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April 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.

Crop Progress: More Than Half the U.S. Corn Already Planted

Apr 30, 2012

This afternoon, the USDA released its weekly crop progress report and to no surprise, corn, soybeans, and wheat are all out pacing their historical averages.

 

As of April 30, 2012, the 18 primary corn producing states have planted more than half of their corn crop with 53% of the U.S. corn planted, compared to 12% one year prior. 17 of the 18 states have planted more than their five-year historical average. Illinois has already planted 79% of its corn which outpaces its five-year average of 29%. 15% of the U.S. corn crop has already emerged compared to 4% from a year ago.

 

As of the fourth week of April, 12% of U.S. soybeans have been planted, a 10% increase from a year ago, and a 7% increase from its five-year average.

 

The six primary spring wheat producing states have planted 74% of their crop, compared to the five-year average of only 32%. South Dakota, which on average the past five years has 50% planted by this time, has almost planted their entire crop at 97%.

 

Winter wheat conditions have largely outperformed 2011's conditions with 64% of the winter wheat crop in good or excellent condition; a 30% increase from last year. Winter wheat in very poor or poor condition is at 10%; a 31% decrease from one year prior.

 

Corn prices increased by 6.1% over the past week ending at $6.60 per bushel, soybean prices increased by 4.6% over the past week ending at $15.03 per bushel, and wheat prices ended the week at $6.47 per bushel, a 3.5% increase from last week. Year-over-year corn prices are down 12.5%, soybeans are up 8.0%, and wheat is down 15.9%.

 

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

Sather Agriculture LP Top Hedge Fund in March

Apr 30, 2012

NEW YORK, NEW YORK, April 30, 2012 – Colvin & Co. LLP is proud to announce its farmland focused fund, Sather Agriculture LP, had the 4th highest monthly return in March for hedge funds, according to Morningstar. Sather Agriculture LP increased 20.0% in March, 2012, and is up 20.8% year-to-date.

 

Back-to-back years of record farm income, strong commodity prices, and tight global grain supplies, have driven agricultural fundamentals to the best in decades. Farmland has been one of the primary beneficiaries of the global agriculture boom. Midwestern US farmland values rose 22% in 2011 and 12% in 2010, according to the Federal Reserve Bank of Chicago.

 

“The global demand for grain and a value oriented approach to acquisitions has allowed Sather to capitalize on the demand for agriculture and outperform its peers,” said Greyson Colvin, Managing Partner at Colvin & Co. LLP. “Grain supplies are at decade lows and if the US stopped producing corn today, we would run out in less than 30 days.”

 

Barrons Hedge Fund Top Performances in March 2012 Sather Agriculture LP Greyson Colvin Marc Schober Patrick Cheney Farmland

 

The world’s population is expected to grow from 7 billion to over 9 billion by 2050. Over the same time period, food production must double. Global grain supplies are already at record low levels. An investment in farmland will provide a steady stream of income and capital gains due to the increasing global demand for agricultural commodities which is driven by the rising world population, rapid growth in emerging markets, and the demand for ethanol and bio-fuels. Demand for agricultural commodities is outpacing supply, which positions farmland as one of the most attractive asset classes for the next decade.

 

About Colvin & Co.

 

Colvin & Co. LLP, with offices in Anoka, Minnesota and New York, New York, is an agriculture-focused investment manager seeking to combine its expertise in the capital markets and knowledge of the agricultural sector to provide investors unique investment opportunities. Colvin & Co. is the General Partner of two farmland funds, administers separately managed accounts, and is the publisher of Farmland Forecast (www.farmlandforecast.com), a daily source of news and research about investing in farmland and agriculture.

 

A Breakdown of Renewable Fuel Standards

Apr 30, 2012

The U.S.'s course of providing cleaner and cheaper fuel while having less dependence on foreign oil has been a subject of much debate. Some believe in drilling domestic oil would provide the best course, others in increasing ethanol production, or pushing for electric powered vehicles. Whichever route the U.S. chooses, it better be fast as gas is pressing $4 per gallon.

