Cash Rents Down Across Nebraska

Nebraska Cash Rent

As farmers begin to wrap up harvest 2016 amidst low grain prices, it’s no surprise that cash rental rates across the state and region have followed suit. The USDA released its annual update on farmland market conditions in August, and highlighted the drop in US land values and rental rates nearly across the board.

Nationally, the average cropland cash rent fell 6 percent—$136 per acre lower—in 2016, after the long upward climb that began in 2008. Since 1998, the only other time the cash rental rate has seen a decline was in 2007, with a 3 percent drop.

Despite the overall decline, overall changes at the state level were much more variable. In the Midwest, Minnesota and Iowa showed the greatest decline in cash rents, similar to most other Midwest and Great Plains states. The only two states to show in increase were Michigan and Wisconsin.

Nebraska’s farmland real estate value—the value of all land and buildings on farms—decreased 3.3 percent from 2015, averaging $2,950 per acre. Similarly, Nebraska’s cropland value fell 4.3 percent from 2015, with an average value of $4,850 per acre.

Nationally, average rental rates for pasture land also saw declines in 2016—7 percent in total from 2015 highs, although Nebraska pastureland increased $40 per acre from 2015, at $910 per acre.

More specifically, for Nebraska, the dryland cropland value averaged $3,800 per acre, down $170 from 2015, while irrigated cropland averaged $6,560 per acre, also down from 2015’s $310 per acre average.

Looking expressly at cash rental rates in the Cornhusker state, renters paid less to landlords in 2016 than in 2015. Irrigated cropland cash rent average $243 an acre, an $11 decrease from 2015. For dryland cropland, rents averaged $150 per acre, down $10 from the previous year. Pastureland cash rental rates average $24 per acre, down $4.50 from 2015.

While cash rental rates are falling, a survey recently conducted by ProFarmer found that more farmers may choose to walk away from ground that can’t be renegotiated—another possible contributing factor to the trend, aside from other more obvious factors, chiefly lower commodity prices.

ProFarmer LandOwner newsletter editor Mike Walsten said, “According to our survey, we found that 44 percent of members and subscribers are willing to walk away from a cash lease if that lease is not lowered going into 2017.”

Based on these numbers—and similar sentiments shared elsewhere—cash rent conversations could be tough. Facing the decision to buy, sell, or walk away from pricey cash rents will be difficult the next year, but trying to keep emotions out of that decision is encouraged by farm managers.

Are you facing concerns about your rented ground, or nervous about looming cash rental negotiations? Please let an experienced UFARM land manager take the pressure off. We have the practical knowledge and necessary skills to help both parties reach a mutually agreeable rental price during this adjustment period.

UFARM offers a full range of Nebraska land management services, including real estate sales, rural property appraisals, consultations and crop insurance. UFARM has operated in Nebraska since the early 1930’s. If you have questions about yields and productivity on your rented farmland, give the UFARM managers contact us today!

Sources consulted: “NE Farm Real Estate Values Down 3 Percent from 2015; Cash Rents Also Down.” UNL Cropwatch. University of Nebraska-Lincoln. 05 Aug. 2016. Web. 26 Oct. 2016.Morgan, Tyne. “More Farmers Walking Away from Pricey Cash Rents.” AgWeb.com. Farm Journal. 25 Oct. 2016. Web. 26 Oct. 2016.Widmar, David. “Most States See Cash Rental Rates Fall, Economist Says.” Agriculture.com/Successful Farming. Meredith AgriMedia. 24 Oct. 2016. Web. 26 Oct. 2016.

 

Nebraska Harvest Progress from UFARM Managers

img_3813 img_3815 img_3817 img_3829

Harvest is in full swing across the Cornhusker State. Soybean harvest is nearing completion as farmers hasten to bring in what they can while the weather conditions remain favorable.

UFARM manager Mike Waller, located in Kearney, notes, “the harvest progress in the South Central part of the state is moving along at a rapid pace, with soybean harvest at about 90 percent complete. Soybean yields range from 70 to 85 bushels per acre, with some at 90 bushels per acre.

Waller also reports that most of the high moisture corn has been harvested. The weather conditions up until this week have allowed the plants to dry down quickly, with dryland corn in Harlan and Furnas Counties being harvested with moisture levels around 14-16 percent. Dryland yields range from 125-240 bushels per acre, with irrigated corn yields in Phelps and Kearney counties in an equally wide range of 175-240 bushels per acre, and moisture levels between 15-20 percent. Waller attributes the wide yield range to the abnormal weather conditions that occurred in early June, with significantly higher than average day- and nighttime temperatures. As a result, many cornfields in this area have abnormal ears or barren stalks.”

Norfolk UFARM manager Randy Oertwich reports, “the soybean harvest in the Northeast part of Nebraska was off to a good start, but was stalled by last week’s rainfall on Monday the 3rd and Thursday the 6th. Oertwich also notes that the soybean harvest has been difficult for some due to very dry beans and pods on green stems. Soybean yields have been in the 60-65 bushel per acre range.

High moisture corn is still being harvested, as well, with some producers combining corn in the 16-19 percent range. Yields in Northeast Nebraska have also been more sporadic than normal attributing to bottom ground replanting in late spring. Dryland corn for this portion of the state has seen 190-220 bushels per acre, with irrigated in the 225-245 bushels per acre range.”

UFARM manager Jeff Frack from the Lincoln office reports that “Harvest in the Southeast part of the state was brought to a screeching halt with the 1-4 inches of rain the area received last week. Up until that point, corn yields were varying from 110-205 bushels per acre, with the wide range attributable to summer moisture. Soybean yields were at 40-66 bushels per acre, again owing to a lack of adequate summer rainfall. “

The USDA NASS Crop Progress report for the week ending Sunday, October 9th shows that precipitation did indeed slow down harvest in some western counties as well as the eastern third of the state. Temperatures averaged near normal, with 4.7 days suitable for fieldwork.

In total, 23 percent of corn has been harvested—equal to last year, but behind the 30 percent five year average. Ninety-five percent of beans have dropped leaves, ahead of last year’s 93 percent and ahead of the 94 percent 5 year average.

Condition-wise, 17 percent of corn is in excellent condition, with 55 percent in good condition, 21 percent fair, 6 percent poor, and 1 percent rated very poor. Nineteen percent of Nebraska’s soybeans are rated excellent, with 59 percent good, 18 percent fair, 3 poor, and 1 percent very poor.

UFARM offers a full range of Nebraska land management services, including real estate sales, rural property appraisals, consultations and crop insurance. UFARM has operated in Nebraska since the early 1930’s. If you have questions about yields and productivity on your rented farmland, give the UFARM managers contact us today!

Nebraska Land Values and Property Taxes

Nebraska Land Values

 

Amid the many challenges that face farmers and landowners across Nebraska, a continued concern is high property taxes. With the plummeting grain prices over the last 3 years, and with the skyrocketing property tax rates of the last 10 years—which have increased 176 percent—it’s no wonder landowners and producers are hoping for property tax relief at the legislative level.

Toward the end of this year’s 2016 legislative session, lawmakers were able to advance LB 958 and LB 959, which provides additional money to the state’s property tax credit program, valuing ag land at 90 percent versus 75 percent of market value for the credit program, tightens limits on budget growth and levy increases for all local governments, and slows the rise in government-assessed cropland values across the state—measures that proponent and Governor Pete Ricketts calls “tools to help local governing entities control spending.”

In a state where 51 percent of total school spending comes from property taxes, in comparison to the national average of 32 percent—this is welcome news to landowners.

In calculating real estate taxes, all land is taxed based on either market value or fair use value. Often farmland appraisals are based on a formula for Current Agricultural Use Value (CAUV), or the income a farmer can expect to earn based on factors including grain prices, farm rental rates, soil type and productivity, production expenses, and interest rates, among other variables.

As such, the record high crop prices in 2012 and the all time high farm incomes of 2013 are now factoring in to property tax appraisals. Given the plummeting farm incomes since then, combined with low interest rates, which also push taxes up for landowners, there is a perfect storm brewing for potential tax problems, despite the property tax relief legislation.

With this much money on the line, it’s little surprise that owners of Nebraska farmland often turn to professional land managers to provide them with highly accurate appraisal services. UFARM’s own agricultural valuation professionals have years of combined experience in local land markets with which to provide their clients with a clear account of their property’s value and potential.

Using the latest appraisal technology, UFARM appraisers are experienced in completing all the necessary reports for estate valuation, loan collateral, sales analysis, and property partition.

In addition, UFARM has certified rural appraisers on staff, offering appraisals through each of our offices across the state. These services include documented market value estimates that are carefully researched, written to withstand challenge, and provide a precise picture of a landowner’s property value.

In addition to property tax purposes and property tax appeals, an accurate value appraisal is important for a number of other, equally significant reasons, including:

-buying, selling, exchanging, or dividing real estate

-estate planning and gifting

-loan evaluations

-litigation

-condemnation proceedings

-eminent domain for roadways, pipelines, or electrical lines

When it comes to determining the value of your land, count on the most experienced appraisers. Feel free to contact UFARM for all of your appraisal needs.

 Agricultural Landowners Need Good Record Keeping

recordkeeping for Nebraska landowners

As any business owner knows, keeping accurate and organized records throughout the year means less headache during tax season. This is no less true for agricultural landowners. Staying up-to-date with one’s business records is an integral part of managing your land, and contributes a great deal to being a profitable.

While some people enjoy this aspect being a landowner, many more do not. With the numerous responsibilities that come with owning farm or ranch land, it’s easy for record keeping to be pushed to the back burner, or neglected altogether.

It is for this reason that so many landowners turn to professional land managers to help them keep accurate records. At UFARM, our land managers follow strict guidelines in ensuring our clients receive accurate and timely records, with written evidence of their best interests at all times.

To start, each year UFARM clients receive a detailed plat map of their farm, including current crop locations and farm features. This sets a basis from which to gauge all aspects of the landowner’s operation. All bills—unless otherwise requested—are sent directly to the UFARM land manager, who then carefully reviews each invoice for accuracy before they are paid. This is an aspect that brings peace of mind to UFARM clients, who often don’t have the time to go over these details.

Similarly, any income received, whether it’s for rent, crop sales, or livestock sales is also sent to the land manager, who then issues a cash receipt documenting the transaction specifics before being deposited to earn interest until otherwise needed.

Quarterly, detailed Transaction Journals are sent to landowners for review. The Transaction Journals itemize income and expense activity on the farm management account in chronological order, as well as show a running cash balance, offering at-a-glance information in an easy to follow format. At year’s end, a General Ledger Detail is presented, consisting of detailed listings of each transaction that occurred during the last fiscal year. Along with the General Ledger Detail is the Income Statement, summarizing the year’s income and expenses.

Lastly, UFARM land managers help landowners keep track of Government Farm Programs. Relying on a solid understanding of government regulations in accordance with various programs, UFARM managers are careful to make sure all the details are covered in order to maximize income, while avoiding fines and assessments.

It is no wonder so many landowners have turned to UFARM to help them in their farm record keeping. The peace of mind in knowing that all the bases are covered in a systematic way is a bonus that cannot be ignored.

If you are feeling the need to get more organized with your farm record keeping, please do not hesitate to give us a call. We are glad to help you form a plan of action to maximize your land’s profitability, and know right where to help you start.

The Benefits of Having a Land Manager 

Meeting with UFARM Land Manager

You’ve made the decision to engage the help of a Land Management Company to aid you in your farm ownership needs. What happens next?

Fortunately, while the decision to turn to a land manager can be initially difficult, it is good to know that the ultimate goal of a land manager coincides with your own goals, with the overarching purpose of making your land as profitable as possible.

Owning a farm or ranch is an investment that comes with a lot of responsibilities, and can become overwhelming to even seasoned owners. This is especially true in the cases of non-farm owners, who may find themselves in the position after inheriting farm or ranch land from their deceased parents.

For the absentee or non-farm owner, spending large amounts of time arranging leases, supervising tenants, and managing farm property is simply not feasible, and many feel out of their depth as they struggle to make all the decisions that need to be made.

It is for these reasons that landowners across the state have turned to United Farm and Ranch Management (UFARM) to help them oversee and implement a management plan for their land for over 80 years.

The experienced land managers at UFARM begin by preparing a detailed inventory of all assets involved, following a thorough check-in process to itemize specific details of your property, including FSA aerial photos, NRCS soil maps, previous crop history, and a full list of buildings and structures on the property.

Then, insurance plans and options are reviewed to determine if the site has adequate coverage and the best rates. Along with insurance, property tax valuations are reviewed and compared with other properties to ensure that assessments are fair.

At this point, your UFARM land manager prepares a report, detailing his recommendations for your land’s best use and outlining ways to meet your ownership and investment goals.

Your land manager also endeavors to identify any potential problems that may exist, and make recommendations for remedying those problems through various improvements.

You may rely on UFARM to:

  • Make recommendations regarding lease options
  • Locate the best qualified operating personnel
  • Negotiate lease agreements
  • Manage and maintain homes, buildings, and other improvements
  • Develop a comprehensive operating plan covering crop or grassland rotations, tillage practices, chemical applications, etc., which are beneficial for the long-term value of the property
  • Supervise crop programs and conservation measures
  • Manage crop and livestock sales
  • Advise and oversee capital improvements
  • Facilitate participation in and compliance with government programs

While there are many more day-to-day tasks than just those listed, UFARM strives to do whatever needs to be done to work on your behalf and to make your operation sustainable and income-producing.

UFARM land managers pride themselves on keeping you up-to-date and informed about any decisions that need to be made, and to make sure those decisions have your approval. We always make sure to keep our level of involvement at your sole discretion.

An area where a land manager can be especially helpful is when arranging tenant leases—especially true when family is involved. In a perfect world, everyone would rely on a handshake agreement. However, it is best business practice to have a written lease prepared by a neutral third party to ensure both parties involved are satisfied and clear on the lease terms. UFARM land managers can prepare a number of different types of leases, and locate the best operator for the job.

Perhaps most importantly, however, is UFARM’s attention to the details that make such dramatic differences in profitability. We strive to keep up-to-date on the latest advances in marketing, science, government programs, technology, and equipment in order to help your farm continually improve.

Through frequent visits to your property, UFARM land managers provide you with timely reports that outline the status of your operation. We also are happy to take care of bills that need to be paid, and carefully review invoices for accuracy beforehand. Transaction journals are sent quarterly, itemizing farm income and expense in a clear, understandable way.

Most importantly, you can trust a UFARM land manager to always keep your goals in mind and your best interests at heart.  We are proud of our 85 year track record, and are eager to serve our clients for many more years to come. Please don’t hesitate to contact us at any time with your questions or concerns—we are happy to be of service to you.

8 Farmland Ownership Trends to Watch

Land Ownership Trends

A wide array of farmers, landowners, ag policy makers, lenders, and real estate investors met in early June to take a look at the current farm trends happening across the nation, and how US Ag Policy may need to adapt as a result of these changes. The meeting, hosted by the Farm Foundation, Bank of America/Merrill Lynch, and the USDA’s Economic Research Service, honed in on 8 specific trends that are shaping ag ownership trends not only across the US but for Nebraska farmland as well.

Trend 1: Overall, experts and farmers agree: Cash rent reductions are on the horizon. The current grain market situation is set to lower cash rents an additional 5 to 15 percent, according to farm economists.

Trend 2: Remember talk of land bubbles? Ag economists at the meeting held firm in their opinion that, despite softening farmland prices, most US farmers are in good shape, equity-wise, to deal with them. That’s not to say that situations are rosy across the board. According to ag economist and director of the University of Illinois’ TIAA-CREF Center for Farmland Research, the average debt-to-income ratio is still 6.8 to 1—levels nowhere near the levels experienced during the 1980s bubble burst, but still “storm warning level.”

Still, farmland is still seen as one of the highest-returning, safest investments, and indeed, with a 30 year average 10.5 percent rate of return on Iowa farmland, compared to just 8.17 percent for S&P 500, that seems like an accurate assessment.

Trend 3: While the land market is ripe for investors, nationwide there has been very little outside investment in agriculture, with 99 percent of farms and 90 percent of production resulted from family-owned farms.

Trend 4: A shift in ownership structures is occurring. Sherrick is seeing more separation of operators and ownership. Larger farms are taking on more complex business structures, and many operators are becoming multi-generational—a trend that will make it more difficult for federal programs and ag policy makers to define “farmer.”

Trend 5: An age disparity is being noted between farm owners and farm operators. While the average age of farm operators isn’t rising much, the average age of landowners is.

Trend 6: Similarly, the age of beginning farmers isn’t necessarily young. According to Jeffrey Hopkins of USDA ERS, older beginning farmers are the biggest portion of beginning farmers.

Trend 7: From an ag-policy stance, the next farm bill may be drastically different, with the potential for cotton to be replaced by soybeans as a core commodity. Soybeans have grown faster in acreage as well as in farm revenue than cotton in both the North and South.

Trend 8: The Farm Bills recently issued continue to shift focus to conservation, environmental concerns, crop insurance/risk management, and food/nutrition programs. According to extension ag and consumer economist at the University of Illinois Jonathan Coppess, “We need to find ways to expand the farm policy coalition to get favorable farm policies.” He hopes that the focus of the next Farm Bill will be redirected somewhere to the middle, instead of continually shifting left.

Do you have questions about ways to stay ahead in the current agricultural landscape? Feel free to contact a UFARM representative—we are glad to help you put together a plan of action that works for you.

Source consulted:  Vogel, John. “8 Farmland Ownership and Ag Trends Impact Future Farm Policy.” FarmProgress.com. Penton. 14 Jun. 2016. Web. 28 Jul. 2016.

UFARM Celebrates 85 Years of Service

Clifford Jorgensen - 1950

Clifford Jorgensen – 1950

As years go, 2016 is a significant one for the United Farm & Ranch Management team. July marked the 85th year of United Farm & Ranch Management service to agricultural landowners and operators in the state of Nebraska and neighboring states. UFARM is proud of its long and storied history and is eager to build on its experience and success in the farm management profession over the next 85 years and beyond.

Just as agriculture has undergone incredible changes over the last century, so too has the company that is now UFARM, although its goal has always remained the same: To help landowners and farm operators in the state make the most of their land and farms.

In 1931, First Trust Company in Lincoln, Nebraska began to offer farm management services under the supervision of Sam Waugh.  In 1939, Sam Waugh sent farm manager, Cliff Jorgenson to Norfolk, Nebraska to open a farm management office in the Norfolk Hotel.  Cliff successfully opened the office and began managing the 171 farms the company was serving in the area.

Jorgenson was elected Director of the Farm Management Department in 1950. After the company was bought by the National Bank of Commerce Trust and Savings in 1961, Jorgensen continued his role at NBC at the company’s building at 13th and “O” street in downtown Lincoln, where he acted as manager of the farm department until his retirement in 1974.

At this point, Keith Carlson stepped in to continue Jorgensen’s role as Farm Management Vice President at NBC. Then, in 1994, NBC sold the farm division to United Nebraska Bank, and the name changed to United Farm and Ranch Management (UFARM), as we know it today. The company continued to operate from downtown Lincoln as it became a subsidiary of TierOne Bank in 2004.

Then, in 2010, eight employees bought the company, and UFARM continued to fulfill its mission of serving landowners in its current form. Carlson became president until his retirement in 2015. Long-time UFARM employee, Chris Scow now serves as the managing broker and operations manager for the organization.

Overall, the hard-working UFARM team has over 254 years of combined experience in farm and ranch management and land sales—an impressive record, and one on which they are proud to stand.

It is this experience, combined with the dedicated attention that our land managers pay our valued clients, that keeps us inspired and motivated to continue and expand our services well into the future.

We appreciate our clients, and thank them for putting their trust in us over the past 85 years. We look forward to continue cultivating these relationships in the years ahead as we take a moment to celebrate our past.

UFARM offers a full range of Nebraska land management services, including real estate sales, rural property appraisals, consultations and crop insurance.  Contact us today!

Monitoring Nebraska Pasture Conditions

Nebraska-pasture

Things are heating up across the Cornhusker state, and many landowners are starting to turn their attention to the conditions of their pastureland as well as that of their cropland.

According to the latest NASS data, for the week ending July 10th, across Nebraska pasture and range conditions rated 2 percent very poor, 2 percent poor, 19 percent fair, 64 percent good, and 13 percent excellent—overall very favorable numbers. In fact, pasture conditions are now rated well above both last year and the five year average. Topsoil moisture supplies also rate favorable for this time of year.

As land values in all categories are in a downward trend, pasture- and rangeland are unique: Major cow-calf producing regions in Nebraska have reported small increases in value of around 10 percent for tillable and non-tillable grazing land, and hayland.

This fact, combined with the ongoing trend of higher cow-calf rental rates—record-setting in 2015—make closely monitoring the health of pasture-land a good idea for landowners. According to the 2015 UNL Nebraska Farm Real Estate Market Survey, per-acre rental rates reported an average increase of about 15 percent, with cow-calf rental rates averaging about $50 per month, or $250 for the 5 month season.

Keeping a close eye on rangeland conditions is important, according to UNL Extension Educator Bethany Johnston. Whether it’s to document pasture health for cattle grazing, wildlife habitat, or for NRCS programs, knowing the conditions of the land is advantageous to landowners in their decision making.

According to UNL Extension Educators, monitoring is key to rangeland and pasture management, and having a plan in place to measure changes in the land help landowners reach their overarching goals. Keeping records of precipitation, vegetation, and grazing is all part of that process.

For landowners, checking the conditions of their pasture may now be easier with the introduction of a new app, available on both Android and iOS devices, for use on tablets and mobile phones. Called “GrassSnap,” the app provides the following services:

  • takes ranchers through the monitoring steps;
  • stamps the photographs with the pasture name, GPS location, date, and direction looking;
  • records comments about each pasture;
  • stores the photographs and data in pasture folders; and
  • can quickly download the information to a computer.

Extension Educator and app developer Cindy Tusler says the app helps landowners collect and upload data in an organized manner, using GPS for precise location markers.

“This is a decision support tool. It will give you easily repeatable information that helps you make decisions. It doesn’t make the decision,” Tusler said.

Johnston adds, “Each person’s management goals are different, so monitoring and assessment will flow out of those goals. The app makes it easier to remember and compare conditions from one year to the next at exactly the same site.”

How do you feel about the conditions of your pastureland? Do you have a monitoring plan in place? If you have any concerns regarding pastureland management, don’t hesitate to contact a UFARM representative.  UFARM offers a full range of Nebraska land management services, including real estate sales, rural property appraisals, consultations and crop insurance. UFARM has operated in Nebraska since the early 1930’s. Contact us today!

Sources consulted:  Johnston, Bethany. “Monitoring Pasture Condition? UNL Has an App for That.” UNL Beef. University of Nebraska-Lincoln. Jun. 2014. Web. 13 Jul. 2016.  “Nebraska Pasture Conditions Exceed 2015 Levels.” Nebraska Ag Connection. USAgNet. 03 May 2016. Web. 13 Jul. 2016.

Nebraska CRP Acres in High Demand

CRP Acres

Farmers and landowners continually look for ways to make the most of their farming operations. Whether they focus on advancing technology, better machinery, or new irrigation techniques, increasing their bottom line is an ever-present pursuit. For many landowners in Nebraska, enrolling a portion of their farmland in the Conservation Reserve Program (CRP) is a good way to diversify their land asset while also benefitting the environment and preserving the integrity of their ground. Recently, however, it is proving much more difficult for Nebraska landowners and farmers to get their acres enrolled in the federal program due to such high CRP demand in Nebraska and across the Midwest.

The Conservation Reserve Program is a land conservation program that offers an annual rental payment and cost-sharing to landowners who agree to remove the selected piece of land from agriculture production and agree to incorporate certain types of beneficial plant species to the land. The CRP’s long term goals are to improve environmental and water quality, prevent soil erosion, and improve natural wildlife habitat. A typical CRP contract lasts 10-15 years.

The CRP is administered through the local Farm Service Agency (FSA) office. The USDA periodically holds a general signup for entering land into the program on a competitive basis, based upon environmental ranking and cost. The general sign up is announced by the Secretary of Agriculture, but there is no set schedule.

This year, Nebraska farmers who attempted to enroll some acres into the 49th general CRP program signup were likely met with disappointment: only 411,000 acres of the 1.8 million acres offered were actually enrolled—a 23 percent acceptance rate, marking it as the most selective round ever in the history of the program. For reference, in 2013, the USDA accepted almost 90 percent of the acres offered.

Why the low acceptance rate? The 2014 farm bill established a cap on the program of 24 million acres—a number that is 35 percent below the peak enrollment of 36.8 million acres, achieved in 2007. The lowered cap occurred when policy makers were confident that the higher commodity prices farmers enjoyed had also lessened their interest in enrolling those profitable acres into CRP, resulting in budgetary savings for government.

The story has changed, of course, and in the face of declining crop prices, farmers are once again looking for ways to make a profit, and the CRP program is one option: The prospect of receiving a rental payment for CRP land for a number of years is seen as a viable option for many landowners in the country.

USDA secretary Tom Vilsack says, “When Congress begins to deliberate the 2018 farm bill, they’re going to be faced I think with a demand to rethink the cap on CRP. The deliberation should not begin with ‘You have to save an artificial dollar amount,’ but it should really look at what the demand and need is.”

Are you looking for ways to make your land investment more profitable? Feel free to contact us at UFARM—we are experts at helping landowners reach their goals!

Sources consulted:  Mercier, Stephanie. “Why is the Conservation Reserve Program ‘Trending’ Again?” Agweb.com. Farm Journal. 13 May 2016. Web. 29 Jun. 2016. Wiklund, Jared. “Record Landowner Demand for CRP Met with Extremely Low Acceptance Rate.” Pheasants Forever.org. Pheasants Forever. Web. 29 Jun. 2016.

Where are Grain Prices Headed?

Grain Prices

 

Ahead of the three day holiday weekend, the USDA released its quarterly Acreage and Grain Stocks reports, and Nebraska landowners and producers hoped that the numbers would play out favorably for commodities prices. Unfortunately for corn prices, the report indicated far more corn acres planted than previously stated in March, resulting in another slump in prices. This came as a surprise to many analysts, who had expected a decline in corn acres from the March numbers.

Soybean stocks, too, came out higher than expected, though the market reaction was the opposite of corn, with soybean prices higher immediately following the June 30th numbers. The weather then abruptly changed that outcome and soybeans began a significant drop in prices after rains moved across the Midwest during the fourth of July weekend.

Looking more closely at the actual report numbers, corn planted is estimated to stand at 94.1 million acres, up 7 percent from last year, and the third highest planted acreage in the US since World War II. Area harvested for grain was also up 7 percentage points at 86.6 million acres, also the third highest number since 1933.

The corn numbers were also a half-million more acres than March estimates, when corn planting intentions stood at 93.6 million acres. Corn stocks, at 4.72 billion bushels, were also higher than the average trade guess of 4.52 billion bushels.

Soybeans reflected a similar story, with planted acres at a record high 83.7 million acres, up 1 percent from last year’s numbers, but less than the trade estimate of 83.8 million acres. This number is also up from the March Prospective Plantings report, which estimated 82.2 million soybean acres to be planted. Area for harvest stands at 83.0 million acres, up 1 percent from last year, and soybean stocks were also higher than expected at 870 million bushels versus the trade guess of 829 million bushels.

Similar stories for both corn and soybeans should mean similar market reactions. However, this wasn’t the case, with corn prices moving down 11 to 14 cents, and soybean prices up 40 cents. The divided reaction, according to grains analyst Jerry Gulke, reflects which crop is in the stronger position. Underlying fundamentals for beans, globally, are stronger, and the market apparently isn’t worried about a corn shortage any time soon.

Looking ahead, as far as market prices are concerned, experts agree that weather will be key in determining any effects on yields and prices, and if the current grain market trends will continue. A weather problem could spell a market bounce for corn, and could have major affects on beans, especially during August.

“It may be too late to kill corn, then, but if we get too hot in beans, we could easily lose 150 million bushels to 200 million bushels in bean production from a minor weather problem,” Gulke said. “The market does not want that to happen. They are really nervous about this.”

How are you positioned at the midpoint of the growing season? Were you surprised by the report’s latest numbers? Always feel free to contact UFARM with your questions or concerns. We look forward to working with you to make the most of your farming operation.

 

Sources consulted: Beachy, Debra. “Weather Next Big Question for Markets.” Agweb.com. Farm Journal. 06 Jul. 2016. Web. 07 Jul. 2016., Rice, Alison. “Gulke: Report Reaction Reveals Soybeans’ Strength.” Agweb.com. Farm Journal. 30 Jun. 2016. Web. 07 Jul. 2016., Rice, Alison. “The Essential Numbers in USDA’s June 30 Reports.” Agweb.com. Farm Journal. 30 Jun. 2016. Web. 07 Jul. 2016.