Thursday, December 29, 2011

Ready to Ring in the New Year with New Low Mortgage Rates!

Happy New Year everyone!

I was just reading an article from the Associated Press about how fixed mortgage rates are still near record lows. The average 30-year home loan averaged about 3.95% last week, which is the lowest it has been since the 1950s!

According to the article, "The average on the 15-year fixed mortgage rose to 3.24 percent. That's up from 3.21 percent, also a record low. Rates have been below 5 percent for all but two weeks in 2011. Even so, this year is shaping up to be one of the worst ever for home sales."

Unfortunately, because of the lingering recession, few people have been able to take advantage of these fantastic rates. Without being able to seel their current home, many people can't move on to their next home. We haven't seen that quite as much here, where home sales have dropped but not nearly as fast as in other parts of the state or nation, and foreclosure rates are relatively low.

If you're thinking that you'd like to start the new year in a new house, please give me a call at 320-894-7528 and I can help you explore your options. With rates staying below 4 percent, now is a great time to buy!

My new year's resolution could be to help you find a new home - and to sell your old house!

Have a safe and Happy New Year,
Noah Hultgren

Tuesday, December 6, 2011

Follow up on MF Global

Wow - a day after I posted the story on MF Global and how it is affecting Minnesota farmers, I came across this story that puts it even closer to home. Again, the article interviews and quotes Minnesota farmers - some of whom are going to have to delay buying seed or farmland, which directly impacts all of us.

Here is the story written by Tom Polansek, of Reuters:


By Tom Polansek | Reuters – 1 hr 7 mins ago

CHICAGO (Reuters) - For the first time in 25 years, Minnesota farmer Dean Tofteland has missed his deadline to buy seed for next spring's corn and soybean crops.

With $200,000 of his money yet to be returned from the accounts of MF Global, his former broker, the 49-year-old farmer has missed a $5,000 discount for early buyers, and is watching friends and neighbors snap up the best varieties of seeds.

In the latest sign of how MF Global's failure is continuing to cascade across the commodity industry, Tofteland and other farmers who have yet to recover more than a third of their money from the bankrupt broker now find themselves in a cash crunch that risks rippling far beyond the futures market.

Some farmers have had to postpone purchases of land or equipment. Tofteland still expects to sow his 1,000 acres in the southwest corner of the state, but may have to borrow money to do so.

Still, the delay in returning billions of dollars in customer funds more than a month after MF Global filed for bankruptcy is starting to affect actual decisions on the farm. This threatens to cloud the outlook for U.S. crops, warn farmers who have been ratcheting up pressure on the bankruptcy trustee to move faster to disperse any cash he secures.

"That's pretty serious when you're raising food for the country and the world," Tofteland said.

For most farmers, the fact that their broker may have taken as much as $1.2 billion of customer money for its own use is bad enough. But the seasonal business of farming is now being disrupted since regulators still can't account for the missing funds, or even agree how big the hole is.

The chief regulatory officer for CME Group said on Tuesday the exchange was confident after more investigations that some of the higher estimates of the shortfall in MF Global customer funds were inflated. CME was MF Global's main regulator at the exchange level.

"The amount of money that we have tied up is significant," Tofteland said. "Because of this I've been delaying my seed purchase decisions."

Tofteland normally would have made his purchases at least two weeks ago to take advantage of discounts for farmers who buy early. He has avoided borrowing money in order to do so because he does not want to take on more debt but says he will consider a loan if the delay persists.

Tofteland worries his harvest next fall will suffer because the best-performing types of seeds will likely be sold out by the time he makes his purchases. He still plans to plant his crop in the spring.


Farmers are among the thousands of former MF Global clients who are missing money from the brokerage. The firm run by former New Jersey Governor Jon Corzine, an ex-CEO of Goldman Sachs, collapsed on October 31 after making bad bets on European debt.

The bankruptcy had an immediate impact on farmers' abilities to hedge their crops at grain exchanges. Many had to liquidate positions or put up additional cash to meet margin calls after their accounts were transferred from MF Global to other brokerages.

