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June 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.

Corn Stocks at Lowest Level since 1998

Jun 29, 2012

Corn stocks were 14% below last year's levels and the lowest Q3 number since the 3.04 billion bushels in June of 1998, indicating strong global demand for corn. The USDA estimates in 2012 the U.S. will plant 96.4 million acres of corn, the most since 1937 when an estimated 97.2 million acres were planted; this came as no surprise as corn planted acres fell in line with analysts' expectations. The increased acreage of planted corn is the USDA's feeble attempt to increase production numbers, as their estimate of average yield, 166 bushels per acre, will certainly fall short due to sustained dry and hot weather across the Corn Belt. Soybean planted acres increased due to double-cropping and attractive pricing, in March, compared to corn.

Acreage
Farmers are expected to plant 228.5 million acres of corn, soybeans, and wheat for the 2012 crop year, a 3.3% increase from 2011's 221.3 million acres. Improving agricultural economics is incentivizing farmers to plant as much acres as possible.
Corn planted acres for 2012 were estimated at 96.4 million acres, the largest acreage since WWII and a 5% increase from 2011's 91.9 million acres. This is an increase from March's estimate of 95.9 million acres, but not surprising as on average the USDA increases planted corn acreage by 1.3% from the March to June acreage report.
Soybean planted acres was estimated at 76.1 million acres, an increase of 1% from last year's 75.0 million acres and the third highest on record. Record breaking planted acreage is expected in New York, North Dakota, and Pennsylvania. South Dakota expects to tie its previous record high.
The increase in soybean acres planted was due to an early winter wheat harvest which allowed farmers to double-crop with soybeans. Another farmer incentive for planting soybeans was attractive new crop prices in March, compared to corn.
Wheat planted acres were estimated at 56.0 million acres, an increase of 3% from 2011's 54.4 million acres. Not much has changed since March's Prospective Planting report of 55.9 million acres as high wheat supplies provided little incentive for farmers to plant wheat.
Quarterly Stocks
Corn stocks as of June 1, 2012 were estimated at 3.15 billion bushels, a 14% decrease from last year. Of the 3.15 billion bushels, 1.48 billion are stored on farms, down 12% from 2011. 1.67 billion bushels were being held in off-farm locations, a 16% decrease from last year. Disappearance from March 2012 to May 2012 was 2.87 billion bushels a year prior.
Soybean stocks as of June 1, 2012 were estimated at 667 million bushels, a 8% increase from 2011. On-farm stocks were 179 million bushels, a 18% decrease from a year prior. 488 million bushels were located in off-farm locations, a 22% increase from last June. Disappearance from March 2012 to May 2012 was 707 million bushels, a 12% increase from last year.
Wheat stocks as of June 1, 2012 were estimated at 743 million bushels, a 14% decrease from a year prior. 112 million bushels were held in on-farm locations, down 14% from last June. Off-farm stocks were estimated at 631 million bushels, a 14% drop from a year ago. Disappearance from March 2012 to May 2012 was 457 million bushels, a decrease of 19% from last year.
Outlook
Today marked the first time a USDA report of this magnitude was released while the market was open. Corn, soybean, and wheat prices rallied but most likely due to the cheap dollar and dry hot weather across the Corn Belt, not these reports. We believe corn prices will remain strong going forward as we feel the planted acreage was well above actual numbers and prices will be supported by diminishing  yields due to the continued heat wave in the Corn Belt.

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

 

Crop Progress: Corn Conditions Dangerously Low

Jun 25, 2012

Corn and soybean conditions declined for the third consecutive week as the Corn Belt continues to see hot and dry weather. Abundant rainfall is needed for conditions to improve. Expectations for a record corn crop in 2012 are all but eliminated and now the question is “How tight will stocks be?”

 

As of June 25, 2012 corn conditions have deteriorated to 56% of the crop in good or excellent condition, compared to 63% last week and 68% last year. 10% of the corn was silking which is above the five-year average of 3%. Corn prices increased by 5.3% over the past week ending at $6.31 per bushel and year-over-year prices have decreased by 5.8%.

