Aug 20, 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.

Land Values Increase Steadily due to Easing Drought Concerns in Great Plains

Aug 19, 2014

Double digit year-to-year increases in farmland values were reported in select regions of the Great Plains. The Tenth Federal District estimated that irrigated and nonirrigated crop land increased 6.3% and 6.9% respectively from the second quarter last year. Irrigated farmland in Kansas, Oklahoma, and areas of Colorado, New Mexico, and Wyoming all reported double digit increases.

Nonirrigated land in Oklahoma and areas of Colorado, New Mexico, and Wyoming also reported double digit increases. Nonirrigated land had not seen comparable increases over the past several quarters due to the drought across the district, but storms over the past few months have provided precipitation, easing drought conditions.

KC Q2 2014 pic1

Source: Federal Reserve Bank of Kansas City Tenth District Agricultural Credit Conditions Report

Credit

Credit conditions across the District were healthy despite low grain prices. Bankers surveyed believe that several years of strong profitability in the crop sector allowed farmers to financially position themselves to weather a decline in farm income in 2014/15. Farm income 2014/15 is expected to be lower than 2013/14 due to low crop prices and poor wheat yields. Normally, poor U.S. wheat yields result in higher global prices, but ample global supply due to increased production in Europe and Asia has significantly limited the crop’s profit potential in 2014/15.

Bankers reported that there was an ample supply of capital available for farm loans, and that they expect interest rates to remain steady through the third quarter. Collateral requirements went unchanged from last quarter.

Outlook

Falling farm income may provide some risk to credit conditions, but farmland values are expected to continue to increase through harvest. Record breaking yield expectations for corn and soybeans should be another factor when evaluating farm income in 2014. The decline in crop prices should be partially offset by the increase in expected bushels per acre, lessening the impact on overall farm income.

The Federal Reserve Bank of Kansas City’s second quarter survey of Farmland Values and Agricultural Credit Conditions Report is a summary of the Tenth District’s value of farmland, farm loan portfolio performance, and on-farm income. The Tenth District consists of Colorado, Kansas, Nebraska, Oklahoma, Wyoming, the northern half of New Mexico, and the western third of Missouri.

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

Favorable August Weather Continues to Support Healthy Crops

Aug 18, 2014

Ideal growing weather continues to support corn and soybean conditions as we move closer to harvest. Illinois and Iowa, the largest corn producing states, have the best conditioned corn in the U.S.

The highly acclaimed Pro Farmer Crop Tour commenced today, which will provide a ground level test to the expected bumper corn and soybean crops. The tour will span 30,000 miles before concluding in southern Minnesota and unveiling the true crop conditions.

The USDA corn conditions were estimated 72% in "Good" or "Excellent" condition, a 1% decrease from last week, but an 11% increase from last year. 20% was considered "Fair", unchanged from last week, while only 8% was considered "Poor" or "Very Poor." Of the Corn Belt states, Illinois had the most corn rated "Excellent" at 29%, followed by Iowa and Indiana with 24% and 21% respectively. Corn doughing was reported at 70%, a 16% increase from last week and 7% ahead of the five-year average. Corn dented was reported at 22%, an 11% increase from the previous week, but 5% behind the five-year average. Of the five largest corn producing states, Illinois reported the most dented corn at 34%, while Minnesota reported the least at 6%.

Soybean conditions were reported with 71% of the crop in "Good" or "Excellent" condition, a 1% increase from last week, and a 9% increase from last year. 23% was reported in "Fair" condition, unchanged from the previous 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," at 23% and 22% respectively. Soybeans blooming were reported at 95% this week, up 3% from last week, and even with the five-year average. Soybeans setting pods were reported at 83%, an 11% increase from last week and 4% ahead of the five-year average. Of the five largest soybean producing states, Nebraska had the most soybeans setting pods at 87%, Indiana had the least at 77%.

Spring wheat conditions were reported with 64% of the crop in "Good" or "Excellent" condition, unchanged from last week, but a 2% increase from last year. 26% was reported in "Fair" condition, a 1% increase from the previous week, while only 6% was reported as "Poor" or "Very Poor." The spring wheat harvest is under way, with 17% of the crop reported harvested. That is an 11% increase from the previous week, but 16% behind the five-year average.

