By Mike Walsten
Land Values Trend Weaker, Though Strong Auctions Persist
Land Update with Mike Walsten
Farmland values remain generally steady to weaker, depending on the area of the country. After a spring and summer of limited supplies, the number of farmland offerings available across the Midwest is on the rise. Investors and recent heirs of Midwestern farmland who thought of selling their holdings within the next few years have pushed their sale date forward because of the negative outlook for grain prices.
Although the general trend is steady to weaker with a boost in no-sale auctions in the eastern Corn Belt, some farm auctions have been surprisingly strong. For example, a contiguous 716 acres in north-central Indiana recently sold as a single unit for $11,567 an acre. Western Illinois has seen two auctions post prices of $14,700 and $15,500 an acre. Similar sales at that level have occurred sporadically in Iowa, with one auction of 148 acres in far northwestern Iowa bringing $18,100 an acre.
The mid-South seems to be holding values, according to a recent appraisal update conducted by Farm Credit Midsouth, which serves eastern Arkansas. It shows cropland values as of July 1 were steady to about 5% higher versus a year earlier.
Meanwhile, demand for ranch and pastureland remains steady to stronger across the Plains, Midwest and South.
By Nate Birt
Ask an Analyst: Ray Grabanski | Progressive Ag
What is the most underappreciated commodity marketing tool among producers?
Doing the opposite of the majority. If you do, you will usually be right.
What is your commodity marketing philosophy?
Buy low, sell high and marry rich. (Oops, I didn’t do the last one!)
What’s one action every producer should take to manage risk as 2015 ends and 2016 begins?
Take off all grain hedges between Nov. 15 and Jan. 14. A multiple-year bottom will be formed this winter, and there is very little risk at the lows that will be made then.
What percentage sold should farmers be on corn, soybeans and wheat for 2015/16 crops?
We have been 100% sold months and dollars ago. Remove all hedges between Nov. 15 and Jan. 14,
as multiple-year lows will be formed in the weeks ahead.
Who is one expert in the agriculture industry whose business advice you respect a great deal? Why do you respect their insights?
Bill Wilson, professor in the department of agribusiness and applied economics at North Dakota State University and an expert in commodity marketing, is an international adviser and one of the smartest people I’ve ever met.
What is the biggest mistake a farmer can make when managing financial risk?
Underestimating what markets can do. I continually do so myself, and I am a broker!
When producers and their commodity broker don’t see eye to eye on a financial play, how do you decide who wins?
It doesn’t matter—no one wins in a disagreement!
When you aren’t thinking about commodities, what activities do you enjoy most?
I enjoy water skiing, water surfing, golfing, downhill skiing, tennis and flying my airplane. It’s a Piper Cherokee 6-300.
By Anna-Lisa Laca
For Better Profitability, Lock In Natural Gas
Profits are calculated with the equation of sales minus costs. For producers, improving profitability not only means trying to sell for the best price but also decreasing expenses.
“If I’m a corn producer thinking long-term, I’m going to look at where I can find value,” says Bryan Doherty, senior market advisor with Stewart-Peterson. “Where can I buy inputs cheap?”
Consider booking your natural gas needs. The predicted mild winter and the lack of corn dryers running throughout the Midwest have sent natural gas prices to a three-year low, Doherty says.
Yet the price could rally if the U.S. experiences a long cold spell, cautions Kyle Schrad, a market analyst with INTL FCStone. He says farmers would be smart to lock in natural gas now “because it’s so cheap.”
Natural Gas Price Tumble Continues
The price of natural gas is at levels last seen in 2012.