By MICHELE F. MIHALJEVICH
Indiana Correspondent

FORT WAYNE, Ind. — A slight increase in solar activity means this year’s weather should be a little better for agriculture – but not by much, according to David Kohli, a market analyst with Allendale, Inc.

“There’s not going to be enough solar activity to really warm up the atmosphere,” he said.

“Solar activity should be rising rapidly, but it’s not. Solar activity’s effect on the Earth was dramatically seen in the last year.”
For farmers, this could mean they have to re-think some aspects of their operations, Kohli said.

For example, they may consider using shorter-season crops, or changing their planting dates.

Kohli and Jon Cavanaugh, marketing director of Central States Enterprises in New Haven, Ind., spoke Jan. 12 at the Fort Wayne Farm Show.

In addition to the impact of the weather, the prices U.S. farmers get for their crops will be hurt by production elsewhere, Cavanaugh said.

Brazil is estimating it will produce 65 million tons of soybeans, up from last year’s 57 million tons, he said.

“This would be record production for Brazil. Their weather has been quite favorable. If their good weather continues, they’re looking at a better number than 65 million.”

Argentina is also estimating a good crop, he said.

“South America is a real negative and will be the key to our prices for the next year or so. That’s a huge hammer over this market,” Cavanaugh said.

Kohli sees a lower price potential for corn and beans, with prices potentially in the $3.50-$4.50 range short term for corn, and in the high $8/low $9 range for soybeans.

“You have to keep an open mind about grain prices. It’s not as easy as it used to be. The weather definitely could be a problem this year,” he explained.

It’s difficult for the USDA to give final numbers on the 2009 corn crop because about 5 percent of it could still be in the fields, Kohli said.

“When corn is out there that long, the wildlife, such as deer, tends to take a toll on it,” he added. “They’ll be revising their numbers in March.”

Prices are also affected by an increase in investors, Cavanaugh said. “Fund activity is tenfold what it was in 2000. They want to buy commodities because stocks are out of favor.”

Farmers should have 50-75 percent of their new crop of corn and beans sold already, Cavanaugh said.

“Corn prices are very attractive and input costs are down. With beans, you can sell, bank it, count on it and not worry where (the prices) are going.”