September futures for corn closed the week at $3.60 per bushel, a 1.1% increase from last week. August soybeans ended the week at $11.15, a 15.1% decrease from last week. September wheat ended the week at $5.42, a 0.7% decrease from last week. Year-to-year corn prices are down 18.0%, soybeans are down 15.7%, and wheat is down 15.4%.

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

Damaged European Wheat Crop Raises Expected U.S. Wheat Exports for 2014/15

Aug 14, 2014

Wheat exports were increased by 25 million bushels for 2014/2015 in Tuesday’s World Agricultural Supply and Demand Estimates released by the USDA. The increase in exports was spurred by recent rains in the European grain belt that is expected to greatly damage their production this year. Continued fighting in the Ukraine has also led to speculations of a lower than expected amount of wheat in the global market this coming year. 


A reduction in weekly corn sales was reported for the first time since the 2012/2013 Marketing year. Soybean sales declined moderately, and wheat sales fell below the ten week average for the first time this marketing year. Exports for soybeans and wheat both increased, while corn exports declined.

Weekly U.S. net corn sales for the week ending August 7th in the 2013/2014 marketing year were a reduction of 117,900 metrics tons (MT), the first sales reduction in corn for the marketing year. Increases were reported from South Korea, Venezuela, Mexico, Taiwan, Canada, and the Netherlands. Decreases were reported from unknown destinations, Colombia, Morocco, the Dominican Republic, and Japan. Exports were 721,800 MT, a 33% decrease from the prior week and a 31% decrease from the prior 10-week average. The primary destinations were Mexico, South Korea, Japan, Venezuela, the Netherlands, Guatemala, and Taiwan.

Weekly net soybean sales in the 2013/2014 marketing year were 61,400 MT, a 35% decrease from the previous week and a 48% decrease from the 10 week average. Increases were reported from Indonesia, China, Taiwan, and Mexico. Decreases were not reported. Exports were 146,900 MT, a 173% increase from the prior week’s marketing year low and a 14% increase from the prior 10-week average. Primary destinations were China, Mexico, Japan, and Venezuela.

Weekly net wheat sales for the week ending August 7th in the 2014/2015 marketing year were 338,700 MT, a 42% decrease from the previous week and a 22% decrease from the prior 10-week average. Increases were reported from Nigeria, Taiwan, Mexico, Chile, Jamaica, and South Korea. Decreases were reported from Brazil. Exports were 501,300 MT a 21% increase from the prior week and a 12% increase from the prior 10-week average. Primary destinations were Mexico, the Philippines, Taiwan, Nigeria, Guatemala, and Peru.

8 14 14 Sales
Source: USDA Foreign Agricultural Service

8 14 14 Exports
Source: USDA Foreign Agricultural Service

- Colvin

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

Record Corn Yield Expected for 2014 Due to Favorable Weather

Aug 12, 2014

The USDA expects the 2014 corn crop to average a record 167.4 bushels per acre, although the yield estimate was below what analysts were expecting. Adjusting for corn's 2014/15 record production, the ending stocks-to-use ratio is now estimated at 13.5%, which is the highest in a decade.

Demand for U.S. corn this summer has picked up in the most unlikely place, ethanol. Low corn prices have resulted in attractive margins for U.S. dry mill ethanol plants, causing them to produce more corn based ethanol. Year to date domestic gasoline demand has picked up and thus demand for corn based ethanol has risen with it. In addition to increased demand at home, exports have picked up due to production constraints in large ethanol producing countries like Brazil.

The August WASDE is special in regards to data retrieval as the USDA switches from a weather input model to a survey based model.

Corn

U.S. corn ending stocks for the 2013/14 marketing year were projected 65 million bushels lower to 1.181 billion bushels, due primarily to increased export and ethanol demand. Exports for U.S. corn in the 2013/14 marketing year were increased by 20 million bushels to 1.920 billion bushels.

