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December 2012 Archive for Farmland Forecast

RSS By: Marc Schober, AgWeb.com

Marc Schober is the editor of Farmland Forecast an educational blog devoted to investments in agriculture and farmland.

Rural Mainstreet Index Reaches Five-Year High

Dec 26, 2012

The Rural Mainstreet Index (RMI) increased for the fourth consecutive month and posted its highest level since June of 2007. The farmland price index remains above growth neutral for the 35th consecutive month.

The RMI increased to a 60.6 from a 57.5 in November. According to Creighton University economist Ernie Goss, "This is the healthiest reading that we have recorded since well before the national economic recession began in 2007."
Rural Mainstreet Index December 2012

Agriculture

The farmland price index decreased slightly to a 82.5 from a 83.9 the previous month. This marks the 35th consecutive month the index has been above growth neutral. The farm equipment sales index increased to a 67.0 vs. 60.4 last month.
 
Farmland Price Index December 2012

Bankers were asked where cash rents have moved over the last 12 months. On average, they believe that cash rents have increased by 15%. Bankers were also asked about the ethanol industry. 23.2% of bankers expect shutdowns or temporary closings of ethanol plants in their respective areas.

Banking
The loan volume index increased substantially to 62.1 from a 47.8 in November. The check deposit index increased to 75.8 from 75.1 last month and the certificate of deposit and savings instruments declined to 40.2 from 45.5 in November. "Bank CEOs are reporting significant increases in borrowing to purchase farmland and farm equipment," explained Goss.
December's hiring index increased slightly to 53.5 compared to 53.0 last month. The economic confidence index, which reflects expectations of the economy in the next six months, increased heavily to 55.5 from November's 45.6. Ernie Goss said, "Improvements in retail sales, home purchases and lower energy prices boosted banker’s economic outlook."
Survey
This survey represents an early snapshot of the economy of rural, agriculturally and energy-dependent portions of the nation. The RMI is a unique index covering 10 regional states, focusing on approximately 200 rural communities with an average population of 1,300. It gives the most current real-time analysis of the rural economy.

For daily articles on farmland and agriculture, visit www.farmlandforecast.com

WASDE: Minimal Changes to Balance Sheet

Dec 11, 2012

The USDA's December WASDE held few surprises as market participants look past the WASDE and into the holiday season. Corn and soybean balance sheets showed little change. Global wheat supplies were increased due to a jump in production. Prices were lowered for all three grains.

Corn

U.S. corn balance sheets were unchanged for December, but price outlooks were lowered, based heavily on reported prices from farmers. Through October, farmers received prices that were well below cash market bids. Corn season-average farm price has been lowered to $6.80-$8.00 per bushel.
 
The unchanged balance sheet came as a slight surprise as analyst pre-report estimates had an increase in 2012/13 U.S. ending stocks, due mainly to decreased export demand. The stocks-to-use ratio remains at a staggering 5.8%.
 
Global coarse grain supplies in 2012/13 were estimated to increase 7.0 million tons, mostly due to a larger than expected corn crop from China. Estimates from the National Bureau of Statistics estimates China's corn production has increased 8.0 million tons due to complimentary rainfall and incentive, due to prices, to plant more acres.
 
Soybeans
 
U.S. soybean exports for 2012/13 were unchanged at 1.345 billion bushels. U.S. 2012/13 ending stocks were decreased by 10 million bushels to 130 million bushels. The 2012/13 average soybean price was lowered by $0.35 on both ends of the range to $13.55 to $15.55 per bushel.
 
Global soybean production was projected up 0.1 million tons to 267.7 million tons, due to increased production from Canada.

Wheat 
 
2012/13 U.S. wheat ending stocks were increased by 50 million bushels to 754 million. Slower shipment pace and stronger than expected competition lowered 2012/13 wheat exports again, by 50 million bushels. The season average wheat price for 2012/13 was projected lower to $7.70 to $8.30 per bushel.
 
Global wheat supplies were estimated 1.6 million tons higher as world production was increased by 3.7 million tons.

Outlook
 
The Holidays are approaching, which means January 1 is around the corner and many issues will need to be addressed including the Fiscal Cliff, Farm Bill, and Crop Insurance. For agriculture news and research, visit www.farmlandforecast.com.
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