Sep 18, 2014
Sign UpLogin


October 2011 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.

Crop Progress: Corn and Soybean Harvest Exceed the 5-Year Average

Oct 31, 2011

This afternoon, the USDA released its weekly crop progress report. The corn harvest is 78% complete, which is ahead of the 62% 5-year historical average, but behind last year's October 30th percentile of 90%.

 Of the 18 primary soybean producing states, 87% of soybeans were harvested by October 30th. Last year at this time 95% of soybeans had been harvested and the 5-year historical average is 79% harvested.
 
The winter wheat planting progress is at 89%, which is slightly ahead of the 5-year average of 88% and slightly behind last year's progress of 87%. Winter wheat emergence is at 68%, down from the 5-year average of 72% emerged. Winter wheat in poor or very poor condition is at 13%, a 3% decrease from last year at this time. Winter wheat in good or excellent condition is at 46%, a 1% decrease from last year at this time.
 
Corn prices decreased by 0.06% over the past week ending at $6.47 per bushel, soybeans were down 1.50% to 12.07 per bushel, and wheat ended the week down 2.20% closing at $6.28 per bushel. Year-over-year corn prices are up 12.1%, soybeans are down 1.5%, and wheat is down 10.5%.
 
-Colvin
 
For Daily Updates Visit http://farmlandforecast.colvin-co.com 

Is Farmland in A Bubble?

Oct 31, 2011

Recent sales of Midwestern farmland have been reaching prices of $10,000, $12,000, and even $16,000 an acre. The media and well-known market pundits have been highlighting these high dollar sales and making an argument that farmland is in a bubble.

Rising grain prices and strong farm income over the last few years have driven strong interest in agriculture and the farmland market. Farmers and investors have allocated capital to farmland and prices in the Midwest have increased 17% in the last twelve months and 12% in 2010 according to the Federal Reserve Bank of Chicago.

Below are a few points to think about when analyzing farmland values and deciding whether or not prices are in a bubble:

Agriculture fundamentals are the best in decades. Grain supplies in the U.S. and globally are at decade lows, driven by emerging-market demand, disappointing U.S. yields in the last two years, and demand for biofuels. The USDA estimates that farm income rose 28% in 2010 and will rise by 31% in 2011, allowing farmers to reinvest their cash flows back into farmland to expand their operations.

Balance sheets are still conservative. Strong agricultural fundamentals and minimal use of debt have allowed the U.S. farm sector to maintain conservative balance sheets as current debt to assets ratios are at 40 year lows. According to Iowa State University, 72% of the land in Iowa has no money borrowed against it. New banking regulations have constricted the access to capital for farmland buyers and loans secured by farmland are typically limited to 50% of the purchase/appraised price.

Farmland is a long-term investment. Farmland is illiquid and based on long-term commodity prices. Farmers buy land thinking about two to three generations down the road. Investors buy farmland for its cash flows and appreciation potential based on the global agriculture story. Farmland buyers are not thinking about prices next year but rather ten years from now.

The agriculture thesis hasn’t even played out yet. Most agriculture investors are attracted to the sector because of the wealth creation and the transfer to a protein based diet in emerging markets. China is expected to increase corn imports from 1 million tons in 2010 to 15 million tons by 2014. Emerging market demand for grain has not even occurred yet.

Farmland has different values to different people. The majority of farmland buyers are farmers, who comprise roughly 70% of all purchases. Farmers on average have a roughly 30 mile radius to buy farmland in. Farmland in their radius is worth much more to them than outside buyers. There are economies of scale in farming and each additional acre under management lowers their fixed costs and increases their negotiating power for inputs.

The witch hunt for the next bubble. After the housing bubble, investors and regulators are making sure to not overlook the next bubble and may be too quick in their use of this term. 

Is farmland in a bubble? No. We think it is unfair and inaccurate to take a few data points and assign these assumptions to the whole market. Yes there have been some irrational sales that may take years to realize their value, but the market average is rationally priced and represents its fair market value based on near-term commodity expectations.

Farmland investors still need to be cautious and take a value oriented approach to acquiring farmland. The long-term outlook for agriculture has never looked better, but global economic concerns, potential changes in government regulation, and the unexpected may provide some speed bumps along the way.

