(relaxing music) (upbeat music) - Hello, everyone and happy new year, I'm Lyndall Stout.

As we kick off 2022, we are featuring our annual SUNUP round table with our OSU Extension Agriconomist, Dr. Kim Anderson, Grain Marketing Specialist, Dr. Derrell Peel, Livestock Marketing Specialist, and Dr. Amy Hagerman AG Policy Specialist.

Today, we'll spend some time looking back at the past year, seeing where we are as we're starting the new year, and looking ahead at what the next 12 months may have in store.

(upbeat music) First step is Dr. Kim Anderson.

Kim, let's take a look back at 2021, the year that was.

Some of the big trends and big news in the markets that you kept an eye on.

- Well, 2021 turned out to be a relatively good year.

Looking at wheat go back to 2020, the harvest time period, $4.10.

In 2021, our harvest average price for June and July was $6.10 a bushel, $2 higher.

We had 40 bushels per acre that's tied the record of the year before, our production was 115 million bushels compared to 104 million the year before.

So farm income for wheat was relatively good.

You look at the wheat prices.

We came on through the year get out into August, average price 6.80.

October 1, we hit $7 wheat, and on November the 12th, we hit $8 wheat.

So this has been a relatively good year for wheat.

Corn, another excellent year, 2020 harvest price was $3.70 a bushel.

$5.25 this year.

Our yield in 2020 was 150 bushels per acre, 155 bushels per acre for corn in Oklahoma, and that's good deals.

You look at Oklahoma production last year, 432 million bushels, 465 million this year.

Good income from corn.

Soybeans, $9.25 last year, 11.75 this year, $2.50 higher.

Cotton .68 last year, this year, a dollar or higher during harvest.

You look at cotton production, 636,000 bushels last year, 760,000 bushels estimated for this year.

Excellent year for income for Oklahoma crop farmers.

- And that certainly a nice way to wind down the year.

As we start the new year, and we kind of take a look at this moment in time.

Where are we at the 1st of January?

- Well, we're set in relatively good.

Our prices are holding up.

Wheat prices backed off a little bit here recently, a lot going on in the world.

Our higher prices have been mostly demand driven.

Now total US wheat production was down, corn production was up, soybean production was higher, held those prices.

So what we've got right now is a demand driven price, and when we lose that, we're going to go back to a supply driven price, which is relatively normal, and we're going to have some market adjustments and probably lower prices.

The other thing we got to look at is our weather.

Current weather is dry around the state.

We need some rain.

The one month forecast is for well above average temperatures, below average precipitation.

You look at the 90 day that December, January, and February, you get out, and it says pretty much slightly above average temperature and average to a slightly below average for precipitation.

Which means February has the potential to be slightly cooler maybe normal temperatures with a relatively good precipitation, but that's gonna impact fertilizer top dressing for a wheat, and that's what produces will be taken in consideration in applying that nitrogen is how much moisture they have.

- As we look at the year as a whole, the 12 months ahead.

What kind of trends are you forecasting, you and your fellow analysts, in the grain industry?

- Well, the best predictor of price is the futures price or the forward contract price, and you look at a forward contract price for a wheat.

A year forward contract in Northern Oklahoma around $7.60 a bushel.

Corn for the 2022 harvest is $5.25.

Soybeans 11.80, canola $12.60, cotton around .85.

So all of those commodities, cotton's only when it drops off a little bit.

Remember cotton is normally around .69-.70 is we're in harvest, .85 still a relatively good price.

However, I think our farm income is going to be down.

- We may have relatively good prices, and I expect those, but our fertilizer, our inputs, our equipment, everything is costing more right now, and that's gonna reduce that income.

I still think it's got the potential for good and healthy income, but the weather's gonna determine that price.

Remember, policy comes, policy goes, but weather determines price and weather, again, will determine our income for 2022.

- So producers, they need to sharpen their pencils and get a new notepad and still put pencil to paper, right, for the new year?

- Well, as my son tells me, "Dad, throw away that pencil, and get a good computer, "and learn how to use it."

- Exactly.

Kim, thank you very much for the great information as always, and of course, Happy New Year to you and yours.

- Well, I'm glad to start the new year out with you and working for the farmers of the state of Oklahoma.

- Of course, we'll see you again next week.

(upbeat music) - So as we enter the colder months of the year, I think it's particularly important to consider how we're taking care of those pregnant cows.

In particular, we need to consider fetal programming, which is the concept that how stress and other influences on the cow, particularly nutritional influences on that cow, impact not only her, but maybe more importantly, that calf in utero.

And so I think it's important to recognize for a long time it's been thought, "Well, the biggest part of growing for that calf in utero is going to be in that last trimester."

