By Mike Walsten
Land Update with Mike Walsten
Cattle Prices and Moisture Nudge Rangeland Values Higher
In contrast to the weakness of Midwestern cropland values, pasture and rangeland prices are on the rise. According to data from Farm Credit Services of America (FCSAmerica) in Omaha, Neb., the value of pasture in its four-state service area of Iowa, Nebraska, South Dakota and Wyoming rose 2% to 11% this past year. That follows gains of 0.5% to 6% in 2014. Meanwhile, Frontier Farm Credit in Manhattan, Kan., indicates pasture prices rose 4.6% in eastern Kansas.
Driving the rise in values is a combination of strong feeder-cattle and cow prices, along with greener pastures resulting from the return of precipitation to large areas of the Central and Southern Plains.
On a state basis, Nebraska pasture values rose 6.2% this past year, according to FCSAmerica. That follows an increase of 5.1% in 2014. South Dakota posted a 3.9% increase in 2015, following a 6% surge in 2014. Wyoming ranchland jumped 11.1% this past year after a 2.3% rise in 2014. Iowa pasture values marked a 2.2% rise after a tepid 0.5% uptick in 2014.
How much longer strong demand will continue is unclear. The severe squeeze on cattle-feeding profits during the second half of 2015 reduced demand for pasture in some areas. The cowherd is expanding, signaling a likely downtrend in cattle prices and cooling in demand for pasture and rangeland.
To read Mike Walsten’s “Your Precious Land” blog, visit agweb.com/blog/your_precious_land.
By Nate Birt
Ask an Analyst: Sue Martin, Ag & Investment Services
What is your commodity marketing philosophy?
Each year, I start in the fourth quarter looking a year ahead. I look at fundamentals globally and domestically, then at timing within the market and in similar years. I try to give producers a focus that each year holds promise; it’s just which time is best to be doing your marketing.
What distinguishes your consulting firm from others?
We are pretty aggressive in voicing our opinion on timing of the market. We focus on what will work for individual producers—how aggressive they should be in their marketing. We try throughout the marketing year to give them a percentage as to how they should be marketing in increments. We’ve managed to network with a lot of different analysts and sources of information, not only here within the states but also overseas.
What’s one action producers should take to manage commodity marketing risk?
If they’ve got old-crop corn sitting around, we’re recommending they go ahead and make the cash sales if basis seems to improve. We’re also recommending they retain ownership via options, call-option spreads or buying futures back until the low is set in stone. Don’t get too aggressive with new-crop sales just yet. We think global foreign needs for grain are greater this year than in the past few years.
Which marketing tool is most underappreciated?
Options are the most underappreciated tool. There are so many different strategies. There are other times you need to go to an elevator and just sell the grain or take a hedge-to-arrive contract.
In terms of industry experts, whose business advice do you respect greatly? Why?
A very calm, stable view is Darrell Good of the University of Illinois Extension and FarmDocDaily. AgResource also does a good job.
What activities do you enjoy most outside of agriculture?
I love to golf, and my family and I like to boat at West Okoboji Lake in northwest Iowa.