Pick up almost any newspaper or click through your television channels and the economic news is downright glowing:
“Economy Revs Up; Mood Is Upbeat”
“Economists See Vigorous Growth For '04”
Now those are the headlines we all want to read as we flip the calendar and begin the trek into 2004.
A recent story in The New York Times reports the U.S. Commerce Department raised its estimate for growth for the quarter from 7.2%, already the fastest rate in nearly two decades, to 8.2%. Growth will almost surely continue as companies race to restock their depleted warehouse shelves.
In addition, corporate profits jumped 11.6%, the biggest quarterly increase since 1992. And many economists predict the economy, as measured by the gross domestic product (GDP), will grow at an annual rate of 4-4½% throughout this year.
But what does all this mean for ag?
On the soybean front, it's all positive. Prices are up and world demand for soybeans remains strong. U.S. soybean exports reached record levels for the third year in a row. According to USDA, the U.S. exported more than 1 billion bushels of soybeans this past marketing year.
China, the largest customer for U.S. soybeans, imported more than 282 million bushels — an increase of 251% over the past five years.
On the corn front, the news is good, too. “Given the strengthening global economy, grain consumption continues to grow to meet demand for protein,” says Michael Swanson, Wells Fargo & Co. economist. “Strong feeding, exports and ethanol production have given the market confidence. Also, China is exiting the market from the export side. So without that competition, there's a huge world demand.”
For livestock prices, Swanson expects a good, strong year for cattle and a good year for hogs.
Even though the market and prices look solid for the year, don't ease off striving to be a low-cost producer.
“Good prices or bad, it's all about where you stand relative to the competition,” Swanson says. “Cost of production is the only thing you can control. However, you need to constantly look for ways to innovate on your own operations. Don't just rely on off-the-shelf technology.”
So take another look at your books and polish up your cost-cutting skills. Pencil out new technologies and challenge yourself to stay in front of the pack. It's one of the best things you can do to stay strong in the year ahead.