- Colvin

For Daily Updates Visit http://farmlandforecast.colvin-co.com 

Crop Progress: Harvest for Corn and Soybean Ahead of 5-Year Average

Oct 24, 2011

This afternoon, the USDA released its weekly crop progress report. The corn harvest is 65% complete, which is ahead of the 51% 5-year historical average. USDA estimated 54% of the corn crop is in good or excellent condition, which is a 1% increase from last week. The estimate for corn condition in poor or very poor condition is the same as last week at 19%.

 Of the 18 primary soybean producing states, 80% of soybeans were harvested by the fourth week in October. Last year at this time 91% of soybeans had been harvested and the 5-year historical average for week four of October is 71% harvested.
 
The winter wheat planting progress is at 82%, which is slightly behind the 5-year average of 84% and last year's progress of 87% for the fourth week of October. Winter wheat emergence is at 56%, down from the 5-year average of 63% emerged. Winter wheat in poor or very poor condition is at 16%, a 2% increase from last year at this time. Winter wheat in good or excellent condition is at 47%, same as last year in the fourth week of October.
 
Corn prices increased by 1.7% over the past week ending at $6.51 per bushel, soybeans were down 2.2% to $12.26 per bushel, and wheat ended the week up 2.9% closing at $6.42 per bushel. Year-over-year corn prices are up 14.6%, soybeans are up 0.7%, and wheat is down 4.7%.
 
-Colvin
 
For daily updates visit http://farmlandforecast.colvin-co.com 

Rural Economy Rises Slightly in October

Oct 24, 2011

The rural economy continued to inch forward in October and has remained above growth neutral for nearly two years. Farmland values remained elevated as bankers are optimistic about growing appreciation for the next 12 months, driven by rising cash rental rates.

The Rural Mainstreet Index (RMI) advanced to 52.9 from 52.2 to remain positive for the second straight month, and positioned well above the 48.4 it posted 12 months ago. Although the RMI shows a positive trend, it is increasing at a sluggish rate.
Farmland values remained elevated as bankers are optimistic about growing appreciation for the next 12 months, driven by rising cash rental rates.
The Rural Mainstreet Index (RMI) advanced to 52.9 from 52.2 to remain positive for the second straight month, and positioned well above the 48.4 it posted 12 months ago. Although the RMI shows a positive trend, it is increasing at a sluggish rate.
Rural Mainstreet Index, October

Creighton University economist Ernie Goss said, "Survey results over the past several months, similar to national surveys, indicate that the economy is growing but at an anemic pace. However, companies linked to agriculture continue to experience healthy growth."

Agriculture
The farmland price index remained unchanged at 66.9 in October. This marks the 21st straight month the index has been above growth neutral. The farm equipment sales index decreased to a still strong 63.1 from September's 65.4.
"Throughout the region, bankers are reporting very strong growth in farmland prices. One banker in Storm Lake, Iowa, reported a recent farmland sale of $13,000 per acre.  Current high agriculture commodity prices and record low interest rates are supporting these prices.  I am concerned that a sharp upturn in the value of the dollar, as happened with the failure of Lehman Brothers in 2008, could take some of the air out of this price bubble by pushing agriculture commodity prices lower,”said Goss.
Farmland Price Index October

Bankers were asked to project 2012 cash rents for farmland. An average of 8.2% increase is expected in 2012 and over 18% of respondents expect cash rents to grow by more than 16%. The USDA expects farm income to rise 31% in 2011, which we expect will drive farmland values and cash rents in 2012.

Banking
The loan volume index decreased to 57.3 from 62.5 a month prior. The check deposit index increased to 71.1 from 60.3 in September and the certificate of deposit and savings instruments increased to a still weak 44.9 from 41.2 last month.
October's job index increased to 56.4 compared to 54.7 in September. “Year over year job growth for Rural Mainstreet communities is approximately three times that of metropolitan areas of the region.  Even with the recent strength, employment for Rural Mainstreet communities is down approximately 3.1 percent from pre-recession levels,” said Goss.
The economic confidence remained unchanged at a flat 50.0. “While the index stood at growth neutral 50.0, bankers remain less than optimistic about future economic conditions, compared to last year at this time,” explained 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.
- Colvin
For Daily updates visit http://farmlandforecast.colvin-co.com/ 

Crop Progress: Corn Harvest Ahead of Schedule

Oct 17, 2011

This afternoon, USDA released its weekly crop progress report. The corn harvest is 47% complete, which is ahead of the 41% five-year historical average. USDA estimated 53% of the corn crop is in good or excellent condition, which is the same as last week. The estimate for corn in poor or very poor condition is also the same as last week, at 19%.

