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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.

What to Expect in 2010

Feb 11, 2010
2010 should be another exciting year for agriculture and farmland. The economy is expected to continue to stabilize in 2010, but headwinds from high unemployment and rising deficits in Europe will make it a bumpy ride. Farmers are happy that input costs have came down, but the large amount of crops in the ground due to the difficult harvest of 2009 will make spring planting difficult.
Below is a list of things we are keeping an eye on in 2010:
Land Prices – We should see a large amount of land sales in early 2010, as the late harvest delayed the traditional buying season this fall. We expect farmland values to perform well in 2010 as the economy continues to stabilize, grain prices recover, and banks become more willing to lend.
Recent reports from the University of Minnesota and Iowa State have shown strength in farmland prices as values have increased slightly recently.
Grain Prices –We were surprised by the increased production estimates from the USDA in January, but we expect the re-survey in the spring to show a significant decline in production, which should support grain prices. The USDA also needs to factor in the lower test weights of corn, which could drive a premium for higher quality corn. Meteorologists are expecting a wet spring in 2010, which could limit the amount of acres planted for 2010.
We expect corn to outperform in 2010 due to a rebound in feed demand, better ethanol economics, and farmers may transition to soybeans from corn due to the shorter growing season and higher prices.
Interest Rates – The big question for 2010 is when is the Fed going to raise interest rates. Futures markets expect that the earliest chance of an increase in the Fed’s target rate to 0.50% is next September and many analysts expect the Fed to hold steady until 2011.
Mortgage rates will be tested in March as the Fed begins to remove its temporary liquidity programs.
Ethanol – We expect the EPA this summer to increase the amount of ethanol in gasoline to 12% to 13% from 10%. The Obama administration’s proposal for Renewable Fuel Standards 2 should be a strong boost for agriculture as it will accelerate the demand for biofuels.
Remember to visit Farmland Forecast (farmlandforecast.colvin-co.com) for your daily update on news and research about agriculture and farmland during the busy 2010.
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COMMENTS (3 Comments)

Anonymous
I agree. I know of startup farmers that simply shared equipment with a buddy and they rented a half section to split.
9:25 AM Feb 12th
 
Anonymous
If you are a begining farmer don't buy land at 8000 plus you will live in debt your whole life. Share the risk with the land owner. Use old equipment, keep cost of production as low as possible, cash in the bank is worth far more than land ownership at stupid prices. The chance will be come along, be ready with the cash and act on it.
8:05 AM Feb 12th
 
 
 
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