WILLAg Notes

May 04, 2016

Falling Cattle Prices, Where Is the Bottom

The price of cattle has been on a downward spiral for months and ranchers and farmers are wondering when it’ll hit bottom. Todd Gleason has more on the coming prospects for the price of beef.

May 03, 2016

Wheat Quality Council 2016 HRW Tour

Scouts will be moving through Kansas, Oklahoma, and Nebraska this week to check on the condition of the hard red winter wheat crop (HRW). We've posted a twitter feed from the tour here.

May 03, 2016

Weekly Crop Progress for May 2, 2016

Around the nation farmers have planted about 45% of the corn crop. That’s a 15% gain over last week, and despite the rainfall, still running 15% ahead of the rolling five year average. 13% of the corn crop has emerged. Missouri producers continue to come out of the gate at a sprint. Usually they have about half their crop in, this year that number is 87%. There are no condition reports, yet, for corn.

USDA NASS Crop Progress Report as of May 1, 2016

Farmers have moved quickly into soybean planting with 8% in the ground. That’s a five point gain over the week and 2% ahead of average.

USDA, in its weekly Crop Progress report, shows 42% of the winter wheat crop has headed, that’s just ahead of last year and 8 points faster than average. Crop condition improved again. The current winter wheat numbers are 32% fair, 50% good and 11% excellent.

Here are regional updates with audio from the statisticians in four of the five top corn producing states in the nation.

April 29, 2016

Farm Economy Beginning to Show Signs of Stress

This is the third year of a financial crunch on the farm. It follows on the heels of a series of tremendous seasons since 2006. The extra money, from then, is now starting to run out.

The financial stress in the ag sector may really begin to show this fall if low commodity prices persist says the Director of the TIAA CREF Center for Farmland Research on the Univeristy of Illinois campus, Bruce Sherrick.

Quote Summary - It is already affecting cash rents and land prices some. However, on a percentage basis not as much as the current cash prices (would suggest) for delivery within this year at least.

Sherrick says a a couple of things have happened which explain this buffering. The last several years have been really quite good for agricultural incomes. So, farmers have pretty strong balance sheets. It is easier to weather a downturn, says Sherrick, after a few good years, than a bad year after a few bad years, “We are seeing, clearly, working capital crunches beginning to hit people. This is the first year that is material, and lenders are seeing and uptick in volume. As we’ve adjusted to more normal stocks, we are into a period were we think, ”this might be the last year were people can really just stand for what’s going on without making some major changes in how they manage cash rents, or inputs, or financial structures".

This does not mean the price of farm land will plummet. Long term interest rates are very, very low and the rate of turnover in farmland is supper small. Money is cheap and farmland for sale is scarce.

Quote Summary - If you look at the number of acres that sell, maybe around 2% transfer per year within the agriculturally intense states. Only half of that moves outside of a family. The market is thin, and this helps buffer or slow down changes in farmland values because of changes in short term farm income. The low interest rates help people pay for a longterm investment with a stable cash return that can be rented for perhaps 3% of its value on a cash basis.

Farm land doesn’t look like such a dire situation, then, when you step back from it. It also has shown, very reliably says Bruce Sherrick, a positive correlation with inflation. Even if the price of commodities stay relatively low, it may be that the price of farmland, as an owned asset, will help farms stay afloat.

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