Nobody goes to sleep when Darrell Holiday comes to speak.
Even though what’s said, likely more often than not, doesn’t appeal to listeners, nobody questions the agriculture economist is completely honest and straight forward in his opinion.
At a Farm Profit Conference sponsored by 580 WIBW at Oskaloosa, Holaday, representing his Country Futures commodity business at Frankfort, opened the hour long-plus, always moving back-and-forth stage front presentation: “Let’s keep it simple.”
Yet, undeniably, Holaday’s remarks predicting “Where Are The Markets Headed” weren’t that easy for many of the 170-plus farm folks attending to grasp, much less swallow.
Predictors said fuel prices couldn’t go lower, but they’ve continued downward. “There are lessons in the energy sector,” Holiday said. “Don’t assume that prices can’t go lower than the cost of production and won’t go lower.”
Despite, lower prices, drillers are finding more oil. “The result is record large inventories of crude oil in the United States, and supplies are getting bigger,” Holaday said.
Additionally, U.S. ethanol production is growing steady even though margins are very thin. “There is a mature ethanol market with record large ethanol stocks,” Holaday stated.
World competition in grains is extremely tough. “The world has not set still,” Holaday said. “There has been big increases in acres and yields as technology and management have advanced without increased costs.
“This is being influenced by substantial currency weakness,” he evaluated.
Grain supplies in the United States and worldwide are growing at a faster pace than consumption, according to the speaker.
“Wheat is a serious concern,” Holaday insisted. “There’ll likely be increased corn and soybean plantings this year. Still, soybeans will be the last to fall.”
For grain prices, Holaday said “if trend yield in wheat is 46 to 48 or better, the September-October Futures low will be $3.85-$4.”
If trend yield in corn is “167-170 or better, expect a Futures low in November of $2.85-$3,” Holaday calculated.
Regarding soybeans, the economist predicted, if “trend yield is 46.5-47.5, Futures low in October will be $7 to $7.20.”
Looking at meat markets, Holaday said, “Remember, meat will be consumed, but the question is at what price?”
Poultry and pork supplies jumped in 2015, and the country is predicted to see another production jump in poultry this year.
“Bird flu was a serious problem for all of the meats as the United States had to find a home for 1 billion pounds of chicken that could not be exported,” Holaday said.
Feed supplies and strong margins at the cow-calf level have now put the U.S. beef industry at the brink of a major increase in beef production.
“The largest increases will be in 2017 and 2018,” Holaday said. “However, reduced imports from Australia in 2016 will be supportive.
“Beef exports in the next three year will be critical to keep the market supportive,” Holiday insisted.