 

As of the fourth week of June, 12% of U.S. soybeans have bloomed which is ahead of its five-year average of only 4%. Soybean conditions worsened as 15% is in very poor or poor condition compared to 12% last week. Soybeans in good or excellent condition have decreased by 3% from last week to 53%. Soybean prices increased by 7.1% over the past week ending at $14.82 per bushel and year-over-year prices increased by 12.3%.

 

Of the six primary spring wheat producing states, 57% of the wheat has headed by this week. Spring wheat conditions are favorable as 77% is in good or excellent condition and only 4% is in poor or very poor condition.

 

Winter wheat conditions continue to outpace last year's conditions with 54% of the winter wheat crop in good or excellent condition, a 19% increase from last year. Winter wheat in very poor or poor condition is at 17%, a 25% decrease from one year prior. As of the fourth week of June, 59% of the winter wheat has been harvested, compared to the five year average of only 27%. Wheat prices ended the week at $7.24 per bushel, a 14.9% increase from last week. Year-over-year wheat prices have increased 14.0%.

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

 

Global Economy Affecting Rural Economics

Jun 25, 2012

The Rural Mainstreet Index (RMI) decreased slightly this month, but remains growth positive, as the global economy continues to slowdown. The farmland price index declined this month to its lowest level since July 2011, but remained above growth neutral for the 29th consecutive month.

The Rural Mainstreet Index decreased to 56.7 from a 58.5 in May and its lowest level since last October. This marks the tenth straight month the RMI has been above growth neutral.

Rural Mainstreet Index June 2012

According to Creighton University economist Ernie Goss, “Our surveys point to slower but positive growth for the agriculturally and energy dependent areas of the nation. The global economic slowdown combined with a stronger U.S. dollar has pushed agriculture and energy prices lower. This is weakening overall growth for the Rural Mainstreet economy.”
 
Agriculture

Although the farmland price index decreased, it remains above growth neutral, posting a 60.0 from a 64.6 in May. This marks the 29th straight month the index has been above growth neutral. The farm equipment sales index decreased significantly to 54.7 from May's 65.1.

“Europe’s economic turmoil has pushed the value of the U.S. dollar higher and agriculture prices lower. Over the past two months, for example, farm products have declined by 3 percent. This is slowing growth in the farm sector for both farmland and farm-equipment sales,” said Goss.

Farmland Price Index June 2012

Bankers were asked this month about the new farm bill. An overwhelmingly 87% support separating the food stamps program from the farm bill. The new farm bill also includes spending for research on agriculture and energy, and 64% of bankers support spending on research.

Banking
 
For the fourth consecutive month the loan volume index has increased to a 64.2 from 56.9 a month prior. The check deposit index decreased to 55.3 from 62.9 in May and the certificate of deposit and savings instruments decreased to 38.9 from 41.7 in May.

Junes hiring index decreased to 59.1 compared to 59.2 in May. “Job growth across the Rural Mainstreet economy continues to exhibit a great deal of geographic variation with strong growth in Colorado, Iowa, Kansas, Minnesota, and North Dakota. Employment growth was much weaker in rural Illinois, Missouri, Nebraska, South Dakota and Wyoming. Overall government data shows that job growth in urban areas is currently double that in rural areas,” said Goss.
 
The economic confidence decreased to 58.5 from May's 60.2. “European economic problems, weaker farm prices and slower global economic growth failed to significantly lower optimism among bankers in our survey regarding the outlook for their local economies,” said Goss.

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.

 

Crop Progress: Midwest Conditions Remain Dry

Jun 18, 2012

Corn and soybean conditions decreased for the second consecutive week due to the lack of precipitation across much of the Corn Belt. Rains came across less than half of the Corn Belt this weekend and fell short of the much needed moisture. Dry and hot weather conditions are forecasted for the rest of this week.

 

As of June 18, 2012 corn conditions have weakened as 63% of the crop is in good or excellent condition compared to 66% last week and 70% a year ago. Corn prices increased by 1.5% over the past week ending at $6.01 per bushel and year-over-year prices have decreased by 14.1%.