For the 2014/15 marketing year, U.S. corn ending stocks were projected to be 1.808 billion bushels due to a consecutive record corn crop. U.S. exports were estimated at 1.725 billion bushels with total usage of 13.435 billion bushels. Projected total production was 14.032 billion bushels, a record if realized. The 2014/15 season-average farm price for corn was estimated at $3.55 to $4.25 per bushel, compared to $4.40 to $4.50 per bushel for 2013/14.

U.S. Ending Stocks (Million Bushels) 2013/14

Grain

August 2014

Average Estimates

July 2014

Corn

1,181

1,239

1,246

Soybeans

140

137

140

 

U.S. Ending Stocks (Million Bushels) 2014/15

Grain

August 2014

Average Estimates

July 2014

Corn

1,808

2,003

1,801

Soybeans

415

409

415

Wheat

663

663

660

 

Soybeans

U.S. Soybean exports for 2013/14 were raised 20 million bushels to 1.640 billion bushels. Ending stocks were unchanged at 140 million bushels. The stocks-to-use ratio remains at a record low of 4.2%.

For the 2014/15 marketing year, U.S. soybean ending stocks were projected to be 430 million bushels. Exports were estimated at 1.675 billion bushels with total usage of 3.451 billion bushels. Projected soybean yield was 45.4 bushels per acre with total production a record 3.816 billion bushels due to increased yields. The 2014/15 season-average farm price for soybeans was estimated at $9.35 to $11.35 per bushel, compared to $13.00 per bushel for 2013/14.

Wheat

U.S. wheat ending stocks for 2013/14 were increased to 590 Million bushels from 583 million bushels. Exports were decreased 9 million bushels to 1.176 billion bushels.

For the 2014/15 marketing year, U.S. wheat ending stocks were projected at 663 million bushels, a 73 million bushel increase from 2013/14 due mainly to lower feed and residual use. The 2014/15 all wheat average price was estimated at $5.80 to $6.80 per bushel.

Outlook

Grain prices have struggled throughout the summer due to high production expectations domestically and globally. Farmers and the USDA have also been optimistic about the crop condition, which has also been a factor weighing on prices. The harvest for corn and soybeans will begin in six to seven weeks leaving time for only drought or frost to significantly impact the crop on a large scale. There is still time for production estimates to fall and provide some relief to corn and soybean prices.

 

Crop Progress: Near Record Conditions Continue to Hold

Aug 11, 2014

The market awaits anxiously for The World Agriculture Supply and Demand Estimates (WASDE) to be released tomorrow by the USDA. Most analysts expect a continued sense of optimism over this year’s production for corn and soybeans. Analysts are estimating a 1.6%-5.7% increase in average corn yield, and a slight increase in average soybean yield from the July report.

The USDA corn conditions were estimated 73% in "Good" or "Excellent" condition, unchanged from last week, but a 9% 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 25% and 21% respectively. Corn silking was reported at 96%, a 6% increase from last week and 1% ahead of the five-year average. Corn doughing was reported at 54%, an 18% increase from last week and 8% ahead of the five-year average. Corn dented was reported by the USDA for the first time this week. 11% of the corn crop was reported dented, 6% ahead of this time last year, but 5% behind the five-year average. Northern corn producing states have yet to report any denting due to the delay seen during planting this year.

Soybean conditions were reported with 70% of the crop in "Good" or "Excellent" condition, down 1% from last week, but a 6% 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," both with 22%. Soybeans blooming were reported at 92% this week, up 7% from last week, and 1% ahead of the five-year average. Soybeans setting pods were reported at 72%, a 15% increase from last week and 7% ahead of the five-year average. Of the five largest soybean producing states Indiana and Nebraska had the most soybeans setting pods, both at 80%.

The winter wheat crop was reported 95% harvested, up 5% from last week, and 5% ahead of the five-year average. The wheat harvest is near completion as the northern producing states have made up significant ground over the last week.

September futures for corn closed the week at $3.56 per bushel, a 0.6% decrease from last week. August soybeans ended the week at $13.14, a 6.7% increase from last week. September wheat ended the week at $5.46, a 0.4% decrease from last week. Year-to-year corn prices are down 24.6%, soybeans are down 4.5%, and wheat is down 14%.

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

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