In order to meet these goals, the U.S. has developed mandates for renewable fuel production through 2022. Below is a description of these goals and after reading them, you, the reader, can decide if the U.S. is on track to a self sustaining fueled economy.
In 2005, the U.S. passed a Renewable Fuel Standard (RFS) as part of the Energy Policy Act (EPA). Included in this standard was the first U.S. renewable fuel volume mandate. This act was amended in 2007 in the Energy Independence and Security Act, increasing the volume mandate. The mandate stated that the U.S. will need to produce 36 billion gallons of renewable fuel by the year 2022. Of that 36 billion gallons, 15 billion needs to come from corn based ethanol, 16 billion from cellulosic ethanol, 4 billion from other advanced biofuels, and 1 billion from biodiesel.
These were the goals set forth by the EPA. How far along are we to meeting these mandates? U.S. renewable fuel production in 2011 was 13.9 billion gallons, and of that, 13.5 was corn based ethanol. The goal of producing 15 billion gallons of corn based ethanol by 2022, is a feasible goal. For the past 30 years, the corn based ethanol industry has come a long way. In 1980, the U.S. produced 175 million gallons of ethanol and that number has increased to 13.5 billion today.
 
Renewable Fuel Standard Consumption Manadate

In contrast, the cellulosic ethanol industry has produced 0 gallons of ethanol through 2011. This is alarming due to the fact that the federal mandate called for 250 million gallons to be produced in 2011 and 16 billion gallons to be produced by 2022. Wallace Tyner, co-chair of the National Academy of Sciences panel, a professor of agricultural economics at Purdue University and co-director of the Center for Research on Energy Systems and Policy stated, “Whereas the technology and costs of making ethanol fuel from corn are well known, cellulosic on the other hand is new technology. We don’t know how it works. We don’t know how much it will cost. There are no plants in operation. Here we are in 2011 at 0 gallons and we have to get to 16 billion gallons by 2022. That’s double or triple how fast ethanol fuel became commercially viable. Everybody in the industry wants to build the fourth or fifth plant. Nobody wants to build the first.”

 
Furthermore, the Midwest Energy Security and Climate Stewardship Platform Plan in which most Midwest states are participating in called for the production of commercially available cellulosic ethanol by 2012. With no commercially viable plants producing cellulosic ethanol, the goal of producing 16 billion gallons in 10 short years seems more of a miracle than an achievable goal.
 
The U.S. government has taken steps to increase renewable fuel production. In April of 2012, the EPA approved E15 as a registered fuel. E15 contains a 15% blend of ethanol, whereas the current blend at pumps is 10%. Fueling stations would not be required to provide E15 but the Obama Administration has set a goal to install 10,000 blender pumps to support E15 in the next five years.
 
Tom Buis, CEO of Growth Energy commented, “This announcement strengthens the ethanolindustry’s efforts to innovate and continue to deliver domestically-produced and affordable alternatives to foreign oil. With ethanol selling an average of a dollar a gallon cheaper than gasoline and $4 a gallon gasoline on the horizon, we’d encourage all Americans to ask their local filling station how soon they will see more-affordable E15.”
 
The approval by the EPA for E15 as a registered fuel will increase ethanol demand in the U.S., but where are we going to get supplies for this increased demand? With over 200 commercially viable corn based ethanol plants in the U.S. and cellulosic ethanol not ready for commercial use, corn based ethanol is the only viable option.
 
To better understand how the U.S. will meet these goals, here is a breakdown of goals for some of the top renewable fuel producing states provided by the National Governors Association:   
 
Illinois
 
·         Goal to replace 50% of the state’s energy supply with homegrown fuels by 2017.
·         Increase the percentage of biodiesel blend required to be used by a diesel powered vehicle owned by the State or units of local government of the State when refueling at a bulk central fueling facility from 2% to 5%.
 
