Sep 2, 2014
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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.

Crop Conditions End August at 20-Year Highs

Sep 02, 2014

Fall frost remains the final major threat to corn and soybean crops whose conditions remain at 20-year highs. Farmers at the Farm Progress show noted excellent growing conditions present this farming season, but some were not as confident in the forecasts of record production as the USDA.

Many farmers raised concern over the interior of their plots, as airplane and drone views have shown trouble spots not visible from the road. Others were concerned over soybean Sudden Death Syndrome (SDS), which is common when temperatures are below average as they have been throughout this year.

Corn conditions were estimated by the USDA at 74% in "Good" or "Excellent" condition, a 1% increase from last week and an 8% increase from last year. 19% was considered "Fair", a 1% decrease from last week, while only 7% was considered "Poor" or "Very Poor." Of the Corn Belt states, Illinois had the most corn rated "Excellent" at 30%, followed by Iowa and Indiana with 25% and 22% respectively.

Corn doughing was reported at 90%, a 7% increase from last week and 1% ahead of the five-year average. Corn dented was reported at 53%, an 18% increase from the previous week, but 6% behind the five-year average. Mature corn was estimated by the USDA for the first time this week. 8% of the corn was deemed mature, 4% ahead of this time last year, but 8% behind the five year average. Of the five largest corn producing states, Indiana and Nebraska reported the most mature corn both with 8%, Minnesota was the least with 0% mature.

Soybean conditions were reported as 72% of the crop in "Good" or "Excellent" condition, a 2% increase from last week and an 18% increase from last year. 22% was reported in "Fair" condition, a 1% decrease from last week, while only 6% was reported as "Poor" or "Very Poor." Of the five largest soybean producing states, Illinois and Iowa had the most crop rated "Excellent," both at 23%.

Soybeans setting pods were reported at 95%, a 5% increase from last week and even with the five-year average. Nebraska had the most soybeans setting pods at 95% and Minnesota had the least at 92%. The USDA reported soybeans dropping leaves for the first time this week. 5% of the U.S. soybean crop was reported at the leaf dropping stage, 2% ahead of this time last year, but 2% behind the five-year average. Of the five largest soybean producing states, Indiana had the most soybeans dropping leaves with 10%, both Iowa and Minnesota reported 0%.

Spring wheat conditions were estimated with 63% of the crop in "Good" or "Excellent" condition, a 3% decrease from last week and a 7% decrease from last year. 29% was reported in "Fair" condition, a 1% increase from last week, while only 8% was reported as "Poor" or "Very Poor." Spring wheat harvest was reported at 38% complete, an 11% increase from the previous week, but 27% behind the five-year average.

September futures for corn closed the week at $3.55 per bushel, a 1.4% decrease from last week. August soybeans ended the week at $10.97, a 2.5% decrease from last week. September wheat ended the week at $5.43, a 0.2% increase from last week. Year-to-year corn prices are down 28.7%, soybeans are down 23.6%, and wheat is down 14.6%.

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

Jack Frost; Last Major Risk to Record Crops

Sep 02, 2014

Ideal crop weather continued in the month of August, supporting expectations for a record corn crop on weighing on commodity prices. July ended dry for some farmers across the Corn Belt, but August rainfall was at or above average for many regions, helping progress the corn and soybean crops. Outside of localized pest or disease issues, the last major risk appears to be an early frost. The 2014 corn crop in particular is behind schedule maturing, which positions the risk of frost higher than normal. On average, the first major frost occurs in early October across much of the Corn Belt.                

Farmer income is expected to decrease by 13.8% in 2014, the lowest since 2010 due to the second straight bumper corn crop, according to the USDA. The August estimate is less harsh than the 27% decrease the USDA expected back in February, 2014. Livestock producers have been the primary beneficiary of low commodity prices and are expected to see increased 2014 revenues.

Grain Prices

The December corn contract increased by 1.6% in August and closed the month at $3.72 per bushel. Corn exports increased towards the end of the month and finished 6% ahead of the 4-week average. While China is slowing their imports of U.S. corn, other countries including Colombia are increasing. It is estimated that the U.S. is on track to capture 95% of Colombia's 141 million bushel corn market; an increase of 82% from 2013.

