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Producers Shouldn't Change Planting Plans

spring planting, planting plans

Submitted by Craig Askim, Extension Agent/Agriculture and Natural Resources

Friday the 13th, March 2020, the day that will be marked in history of when the world as we know it changed for at least the next few months anyway. The coronavirus has caused changes to our daily life and the way we presently conduct ourselves. Due to this change in our lifestyles many people have greatly changed their daily habits. However, the farming industry cannot change 360 degrees, things must keep moving forward. Cows will calf, spring will come, animals will still have to be fed and crops will have to be planted. I’m getting some calls from producers on what to change for the 2020 cropping/ranching year. In my opinion, don’t change much and stay the course. Will it be rough and bumpy in 2020? Guessing so, but remaining calm and keeping all options open will be the key to pulling through. Below is an article to back my statements.

Producers should not change their spring planting intentions because of the coronavirus outbreak, according to North Dakota State University Extension crops economist Frayne Olson.

"Don't change your plans based on what you see in the markets today because it's not going to be a good reference point," he says.

Livestock, grain and energy, mainly oil, prices and the stock market have dropped so dramatically because of the uncertainty surrounding the COVID-19 outbreak, and not because of a supply and demand issue, he notes. This situation is unprecedented, so people do not know what to expect and tend to think of the worst-case scenario.

"Right now, this is a psychological battle," Olson says.

The market volatility likely will continue until the number of new cases of

COVID-19 in the U.S. starts to decline, he believes. That is when people will feel that the worst is over. However, producers should not expect conditions to improve quickly.

"It's still going to be a slow process," Olson cautions.

Energy and grain prices probably will recover more quickly than livestock prices, he says. Livestock prices likely will rebound more slowly than the other two because of consumer behavior, such as how quickly they are willing to return to eating at restaurants. The stock market will be the last to recover.

In the meantime, despite the low prices, some producers may need to sell grain they have in storage because they need the money or the quality of the grain is deteriorating.

"For those who have to sell, go ahead and sell," Olson advises.

The lowest risk strategy is to buy a call option if producers want to take advantage when prices start to rebound, he says. However, producers will need to select a broker to work with and set up an account if they do not already have one. He also recommends producers do a bit of research so they understand call options.

Source: Frayne Olson, NDSU Extension Crops Economist, frayne.olson@ndsu.edu

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