And what we found over recent years is we've got more and more impacts, recognizing that organ development and tissue development, placental development, occur throughout the pregnancy, and so we need to make sure we're maintaining those pregnant cows right from the get-go, and we're monitoring them closely, particularly again, in these winter months as nutrition reserves become depleted.

The beginning of the year is a really great time to sit down with your veterinarian and discuss some of your operational goals and how your veterinary practitioner fits into the team for your operation.

Particularly, for cow-calf producers, as you're looking into spring and spring calving, you want to make sure that you have treatment plans in place, know when to call that veterinarian, and then also take a more broader, maybe a little bit more holistic, look of your operation and see how your veterinarian can add value to your current practices, and just because that's the way we've always done it, doesn't mean it's the best practice now.

And so it gives us an opportunity to set aside some time, maybe sit down across the kitchen table, and visit with our veterinarian on what things should we be considering as we go into the next year so that we can have a profitable and successful beef cattle operation.

(upbeat music) - We continue our round table discussion now with Dr. Derrell Peel.

Derrell, let's look back at the livestock markets in 2021 and some of the things that made big news and some of the pricing trends that you have observed.

- Yeah, you bet.

You know, 2021 started with some carryover impacts from 2020, pretty direct impacts, particularly in the fed cattle market.

So the dynamics in 2020 created a bit of a backlog of fed cattle that we brought in to 2021, and when you combine that with the fact that the packing industry has really been living close to the knife edge, if you will, in terms of the balance between the supply of fed cattle and the capacity, it took much of the year, about 10 months of the year to, sort of, work through that backlog.

So we spent a lot of time with that market, kind of holding everything else back, if you will.

Fed cattle prices moved slowly higher, but they really were just pretty stagnant for much of the year.

The feeder cattle markets had more optimism built in them and started to reflect that as much as they could through the year, but they were really waiting for the fed cattle market to get in line and let them go for that.

Other things that we've dealt with this last year, obviously, drought has been a big issue in the cattle industry, and so we did see elevated beef cow slaughter through the year.

We know that that's added to cowherd liquidation.

It's bringing numbers down.

The cowherd actually peaked in 2019, so we've been getting a little bit smaller for a couple of years, but we added to that with the additional slaughter that we saw in 2021.

So we've had that, and partly because of the drought, we've seen significant increases in hay prices, particularly in those drought areas.

- In general, hay prices are a little bit higher, but obviously, hay markets are pretty regional.

So some parts of the country had pretty adequate supplies and not too much change in price.

Some of those drought areas saw prices 75% to 100% higher on a year over year basis as we move through the year.

Other, you know, the feed grain prices have been higher.

So feed lots in particular are experiencing sharply higher cost to gain through 2021.

And, you know, in fact by October, we had a cost to gain in the feed lots reported at about 40% to 50% higher year over year.

So that's something that we'll carry forward, you know, from this point on, is dealing with those, those higher feed prices.

Beef demand has been strong.

Exports were strong in 2021.

So, you know, there was a lot of change from the beginning to the end of the year.

- Let's take a look now that we're at January 1st and everyone's kind of optimistic, of course, at the first part of the year.

Are we seeing optimism at this stage?

- Yeah, again, and we ended 2021 on a very strong note with the cattle markets, with the fed cattle market finally kind of turning the corner late in the year.

So the stars kind of aligned for all of the segments to, to sort of get on board.

And so we're really starting to see things happen.

Again, beef demand was strong through the year.

We're carrying that into the new year.

Exports actually set a record in 2021, exceeding 2018 was the previous record in terms of the quantity of beef exports.

They'll probably drop a little bit in 2022, but, but you know, we're ending the year on a very strong note from a demand standpoint.

We're also seeing sort of the effects of these tightening cattle and beef supplies as we go forward.

We had record, all time record, beef production in 2021 as a result of, of kind of the way the timing has worked out on these peak feedlot numbers in the early part of the year.

- So as we look at the 2022 as a whole, and some of the things that you and your fellow analysts are keeping an eye on, what do you want to pass along to Oklahoma producers?

- Well, again, we're really in a position to sort of capitalize on the optimism that's been building in the industry.

So, you know, we're coming into the year with prices across the board, feeder cattle prices, whether it's calves or big feeder cattle or fed cattle prices, sharply higher on a year over year basis.

And we expect that to continue.

So we're looking for higher average prices in 2022.

You know, there's little doubt that the revenue side of the equation is going to look better in 2022.

There are some challenges on the, on the cost side of things.

So profitability will depend really on cost management.

Again, hay prices, feed and supplement prices in general, in some places, depending on the type of forage base that we're using, fertilizer and other input prices will also be important.

So, so the cost management is probably going to be the place where producers really need to put their emphasis in 2022.

