Blog: Becareful what you wish for
Michael Swanson, Ph.D.,Wells Fargo Chief Agricultural Economist
The drop in crude oil prices has acted as both a symptom and a cause in the agricultural economic outlook. According to the Baker Hughes rig count, only 571 active rigs were working in February 2016, down an astounding 71% in 18 months. Since drilling activity peaked in September 2014, crude oil production has risen by 5% highlighting the lag in the energy production system loop. Likewise, Natural Gas Liquids (NGLs) are up 8% with a similar drop in active natural gas rigs.
Blog: The EPA has spoken. But what did they say?
Michael Swanson, Ph.D.,Wells Fargo Chief Agricultural Economist
Given the “Sturm und Drang” of ethanol pro and con lobbying, the industry waited with baited breath for the Environmental Protection Agency’s (EPA’s) release of the 2016 Renewable Fuel Standards. Now that the standards are released, the key question is whether the EPA’s targets for blending requirements will afford higher profitability for the industry.
Blog: Where can you find the profit in agriculture?
Michael Swanson, Ph.D.,Wells Fargo Chief Agricultural Economist
Financial pain and suffering has hit hard throughout the majority of the row crop and forage economy. Producers can see $4/bushel corn on the Chicago Mercantile Exchange (CME) for 2016, 2017, and 2018, and they know that their cost structures won’t yield profits, and in many cases, will mean more losses.
Blog: The who and what of farm financial stress
Michael Swanson, Ph.D.,Wells Fargo Chief Agricultural Economist
Even with the recent rally in corn prices, grain and oilseed producers still face break-even or losses in most circumstances. This prompts the questions of how long will it be before the sector enters a financial stress mode, and how severe will the stress be at the bottom of the cycle.
How far is the land market from its real value?
Michael Swanson, Ph.D.,Wells Fargo Chief Agricultural Economist
The single most important asset in agriculture is land, and the single most vexing question in agriculture is what land is worth. For agricultural producers, land values incorporate many things that fall outside the cold-hearted economist’s model.
Blog: Managing expectations within the crop sector
Michael Swanson, Ph.D.,Wells Fargo Chief Agricultural Economist
The question for the crop sector is how bad can it get before it gets better? 2014 results show a stunning spread between losses for Minnesota row crop operators.
Blog: The impact of crude oil on corn’s upside pricing potential
Michael Swanson, Ph.D.,Wells Fargo Chief Agricultural Economist
With crude oil stuck at $50.00 or less per barrel, grain producers and purchasers should understand how much this limits the upside opportunity for corn.
Blog: The impact of the strengthening dollar on U.S. agricultural exports and imports
Michael Swanson, Ph.D.,Wells Fargo Chief Agricultural Economist
Just as the interest rate markets try to anticipate the future, so do the exchange rates. These two markets, while not about agriculture, have a huge impact on the U.S. agricultural markets.