Economists Who Are Brothers Share Their 2022 Ag Outlook

Brothers Josh and Will Maples, both agricultural economists at Mississippi State University, are optimistic about 2022.

Josh Maples is an assistant professor and livestock economist with Mississippi State University Extension Service. During a recent interview he discussed the past year and the economic outlook for beef cattle markets in 2022. He was joined by his younger brother, Will Maples, a fellow MSU extension economist who specializes in row crops.

It’s been said that 2021 is a good year to be a farmer. 

It’s not a bad time to be an Extension economist, either. 

“Strong prices and demand have certainly made the outlook talks a lot more fun,” Josh said. 

“There’s a lot of optimism in agriculture right now,” said Will. “That’s not to say there aren’t challenges and concerns but it’s good to see producers be encouraged by the markets.” 

 Row crops outlook 

While producers have seen strong grain and cotton prices this year, the big question as we head into 2022 is how long will the good times last? 

“As we watch the markets, nothing is saying next year is going to be bad by any stretch pricewise,” Will said. “Demand is still good. We’re still exporting a lot of beans and corn. Cotton is over $1, which we haven’t seen in years. Long-term, I think demand is going to hold. Going into next year I think prices are going to remain strong. But with fertilizer prices going through the roof, equipment costs  up, chemical costs  up, it’s a good year to have good prices because those margins are going to get squeezed,” he added. 

With input prices already high, Will said there is little producers can do to manage the risk of rising expenses. “One thing for row crop producers to consider is soil testing,” he said. “Soil testing will pay off  this year because growers can’t afford to needlessly apply fertilizer and soil amendments. That’s the first step.” 

“Crop mix decisions will be more dynamic this year than normal. I’ve heard some conversation about shifting crop mix — moving away from a fertilizer-intensive crop like corn. But if you look at current prices, corn is still looking just as good as soybeans. When making crop decisions, growers need to carefully evaluate prices versus costs. Really understand what costs are going to be and how to be profitable,” said Will. 

Despite input cost concerns, Will is optimistic about 2022. 

According to Will, “Market-wise I think it’s going to be pretty good. We’re past the trade war. Export markets are back to normal. $5 corn and $12 beans should be attainable. It’s just the inputs. The inputs right now are the big question mark. But even with increased costs, prices are there to make a profit.” 

Beef outlook

After two pretty tough years, Josh said the current beef outlook is positive, as well. Thanks to a tightening supply, beef producers may finally be able to participate in high beef prices. 

“Processing disruptions caused by COVID created a logjam,” Josh said. “Consumers saw high beef prices, but cattle prices actually dropped because they got backed up through the system. But we’re getting back to a point where cattle supplies are a lot more current. The number of cattle in feedlots has come down quite a bit.”  

Although feedlot inventories remain above 2019 levels, overall, the feedlot situation continues to improve. Meanwhile, beef demand has been incredible. Josh’s optimism is fueled by high beef cattle slaughter numbers - which are currently higher than this time last year and any time in the past five-year average. 

“If you’re processing more cows that means one of two things. You’re either culling early or you’re doing some true liquidation. I think over the next few weeks we’ll get our answer. It could be because of the drought out West we’re just seeing producers cull earlier than normal. If that’s the case, then over the next month or two, when we typically see slaughter numbers hit their peak, we shouldn’t see as much of an increase. If we continue to see really strong slaughter numbers, that will tell us we’re going to have even tighter supplies next year than previously expected. We could be looking at 2% decline of beef cows in the U.S. in January,” Josh said. 

“Producers are optimistic in terms of prices,” Josh continued. “Anytime you have strong demand with a tight supply of cattle, that’s when you can see strong prices. We have spring cattle futures at levels we haven’t seen in five to six years, so there is a lot of optimism out there. Until someone brings up input prices.” 

Josh said he expects to see less winter ryegrass this year due to high fertilizer costs. “The good news is we didn’t have a dry year so most producers have grass to feed,” he said.  

Risk management 

While current commodity prices are good, markets can change quickly. Josh and Will suggest that producers know what tools they have available and put a marketing plan into place. Know what prices you need to be profitable. If the market gives you that, take it.  

Will encourages growers to use MSU’s online budget planning tools. The site offers budgets for each major crop grown in Mississippi, as well as forages. Budget tools will be updated with current prices and costs in November 2021. 

“For cattle producers, risk management is especially important as we get into the spring,” Josh said. “If your herd is calving in January or February, think about doing some risk management during that springtime. I always encourage producers to pay attention to what’s going on in the markets. If you see prices that are well above your break-even and you can, take it, don’t get caught waiting for prices to get higher and higher.”  

Josh said farmers should consider using a variety of marketing tools to spread their risk.   “The most important thing is having a plan before you start. Producers who are good at marketing are those who start with a plan and stick to it.

EDITOR’S TAKE:

Good solid advice for producers, but we also wanted to share this article because it provides some additional insight into what we might expect for agriculture in 2022. The Maples brothers paint a pretty optimistic outlook, but one that is also realistic. We have heard the concerns of producers in the Purdue Ag Barometer that was shared in last week’s AIR. Producers are concerned about rising costs and availability of products due to the supply chain debacle that is currently taking place.

The other good news is that as a CAD member you have AgPack. AgPack offers thousands of dollars in exclusive rebates and discounts on products that farmers/ranchers already use in many instances. It’s really quite simple - they purchase or lease a truck (or any number), even if it used, and qualify for AgPack. For farmers/ranchers concerned about fertilizer prices – send them to AgroLiquid, one of our valuable AgPack partners. If they need cattle equipment – you have that covered with two of our valued partners – Gallagher and Tarter. For tires – Michelin/B.F. Goodrich is a great source. And the list goes on.