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BRIAN HOOPS

By Staff | Apr 10, 2015

Farmland prices in Iowa, the top U.S. corn and soybean state, are down by an average 7.6 percent over the past six months and 11 percent from a year ago, pressured by lower grain prices and firmer interest rates, according to a survey.

According to Reuters, the report by the Iowa Realtors Land Institute said Iowa’s nine crop-reporting districts all showed a decrease in value, ranging from 4.6 percent in the southwest to 11 percent in the northeast, since September 2014.

The highest prices for top-quality crop land averaged $11,619 an acre in the northwestern district of Iowa, down from $12,385 six months earlier.

Lowest prices for high quality grain acreage were in the southcentral district at $7,775, down from $8,267.

Highest pasture prices were in the southwest district at $3,400 per acre, up from $3,394.

Pasture land prices ticked higher in all but two districts, buoyed by livestock farm demand.

U.S. farmland values have set records in recent years following the strength in grain prices amid short supplies and the booming demand for biofuels and food exports.

CORN ANALYSIS

Corn closed the week 4.5 cents lower.

Last week, private exporters reported sale of 131,172 metric tons of corn to an unknown destination.

Weekly export sales showed corn sales at 16 million bushels. Annual corn sales now have reached 1.472 billion bushels, and sales are now 8 percent below a year ago.

In the quarterly stocks and acreage report, the USDA said U.S. corn acres are estimated at 89.2 million for 2015, down 2 percent from last year and the lowest since 2010.

However, it was above the average estimate of 88.7 million. The U.S. planted a total of 90.59 million acres in 2014.

The corn stocks number came in at 7.74 bb. This was above the 7.6 bb average corn stocks estimate; and the range was 7.46 bb to 7.8 bb.

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, especially after finding out 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.

Strategy and outlook: Producers are 100 percent sold of the 2014/15 crop and re-owned 50 percent with July options. They sold 10 percent of 2015 production.

They should 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 16.5 cents higher. Soybeans and meal both posted outside higher weekly closes.

Last week, private exporters reported a sale of 118,000 mt of soybeans to an unknown destination.

Weekly export sales of soybeans were only 1 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 ensured the world has an adequate supply of soybeans.

In the report, the USDA said soybean acres came in at a record 84.6 million acres, below the average pre-report estimate of 85.92 million acres as acres increased in 21 of the 31 major producing states.

March 1 soybean stocks totaled 1.33 billion bushels, up 34 percent from last year, but below the average trade guess of 1.3 bb.

Estimates were between 1.25 bb to 1.4 bb.

At the same time, last year’s stocks totaled 994 mb. On-farm stocks were 609 mb, and off farm at 724 mb for a 1.333 bb total.

The soybean market has one simple job, to rally and compete with corn this spring so it does not lose any acres.

Support comes from an effort to return to profitability to encourage farmers to not switch from corn to soybeans.

Strategy and outlook: Producers are sold 100 percent of 2014/15 production. They bought calls on 50 percent of 2014/15 production to re-own previous

sales.

They sold 10 percent of 2015/16 production. They should consider selling another 15 percent at $10.95 November.

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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