Floor Talk March 13

[marketeye]

If you have a minute, grab a cup of coffee and take a look at a story I put together.

**Lenders Get Cautious As Farmland Values Rise**

--The story shows the latest cash rents in Iowa, Illinois, Indiana, Minn., South Dakota

--Also, who is buying all of the farmland? You might be surprised.

--How much higher will land values go? The answer is in the story too.

Thanks for taking time to read it. I hope the information is helpful.

Mike

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At the close:

The May futures corn contract finished 4 cents lower at $7.10. The May soybean futures contract settled 21 cents lower at $14.47. May wheat futures ended 6 cents higher at $7.10 per bushel.

The May soyoil futures contract settled $0.46 lower at $49.52. The May soymeal futures closed $7.30 per short ton lower at $428.90. 


In the outside markets, the NYMEX crude oil is $0.47 per barrel lower, the dollar is higher and the Dow Jones Industrials are 9 points higher.

One analyst says, "Beans are the leader today lower. Lower cash prices in Brazil and the US has futures on the defensive. There's been good delivery of beans against the expiring March futures, Thursday. This and talk of 7 million metric tons of beans to be shipped out of Brazil in March all pushed prices lower, with corn lower in sympathy. Wheat strength comes on expectation of bullish numbers on Thursday's weekly export sales report."

Mike

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At mid-session:

The May futures corn contract is trading 4 cents lower at $7.09. The May soybean futures contract is trading 21 cents lower at $14.47. May wheat futures are trading 4 cents higher at $7.07 per bushel. 


In the outside markets, the NYMEX crude oil is $0.47 per barrel lower, the dollar is higher and the Dow Jones Industrials are 9 points higher.

Mike

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At the open:

The May futures corn contract opened 10 cents lower at $7.03. The May soybean futures contract opened 24 cents lower at $14.44. May wheat futures opened 4 cents lower at $6.99 per bushel. 


In the outside markets, the NYMEX crude oil is $0.60 per barrel higher, the dollar is higher and the Dow Jones Industrials are 11 points lower.

Mike

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At 8:20am:

--USDA announces Wednesday that an 'unknown' bought 114,300 tons of U.S. sorghum for 2012-13 delivery.

Meanwhile, Jeff Coleman, Trean Group analyst and CME Group pit trader says the entire commodity sector has backed off. In his own words:

"Grains were, for the most part, inactive overnight. Soybeans were down 8.5 cents with wheat up a penny and corn unchanged. As I have been saying, the whole commodity sector has slowed quite a bit with most eyes seemingly concentrating on the equities markets, both foreign and domestic. Between equities and world politics, it’s hard for commodities to remain in the spotlight. Retail sales came out better than expected which turned what looked to be a lower stock market opening into a positive opening. Will the market continue to grind upwards to new highs," Coleman asks.

Mike

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At 7:10am: 

Early calls:  Corn is seen 1-2 cents higher, soybeans 5-7 cents lower, and wheat 1-2 cents higher.

Trackers:
Overnight grain, soybean markets=Trading mostly higher.
Crude Oil=$0.19 per barrel higher. 
Dollar=Higher. 
Wall Street=Seen opening lower, after Italy's auction drew little interest. Also, today U.S. consumer spending reports are expected to show weak signals.

World=Asia/Pacific stocks were lower and Europe's stocks were lower.

More in a minute,

Mike

[giolucas]

Land prices will drop and the bubble will burst when more corn and soybeans are planted on foreign lands.  It might take awhile but will happen.

[BA Deere]

With grain prices and land prices, there seems to be some strong underpinnings, because to get the production, the market constantly has to bid for more acres and bushels.  That`s not to say that a couple perfect growing years won`t take corn below the average breakeven of $4.  However if we get $3.50 other inputs will have to drop as well..$300 seed corn, $600/ton fertilizer.  From what I`ve heard banks aren`t borrowing over $3 or 4,000/acre and anyone borrowing money these days there`s zero tolerance for fudging figures.  It would take a flock of black swans to make a land crash like was seen in the 80`s, not to say we wouldn`t see it, we`re in interesting times.

Interest rates are the canary, of course if go they go up the gov is messing their own shoes, what would 11% interest on $16 Trillion be?  Anyway just my 2¢

[Faust100F]

BA - rather than investing in more land at these prices, it might be more prudent to improve the land already owned, whether it be land leveling in the South, irrigation in next year country or laying more field tile here in the Midwest.  Great article, but when the zero interest rates go away and 10% interest returns the party will be over.

I am not sure Africa will ever be stable enough to become a reliablie farming region.  I mean . . . they killed or drove all the white farmers who had the skills to make farming operations there work.   I really get a kick out of the gal, that shows up at the Land and Investment expo in DSM every year, preaching about the benefit of farming in Africa.

I do not think it would ever be a good idea to farm in countries controlled by islamics   who killed white land owners, and hate infidels.  Brazil is what it is, they might be able to raise a crop down there, but cannot get it to market.   Russia, Ukraine, et.al., have property title problems like Brazil does and they will never have a stable agriculture until land is allowed to pass into private hands, and have laws enacted to protect property rights.  In short . . . it is a gangster run region of the world. 

Soooooo . . . let the fear mongers whine every day about American Farmers being buried by these 3rd world countries.  I have during my lifetime witnessed very large tracts of land attempted to be operated here in the US by corporations, most gave up and rented out their land, or sold it.  Even with laws in the US that limit acres owned by foreigners and even citizens operating as corporations few large operations are ran by a headquarters located in New York.   The exception is livestock production, that can be ran with non-farmers.   

In the eighties and ninetys large land owning farming operations sold out, one that comes to mind is Pilgrims Pride in Texas, and large tracts of land in the Delta sold by insurance companies that believed farmland was a great investment, and then ended up dumping those tracts for half what they paid for them. 

Adios Amigo. John

[rswfarms]

Yes Faust, I am seeing a huge amount of drain tiling go in here in North-Central Iowa. Guys are working first to improve there land by increasing the drain tiling, before trying to purchase additional farmland at $10,000 to $15,000/acre. Plus there is almost no land for sale in my area, except that 80 acre farm that I am working on buying when it comes on the market in the next few months.