Indiana
 
·         Participant in Midwest Energy Security and Climate Stewardship Platform Plan to establish shared goals for the Midwest region.
·         Produce commercially available cellulosic ethanol and other low-carbon fuels in the region by 2012.
·         Increase E85 availability at retail fueling stations in the region to 15% of stations by 2015, 20% by 2020, and 33% of all fueling stations in the region by 2025.
·         Reduce the amount of fossil fuel that is used in the production of biofuels by 50% by 2025.
 
Iowa
 
·         RFS goal to replace 25% of gasoline in the state with biofuels (ethanol or biodiesel) by January 1, 2020.
·         Enrolled 2008 legislation provides 1) that renewable fuels infrastructure is expanded to include blender pumps, 2) increased funding for biodiesel terminals from $50,000 to $100,000, and 3) tasks the Office of Energy Independence to create a renewable fuels marketing plan and a marketing campaign for owners of flexible fuel vehicles.
·         Participant in Midwest Energy Security and Climate Stewardship Platform Plan to establish shared goals for the Midwest region.
·         Produce commercially available cellulosic ethanol and other low-carbon fuels in the region by 2012.
·         Increase E85 availability at retail fueling stations in the region to 15% of stations by 2015, 20% by 2020, and 33% of all fueling stations in the region by 2025.
·         Reduce the amount of fossil fuel that is used in the production of biofuels by 50% by 2025.
 
 
Michigan
 
·         Participant in Midwest Energy Security and Climate Stewardship Platform Plan to establish shared goals for the Midwest region.
·         Produce commercially available cellulosic ethanol and other low-carbon fuels in the region by 2012.
·         Increase E85 availability at retail fueling stations in the region to 15% of stations by 2015, 20% by 2020, and 33% of all fueling stations in the region by 2025.
·         Reduce the amount of fossil fuel that is used in the production of biofuels by 50% by 2025.
 
Minnesota
 
·         Requires all gasoline to contain 10% ethanol increasing to 20% by 2013 and requires all diesel fuel to contain 2% biodiesel, increasing to 5% in 2009 and 20% by 2015.
·         Participant in Midwest Energy Security and Climate Stewardship Platform Plan to
           establish shared goals for the Midwest region.
·         Produce commercially available cellulosic ethanol and other low-carbon fuels in the region by 2012.
·         Increase E85 availability at retail fueling stations in the region to 15% of stations by 2015, 20% by 2020, and 33% of all fueling stations in the region by 2025.
·         Reduce the amount of fossil fuel that is used in the production of biofuels by 50% by 2025.
 
Nebraska
 
·         Offered assistance to fuel marketers who wish to market E85 via direct marketing agreements with Nebraska ethanol plants; technical and marketing assistance are available; E10 market share stands at 77%; Nebraska fleet compliance for Flexible Fuel Vehicle use exceeds gubernatorial target.
·         Participant in Midwest Energy Security and Climate Stewardship Platform Plan to establish shared goals for the Midwest region.
·         Produce commercially available cellulosic ethanol and other low-carbon fuels in the region by 2012.
·         Increase E85 availability at retail fueling stations in the region to 15% of stations by 2015, 20% by 2020, and 33% of all fueling stations in the region by 2025.
·         Reduce the amount of fossil fuel that is used in the production of biofuels by 50% by 2025.
 
 North Dakota
 
·         75% of gasoline used in the state must be blended with ethanol by 2015 and the state will have a production capacity of at least 135 million gallons per year of biodiesel by 2015.
·         Participant in Midwest Energy Security and Climate Stewardship Platform Plan to establish shared goals for the Midwest region.
·         Produce commercially available cellulosic ethanol and other low-carbon fuels in the region by 2012.
·         Increase E85 availability at retail fueling stations in the region to 15% of stations by 2015, 20% by 2020, and 33% of all fueling stations in the region by 2025.
·         Reduce the amount of fossil fuel that is used in the production of biofuels by 50% by 2025.
·         Set goal of producing 450 million gallons of ethanol by 2011.
·         Created an Ethanol Council that appropriates the ethanol fund and reports to the legislature.
 
