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BRIAN HOOPS

By Staff | Aug 23, 2014

According to USDA’s National Ag Statistics Service, land prices rose 8.1 percent this year.

Regional changes in the value of farm real estate ranged from a 16.3 percent increase in the Northern Plains to a 1.1 percent increase in the southeast region.

A state-by-state analysis reveals land values spiked the most in North Dakota and South Dakota, with respective increases of 22.5 and 17.4 percent.

Minnesota’s farm real estate value gained 10 percent this year.

Cropland value increased 11 percent, to $4,870 per acre. Cropland cash rent paid this year averaged $186 per acre.

Non-irrigated cropland rent averaged $185, up $8 per acre from last year.

USDA said Minnesota’s farm production expenditures totaled more than $19 billion last year, up 3.6 percent from 2012.

Feed expense was the largest single production expense, followed by rent.

Cash rents have also increased this year in North Dakota.

Non-irrigated cropland averages $67 per acre, up $3 from last year.

Pasture rent averages $16 per acre, up a dollar.

Russia’s meat bans

The U.S. chicken business may take the biggest hit from Russia’s ban on many food products from the U.S. and European Union.

Russia has been the second-largest export customer for U.S. chicken, representing about $310 million in export value last year.

Beyond chicken, North Dakota State University Extension livestock marketing economist Tim Petry said Russia has not been a major meat export market.

In 2013, it banned all beef, pork and turkey because these types of meat had to be certified beta agonist free.

Essentially, on the beef and pork side, they weren’t a customer the last two years, so there’s no loss there.

Oh, Deere

Deere & Co. joined the farm operators cutting profit forecasts, citing “moderating conditions” in the farm sector thanks to lower crop prices, with prospects retreating particularly in the North and South American markets.

The maker of John Deere machinery again cut its sales forecast for its full financial year, which ends in October, foreseeing a 6 percent decline in takings, compared with a previous estimate of a 4 percent drop.

And this time, it reduced its forecast for full-year profits to about $3.1 billion, from a previous estimate of $3.3 billion.

“Earnings are forecast to be somewhat lower than in 2013,” said Deere, which has not reported a drop in full-year profits since 2009.

Deere & Co said it would indefinitely lay off more than 600 employees at plants in Illinois, Iowa and Kansas as falling grain prices hurt demand for tractors, harvesters and other agricultural machinery.

Deere had about 67,000 full-time employees as of Oct. 31, 2013, of which about 33,900 were in the United States and Canada. The layoffs are at plants in Moline and East Moline, Ill.; Ankeny, and Coffeyville, Kan.

The company operated 26 plants in the United States and Canada as of Oct. 31, of which 17 primarily make agriculture and turf equipment.

Deere also makes construction and forestry equipment. The U.S. Department of Agriculture has forecast record U.S. corn and soybean crops this year – a prospect that has sent prices

plummeting and discouraged farmers from buying equipment.

CORN ANALYSIS

Corn closed the week 13.26 cents higher.

Last week, private exporters announced a sale of 107,600 metric tons of corn to Mexico and 130,000 mt to an unknown destination for the 2014/15 marketing year.

Weekly export sales of corn showed sales of 26.2 million bushels.

In the weekly progress report, corn crop conditions were unchanged from last week at 73 percent good-to-excellent, and well above last year’s 64 percent and the highest rating in the last 10 years.

Crop ratings historically decline in August under warmer and drier conditions. This month, it doesn’t appear either will happen.

The first survey-based corn yield estimate of the season is 167.4 bushels per acre, a record larger figure, but less than the average trade estimate of 170.2 bpa.

The USDA raised production by a less-than-expected 172 million bushels. Production was forecast at a record 14.032 bb.

On the demand side of the scale, old-crop usage was increased for both exports and for ethanol usage, lowering the beginning stocks for the 2014/15 marketing year by 65 mb.

Total new-crop usage was increased by 100 mb, due largely to an increase in feed/residual use based on the larger crop size.

Ending stocks edged up just 8 mb to 1,808 mb, well below trade estimates.

Strategy and outlook: Producers are 25 percent sold of the 2014/15 crop and own December puts on 50 percent of the crop.

They should exit at $3.25. Most are 75 percent hedged by buying additional at-the-money puts.

SOYBEANS ANALYSIS

Soybeans closed the week 33 cents lower from last week.

Last week, private exporters announced sales of 278,000 mt of soybeans to China for the 2014/15 marketing year.

Weekly export sales of soybeans showed sales of 42 mb. In the weekly crop progress report, soybean conditions were 70 percent good-to-excellent, a 3 percent decline from the previous week. Last year’s rating was 64 percent.

This is the highest soybean ratings on record in the last 20 years.

The NOPA crush report showed July soybean crush at a surprisingly large 119.6 mb, up from June crush of 118.7 mb sharply above the average trade estimate of 115.8 mb, as the market was anticipating a decline from month-ago levels.

In the August supply/demand report, the soybean yield came in close to the average trade expectation at 45.4 bpa, up from the 45.2 bpa estimate seen in July.

Production is forecast at a record large 3.816 billion bushels.

Ending stocks were unchanged for old-crop thanks to an unusual 25 mb reduction in residual use that offset a 20 mb increase in exports and a 5 mb decline in imports.

New-crop usage was unchanged, and ending stocks rose by 15 mb.

Soybeans posted a new low close last week, opening the door for a test of weekly support at $10.22.

Strategy and outlook: Producers are 25 percent sold of 2014/15 production.

Producers exited calls and bought at-the-money puts on 75 percent of the crop.

This material has been prepared by a sales or trading employee or agent of Midwest Market Solutions and is, or is in the nature of, a solicitation. This material is not a research report prepared by Midwest Market Solution’s Research Department. The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment.

Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results.

Trading advice is based on information taken from trades and statistical services and other sources that Midwest Market Solutions believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such.

Brian Hoops can be reached at (605) 660-1155.

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