Ending stocks of corn in 2013/14 were estimated at 1.181 billion bushels, down 65 million bushels from July, due to increased ethanol production and exports, according to the August WASDE Report. The 2014/15 ending stocks were increased to 1.808 billion bushels, up 7 million bushels from July, though well below analyst expectations of 2.000 billion bushels.

November soybeans closed at $10.24 per bushel, down 4.9% for the month, primarily due to higher expected supplies in 2014/15. The August WASDE reported 2014/15 production up 16 million bushels to a record 3.816 billion bushels due to a slight increase in the average yield now at 45.4 bushels per acre. The old crop soybean stocks to use ratio is at an alarmingly tight 4.2%, but the 2014/15 stocks to use ratio is at 12.1%. The favorable weather conditions continued to weigh on soybean prices throughout the month as well.

December wheat prices increased by 6.2% this month and closed at $5.63 per bushel. World demand is growing for U.S. wheat as deteriorating wheat conditions worsened in the EU's two largest wheat producing countries, France and Germany, due to high moisture. The growing conflict between Russia and Ukraine also led to higher wheat prices as analysts are concerned the fighting will not allow for a normal harvest.

U.S. wheat exports for 2013/14 were raised 164 million bushels from July's estimate, according to the August WASDE Report. Although drought ravaged the wheat crop in the southern and central U.S. plains, favorable weather in the northern Wheat Belt helped increase projected average yield from 43.1 bushels per acre in July to 43.9 bushels per acre in August. Total U.S. production for 2014/15 was increased from 1.992 billion bushels to 2.030 billion bushels.

Crop Progress

As of the last week in August, the U.S. corn crop continues to hold well above average historical condition, but is maturing slower than normal. The USDA estimated corn conditions at 73% in "Good" or "Excellent," a 14% increase from last year. Only 7% was considered "Poor" or "Very Poor." Of the Corn Belt states, Illinois had the most corn rated "Excellent" at 30%, followed by Iowa and Indiana with 24% and 22% respectively. Corn dented was reported at 35%, a 13% increase from the previous week, but 8% behind the five-year average.

Soybean conditions were reported with 70% of the crop in "Good" or "Excellent," a 1% decrease from the third week in August, but a 12% increase from last year. Of the five largest soybean producing states, Illinois and Iowa had the most crop rated "Excellent," at 23% and 22% respectively.

Spring wheat harvest is also running behind historical schedule with only 27% of the crop harvested compared to 37% by the last week in August, based on a five-year historical average.

Farmland Values

The value of, "good" farmland increased by 2% in the second quarter of 2014 compared to the first quarter of 2014, and year over year prices have increased 3% in the Federal Reserve Bank's Seventh District which includes Iowa, Illinois, and Indiana.

In the Tenth Federal District, irrigated farmland values increased 6.3% year-over-year and non-irrigated farmland values increased 6.9%. Compared to the first quarter of 2014, irrigated farmland values increased 0.5% over the quarter, and non-irrigated farmland values increased 1%. Nebraska, Kansas, and Colorado are included in the Tenth District.

Both Federal Reserves stated that farmer debt levels are in stable condition and higher farmer income led to the increase in farmland values.

Outlook

The U.S. corn and soybean crops are in great condition heading into the end of the growing season. At this point in the growth stage, an early frost is the largest, and nearly last, major risk to the crops. Late maturing crops typically carry higher moisture at maturity which demands more drying costs by the farmer and may weigh on farm income. After the severe shortage in LP gas throughout last winter in the Corn Belt, farmers should have forward purchased much of their fuel and might need to even order more if the crops are abnormally wet.

New end users of grain are emerging as low prices have sparked interest. An ethanol plant reopened in South Dakota due to favorable price margins which could spark increased demand on a broader scale.

Outside of the monthly USDA reports, on September 30, 2014, the USDA will release its quarterly Grain Stocks Report which will provide an update regarding on and off farm storage inventories.