Out of the entire corn crop, 94% was considered mature by USDA this week, 89% was mature last week and 100% was mature last year at this point. Corn maturity is on pace with the five-year historical average of 93%.
 
In the 18 primary soybean producing states, 69% of soybeans were harvested by the third week in October. Last year at this time, 81% of soybeans had been harvested and the five-year historical average for week three of October is 61% harvested.
 
The winter wheat planting progress is at 73%, which is behind the five-year average of 77% and last year's progress of 80% for the third week of October. Winter wheat emergence is at 44%, down from the five-year average of 51% emerged.
 
Corn prices increased by 5.8% over the past week, ending at $6.40 per bushel; soybeans were up 6.5% to $12.53 per bushel; and wheat ended the week up 2.1% closing at $6.24 per bushel. Year-over-year corn prices are up 15.3%, soybeans are up 8.8% and wheat is down 12.0%.
 
-Colvin
 
For daily updates visit http://farmlandforecast.colvin-co.com/ 

Chinese to Import Record Amount of Corn in 2012

Oct 17, 2011

China, a historically self-sufficient corn producer, is harvesting a record-large crop of 166.6 million tons for the 2011/12 season. Despite the record crop, China will still be structurally short of corn for the seventh out of eighth year as use is estimated at 170.1 million tons. The U.S. Grains Council projects China to need to import 5-10 million tons of corn for the 2011/12 season, a significant increase from the USDA's estimate of 2.0 million tons.

Farmland Forecast   Chinese Corn Imports from 2002 to 2012 in million tons

China has planted an estimated 76.35 million acres in 2011/12, up 3% from the previous year. Yields though are forecasted to be 86 bushels per acre, which is roughly half of the U.S. yields. Chinese corn yields have held steady the past few years, which is surprising as they have been using new agronomic practices and increasing plant populations.

China's rapid population and economic growth has driven the country's demand for grains. Economists have long shown that as GDP rises and a middle class develops, consumption of protein also rises. The transition to protein has a large effect on the demand for grains as one pound of meat requires seven pounds of grain. China has 20% of the world's population and only 7% of the world's arable land making it nearly impossible for supply to meet demand.

Chinese domestic crop production has continued on an upward trend to fulfill its own grain demand. China's crop output has increased 34% in the past six years. This supply increase has not met demand as Tom Dorr, Grains Council president, estimates China's corn demand will exceed production by about 3.5 million metric tons.

Their appetite for pork, poultry, and eggs has motivated the Chinese government to keep food prices affordable. In Beijing, where high food prices could trigger social unrest, stock piling corn to keep prices down is a priority. They will turn to the world's largest exporters (U.S, Argentina, Ukraine) to increase their supply.

Private analysts estimate China's carryover at 23.8 million metric tons in 2010-11, as opposed to 48.8 million metric tons in 2008-09. China’s goal for carryover is to be between 35 million and 40 million metric tons. To fill that gap, China will go to the world's largest exporters to import 5 million to 10 million metric tons by the end of 2012.

Massive imports remain to be seen as China is sensitive in regards to their portrayal in the global economy. "When they're buying corn, they're concerned that it isn't going to drive the price up for the less developed countries. And they want to make sure they do everything they can to avoid being characterized as...entering into the world market and making it difficult for less resourceful countries to have adequate food supplies," Dorr said.

Regardless of China's concern for their reputation, importing substantial amounts of grains will have a significant impact on grain prices and global stocks. Monika Barthwal-Datta, who heads the food security program at the centre for International Security Studies at the University of Sydney stated, "It means China is going to enter the market in a substantial manner and it is going to compete with other countries in the region that rely on U.S. corn."

Luke Mathews, a commodity strategist at Commonwealth Bank of Australia in Sydney believes, "the explosion in Chinese imports from 1990 through today has certainly been a key driver in the oilseed market and we think a repeat of that in the corn market would certainly be a supportive influence on world prices."

China has become the world's largest consumer and importer of soybeans, importing 55 million metric tons a year, which makes up for 60% of the annual global trade. Traders believe the soybean scenario is a precedent for corn.

Outlook

As China's demand for protein increases over the next decade, corn needed for livestock feed will be substantial and result in a shortfall of over 20 million tons. The increase in demand will not be met by domestic production forcing China to look elsewhere for corn supply. Importing record amounts of corn will leave global supplies depleted. Strong Chinese demand may result in corn prices well above the record $8 a bushel set in June and drive profits for the largest global exporters of corn.