South Dakota
 
·         Participant in Midwest Energy Security and Climate Stewardship Platform Plan to establish shared goals for the Midwest region.
·         Produce commercially available cellulosic ethanol and other low-carbon fuels in the region by 2012.
·         Increase E85 availability at retail fueling stations in the region to 15% of stations by 2015, 20% by 2020, and 33% of all fueling stations in the region by 2025.
·         Reduce the amount of fossil fuel that is used in the production of biofuels by 50% by 2025.
 
Wisconsin
 
·         The state aims to generate 25% of its transportation fuels from renewable sources by the year 2025.
·         Participant in Midwest Energy Security and Climate Stewardship Platform Plan to establish shared goals for the Midwest region.
·         Produce commercially available cellulosic ethanol and other low-carbon fuels in the region by 2012.
·         Increase E85 availability at retail fueling stations in the region to 15% of stations by 2015, 20% by 2020, and 33% of all fueling stations in the region by 2025.
·         Reduce the amount of fossil fuel that is used in the production of biofuels by 50% by 2025.
 
As an educated reader, what is your conclusion? Is the U.S. on track to provide a self sustaining fueled economy?

Crop Progress: Everyone is Above Average

Apr 23, 2012

This afternoon, the USDA released its weekly crop progress report. Soybeans joined the mix and are outpacing average historical planting percentages as well.

As of April 22, 2012, the 18 primary corn producing states have planted 28% of their corn, compared to 8% one year prior. 16 of the states have planted more than their 5-year historical average. Illinois has already planted 59% of its corn which outpaces its 5-year average of 17%. 9% of the U.S. corn crop has emerged compared to 2% from a year ago.
 
As of the third week of April, 6% of U.S. soybeans have been planted, a 4% increase from a year ago. Sugar beets planted was at 60% with Michigan finishing up this past week. During the same time last year, only 9% of the entire sugar beet crop was planted.
 
As of April 22nd, 2012, the 6 primary spring wheat producing states have planted 57% of their crop, compared to the 5-year average of only 19%. South Dakota, which on average the past 5 years has 30% planted by this time, has almost planted their entire crop at 91%.
 
Winter wheat conditions have outperformed 2011's conditions with 63% of the winter wheat crop in good or excellent condition, a 28% increase from last year. Winter wheat in very poor or poor condition is at 10%, a 30% decrease from one year prior.
 
Corn prices decreased by 0.2% over the past week ending at $6.22 per bushel, soybean prices increased by 1.2% over the past week ending at $14.37 per bushel, and wheat prices ended the week at $6.25 per bushel, a 1.5% increase from last week. Year-over-year corn prices are down 18.4%, soybeans are up 3.5%, and wheat is down 24.3%.
 
For daily articles on farmland and agriculture, visit www.farmlandforecast.com 
 
 

Rural Economy Slows in April

Apr 23, 2012

The Rural Mainstreet Index (RMI) decreased slightly this month, but remained well above growth neutral. The farmland price index declined in April, indicating slower growth in values, but remained above growth neutral for the 27th continuous month.

The Rural Mainstreet Index decreased to 57.1, a slight decrease from the 59.8 it posted last month.
RMI Data
According to Creighton University economist Ernie Goss, “We are seeing some signs across the Rural Mainstreet economy that higher energy and fuel prices are slowing growth for areas dependent on agriculture. Furthermore, somewhat slower global growth has negatively affected some portions of the rural and agriculturally dependent economy.”
Agriculture
The farmland price index decreased to 69.4 this month from 78.7 in March. This marks the 27th straight month the index has been above growth neutral. The farm equipment sales index increased to 62.4 from March’s 61.5.
Farmland Price Index
Bankers were asked this month what percentage of sales were purchased by non-farmers. Bankers indicated that 20% of sales were purchased by non-farmers. DeWayne Streyle, CEO of United Community Bank of North Dakota reported, “Nonfarmer and recreation investors are driving the farm land valuations (higher).” We find this statement inconsistent with the data we have observed. In fact, we believe farmers are the primary reason farmland values have increased.
Banking
The loan volume index increased to 52.8 from 48.4 a month prior. The check deposit index increased to 72.6 from 69.4 in March and the certificate of deposit and savings instruments increased to 53.5 from a 48.4 last month.
March's hiring index decreased to 59.3 compared to 63.0 in February. “Our survey data along with government job data indicate that year-over-year job growth is now much stronger in the metropolitan and urban areas of the region than on Rural Mainstreet. Again, some of the air is coming out of the agriculture bubble, and that is not a bad thing,” said Goss. The economic confidence decreased to 60.6 from March's 63.0.
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: An Early Planting Season