Now, the collapse has begun to impact farm decisions that can directly affect output.

In Montana, Marty Klinker, who grows wheat and barley, is missing about $275,000 from his accounts at MF Global. He said the shortfall caused him to delay buying more than $500,000 worth of farm equipment, including a tractor and combine, from manufacturer Case IH.

Klinker didn't know whether he would eventually buy the equipment, which would replace older models on his farm. He said he has to decide by the end of the year to take advantage of prices he previously negotiated with the company.

Case is a brand of CNH, a majority-owned subsidiary of Italy's Fiat SpA. A Case spokesman did not respond to a request for comment.

"We're right in the middle of year-end equipment decisions," Klinker said.


MF Global's collapse has not completely halted farm purchases.

Stine Seed, which calls itself the largest independent U.S. seed company, has not seen a slowdown in sales, said Myron Stine, vice president of sales and marketing.

Yet, other agribusiness professionals confirm shockwaves from the bankruptcy have disrupted plans affecting crop production.

Diana Klemme, a broker for Midwest grain elevators and vice president of Grain Service Corp in Atlanta, said one of her clients was holding about $400,000 cash in an MF Global account at the time of its collapse. The client had to delay purchasing some land because the money had been frozen, she said.

Farmers were caught off guard by the disappearance of their money because it was held in segregated accounts considered to be immune from troubles at brokerages. Several farmers said they had felt it was safer to keep cash in the accounts than at local banks.

Congress is holding a series of hearings to examine whether regulators and company insiders could have done more to prevent MF Global's failure from hurting farmers and investors.

At a Senate Banking Committee hearing on Tuesday, Senator Richard Shelby criticized the Commodity Futures Trading Commission's handling of the meltdown, saying he thought former clients of MF Global "deserve better".

Farmers worry the cost of doing business could go up permanently due to the increased risk of keeping money in segregated accounts, making it more expensive to produce crops. For Klinker, whose oldest son is entering the family business, that could mean upgrading equipment less frequently than he has in the past.

"It impacts everything," he said.

(Reporting by Tom Polansek; Additional reporting by Jonathan Spicer in New York and Dave Clark in Washington; Editing by Dale Hudson)"


It is frustrating to read of this breach of trust, and how it impacts all of us. I wonder if Jon Corzine has any trouble buying land... This again highlights why it is so important to be able to trust the people you are working with. I would love a chance to work with you and earn your trust. If you are interested in buying or selling farmland, or having your farmland appraised before the next crop season, please contact me at or 320-894-7528.

Take care,
Noah Hultgren
The FarmlandMan

Monday, December 5, 2011

MF Global

Did you hear about the bankruptcy of MF Global - a big trading firm in New York that reported a material shortfall in October of 2011? According to reports, it was the 8th largest bankruptcy in the U.S., destroying as much as $1.2 billion through the mishandling of their customers' money. While it is sad, it seems to be a common occurrence these days, that maybe people are getting used to these types of disasters. And usually, we can look at them with a kind of unfamiliar disgust since we probably don't know anyone directly affected; though we should all be disgusted as taxpayers and consumers. Anyway, the MF Global case is a little different, because it's hitting closer to home. Several farmers from Minnesota were directly affected. I saw this article today laying out more of the details and tying it back to Minnesota:

"Farms across state feeling shock waves from collapse of MF Global
Steve Karnowski - 12/05/2011