-Colvin

For daily updates visit http://farmlandforecast.colvin-co.com 

WASDE Report: Higher U.S. Corn Ending Stocks

Oct 12, 2011

The USDA updated the U.S. and world balance sheet estimates for major agricultural commodities in the World Agricultural Supply and Demand Estimates (WASDE) report today. There were minor changes in this month’s estimates, following the big increase in supplies from the quarterly stocks report at the end of September.

Corn
Slightly bearish news from the USDA as corn production declined by 64 million bushels due to a decrease in planted acres of 385,000 and harvested acres of 452,000. Despite the reduced production estimate, this year's crop is still on pace to be the third largest on record. Yields remain unchanged from last month at 148.1 bushels per acre.
U.S. corn beginning 2011/12 stocks increased 208 million bushels due to the increased September 1 quarterly stocks estimate. Due to the 50 million bushel reduction in exports, corn supplies for 2011/12 are now forecasted 144 million bushels higher. Competition for corn exports has increased for the U.S. due to higher expected Black sea production, although the export estimate may be revised next month due to China’s announcement on Tuesday of additional corn exports. Ending corn stocks for 2011/12 were  increased by194 million bushels to 866 million bushels. The USDA forecasted the season-average farm price $0.30 lower on both ends of the range to $6.20 to $7.20 per bushel.  
Global supplies for 2011/12 increased by 10.4 million tons of which more than half reflecting the 5.3 million ton increase in U.S. corn beginning stocks. Global corn production was raised 5.4 million tons due to foreign increase in production which has more than offset the U.S reduction. China has an estimated increase of 4.0 million tons due to favorable weather and early yield forecasts. Ukraine is also projected with an increase of 3.0 million tons reflecting favorable temperatures and timely precipitation.
Soybeans
The USDA decreased U.S. soybean production by 25 million bushels to 3.06 billion bushels based on decreased harvested acres and yields. Harvested acres were reduced by 147,000 acres to 73.1 million acres. Yields estimates declined by 0.3 bushels per acre to 41.5 bushels per acre.
Exports decreased by 40 million bushels to 1.375 billion bushels due to South American competition. Increased residual use has decreased ending stocks by 5.0 million bushels to 160 million bushels. The U.S. season-average price range for 2011/12 is projected at $12.15 to $14.15 per bushel, a $0.50 decrease on both ends of the range.
Global soybean production has decreased by 0.4 million tons to 258.6 million tons, primarily due to the lower U.S. soybean crop. U.S. soybean exports have declined due to South American competition, but we remain skeptical on South American production due to the potential La Nina weather patterns.
Wheat
U.S. wheat production declined by 69 million bushels due to a decrease in spring wheat production. Domestic use has decreased by 84 million bushels due to lower feed and residual use as indicated from the September 1 stocks. Imports have increased by 10 million bushels on increased Canada production of Durum and Hard Red Spring wheat. U.S. exports decreased by 50 million bushels due to the U.S. decline in production and increased supplies in Canada, Australia, and Russia. The season-average price is projected at $7.10 to $7.90 per bushel compared with $7.35 to $8.35 last month.
Global supplies are projected at an increase of 5.4 million tons. This is due to Australia's increase in beginning stocks and the increase in production in Kazakhstan, Australia, EU-27, Canada, and South America.
Russian wheat exports have dominated the global market due to undercutting other sellers with low prices. Although Russia has not banned exports as they did last year, they are planning on limiting exports due to nervousness of the U.S. government crop report. If Russia limits their exports, this would increase U.S. wheat exports along with prices.
Overview
The increase in U.S corn supplies for the 2011/12 season is a result of demand rationing. China’s rapidly deteriorating inventories may increase 2011 imports to levels above 5 million metric tons. The grain markets will be closely watching China and prices will hang on their every move.
We will get more clarity on harvested acres and yields over the next few weeks as the harvest progresses. We believe the USDA is estimating the best case scenario in their yield estimates,so any unexpected problems with the weather may send prices higher.
-Colvin
For daily updates visit http://farmlandforecast.colvin-co.com 

Crop Progress: Corn Harvest on Schedule

Oct 11, 2011

This afternoon, the USDA released its weekly crop progress report. The corn harvest is 33% complete which is on pace with the 33% 5-year historical average. USDA estimated 53% of the corn crop is in good or excellent condition which is up 1% from last week. The estimate for corn condition in poor or very poor condition is 19% compared to 20% last week. Last year at this time, 11% of the crop was in poor or very poor condition while 68% was in good or excellent condition.

 Out of the entire corn crop, 89% was considered mature by the USDA this week, 79% was mature last week, and 97% was mature last year at this point. Corn maturity is on pace with the 5-year historical average of 88%.
 
Of the 18 primary soybean producing states, 16% of the soybean crop is in poor or very poor condition while 56% is in good or excellent condition, which is off 2010 estimates of 12% and 64% for the second week of October. The USDA estimated that 90% of soybeans were dropping leaves by this week, which is on pace with the 5-year historical average of 92% for the second week of October.
 
The winter wheat planting progress is at 59% which is behind the 5-year average of 67% and last year's progress of 69% for the second week of October. Winter wheat emerged is at 28%, down from the 5-year average of 38% emerged.
 
Corn prices increased by 9.0% over the past week ending at $6.45 per bushel, soybeans were up 4.9% to $12.45 per bushel, and wheat ended the week up 6.6% closing at $6.60 per bushel. Year-over-year corn prices are up 16.2%, soybeans are up 7.2%, and wheat is down 6.9%.
 
-Colvin
 

 

Crop Progress: Corn Harvest on Average Pace

Oct 03, 2011

This afternoon, USDA released its weekly crop progress report. The corn harvest is 21% complete, which is on pace with the 23% five-year historical average. USDA estimates 52% of the corn crop is in good or excellent condition, same as last week. The estimate for corn in poor or very poor condition also went unchanged from last week at 20%. Last year at this time, 13% of the crop was in poor or very poor condition while 66% was in good or excellent condition.

Out of the entire corn crop, 79% was considered mature by USDA this week, 63% was mature last week, and 92% was mature last year at this point. Corn maturity is on pace with the five-year historical average of 78%.

Of the 18 primary soybean producing states, 17% of the soybean crop is in poor or very poor condition while 54% is in good or excellent condition, which is well off 2010 estimates of 12% and 64%, respectively, for the first week of October. USDA estimates that 76% of soybeans were dropping leaves by this week, which is again lagging the five-year historical average of 83% for the first week of October.

The winter wheat planting progress is at 42%, which is behind the five-year average of 53% and last year's progress of 52% for the first week of October.

Corn, soybean and wheat prices all decreased significantly following the USDA quarterly Grain Stocks report, which was released last Friday. Corn prices decreased by 8.6% over the past week, ending at $5.92 per bushel; soybeans were down 6.5% to $11.77 per bushel; and wheat ended the week down 4.4%, closing at $6.19 per bushel. Year-over-year corn prices are up 25.7%, soybeans are up 11.7%, and wheat is down 4.3%.

Visit http://farmlandforecast.colvin-co.com for daily articles on farmland and agriculture.

Yield Expectations Decrease Leading into Harvest

Oct 03, 2011

Commodity prices suffered throughout the month of September due to the increasingly weary state of the global economy. Investors have been reallocating their assets in accordance to the European debt situation and worries of a double-dip recession. Tight grain supplies are still present, but economic concerns and decreased demand continue to impact short-term prices.

U.S. corn yields were estimated 3.2% lower in this month's WASDE report from the USDA due to a deteriorating crop condition. High prices have led to a decrease in corn demand, with livestock producers making the switch to wheat-based feed to ration the extremely low U.S. corn supply. The USDA Grain Stocks report at the end of the month also confirmed such rationing.

The fall harvest has started in the U.S. Corn Belt. As of Sept. 26, 15% of the corn crop had already been harvested and 5% of the soybean crop. A dry weather outlook for the Midwest should keep the harvest on pace with historical averages, but may continue to support lower crop prices in the near term.

Grain Prices

Corn prices decreased by 28.1% in September and closed at $5.92 per bushel due to the ongoing uncertainty of the global economy and decreased demand. Although U.S. corn yields were estimated 4.9 bu. per acre lower, demand decreased with rationing of the U.S. corn crop. In the quarterly USDA Grain Stocks report, old crop corn stocks were marked at 1.13 billion bushels, which was higher than expectations. The rationing of corn is already having an effect on stocks. Wheat remains an attractive alternative for livestock feed, even at current corn prices.