Apr 17, 2012

The USDA released its weekly crop progress report today, a day late due to an electrical fire at their Washington, DC offices yesterday. Corn planted acres continues to outpace historical averages.

As of April 16, 2012, the 18 primary corn producing states have planted 17% of their corn, compared to 5% one year prior and a 5-year historical average of 5%. 17 of the states have already planted more corn than their 5-year historical average, Texas being the only state below its average. Illinois has already planted 41% of its corn, compared to only 8% a year prior.
 
The 6 primary spring wheat producing states have planted 37% of their crop as of the third week of April, compared to their 5-year average of only 9%. South Dakota, which on average the past 5 years has 13% planted by this time, has 83% of their spring wheat planted thus far. Across these states, 10% of the spring wheat has emerged as only 1% was emerged by this time last year.
 
Winter wheat conditions continue to outperform 2011's conditions with 64% of the winter wheat crop in good or excellent condition, a 28% increase from last year. Winter wheat in very poor or poor condition is at 11%, a 27% decrease from one year prior.
 
Corn prices decreased by 4.0% over the past week ending at $6.23 per bushel, soybean prices decreased by 0.7% over the past week ending at $14.20 per bushel and wheat prices ended the week at $6.16 per bushel, a 4.2% decrease from last week. Year-over-year corn prices are down 17.0%, soybeans are up 5.7%, and wheat is down 20.5%.
 
For daily articles on farmland and agriculture, visit www.farmlandforecast.com
 
 

WASDE: U.S. Corn Ending Stocks Unchanged

Apr 10, 2012

The April WASDE forecasted an unchanged balance sheet for U.S. corn. This comes as a surprise as most analysts expected U.S. corn ending stocks to significantly decrease after last month's Quarterly Stocks Report indicated an 8% drop in corn held in all positions. As predicted, soybean production and stocks decreased worldwide.

Corn

U.S. ending stocks remained at 801 million bushels due to a decrease in expected ethanol use and an increase in expected wheat consumption compared to corn. Corn usage for ethanol production remained unchanged from last month at 5.0 billion bushels. The Energy Information Administration's latest report indicated average daily ethanol disappearance was at a 23-month low in January, increasing ethanol stocks to a record high. Larger than expected wheat supplies and competitive pricing compared to corn imply wheat could be the choice of feed this year. The projected range for season-average corn prices was narrowed on both ends of the range by 10 cents to $6.00 to $6.40.
2011/12 global coarse grain supplies were decreased by 4.3 million tons reflecting a 4.0 million ton decrease of Chinese corn beginning stocks due to increased 2010/11 corn feed and residual use.

We will continue to watch the amount of U.S. corn acres planted as the U.S. is poised to plant the largest amount of corn acres since before World War II.

Soybeans

2011/12 U.S. soybean exports were increased this month by 15 million bushels due to soybean crush experiencing higher than expected meal disappearance resulting in exports increasing by 15 million bushels. The U.S. season-average price range for 2011/12 was projected at $12.00 to $12.50 per bushel.

Global oilseed production for 2011/12 was projected 5.2 million tons lower to 440.6 million tons. Weaker foreign production accounts for the decrease. Soybean production in Brazil was lowered 2.5 million tons from last month as warm temperatures and insufficient amounts of rainfall continued to decrease yields. Argentina and Paraguay soybean production was also lowered.