MINNEAPOLIS — The shock waves from the collapse of commodities trading firm MF Global Inc. are hitting hard across rural America, where farmers, ranchers and agricultural business owners are nervously waiting to learn how much money they’ve lost. Many of the farmers who traded with MF Global, which is being investigated over what federal regulators say is an estimated $1.2 billion that may be missing from customer accounts, used the futures markets to reduce the risks of volatile prices. Locking in prices through the futures market — something farmers have been doing for a century — allows them to plan ahead while knowing what their costs will be. Mike Mouw, co-owner of Mouw’s Feed and Grain Inc. in the southwestern Minnesota town of Leota, said his business relies on the futures markets both when it buys grain from farmers and when it sells feed to hog producers. That makes it possible for the company to plan two or three years ahead. Now, though, Mouw estimates he’s out about $250,000. “I’m praying that I get it back,” he said. Farmers, ranchers and rural businesses such as grain elevators and feed mills were among the hardest hit when they were cut off from the cash in their hedging accounts at MF Global, which sought bankruptcy protection in October after making a disastrous bet on European government debt. The number of people harmed and the extent of their losses isn’t clear yet. “This thing should not be taken lightly by anybody,” Mouw said. “This has a far greater trickle-down than people realize.” Federal regulators are investigating whether MF Global, as its financial condition worsened, tapped client funds that were supposed to be kept safe in strictly segregated accounts. They’re also trying to determine what became of the money — it’s not clear if the cash is parked somewhere or if it’s gone. Violating the rules for segregated accounts can lead to civil and criminal penalties. The chairmen of the Commodity Futures Trading Commission and the Securities and Exchange Commission said Thursday that all those affected should get back at least two-thirds of their money. Dean Tofteland, who raises corn, soybeans and pigs near Luverne in southwestern Minnesota, has about $200,000 tied up with MF Global, said Sen. Amy Klobuchar at an Senate Agriculture Committee hearing. She said his situation shows how the firm’s $6.3 billion bad bet on European bonds is being felt in small towns across America. Klobuchar, a Minnesota Democrat, said afterward that recovering two-thirds of the funds “clearly isn’t good enough” for farmers threatened with deep losses to their life savings. Tofteland said in an interview that he never imagined money that belongs to him would just disappear. “It’s like having your house burn down without insurance,” Tofteland said. Grain farmer and rancher Marty Klinker of Fairfield, Mont., has lost about $336,000, said Sen. Max Baucus, D-Montana. Baucus said Klinker got about 60 percent of his money at MF Global back, but his prospects for the rest seem pretty grim. He told CFTC Chairman Gary Gensler that Klinker trusted the system, and it let him down. “You’re absolutely right, the system has to work for the farmers and ranchers and the energy companies and all of the people that need to lock in a price, and segregation is at the absolute core of this system that’s been existent for decades,” Gensler said. But the chairman did not venture a guess about when, if, or how much of Klinker’s remaining money — or anyone else’s — might be returned. Agricultural prices frequently fluctuate due to ever-changing supply and demand, which are driven by many factors ranging from the weather to exports. Trading on the futures markets helps farmers shield themselves from the risks of prices for their products falling and costs for things such as feed increasing. Hog producers who rode out tough years in 2008 and 2009 came to rely heavily on risk management tools and were starting to lock in some pretty good profits before MF Global collapsed, said Mark Greenwood, a senior vice president and swine expert at AgStar Financial Services, which serves farmers mainly in Minnesota and Wisconsin. Greenwood estimates that about half of the hog producers his company serves have been affected, with combined losses probably more than $40 million. The 300 to 400 clients have individual losses of $50,000 to over $1 million, he said. They’re wondering if they can trust the futures trading system again — whether there are sufficient guarantees to ensure that another MF Global doesn’t happen, Greenwood said. “They’re frustrated, angry,” Greenwood said. “I think the word is disgusted. We’re trying to do everything we can to manage a very volatile industry. This was one risk we never thought we’d see.” Preserving confidence in the system is essential, because farmers who don’t trust traditional risk management tools might end up taking on even greater risks, said Scott Cordes, president of Country Hedging Inc., an MF Global competitor that is a subsidiary of CHS Inc., the nation’s largest farmer-owned cooperative. “At the end of the day it gets down to, who do you know and who do you trust?” Cordes said."

As the article concludes, trust is the key ins trong relationships. I hope those affected are able to get back what is theirs, and I hope those who mishandled the money get what they have coming.

I feel fortunate to work with people I can trust, and would look forward to the opportunity to build a relationship with you. I can help you navigate these difficult financial times - whether through appraising your farmland, or selling it for the best possible price.

Take care,
Noah Hultgren