 

 

 

 

27 Dec 2021

What’s Driving the Grain Markets Heading into 2022?

The 2021 U.S. grain crop has the potential to be one of the largest on record. Where did all the yield come from, what areas were the hardest hit, and why on God’s green earth are grain prices still so high?
Today, we are joined by several RCM Ag Services grain markets experts from around the country to catch up on a post-harvest update and share an outlook for production and marketing in each of their respective regions for the remainder of the 2021 marketing season and the upcoming 22 crops.
Listen or watch:
27 Jul 2021

Managing Today’s Market Risks through Short Dated Options with CME Group

It is no secret that commodity markets have been on fire over the past 12 months.   On today’s podcast we’ve brought on one of our real-life firefighters from RCM Ag – Jody Lawrence along with Tim Andriesen from the CME Group to provide us with some inside baseball knowledge of the current state of the agriculture markets and to discuss the real world application of the use of short dated options to potentially fight the current blaze of volatility surrounding agriculture markets.

As the director of Research for RCM Jody is no stranger to the podcast.  Tim, is the Managing Director of Agriculture products for the CME Group and is responsible for management of the company’s global agriculture commodities business – including grain, oilseed, livestock and dairy risk management products.

 

Find the full episode links for The Hedged Edge below: