Though corn crops are looking good in our immediate area, many farms to the south and west are going to struggle with poor yields this year as the drought continues to spread. I read an article from Jim Suhr of the Associated Press (USDA cuts corn outlook as drought takes toll) that detailed the current status of the nation's corn and soybean crops, which is dire in many parts of the country.
According to the article, the USDA dropped its projection of national corn production almost 20 percent from its forecast just one month earlier - from nearly 13 billion bushels to 10.8 billion bushels - due to the drought. That would be the lowest amount since 2006, and 13 percent lower than last year's result. The USDA is also "predicting what could be the lowest average corn yield in more than 15 years as the worst drought in decades continued punishing key farm states."
It's troubling because the downward revisions are in stark contrast to the year's projections, as "corn farmers forecast a record year when they planted, sowing 96.4 million acres - the most since 1937. But the USDA now forecasts the area to be harvested at 87.4 million acres."
Likewise, "soybean production is now forecast at 2.69 billion bushels, a 12 percent decline from last year and well off the 3.05 billion bushels the USDA had expected last month. Expected yields on average of 36.1 bushels per acre would be the lowest since 2003."
This will likely lead to increased food prices, especially for beef and pork. The prices will likely also rise for farmers, with corn and soybean markets climbing.
The high corn and soybean prices may sustain the high farmland prices we're currently seeing; or it may lead to a change in the next year as the market starts to correct itself. If you're interested in selling your farmland, or getting a new appraisal to see what your farmland is now worth in this market, please call me at 320-894-7528.
Thanks!
Noah Hultgren
noah@farmlandman.com
320-894-7528
Showing posts with label corn prices. Show all posts
Showing posts with label corn prices. Show all posts
Monday, August 13, 2012
Wednesday, October 12, 2011
Corn Supply
As harvest moves along, I saw another interesting article about food prices based on a corn surplus. There was some controversy last year due to rising food prices due to rising corn prices due to the rising use of corn for fuel. A new article from Christopher Leonard with The Associated Press seems to show that a surplus of corn this year may lead to a much slower increase in food prices; even while corn prices are still relatively high. Here is the article, which was published in the St. Paul Pioneer Press:
"ST. LOUIS - Food prices could rise more slowly next year because farmers have a bigger surplus of corn on hand than previously thought.
The Department of Agriculture estimated today that farmers have 206 million more bushels of surplus corn on hand at the start of this year's harvest. That means farmers will have 866 million bushels of corn on hand at the end of next summer, which is higher than last month's forecast of 672 million bushels.
The price corn fell 15 cents, or 2 percent, in morning trading to $6.30 a bushel. In June, corn hit a record high of $7.99 a bushel after supply levels had thinned.
The USDA also increased its estimate of next year's wheat surplus by 10 percent to 837 million bushels. In response, the price of wheat dropped 5 percent to $6.25 a bushel.
Corn is an ingredient in everything from animal feed to cereal to soft drinks. So cheaper corn could ease broader food prices. It takes about six months for higher corn prices to reach the supermarket shelves. That's because there's a long lead time between when meat companies and food processors buy their grain, and when products hit stores.
For all of 2011, the USDA predicts food prices will rise 3 percent to 4 percent. Food price are expected to increase more slowly next year, between 2.5 percent and 3.5 percent, according to the USDA estimate last month.
One reason prices will continue to rise is corn supplies remain tight, even with the larger-than-expected surplus. The 866 million bushels of corn left over at the end of next year would satisfy demand for about 25 days. That's below the 30-day supply that most investors consider healthy.
Just four months ago, analysts were predicting that corn could trade above $8.50 a bushel because of strong demand from ethanol plants and hog and chicken farmers.
In light of the USDA's new estimates, corn will likely hover closer to $6 a bushel, said Jason Ward, an analyst with Northstar Commodity in Minneapolis.
Expensive corn prompted farmers this spring to plant the second-largest corn crop since World War II. It appears that the bigger harvest will be enough to avoid a major food shortage this year."
If corn prices stay relatively high, the value of farmland will likely stay high as well. If you're interested in seeing the market value of your land, we can help you with a farmland appraisal. Please contact me at 320-894-7528 for more information. I'll be in my tractor...
Thanks,
Noah Hultgren
The FarmlandMan
naoh@farmlandman.com
"ST. LOUIS - Food prices could rise more slowly next year because farmers have a bigger surplus of corn on hand than previously thought.
The Department of Agriculture estimated today that farmers have 206 million more bushels of surplus corn on hand at the start of this year's harvest. That means farmers will have 866 million bushels of corn on hand at the end of next summer, which is higher than last month's forecast of 672 million bushels.
The price corn fell 15 cents, or 2 percent, in morning trading to $6.30 a bushel. In June, corn hit a record high of $7.99 a bushel after supply levels had thinned.
The USDA also increased its estimate of next year's wheat surplus by 10 percent to 837 million bushels. In response, the price of wheat dropped 5 percent to $6.25 a bushel.
Corn is an ingredient in everything from animal feed to cereal to soft drinks. So cheaper corn could ease broader food prices. It takes about six months for higher corn prices to reach the supermarket shelves. That's because there's a long lead time between when meat companies and food processors buy their grain, and when products hit stores.
For all of 2011, the USDA predicts food prices will rise 3 percent to 4 percent. Food price are expected to increase more slowly next year, between 2.5 percent and 3.5 percent, according to the USDA estimate last month.
One reason prices will continue to rise is corn supplies remain tight, even with the larger-than-expected surplus. The 866 million bushels of corn left over at the end of next year would satisfy demand for about 25 days. That's below the 30-day supply that most investors consider healthy.
Just four months ago, analysts were predicting that corn could trade above $8.50 a bushel because of strong demand from ethanol plants and hog and chicken farmers.
In light of the USDA's new estimates, corn will likely hover closer to $6 a bushel, said Jason Ward, an analyst with Northstar Commodity in Minneapolis.
Expensive corn prompted farmers this spring to plant the second-largest corn crop since World War II. It appears that the bigger harvest will be enough to avoid a major food shortage this year."
If corn prices stay relatively high, the value of farmland will likely stay high as well. If you're interested in seeing the market value of your land, we can help you with a farmland appraisal. Please contact me at 320-894-7528 for more information. I'll be in my tractor...
Thanks,
Noah Hultgren
The FarmlandMan
naoh@farmlandman.com
Friday, August 12, 2011
Food Prices Will Increase
Just read an interesting article today in the West Central Tribune about how corn supply is going to be a little tighter this year, which will likely lead to higher food prices. Here's the article, written by Christopher Leonard:
"Americans can expect to pay slightly higher food prices next year because of expectations that an unseasonably hot summer damaged much of this year’s corn crop. But the rise in grocery prices might not be severe because farmers are sitting on larger supplies ahead of the fall harvest, and demand for corn is falling.
The U.S. Agriculture Department estimated Thursday that the fall harvest won’t yield as much corn as first estimated. High temperatures in key U.S. corn-growing states have damaged about 4 percent of the coming yield. The price of corn jumped 26 cents to $7.14 a bushel after the report was released. That’s almost twice the price paid last year. But it’s below the record $7.99 reached in June. Corn is used in everything from beef to cereal to soft drinks.
It typically takes six months for a change in corn prices to affect products on supermarket shelves. Traders worry that grain shortages could return next year because of the damaged crops. Farmers are expected to have a surplus of 940 million bushels when the harvest begins next month, the USDA said. That’s roughly a 26-day supply of corn, slightly more than the previous month’s estimate. But the USDA said the corn surplus could dwindle next fall to only 714 million bushels — or about a 20-day supply. A 30-day supply is considered healthy.
For all of 2011, the USDA predicts food prices will rise 3 percent to 4 percent. Last month, it estimated that food inflation could slow next year to between 2.5 percent and 3.5 percent. But that figure will likely change because of the damaged crops. The USDA will release its next estimate later this month. In any case, “I think consumers can expect higher food prices going forward,” said Jason Ward, an analyst with Northstar Commodity in Minneapolis. This year’s harvest will still be larger than last fall’s harvest of 12.45 billion bushels. In the spring, farmers planted the second-largest crop since World War II. And the supply squeeze won’t be as severe as it might have been.
High prices have led ranchers to cut their orders and seek alternative feeds for their livestock, such as wheat. Ethanol producers have also cut demand “Price is going to slow down demand,” Ward said. A smaller surplus drove corn prices higher earlier this year. Global demand for corn, soybeans and wheat has outstripped production for the last 10 years. Surpluses, vital to a stable food supply, have shrunk. When surpluses drop as low as they are now, even relatively small declines in supply can send crop prices sharply higher on global commodities markets."
That's food for thought - but I hope pop prices don't go up too much!
Have a good one,
Noah Hultgren
The Farmland Man
"Americans can expect to pay slightly higher food prices next year because of expectations that an unseasonably hot summer damaged much of this year’s corn crop. But the rise in grocery prices might not be severe because farmers are sitting on larger supplies ahead of the fall harvest, and demand for corn is falling.
The U.S. Agriculture Department estimated Thursday that the fall harvest won’t yield as much corn as first estimated. High temperatures in key U.S. corn-growing states have damaged about 4 percent of the coming yield. The price of corn jumped 26 cents to $7.14 a bushel after the report was released. That’s almost twice the price paid last year. But it’s below the record $7.99 reached in June. Corn is used in everything from beef to cereal to soft drinks.
It typically takes six months for a change in corn prices to affect products on supermarket shelves. Traders worry that grain shortages could return next year because of the damaged crops. Farmers are expected to have a surplus of 940 million bushels when the harvest begins next month, the USDA said. That’s roughly a 26-day supply of corn, slightly more than the previous month’s estimate. But the USDA said the corn surplus could dwindle next fall to only 714 million bushels — or about a 20-day supply. A 30-day supply is considered healthy.
For all of 2011, the USDA predicts food prices will rise 3 percent to 4 percent. Last month, it estimated that food inflation could slow next year to between 2.5 percent and 3.5 percent. But that figure will likely change because of the damaged crops. The USDA will release its next estimate later this month. In any case, “I think consumers can expect higher food prices going forward,” said Jason Ward, an analyst with Northstar Commodity in Minneapolis. This year’s harvest will still be larger than last fall’s harvest of 12.45 billion bushels. In the spring, farmers planted the second-largest crop since World War II. And the supply squeeze won’t be as severe as it might have been.
High prices have led ranchers to cut their orders and seek alternative feeds for their livestock, such as wheat. Ethanol producers have also cut demand “Price is going to slow down demand,” Ward said. A smaller surplus drove corn prices higher earlier this year. Global demand for corn, soybeans and wheat has outstripped production for the last 10 years. Surpluses, vital to a stable food supply, have shrunk. When surpluses drop as low as they are now, even relatively small declines in supply can send crop prices sharply higher on global commodities markets."
That's food for thought - but I hope pop prices don't go up too much!
Have a good one,
Noah Hultgren
The Farmland Man
Tuesday, April 12, 2011
Farm Incomes Up
According to analysis from the Minnesota State Colleges and Universities (MnSCU) system and the University of Minnesota, 2010 was a better year for farming than 2009. Much of the gain was due to increased profits in hog farming, but crop farmers also had a profitable year in 2010.
The positive news was based on the responses of about 2,450 farmers in the state, who report in to the "FINBIN - Farm Financial Database." The FINBIN website is located here:
http://www.finbin.umn.edu/
And is definitely worth exploring. Out of curiousity, I checked on land rent rates for corn farmers in Minnesota. In 2010, the average land rent cost was $143.62, which was about right (maybe even a little low) for our area. I looked at sugar beets, and the land rent average was $104.07 in the state - but that is obviously low for our area. Instead, I looked just at Kandiyohi County and the surroundiung counties, and the average land rent was $166.10 in 2010 - which sounds a lot more realistic for this region.
The positive news was based on the responses of about 2,450 farmers in the state, who report in to the "FINBIN - Farm Financial Database." The FINBIN website is located here:
http://www.finbin.umn.edu/
And is definitely worth exploring. Out of curiousity, I checked on land rent rates for corn farmers in Minnesota. In 2010, the average land rent cost was $143.62, which was about right (maybe even a little low) for our area. I looked at sugar beets, and the land rent average was $104.07 in the state - but that is obviously low for our area. Instead, I looked just at Kandiyohi County and the surroundiung counties, and the average land rent was $166.10 in 2010 - which sounds a lot more realistic for this region.
In addition to land rent costs for specific crops, the FINBIN database also includes information on other expenses ranging from seed and fertilizer to custom farming and hired labor to machinery leases and repair expenses. It's a great set of data for benchmarking your operation.
If you want help with farm management or appraising your agricultural land in the face of rising land rent prices and increasing farm profits, please give me a call at 320-894-7528. Weather permitting, I'll be in the fields for planting soon, but I am still available to help you with all of your real estate needs.
Warmest,
Noah Hultgren
The FarmlandMan
www.farmlandman.com
p.s. Congratulations again to the MACCRAY Boys Basketball team on finishing 3rd in State! As a former Wolverine basketball player on the last team that went to state (in 1996), I was proud to watch all of the games and excited to see us so well-represented!
If you want help with farm management or appraising your agricultural land in the face of rising land rent prices and increasing farm profits, please give me a call at 320-894-7528. Weather permitting, I'll be in the fields for planting soon, but I am still available to help you with all of your real estate needs.
Warmest,
Noah Hultgren
The FarmlandMan
www.farmlandman.com
p.s. Congratulations again to the MACCRAY Boys Basketball team on finishing 3rd in State! As a former Wolverine basketball player on the last team that went to state (in 1996), I was proud to watch all of the games and excited to see us so well-represented!
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