Soybean prices decreased 12.3% this month to $11.76 per bushel on the Chicago Board of Trade. USDA estimated that U.S. production would be increased by 1% due to higher yields. Soybean end users have made a switch to palm oil as an alternative to the current elevated soybean prices. The global supply of soybeans is on the high side, with South America sitting on excess soybeans due to cancelled Chinese imports. The USDA Grain Stocks report revealed slightly less than expected soybean stocks at 215 million bushels, although stocks are 42% higher than in September 2010.

Wheat prices were driven 22.0% lower during September to $6.09 per bushel due to the decrease in corn prices and increased outlook on the global supply. The Former Soviet Union nations have been reporting high yields, which will now be able to be shipped around the world since the wheat export bans of the 2010 drought have been lifted. Contrarily, demand for high-quality wheat has been increasing due to the poor crops in the U.S. and Canada this year. U.S. wheat stocks were reported at 2.15 billion bushels in the recent Grain Stocks report, about 115 million bushels higher than expected by grain analysts.

WASDE

USDA updated the U.S. and world balance sheet estimates for major agricultural commodities in the World Agricultural Supply and Demand Estimates (WASDE) report mid-month. Summer heat and excessively dry weather across the U.S. Corn Belt throughout August hurt crop conditions, which led to a reduction in the estimated average corn yield per acre in the U.S. to the lowest since the 2005/06 season.

Neutral to slightly bullish news from USDA as estimated average corn yields were decreased to 148.1 bu. per acre. Although current estimated yields are the lowest since 2005/06, this year's crop is on pace to be the third largest on record. 2011/12 supplies were decreased by 442 million bushels alongside a 20 million bushel decrease in beginning stocks and a 5 million bushel decrease in imports.

U.S. corn usage was decreased by 400 million bushels as supplies became tighter and rationing of the U.S. corn crop began. Feed and residual use was estimated 200 million bushels lower on decreased expected residual use on the smaller U.S. crop. Ethanol usage was also estimated 100 million bushels lower due to the increased price of corn and the Energy Information Administration's decreased forecast of gasoline consumption. U.S. exports were lowered by 100 million bushels on increased supplies and export expectations from Argentina, Brazil and Ukraine.

Farmland

The Creighton University Farmland Price Index increased to 66.9 from 61.9 in August. This marks the 20th straight month the index has been above growth neutral and the third straight month the gauge has risen. Consistent with the farmland values, the farm equipment sales index increased to 65.4 from August's 56.9. "Although both farming gauges are down from the beginning of the year, they are up significantly from September of last year, reflecting very strong farm income growth," said economist Ernie Goss.

Farmland values in Iowa soared 34% over the past 12 months, according to the latest survey of Iowa real estate agents. An acre of medium quality farmland in the state of Iowa is now worth $6,477, which is higher than the previous inflation adjusted peak of $5,917 in 1979. Previously, the largest single-year increase in value came in 2007 when farmland jumped 21.4%. High commodity prices and low interest rates were the two driving factors in the recent increase in farmland values, according to the survey.

The typical farmland selling season is approaching as crops are making their way into farmers' bins. Farmers make up the majority of farmland buyers and now that farmers are able to sell their crop, they are able to use their profits to purchase additional land. We expect a large amount of farmland property to exchange hands this fall and winter.

Outlook

The short-term commodity markets should remain volatile throughout the next few months due to the high level of uncertainty in the global economy. The long-term outlook on grains, in particular, remains bullish in our view, due to the strong fundamentals. Corn and soybean production is very low this year in the U.S., which gives little to no relief to the already extremely low corn stocks. Expect continued rationing of the U.S. corn crop moving forward into 2012.

The USDA Grain Stocks report confirmed that rationing has been taking place in grains, specifically corn. The markets have pulled back from their peaks and we will patiently wait to see if the bearish USDA report will trigger a slight rebound in demand, although grain stocks-to-use ratios are still extremely low.

Despite the economic uncertainty, we expect grain prices to remain strong, as lower prices will attract emerging markets such as China to provide price support. This fall should see a large amount of farmland sales if the harvest stays on schedule. Farmers will be cash rich and looking to expand their operations.

- Colvin

 

Visit http://farmlandforecast.colvin-co.com for daily updates

Log In or Sign Up to comment

COMMENTS

MARKETS

CROPSLIVESTOCKFINANCEENERGYMETALS
Market Data provided by Barchart.com
Enter Zip Code below to view live local results:
bayer
 
 
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by AmericanEagle.com|Site Map|Privacy Policy|Terms & Conditions