 

As of the third week of June, 95% of U.S. soybeans have emerged which is an increase from 77% at the same time last year. Soybean conditions worsened as 12% is in very poor or poor condition compared to 10% last week. Soybeans in good or excellent condition have decreased by 4% from last week to 56%. Soybean prices decreased by 2.6% over the past week ending at $13.89 per bushel and year-over-year prices increased by 4.2%.

 

Of the six primary spring wheat producing states, 33% of the wheat has headed by this week. Spring wheat conditions are favorable as 76% is in good or excellent condition and only 3% is in poor or very poor condition.

 

Winter wheat conditions continue to outpace last year's conditions with 54% of the winter wheat crop in good or excellent condition; an 18% increase from last year. Winter wheat in very poor or poor condition is at 17%, a 24% decrease from one year prior. As of the third week of June, 48% of the winter wheat has been harvested, compared to the five year average of only 16%. Wheat prices ended the week at $6.29 per bushel, a 0.2% decrease from last week. Year-over-year wheat prices have decreased 6.4%.

 

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

 

 

 

WASDE: Corn Balance Sheets Remain Unchanged

Jun 12, 2012

The USDA projected corn balance sheets as unchanged in June, a slight surprise to analysts as they estimated a reduction in supplies due to dry weather in the corn belt. Soybean and wheat supplies were decreased slightly, in line with analysts' expectations. Today marked the first time the Chicago Board of Trade was open during the WASDE's 7:30AM CT release time.

Corn

 

Projected U.S. 2012/13 supplies, production, and use were unchanged this month. 2012/13 ending stocks remained at 1.88 billion bushels. The 2011/12 and 2012/13 projected range for season-average corn prices was unchanged and remain $5.95 to $6.25 and $4.20 to $5.00, respectively.

 

U.S. corn usage to produce ethanol in 2011/12 was projected 50 million bushels higher, reflecting recent ethanol trade and production data. Corn exports were projected to decline by 50 million bushels as sales and shipments fell below previous estimates. 2011/12 U.S. corn ending stocks remained at 851 million bushels.

 

Global coarse grain supplies in 2012/13 were estimated to increase 4.8 million tons due to increases in corn production and beginning stocks. 2012/13 global corn beginning stocks were increased by 1.6 million tons on higher production from Brazil and China in 2011/12.

 

The USDA's unchanged balance sheet for corn came as a surprise to analysts who predicted a decrease in supplies. We will keeping a close eye on the weather patterns in the Corn Belt as continuing drought would have an adverse effect on production and supply.

Soybeans

2011/12 U.S. soybean exports were increased this month by 20 million bushels due to increased global import demand. U.S. ending stocks for 2011/12 were estimated to decrease 35 million bushels to 175 million bushels.

 

U.S. soybean ending stocks for 2012/13 were projected at 140 million bushels, a five million bushel decrease from last month. Exports for 2012/13 were estimated 20 million bushels lower to 1.485 billion bushels due to decreased supplies. The 2012/13 average soybean price was unchanged at $12.00 to $14.00 per bushel.


We look forward to the acreage report that will be released later this month as we believe more soybeans will be planted due to the timely increases in soybean price and lack of available corn seed for re-planting.

Wheat

U.S. wheat beginning stocks for 2012/13 were adjusted down by 40 million bushels due to increases in food usage and exports. The increased food usage reflects the North American Miller's Association's higher than expected flour milling during the January to March quarter.


U.S. wheat production for 2012/13 is estimated down 11 million bushels to 2.234 billion bushels based on lower production for winter wheat and dorum wheat. 2012/13 ending stocks were projected to decrease by 41 million bushels. The season average wheat price for 2012/13 was projected at $5.60 to $6.80 per bushel.

 

Global wheat supplies for 2012/13 were decreased by seven million tons. Global production for 2012/13 was lowered as there were reduced crop prospects for several exporting countries including Russia, U.S., EU-27 and Turkey.

Outlook

 

The poor conditions of the U.S. corn crop reflected in the latest crop progress report were not taken into consideration in this report and we now expect major revisions in next month’s WASDE. The next major USDA report will be the quarterly acreage and grain stocks reports released at the end of the June.

