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BRIAN HOOPS

By Staff | Mar 31, 2017

FarmLead

Farmers work to feed the world. Yet somehow, corn, wheat and rice sales are still happening at a local level through antiquated paperwork and phone negotiations. Now, an Ottawa-based startup called FarmLead has raised $6.5 million in venture funding to connect grain producers and buyers automatically online, and help farmers get fair prices for what they grow.

The platform is something like an eBay for grains. Monsanto Growth Ventures led the Series A deal, and was joined by Avrio Ventures, the MaRS Innovation Accelerator Fund and Serra Ventures.

MGV investment director Kiersten Stead said, “We see FarmLead as a tool that creates optionality for farmers. That’s what is most important to us. But their platform also gives buyers more choices. They can create a large portfolio of vendors to work with, and get access to a more diverse set of crops than what they had before.”

After they set up a free account, growers or buyers can post sell or buy offers on FarmLead, browse existing offers, sort offers by location or other terms and engage in negotiations.

The company generates revenue through transactional fees. The FarmLead app includes a “forward contracting service and escrow payment option,” which helps growers sell to buyers based on their projected grain yield.

“Knowing they’ve locked in a buyer helps farms better manage their finances. And for buyers, committing early can help score a good deal.”

Farm valuation drop ending?

The three-year downward slide in Iowa farmland values appears to have stopped, at least temporarily, according to a survey released March 22 that showed a 0.9 percent increase in ag land values over the past six months.

“It looks like the bleeding has stopped temporarily,” said Kyle Hansen, a realtor who heads the survey which is conducted by the Iowa Chapter of Realtors Land Institute. The survey of Realtors reflects their thoughts on the price of Iowa farmland over the past six months. It follows a 3.7 percent drop in land values the previous six months, so the total for the last year is still a decline of 2.8 percent.

The average price for Iowa tillable farmland, as of March 1, was about $6,545 per acre, Hansen said. That compares to $8,690 in the March 2013 survey. Values rose slightly for about six months after that and then began dropping in the fall of 2013, according to the survey.

CORN

ANALYSIS

Corn closed the week 12 cents lower. Last week, private exporters announced sale of 132,000 metric tons of corn to South Korea.

Weekly export sales of corn showed a total of 58 million bushels (1.47 million mt) with 53 mb (1.34 mmt) for the 2016-2017 marketing year.

This was well above the 17.5 mb (444,500 mt) needed this week to be on pace with USDA’s March demand projection of 2.225 bb.

Ethanol production was supportive once again as production topped 1 million barrels per day for the 20th consecutive week.

The weekly ethanol data report showed that production improved to 1.04 million barrels per day. The increase of 23,000 bpd was the biggest increase since October.

Highs for corn are likely to be scored during the spring planting time frame or very early summer as values rally to secure enough planted acres to meet record demand.

One week after Informa updated 2017 U.S. planted area forecasts, FC Stone estimated acres at 91.6 million.

Informa estimated corn acreage at 90.8 million while FC estimated acreage at 91.6 million versus 94 million a year ago.

NASS reports that USDA planting intentions survey for March 31 report will be conducted from Feb. 27 through March 18.

Strategy and outlook: A rally into weekly resistance was a great time to sell inventory, look to re-own on support as commercials have been big sellers lately.

SOYBEANS

ANALYSIS

Soybeans closed the week 24.75 cents lower. Last week, private exporters reported a sale of 120,000 mt of soybeans to China.

Weekly export sales of soybeans showed a total of 30.1 mb (818,100 mt) with 27.1 mb (738,200 mt) for the 2016-2017 marketing year.

This was far more than the 2.4 mb (391,500 mt) needed this week to be on pace with USDA’s March revised demand projection of 2.025 billion bushels.

One week after Informa updated 2017 U.S. planted area forecasts, FC Stone released its estimates. FC Stone estimated corn soybean acreage at 87.3 million versus 88.7 million estimated by Informa. This would be up from 84.2 million acres a year ago.

If wet growing conditions materialize this spring as forecast, corn will rally to buy acres as the market anticipate farmers will shift corn acres to soybeans. A very wet forecast will limit the upside for soybeans. The COT is bullish for soybeans, although it is not a timing indicator.

Strategy and outlook: Maintain re-ownership strategies into the summer months. Beans fell to key support, a great time to increase reownership.

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

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