For more articles on farmland and agriculture, visit http://www.farmlandforecast.com 

 

Soybean Exports Increase 116% Week over Week

Aug 28, 2014

U.S. soybean exports increased, eclipsing its 10-week average for only the third time since the end of February. Corn and Wheat exports both saw nominal decreases. Soybean sales reported a reduction for the second consecutive week, an event that hasn’t occurred since April, 2013. Corn sales also reported a reduction for the second time in three weeks. Wheat sales increased after three weeks of decline.

Reports coming out of China are claiming a bumper wheat crop is expected. Earlier in the year reports had been citing extreme drought in many crop growing regions in China; expectations for Chinese crops were well below average. China has purchased less grain in recent weeks suggesting that drought claims may have been exaggerated.

Weekly U.S. net corn sales for the week ending August 14th in the 2013/2014 marketing year were a reduction for 32,700 metrics tons (MT). Increases were reported from Japan, Colombia, Canada, Mexico, and Jamaica. Decreases were reported from unknown destinations, South Korea, Taiwan, Costa Rica, El Salvador, and the Dominican Republic. Exports were 1,002,700 MT, a 12% decrease from the prior week, but a 1% decrease from the prior 10-week average. The primary destinations were Japan, Mexico, South Korea, Colombia, Peru, the Philippines, and Canada.

Weekly net soybean sales in the 2013/2014 marketing year were a reduction of 62,800 MT, the second consecutive sales reduction for soybeans. Increases were reported from Japan, Mexico, and Vietnam, Decreases were reported from China, Taiwan, and unknown destinations. Exports were 202,100 MT, a 116% increase from the prior week and a 73% increase from the prior 10-week average. Primary destinations were Mexico, Indonesia, Japan, and Taiwan.

Weekly net wheat sales for the week ending August 14th in the 2014/2015 marketing year were 403,600 MT, a 93% increase from the previous week, but a 7% decrease from the prior 10-week average. Increases were reported from the Brazil, Nigeria, Japan, Colombia, the Philippines, and Honduras. Decreases were reported from Panama. Exports were 466,700 MT, a 12% decrease from the prior week and a less than 1% decrease from the prior 10-week average. Primary destinations were the Philippines, Mexico, Taiwan, Colombia, Nigeria, and Brazil.

8 28 14 Sales

Source: USDA Foreign Agricultural Service

8 28 14 Exports

Source: USDA Foreign Agricultural Service

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

 

August Weather Supports Crop Conditions

Aug 25, 2014

Crop conditions are at favorable levels not seen since the early 1990’s. Ideal weather throughout the growing season has provided enough sun and moisture to produce, what has been estimated by the USDA to be, record breaking yields for both corn and soybeans this year. The USDA estimates were supported by the in-field inspections performed by the Pro Farmer Midwest Crop Tour scouts last week. Crop tour reports estimated larger corn yields in Iowa, Illinois, Indiana, Nebraska, and Ohio over last year’s crop. Soybean yields are also estimated to increase from last year in Iowa, Illinois, Indiana, Minnesota, Ohio, and South Dakota.

The USDA corn conditions were estimated 73% in "Good" or "Excellent" condition, a 1% increase from last week, but a 14% increase from last year. 20% was considered "Fair", unchanged from last week, while only 7% was considered "Poor" or "Very Poor." Of the Corn Belt states, Illinois had the most corn rated "Excellent" at 30%, followed by Iowa and Indiana with 24% and 22% respectively. Corn doughing was reported at 83%, a 13% increase from last week and 5% ahead of the five-year average. Corn dented was reported at 35%, a 13% increase from the previous week, but 8% behind the five-year average. Of the five largest corn producing states, Illinois reported the most dented corn at 48%, followed by Nebraska and Indiana with 44% and 41% respectively.

Soybean conditions were reported with 70% of the crop in "Good" or "Excellent" condition, a 1% decrease from last week, but a 12% increase from last year. 23% was reported in "Fair" condition, unchanged from the previous week, while only 7% was reported as "Poor" or "Very Poor." Of the five largest soybean producing states, Illinois and Iowa had the most crop rated "Excellent," at 23% and 22% respectively. Soybeans setting pods were reported at 90%, a 7% increase from last week and 1% ahead of the five-year average. Of the five largest soybean producing states, Nebraska had the most soybeans setting pods at 95%, Minnesota had the least at 92%.

