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BRIAN HOOPS

By Staff | Apr 3, 2015

Ag loans

The American Bankers Association reported farm banks increased agricultural lending significantly in 2014 and held $94.6 billion in farm loans at the end of the year, up 13.6 percent.

ABA said asset quality continued to improve as non-performing loans declined to pre-recession levels.

Farm banks held $161 billion in farm and ranch loans at the end of 2014, with more than half being loans of less than $500,000.

Equity capital at farm banks increased 4.8 percent to $46.2 billion.

PICO losses

PICO Holdings reports a net loss of $31 million in its fourth quarter, down from a nearly $8 million loss in the same period last year.

For the full year, PICO Holdings had a net loss of $52.4 million, compared to a net loss of $22.3 million in 2013.

Agribusiness operations lost $14 million last year, compared to a $23 million loss the previous year. John Hart, PICO s president and chief executive officer, said the company is reviewing financial and strategic alternatives for monetizing its investment in Northstar Agri Industries, the canola crush plant in Hallock, Minnesota.

Hart said PICO believes that Northstar may have a higher valuation in the hands of a strategic buyer than as part of a diversified holding company.

CORN ANALYSIS

Corn closed the week 6.5 cents higher.

Last week, private exporters reported sale of 114,000 metric tons to Mexico.

Weekly export sales showed corn sales at 17 million bushels. Annual corn sales now have reached 1.456 billion bushels and sales are now 8 percnet below a year ago.

Like the month of March, April will have commercial and seasonal traders buying weakness for a potential summer weather rally as the uncertainty of the growing season will have end users nervous about weather and this year’s crop after finding out if U.S. farmers will plant less corn this year.

Midwest producers will begin seeding corn acres by mid-April and weather will become important to pricing by May. If the month of April is wet and hampers producers planting efforts, look for December corn to rally in an effort to entice producers to plant corn later, rather than switch acres to soybeans.

Currently, the U.S. is experiencing a pattern of cool weather and soil temperatures that will need to warm up before corn will emerge.

Strategy and outlook: Producers are 100 percent sold of the 2014/15 crop. They sold 10 percent of 2015 production. They shouykd consider selling another 15 percent at $4.65 December. They bought calls to re-own 50 percent of previous sales.

SOYBEANS ANALYSIS

Soybeans closed the week 4.5 cents lower.

Last week, private exporters reported sales of 108,000 mt of meal to Canada and 280,000 mt of soybeans to an unknown destination.

Weekly export sales of soybeans were 19 mb. Annual sales are record large at 1.78 bb, up 9 percent from a year ago.

The quarterly stocks report and world-ending stocks ensure the world has an adequate supply of soybeans and the market is not signaling to producers to increase seeded acres in 2015.

In the month of April, the soybean market has one simple job, to rebound and compete again with corn this spring so it does not lose any acres.

In April, soybeans should find support from an effort to return to profitability to encourage farmers to not switch from corn to soybeans.

Also, a planting season that is slowed by heavy rains will encourage farmers to switch plantings of corn over to soybeans, therefore look for soybeans to maintain their premium to corn to ensure adequate supplies of soybean stocks.

Strategy and outlook: Producers are sold 100 percent of 2014/15 production. They sold 10 percent of 2015/16 production. They should consider selling another 15 percent at $10.95 November. They bought calls on 50 percent of 2014/15 production to re-own previous sales.

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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