Archive for June, 2009

CELLULOSIC ETHANOL GAINING TRACTION (AND FUNDING)

Thursday, June 25th, 2009

If you assumed the financial and political pressures on corn-based ethanol had tabled efforts to commercialize cellulosic ethanol, think again.  In a recent article, Dan Looker, Business Editor for Successful Farming magazine, discussed current cellulosic ethanol development and production efforts.  South Dakota based ethanol producer POET is currently working on a 25 million gallon cellulosic ethanol plant in Iowa, and a joint venture plant between DuPont & Danisco is slated to open later this year in Tennessee.  Given that the current estimate for cellulosic ethanol production is $1 per gallon more expensive than corn-based ethanol, it will be interesting to watch their progress in the coming months.

To read the entire article, continue here.

Is the use of former waste products like corn cobs and wood chips where the ethanol industry should be heading?  If so, how will that impact the grain markets?  Tell me what you think by e-mailing me at doug@loranda.com.

Source – www.agriculture.com

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FACTORS IN PLACE FOR INCREASING FARMLAND VALUES?

Wednesday, June 17th, 2009

According to a recent Fortune article, many experts feel that over the course of the next few decades we could see a long-term boom to arable farmland values.  Fortune senior editor, Brian O’Keefe, spoke with many investors about where they see the market headed and why.

A few of the common reasons for this shared optimism boils down to Economics 101…supply & demand.  According to the article, since 1960 we have seen the worldwide arable farmland acres per capita drop from 1.1 to 0.6, nearly a 50% reduction.  Also, the article speculates that the world population will grow from 6 million to 9 million over the next 40 years.  If these 2 trends, decreasing acreage per capita and increasing population, hold true it could very well translate into higher demand for farmland, which will lead to higher prices.

The article also discusses the increasing trend of non-traditional farmland investors looking more towards agriculture as a viable investment.  The author mentions 3 groups, a hedge fund manager, an investment company, and a retrement fund company all starting to focus more on farmland.

Another long-term farmland investor that Fortune spoke with, Lord Jacob Rothschild, had another take on what he agrees is an upcoming boom for farmland.  He believes that we are headed for an inflationary period and that owning a hard assest, such as farmland, will be a valuable commodity in such a situation.  In fact, he is quoted in the article as saying, “We think right now is an excellent point of entry for taking a long-term position in agriculture”.

To read through the entire article, continue here

What are your thoughts on where farmland values are headed in the future?  We would love to hear your opinions.  E-mail us at eric@loranda.com.

Source: Fortune Magazine, CNNMoney.com

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“GOOD” AGRICULTURAL LAND IN THE MIDWEST SEES A 6% DIP IN THE FIRST QUARTER OF 2009

Saturday, June 6th, 2009

According to the May 2009 newsletter released by the Federal Reserve Bank of Chicago, there was a 6% decrease in dollar value of “good” farmland across the Seventh District, which is comprised of Illinois, Indiana, Iowa, Michigan & Wisconsin.  Also, the rate of increase has slowed to 2% growth for the same region from April 1, 2008 to April 1, 2009.  These numbers were derived from a survey of 227 bankers in the Seventh District.

Cash rent rates have slowed down as well into 2009, but overall they are still 7% higher than 2008 rates in the region.  The article speculates that part of the slower adjustment of cash rent rates relative to land prices is due to 2009 leases being locked in before the decrease in commodities prices that we saw last fall.

With an eye towards the future, nearly two-thirds of the surveyed bankers believe that we will see farmland values hold steady in the second quarter of 2009.

To download an Adobe pdf file of the entire AgLetter, follow this link: The Agricultural Newsletter from the Federal Reserve Bank of Chicago, May 2009

Do you have any thoughts on the information presented in this post?  We would love to hear your comments.  E-mail us at eric@loranda.com and let us know what you think!

Source: Federal Reserve Bank of Chicago, www.chicagofed.org

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