But in general, we've got a lot of optimism coming in the market from both the demand, as well as tighter supplies helping support these markets.

- Well, we'll take the optimism, so... - Absolutely.

- Thank you very much for keeping us all informed on Sunup and of course, Happy New Year to you.

- Happy New Year to you and to all producers in Oklahoma.

- Okay, we'll see you again soon, Daryl.

Thanks a lot.

(upbeat music) - Hello, I'm Wes Lee, here with the Oklahoma Mesonet again.

I thought we would do a little bit of a summary of the weather situation for this past year, 2021, and then take a brief look at what we kind of expect to happen, at least in the early part of next year, 2022.

Well, 2021 started off a little bit cooler than normal for the first few months of the year, especially highlighted with February.

In February, we set 80 new records with the Oklahoma Mesonet on the coolest temperature ever recorded.

That would be since we started in 1994.

In fact, the entire month of February came in at about 10 degrees below normal on average.

And that's an extremely large number.

After that, we felt we had about six weeks of no more freezing temperatures, from that mid February timeframe.

So six weeks of above freezing temperatures that let the crops, the trees start to leaf out and everything.

And then we get into to mid to late April and we had a very significant freeze that impacted several crops, including pecans and a few other things.

After that, the temperatures remained fairly close to normal for the rest of the year or through the summer.

And then we come into the fall.

Since fall, we've been extremely warm more days than not, and we're going to end the year well above normal for the last two or three months.

As far as rainfall for this past year, pretty close to normal statewide for the first half of the year.

Then about late June, early July, it seems like the rainfall stopped, especially in Western Oklahoma.

And so things have got really dry in the west.

The east is still picking up enough rain that they're doing pretty well, but the east, especially, the west, especially the panhandle is became extremely dry.

- Going into next year, what do we have to look forward to?

Well, we're in a very strong La Niña pattern.

It's an enso weather pattern that helps us predict what the weather is going to be in the winter and early spring months, which normally means warm and dry.

Exactly what we've had the last few months.

So I expect that's what we're going to get starting off the first part of 2022.

They are predicting that that weather pattern will shift to a neutral pattern at the end of March, first part of April.

So hopefully we'll return to normal temperatures, normal rainfall patterns when that happens at that time.

But until then, I would be prepared for warmer than normal temperatures and much drier than normal rainfall patterns, until that happens.

That doesn't mean we're not going to have those sporadic cold fronts move through the state.

And we may have some really cold days but overall, I think we're looking at warmer and drier than normal.

(upbeat music) - Our final topic today, is policy and trade, with Dr. Amy Hagerman.

Amy, let's take a look back at 2021, a little bit different than some of the rollercoaster we were on in 2020, for sure.

- Yeah, from the policy front, it was a relatively quiet year.

I say relatively quiet because we're really talking about agricultural policy.

Although there was a lot of discussion and a lot of things happening on the broader federal policy front.

In agricultural policy, where we're mainly focused on just implementing programs and doing really standard business in the agricultural policy area.

We did have a couple of bills that came through this year, that certainly have implications for rural areas.

The first being the Infrastructure bill, which included money for some of our rural electric cooperatives for some of our broad band here in the state, we are a state that has a lot of areas that don't have excellent broadband coverage.

So that could really have some implications here.

There was also money there for things like, rural health care and some of our other rural infrastructure, like roads and bridges.

So that certainly has implications for our rural communities in the state but probably not as much for our agricultural producers.

The bill that has a little more in it for our agriculture, is going to be the Build Back Better bill.

We don't have as much detailed information about what that's going to be at this point but I think one of the things that's really notable about it, is what's not in it.

The first is, there was a lot of discussion about eliminating stepped-up basis.

That did not make it into the final language of this bill.

So we don't have any anticipation that there would be an elimination of stepped-up basis, which is important for our landholders in the state.

The other thing that didn't make it in there, that has received some attention, has been any kind of tax on cattle.

And that also did not enter into any version of the final bill.

And so I think a couple of those things are important to note, for this bill as we go forward into the implementation phase.

- Speaking of programs, where are we with ARC and PLC?

- Actually, the flexibility that was built into the 2018 Farm bill, has really started to show benefits in the ARC and PLC program areas.

Now, if you remember, starting in the 2019 and 2020 year, people chose either ARC or PLC.

But then in '21, they were able to change.

For the '21 crop year, they were able to that election.

And that has really had benefits.

We've seen real changes in the market.

We've seen real changes in the price.

So whenever you're making this choice between a price protection program and a revenue protection program, we have seen people shifting from the price protection of PLC, somewhat into the revenue protection of ARC, depending on the commodity, just in anticipation of those crop prices, those grain prices and cotton prices starting to go a little bit higher, going forward.