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

Crop Progress: Crop Conditions Weaken Below 2011 Levels

Jun 11, 2012

Corn and soybean conditions worsened this week and are below last year's levels for the first time this year. Dry and hot conditions across the Corn Belt are blamed for these poor crop conditions as many farmers are hoping for a much needed rainfall.

 

As of June 10, 2012 corn conditions have further weakened as 66% of the crop is in good or excellent condition compared to 72% last week and 69% a year ago. Corn prices increased by 4.4% over the past week ending at $5.92 per bushel and year-over-year prices have decreased by 24.8%.

 

As of the second week of June, 97% of U.S. soybeans have been planted, a 16% increase from a year ago. Of the 97% planted, 90% have emerged which is an increase from 58% at the same time last year. Soybean prices increased by 6.2% over the past week ending at $14.22 per bushel and year-over-year prices increased by 2.5%.

 

Of the six primary spring wheat producing states 15% of the wheat has headed. Spring wheat conditions are favorable as 75% is in good or excellent condition and only 4% is in poor or very poor condition.

 

Winter wheat continues to outperform 2011's conditions with 53% of the winter wheat crop in good or excellent condition; an 18% increase from last year. Winter wheat in very poor or poor condition is at 17%, a 25% decrease from one year prior. As of the second week of June, 35% of the winter wheat has been harvested, compared to the five year average of only 9%. Wheat prices ended the week at $6.30 per bushel, a 0.8% increase from last week. Year-over-year wheat prices have decreased 17.0%.

 

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

 

 

 

Crop Progress: Corn Conditions Remain the Same

Jun 04, 2012

Corn conditions remain constant and going forward we will keep a close eye on the hot and dry weather patterns in the Corn Belt which could have an adverse effect on conditions.

 

As of June 4, 2012 a total of 97% of the U.S. corn crop has already emerged compared to 75% from a year ago. Corn conditions are favorable as 72% of the crop is in good or excellent condition compared to 67% a year ago, and only 5% in poor or very poor condition.

 

As of the first week of June, 94% of U.S. soybeans have been planted, a 31% increase from a year ago. Of the 94% planted, 79% have emerged which is an increase from 39% at the same time last year.

 

Of the six primary spring wheat producing states 3% of the wheat has headed. Spring wheat conditions are also favorable as 78% is in good or excellent condition and only 2% is in poor or very poor condition.

 

Winter wheat continues to outperform 2011's conditions with 52% of the winter wheat crop in good or excellent condition; a 18% increase from last year. Winter wheat in very poor or poor condition is at 18%, a 26% decrease from one year prior. As of the first week of June, 20% of the winter wheat has been harvested, compared to the five year average of only 3%.

 

Corn prices increased by 0.9% over the past week ending at $5.67 per bushel, soybean prices decreased by 3.4% over the past week ending at $13.39 per bushel, and wheat prices ended the week at $6.25 per bushel, a 4.7% decrease from last week. Year-over-year corn prices are down 24.8%, soybeans are down 5.3%, and wheat is down 19.1%.

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

 

Grain Prices Decrease on Strong Crop Conditions

Jun 04, 2012

Above average crop progress of corn, soybeans, and wheat across the U.S. has lead to a bearish outlook on new crop grain prices. The 2012 corn crop in good or excellent condition stood at a full 9% better than in 2011 and timely rains that moved across the Corn Belt at the end of the May should continue to suppress prices. The economic slowdown in the U.S., China, and the rest of the world has also pushed grain prices lower alongside the strengthening U.S. Dollar.

Farmers have been busy finishing their planting for the 2012 crop year as 76% of soybeans have already been planted as of May 29th. Soybean planting typically follows corn planting in the Corn Belt as corn has a longer growing period until reaching maturity. Fertilizer, herbicide, and pesticide application will now be farmer priorities heading into June.

