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BRIAN HOOPS

By Staff | Jan 2, 2015

Used machinery

After being down 15 to 25 percent in late summer and early fall, the value of used machinery saw a little rebound in November.

Columnist Greg Peterson said prices for large, late-model equipment firmed as winter set in.

Auction prices got a little strong through the first 10 days of December. Peterson expects the volume of used machinery to pressure prices going into spring and summer.

Peterson said the value of older equipment and livestock equipment has remained strong.

Deere insurance

Deere & Co. has agreed to sell its crop insurance business to Farmers Mutual Hail Insurance Co. of Iowa. This plan has been under review since September.

The sale is expected to be finalized in the first quarter of next year.

Bankers watching incomes

Agriculture lenders are carefully watching how their farm customers come out at the end of this year and what they have planned for 2015.

Ag View Solutions president and manager Chris Barron recently surveyed ag lenders in different regions of the U.S. and compiled the lenders Top 10 list of concerns.

The borrowers’ increasing lines of credit is the top concern.

Another challenge is the role of bank examiners, which means farmers may have to start providing more information to their banks. A lot of it stems back to the housing bubble. I think there’s some concern that we could be entering some sort of agricultural bubble.

I think they’re being very cautious in trying to make sure all information and data that comes to and through the banks is correct.

Despite the concerns, Barron is optimistic about agriculture. Usually when the risk is highest is also when the opportunities are the greatest.

CORN ANALYSIS

Corn closed the week 4 cents higher.

Last week, private exporters reported sales of 166,600 metric tons of corn to an unknown destination.

There were no weekly export sales last week due to the Christmas holiday. Corn continues to creep higher as lack of producer selling into the end of the year has lifted basis levels in many locations and prices are rallying in an effort to extract product from producers hands.

This could change after the first of the year if producers are willing to part with their product for cash flow needs during the winter.

Otherwise, it looks as if prices will creep higher with next weekly resistance at $4.30. The market is still projecting nearly 2 billion bushels of ending stocks, giving the market ample supply that will eventually come to market.

Going into the spring, traders will want to buy a break in prices due to the reduced acres and the threat of adverse summer growing season sending prices sharply higher.

Strategy and outlook: Producers are 100 percent sold of the 2014/15 crop. They sold 10 percent of 2015 production. They should sell another 15 percent at $4.50 December.

SOYBEANS ANALYSIS

Soybeans closed the week 15.25 cents higher.

Last week, private exporters did not announce any private sales.

No weekly export sales were reported last week due to the Christmas holiday.

Similar to corn, soybeans have crept higher into the end of the year as the lack of producer selling has limited the product that has come to market and basis levels remain tight.

Limiting the upside for soybeans has been reports from South America that both Brazil and Argentina are expected to produce a record soybean crop this year.

While this has largely been factored into prices, there are still major fundamental changes that can occur. China could cancel large U.S. soybean purchases in favor of South American soybeans at a discounted rate, which would shift ending stocks into a more bearish mode.

Or weather could turn adverse in South America, which would send U.S. prices sharply higher as China would purchase even more U.S. soybeans due to reduced competitive supplies.

Technically, a wedge pattern has formed on the weekly charts and a breakout of this pattern should determine the price direction for the winter months.

Strategy and outlook: Producers are 100 percent sold of 2014/15 production. They sold 10 percent of 2015 production. They should sell another 15 percent at $10.95 November.

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