Wheat

U.S. wheat ending stocks for 2011/12 were projected 32 million bushels lower in April as feed and residual usage was increased. The season-average price was narrowed by 5 cents on both ends to $7.20 to $7.40 per bushel.

Global wheat supplies for 2011/12 were lowered 0.5 million tons due to decreases in beginning stocks worldwide. Global wheat consumption was also increased due to an expected rise in feed and residual use as wheat appears to be a cheaper feed alternative to corn.

Outlook

The grain markets will continue to watch South American production of corn and soybeans as weather has had an adverse affect on yields.  Tomorrow officially marks the beginning of the U.S. corn planting season in many regions of the Corn Belt and we are excited to get this year's crop in the ground.

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

Crop Progress: Corn and Spring Wheat Ahead of 5-Year Averages

Apr 09, 2012

This afternoon, the USDA released its weekly crop progress report. Corn and spring wheat planting continue to outpace historical averages.

As of April 8th, 2012, the 18 primary corn producing states have planted 7% of their corn, compared to 3% one year prior. 15 of the states have planted more than their 5-year historical average. Illinois has already planted 17% of its corn, compared to its 5-year average of only 1% by the second week in April. Warm weather has prompted farmers to get into fields and plant corn at a historically early time.
 
Spring wheat has also been planted at an accelerated pace compared to its historical average. As of April 8th, 2012, the 6 primary spring wheat producing states have planted 21% of their crop, compared to their 5-year average of only 5%. South Dakota, which on average the past 5 years has 6% planted by this time, have 52% of their spring wheat planted thus far.
 
Winter wheat conditions have outperformed 2011's conditions with 61% of the winter wheat crop in good or excellent condition, a 25% increase from last year. Winter wheat in very poor or poor condition is at 10%, a 26% decrease from one year prior.
 
Corn prices decreased by 0.9% over the past week ending at $6.49 per bushel, soybean prices increased by 0.7% over the past week ending at $14.31 per bushel and wheat prices ended the week at $6.43 per bushel, a 2.1% decrease from last week. Year-over-year corn prices are down 15.5%, soybeans are up 2.8%, and wheat is down 19.3%.
 
For daily articles on farmland and agriculture, visit www.farmlandforecast.com 

Crop Progress: Corn and Spring Wheat Planting off to a Fast Start

Apr 02, 2012

This afternoon, the USDA released its first weekly crop progress report of the 2012 planting season. Although a small amount of data was released, it highlighted how warm weather motivated farmers to plant earlier than normal.

As of April 1st, 2012, the 18 primary corn producing states have planted 3.0% of their corn, compared to 2.0% a year prior. 9 of the states (Illinois, Indiana, Kentucky, Michigan, Missouri, Nebraska, North Carolina, Ohio, Tennessee) have planted more than their 5-year average. Illinois has already planted 5.0% of its corn, which is a 5.0% increase from its historical average from 2007-2011. Warm weather has defrosted fields, prompting farmers to get in fields and plant corn at a historically early time.
 
Similar to corn, spring wheat has been planted earlier this year compared to historical averages. As of April 1st, 2012, the 6 primary spring wheat producing states have planted 8.0% of their spring wheat, compared to 1.0% on April 1st of 2011. South Dakota, which on average the past 5 years planted 2.0% of their wheat by this time, have planted 25.0% of their spring wheat thus far.
 
Winter wheat conditions have outperformed last year's conditions immensely. 58.0% of the winter wheat crop is in good or excellent condition, a 21.0% increase from last year. Winter wheat in very poor or poor condition is at 12.0%, a 20.0% decrease from one year prior.
 
Corn prices increased by 2.8% over the past week ending at $6.55 per bushel. Wheat prices decreased by 0.3% over the past week ending at $6.57 per bushel. Year-over-year corn prices are down 11.0% and wheat is down 13.4%.
 
For daily articles on farmland and agriculture, visit www.farmlandforecast.com.