So, we've seen payments coming through this fall, from the 2020 crop year, for both PLC and for ARC.

But we're really looking closely at those risk management decisions going into the next year for the safety net programs.

- Let's also take a look at trade in 2021.

And some of the differences that we saw this past year.

- We certainly saw some big impacts, in terms of implementation of the phase one trade deal.

We did see higher trade levels with China, in some of our agricultural commodities.

However, we didn't really see any new movement in the trade policy front.

There weren't any kind of new negotiations.

A lot of this had to do with just some of the mechanics happening in the background, in terms of appointments with this administration.

So we may see more movement in the trade front, particularly given that the phase one trade agreement only went through January 15th of 2022.

- So here we are at the beginning of the new year, lots of big things in the works.

So what do we need to be prepared for January 1?

- So I think the first thing, let's talk about risk management and let's talk about those programs for risk management.

Given where we are in terms of weather conditions, I think we need to be closely watching some of the drought programs and also some of the conservation programs spending.

Some of those conservation priorities include things that address things like wind, and water, erosion, and so we may see higher spending in those areas, particularly, related to the funds that are in the build back better bill, which does provide an infusion of funds for conservation programs like equip and CSP.

So we may watch for some of those programs, some of the drought assistance programs and some of the conservation programs to help prevent impacts of drought or address impacts of drought on our land.

The other thing we wanna watch for this year is we're watching those prices, we're watching those input prices, and trying to make just good best management decisions, and how can we best use federal programs and the safety net programs in particular in that year?

March 15th is the deadline to change the election to either ARC or PLC for base acres for producers who are enrolled in that program.

So we're watching the market prices really carefully going into this first quarter of the year to make that decision going forward.

Crop insurance is also gonna be very important, and I think we need to really carefully look at some of the programs associated with cover crops.

For producers who are already utilizing cover crops, again, there's some new money in some of these bills that might help address some risk management issues for producers who are already using cover crops.

Finally, just really looking ahead and thinking about the implementation of some of the money that's either in the infrastructure bill or the build back better bill, and being ready to take advantage of new opportunities and new programs as they come forward.

We don't have a lot of big bills on the horizon in 2022, but we're certainly gearing up for 2023, which is a farm bill year.

So we'll see a lot of listening sessions, we'll see a lot of discussion in 2022, in anticipation of building new policy in 2023.

- So we might have you on SUNUP more often, right?

- Absolutely.

- Okay, well, great information, Amy, and, of course, happy new year to you, and we wish you a great year as well.

- Thank you, you as well.

- Okay, we'll see you again soon.

(upbeat music) There are lots of big things in store for OSU AG Research in the new year.

Today, we introduce you to the new leader of that effort Dr. Scott Senseman.

- I grew up in Ohio, just outside of Dayton, came from a farm that my dad was running with my grandfather at the time, so I would have been I think the fourth generation of individuals that would have gone back to the farm.

They had hogs, cattle, corn, soybeans, and wheat, mostly, a little bit oats from time to time.

And then just here last eight years, I've been at University of Tennessee serving as Department Head for the University of Tennessee Plant Sciences Department.

- So this is the corn ax -- - We have 16 different research centers.

We have multiple facilities here.

So it's actually probably in the mid twenties of facilities that we have, and in my responsibilities to lead that organization.

Essentially, we're trying to find research based answers for problems that are within the State of Oklahoma.

Ultimately, what we hope is that those pieces of information get extended out to the public through the extension programs that we have here, as well as some of those research-based things end up in a classroom as well.

One of the things that I've noticed in traveling across the state is that the landscape changes quite a bit in a small amount of time.

We need different locations with different weather conditions, with different soil conditions, with different landscapes, to really in the best way possible, figure out what is the major problem areas for certain commodities, and try to use those different locations for the weather patterns that they have and the resources that they're using there.

The economic impact that we have across the state in our commodity value is substantial, and I think a lot of the research that goes on has a great deal to add to that and has been adding for many, many years, and I think telling that story is gonna be very important for us.

Infrastructure is certainly not a problem that's new to us.

We do have some avenues coming forward in the future.

No doubt infrastructure is an issue in this state at our land grant facilities, but we do feel like there is some great possibilities going forward.

I think if anyone is gonna go have a meal today or tomorrow, or is going to wear anything that's got a certain fiber in it like cotton.

I think if they put fuel in their car, if they do some things related to any of those types of activities every day, we have had something to do with that at some level in the research phase.

- That'll do it for us this week.

Thanks so much for joining us for our SUNUP round table.

Once again, we want to wish you and yours a very happy new year.

I'm Lyndall Stout, and we'll see you next time at SUNUP.

(upbeat music)