Indiana's agricultural outlook for 2015.

• Author: Alexander, Corinne

The outlook for Indiana agriculture in 2015 is for the crop sector to face losses, while the livestock sector will enjoy a period of profitability.

As of October 2014, with the favorable weather this summer resulting in record yields for corn and soybeans, crop prices have fallen significantly. For example, corn prices have fallen 30 percent, soybean prices have fallen 23 percent, and wheat prices have fallen 32 percent since May. With normal weather in 2015 and normal crop yields, prices for corn, soybeans, wheat and hay could decline further as U.S. inventories of these commodities would continue to build. On a brighter note, these lower feed costs mean record profits for livestock producers, which would provide a much-needed incentive to expand their livestock herds; in time, these larger livestock herds will demand more feed and provide support to grain prices.

Pork

The pork industry has returned to profitability with producers earning over $60 per head in 2014 and anticipated returns of over $40 per head in the first half of 2015. There are two primary drivers of profitability in the hog industry: 1) lower feed prices and 2) supply problems as a result of the PED virus. Hog producers are currently expanding their herds, which will result in increased supplies of pork by summer of 2015. As pork supplies increase next summer, hog prices will moderate and profit margins will narrow in late 2015.

Dairy

The dairy industry is facing headwinds as milk prices are under pressure by the strong U.S. dollar that has weakened export demand and higher U.S. milk production. Because of lower feed costs, dairy producers are still profitable at these lower milk prices, and we expect the dairy sector to increase production in 2015. Therefore, milk prices are forecasted to be lower in 2015, but this will depend on how much U.S. milk production will increase and the level of dairy exports.

Beef

Over the last seven years, the beef sector has adjusted to prolonged drought conditions and higher feed costs by reducing the breeding herd. The beef cow herd numbers are at the lowest levels since 1951. As a result, per capita domestic beef availability in 2015 is projected to be 3 percent lower than in 2014 and 20 percent lower relative to 2007. Even though feed costs have moderated, the beef herd expansion will continue to be slow in 2015 due to ongoing drought conditions in the Southern Plains, Southwest and Western regions. Indiana beef producers with access to...