From a commodities perspective, there are several factors that have to be considered, including usage levels, the potential for farmers to switch to a different feed crop, weather conditions and production in South America, said Chad Hart, associate professor of economics, crop market specialist and extension economist at Iowa State University.
Crop prices are expected to be low, but likely without a return to the market bottom set in the August to September period of 2016, he said.
“It feels like an echo of last year,” he said. “In 2016, we saw prices stay low in the early part of the year, and then as we approached springtime, that’s when we saw the rally.”
There is a potential for a weather-based price upturn this year, he said. It could be seen either from another set of crop challenges in South American or production issues in the US.
“I’ve been watching the drought in the Southeast [US],” said Hart. “Drought in the southeast tend to move toward the Midwest and if that does it has the potential to slow supplies down in the Midwest.”
However, a move from some acres used in corn production in 2016 to grow soybeans in 2017 is expected and has been predicted by the US Department of Agriculture (USDA), he said. “They have acreage increasing, but I think it should be up I think we’ll see more substantial growth on the soybean side,” he added.
Low commodity prices in 2016 mean that soybeans outperformed corn, he said. “Even though the futures market isn’t showing a lot of carry for 2017, the prices are still high enough,” he said.
“That’s the key here as we look right now,” he said. “The shift last year was corn, and soybeans saw an increase, but corn dominated the 2016 crop landscape. I think in 2017 it will be soybeans that definitely does that.”
Trade association perspective
For the American Feed Industry Association (AFIA), next year is all about the Food Safety Modernization Act (FSMA) and liaising with the incoming administration on trade.
Richard Sellers, senior vice president of public policy and education, said the AFIA will continue education and training efforts related to FSMA.
Work with the Trump team is expected to cover several areas but with a particular focus on regulation and trade, he said.
“We think the Trump administration could be the doorway to relaxed, but reasonable, regulation if the president-elect keeps his word,” said Sellers. “The AFIA also hopes Trump is open to reconsidering areas of costly and time consuming regulations such as the FSMA, which will cost our industry millions of dollars that have yet to show equal or greater value in safety to the industry or consumer.”
The trade group has continued to stress the importance of trade with the Trump administration, he said. “Currently, the AFIA is still steadily working to educate the incoming administration on the importance of TPP [the Trans-Pacific Partnership] for its connection to American jobs and a fair playing field for the countries involved in the trade deal,” he added.
'Trade is going to be a huge issue for all of us'
Regulation and trade are also at the top of the list of issues to watch in 2017 for the US National Grain and Feed Association (NGFA).
Randy Gordon, NGFA president, said: “We’re going to spending a lot of time continuing the education of the industry on compliance related issues."
Areas for focus include the sanitary food transportation rule as it includes multiple entities like grain elevators, explained Gordon.
“We were disappointed at the final rule, in that it didn’t have more shared responsibility by the carriers and the feed and grain industry in ensuring clean conveyances,” he said. “We’ve had some conversations with the FDA (US Feed and Drug Administration).”
A perceived shortcoming of the rule for the NGFA is that there is little obligation from transporting groups to provide information on previous loads or clean out of conveyances, said Gordon.
The industry may be more prepared for the implementation of the Veterinary Feed Directive (VFD), he said. But more could be done in relation to how paperwork is managed and maintained under the VFD rules, said Gordon.
"Trade is going to be a huge issue for all of us,” he said.
The NGFA is looking forward to working with the new administration to review and improve trade agreements, with an eye to a possible revision of the North American Free Trade Agreement (NAFTA).
The nomination of Iowa governor, Terry Branstad, for the role of US ambassador to China is a positive development from the NGFA’s perspective, added Gordon.
He is also enthusiastic about the development of new gene-editing technology but called for dialogue: “There needs to be good robust international discussion and that’s being led by the international grain trade coalition. We need to have some international regulatory coherence around that. It will be a big area of discussion for the next couple of years as it moves toward commercialization.”
There also will be a push for more engagement with consumers, to explain the reasoning behind the structure of the US agricultural system, he said.
“All of us in agriculture need to get much more engaged than we have been over why we grow our food the way we do, and the benefits to food security that it provides,” said Gordon. “Our industry is there to be responsive to customers.”
Sustainability efforts also may play a role in that discussion: “It’s in our best interest to produce as much as we can in as sustainable a way as we can," said Gordon.