Spring wheat conditions were reported with 66% of the crop in "Good" or "Excellent" condition, a 2% decrease from last week, and a 1% increase from last year. 28% was reported in "Fair" condition, a 2% increase from the previous week, while only 6% was reported as "Poor" or "Very Poor." The spring wheat harvest is under way, with 27% of the crop reported harvested. That is a 10% increase from the previous week, but 12% behind the five-year average.

September futures for corn closed the week at $3.60 per bushel, unchanged from last week. August soybeans ended the week at $11.25, a 0.9% increase from last week. September wheat ended the week at $5.42, unchanged from last week. Year-to-year corn prices are down 30.1%, soybeans are down 21.2%, and wheat is down 17.1%.

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

Rural Bankers Expect Weaker Farmland Values

Aug 25, 2014

The rural economy slowed for the first time in six months due to sinking crop prices. Farmland values are projected to decline over the next year, according to the majority of bankers surveyed for the RMI. This contradicts reports released by the Seventh and Tenth Federal Districts in the past week. Those reports, which surveys bankers across the same region as the RMI, predicted land values to stay consistent or increase slightly over the same time period.

Ranging between 0 and 100 with 50.0 representing growth neutral, the RMI decreased to 48.3 from 51.8 in July. This is the lowest the index has fallen since August 2012. RMI levels are short of where they were last year, but this should be expected with crop prices significantly lower than this time last year.

Ernie Goss, Ph.D, Economics Professor at Creighton University stated, "Agriculture commodity prices have plummeted for crop farmers in our region and are expected to move even lower in the months ahead. This decline has spilled over into the broader rural economy according to our survey. With record crop supplies anticipated by analysts, I expect readings to move even lower in the months ahead."RIM August 2014 Rural Mainstreet index

Source: Rural Mainstreet Index Creighton University

The farmland price index decreased to 41.4 from 48.3, falling to the lowest level since February. Lower expected farm incomes due to declining grain prices has driven farmers, the largest purchasers of farmland in the U.S., out of the marketplace. "Much weaker crop prices are taking the air out of agriculture land prices. This is the ninth straight month that the index has moved below growth neutral," said Goss.

RIM August 2014 Farmland Price index

Source: Rural Mainstreet Index Creighton University

The farm equipment sales index decreased to 25.5 from 33.4, a record low for the index. Goss said, "This is the lowest reading that we have recorded for the equipment index since we began the monthly survey in 2006. The rapid decline in agriculture commodity prices is causing farmers to become more cautious in their equipment purchase."

This month bankers were asked their outlook on farmland prices over the next year. Roughly 78% of the respondents believe that farmland values will decline. The average decline in farmland values was predicted at 4.8%. When asked the same question six months ago the average decline was 3.2%. "Clearly, bankers are becoming more pessimistic regarding the trend in farmland prices," said Goss. Bankers were also asked their projection on cash rent values over the next year. On average bankers responded with $285 per acre, a $27 increase from the average response six months ago. "This will place a financial pinch on the farmer renting land and selling at today’s slumping crop prices," said Goss.



Table 1: Rural Mainstreet Economy Last Two Months and One Year Ago: (index > 50 indicates expansion)

 

August 2013

July 2014

August 2014

Area economic index

55.8

51.8

48.3

Loan volume

70.5

79.8

73.4

Checking deposits

51.7

53.5

46.7

Certificates of deposit and savings instruments

43.5

37.8

32.5

Farmland prices

55.8

48.3

41.4

Farm equipment sales

49.2

33.4

25.5

Home sales

72.5

64.1

59.5

Hiring

59.2

59.7

56.8

Retail business

52.6

55.4

47.5

Confidence index (area economy six months out)

53.4

42.9

39.9

Source: Rural Mainstreet Index Creighton University

Survey

This survey represents an early snapshot of the economy of rural, agricultural 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

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