Grain Prices

Corn prices closed at $5.55 per bushel and decreased by 18.9% in May due to excellent weekly crop condition reports by the USDA. Commercial profit taking by investors paired with the currently strong U.S. Dollar has caused corn prices to decrease with other commodities as well. Projected U.S. 2011/12 ending corn stocks were increased 50 million bushels to 851 million bushels due to larger than expected wheat supplies and the competitive pricing wheat has compared to corn, implying wheat will be the choice of feed this summer, according to the May USDA WASDE Report. Additionally, the average U.S. corn yield for 2012/13 was estimated at 166.0 bushels per acre by USDA which was a 2.0 bushel per acre increase from the 1990 to 2010 trend due to the early planting. Such a domestic yield would provide the U.S. with 15.7 billion bushels of corn, a 16.3% increase from previous estimates.

The rally in soybean prices ended this month with a 12.2% decrease to close at $13.40 per bushel. Prices were volatile throughout May but outside market pressure, a stronger U.S. Dollar, and commercial selling pushed soybean prices lower. The favorable weather throughout May in the Corn Belt has been hurting the majority of agricultural commodity prices. U.S. soybean production for 2012/13 was projected at 3.205 billion bushels in May's WASDE, an increase from 2011/12 due to increased yield projections of 43.9 bushels per acre in 2012/13, up 2.4 bushels per acre from previous estimates. Supplies of domestic soybeans were estimated at 3.43 billion bushels, a 4.0% increase from 2011/12.

Wheat prices declined by 0.6% this month, closing at $6.43 per bushel. Prices followed corn and soybeans downward on outside market pressure and above average crop conditions, although potentially dry conditions in the Southern U.S. Plains, Black Sea region, and eastern Australia have provided upward price support. USDA estimated 2012/13 production for U.S. wheat at 2.245 billion bushels, the highest since 2008/09. Average yields were estimated at 45.7 bushels per acre, an increase of 2.0 bushels per acre from 2011/12. Wheat supplies for 2012/13 were projected up 5.0% to 3.133 billion bushels in the May WASDE.

Farmland Values

Farmland values have been increasing across the Corn Belt in 2012. Federal Reserve Banks across the Midwest released their farmland value survey results this month and values increased by over 20% for the second straight year in the Tenth District in Kansas City and 19% year over year in the Seventh District in Chicago. Farmland values increased by 5% in the first quarter of 2012 in the Seventh District and 8% in the Tenth District. The demand for acquiring land is continuing to grow.

Farmers continue to be the support behind auction sales, driving up sales bids. Although investors were looking to purchase farmland, farmers purchased a higher share of acres sold in the past three months due to increased farmer income over the last year. Demand to purchase farmland was on the rise as 74% of bankers reported higher demand.

The Creighton University Rural Mainstreet Farmland Index decreased this month to 64.6 from 69.4 in April, although this month marks the 28th straight month the index has been above growth neutral. The farm equipment sales index increased to 65.1 from April's 62.4.

Planting Progress and Conditions

Crop conditions are well above historical averages as 72% of the U.S. corn crop is in good or excellent condition compared to 63% last year. As of the fourth week of May, 89% of U.S. soybeans have been planted, a 41% increase from a year ago. Of the 89% of planted soybeans, 61% have emerged which is an increase from 22% at the same time last year. We will continue to watch crop conditions and weather across the Midwest and gauge how realistic USDA's estimate of 166.0 bushels of corn per acre on average truly is.

Of the six primary spring wheat producing states 96% of the wheat has emerged, compared to the five year average of 68%. Spring wheat conditions are also favorable as 79% is in good or excellent condition and only 2% is in poor or very poor condition. Winter wheat continues to outperform 2011's conditions with 54% of the winter wheat crop in good or excellent condition; a 21% increase from last year. Winter wheat in very poor or poor condition is at 17%, a 27% decrease from one year prior.

Outlook

Grain markets will be heavily correlated to the weather patterns across the Corn Belt and crop conditions moving into the summer months. In late June, USDA will release an updated acreage report which grain markets will closely monitor for any changes to soybean and corn acres. Some isolated areas of the Corn Belt received significant rainfall that drowned out corn acres thus forced the field to be replanted with soybeans. Additionally, soybean prices at $15.00 per bushel in early May could have lead farmers to make a last minute switch from corn.

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

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