Grain Markets End March on a Bullish Note

Apr 02, 2012

One of the warmest and dry springs in recent memory, will allow farmers to plant the largest corn crop since 1937. Favorable weather across the Corn Belt has farmers already planting in some of the southern regions. In many areas of the Corn Belt, the first planting date allowed by crop insurance has been moved forward a few days. Grain prices were declining throughout March as the markets were building in a worst-case scenario for the USDA Prospective Plantings and Quarterly Stocks, but lower than expected corn supplies rallied prices on the last day of the month. The amount of 2012 planned corn acres was estimated 2% higher than consensus, but soybean acres were below analyst expectations.

Grain Prices

Corn prices decreased by 1.9% in March and closed at $6.44 per bushel. Prices had declined for the majority of the month as favorable corn economics were incentivizing farmers to plant on of the largest corn crops on record. As the markets built a worst-case scenario for corn prices, the forward contract fell to as low as $6.04 per bushel. At the end of the month, the USDA estimated corn planted acres for 2012 at 95.9 million acres, a 4% increase from 2011's 91.9 million acres. High corn prices relative to soybeans and warm, dry weather has encouraged farmers to plant corn at the expense of soybeans. Corn stocks as of March 1, 2012 were estimated at 6.01 billion bushels, an 8% decrease from March 1, 2011 and a 150 million bushels lower than market expectations.

Soybean prices continued to increase this month by 6.9% to close at $14.03 per bushel, a six-month high. Prices steadily increased throughout March due to the continued difficulties in South America and lower planted soybean acres. Soybean acres were estimated at 73.9 million acres, a decrease of 1% from last year’s 75.0 million acres. Soybean stocks as of March 1, 2012 were estimated at 1.37 billion bushels, a 10% increase from 2011 and somewhat in line with analysts’ estimates.

Wheat prices declined by 0.6% this month, closing at $6.60 per bushel. Wheat planted acres were estimated at 55.9 million acres according to the USDA, an increase of 3% from 2011's 54.4 million acres. High global wheat supplies have provided little incentive for farmers to plant wheat in 2012.

Farmland Values

The Creighton University Rural Mainstreet Index (RMI) increased slightly this month to 59.8, primarily due to increased exports of agriculture commodities. Farm income continued to grow as March marked the 26th straight month the index has been above growth neutral. Cash rent prices for agricultural land have been increasing alongside farmland values and farm income. The farmland price index increased to 78.7 this month from 75.0 in February. As spring approaches and farmers are focused on planting the upcoming crop, the farm equipment sales index declined to 61.5 from February's 63.4.

Bankers were asked this month, as they were also asked in May of 2010, to assess the change in cash rent prices for farmland over the past 12 months. 39.0% of bankers reported cash rents growing by more than 10.0% year-over-year whereas only 3.0% reported this type of growth in May of 2010.

China Buying U.S. Corn

China, the world’s number two consumer of corn, bought 120,000 tons of corn in March from the U.S., bringing China’s purchases of corn this year to almost 4 million tons. The purchases were by livestock feed mills in southern China for shipment in May to August and a price of $320 per ton. Domestic corn supply remain tight and more corn imports are expected over the next few months.

China, historically self-sufficient in corn, transitioned to being a net importer of corn in 2010 and is now a major importer. Strong domestic growth and higher protein consumption has left the county short of corn the last few years. Corn imports in China are expected to grow rapidly and may reach 15 billion tons by 2014.

Outlook

The USDA Prospective Plantings report and Quarterly Stocks report gave investors confidence as grain prices proved to be fundamentally strong. At 2.3% less than market expectations, current corn supplies are low in the U.S. which may lead to rationing of the 2012 corn crop if yields are short of the USDA trend line expectations.

Our attention will turn to the weekly USDA Crop Progress reports staring April 2nd, along with the June 1st Plantings Report. The weather has been favorable for farmers seeking to plant early, but we will watch any changes and how the grain markets will react.


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

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