Archive for November, 2009

FARM AUCTION RESULTS

Tuesday, November 24th, 2009
This previous Friday, November 20, we conducted an auction of 120 acres in northern Christian County, IL.  The property was offered in 4 tracts and presented bidders with many different features from quality tillable farmland to a small wooded home site.  The final sale results were:

Tract 1 (75.7 Acres) – $470,000 or $6,208.72 per acre; This tract consisted of nearly all-tillable land

Tract 2 (4.3 Acres) – $25,000 or $5,813.95 per acre; This tract featured a small, wooded tract ideal for a home site

Tract 3 (17 Acres) – $72,000 or $4,235.29 per acre; A nearly all-tillable tract

Tract 4 (23 Acres) – $72,000 or $3,130.43 per acre; A combination of woods, a creek, and timber that would be great for recreational activities.

The overall price for the entire 120 acres was $639,000, or $5,325 per acre.

Click Here to download more details from the auction.

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TROUBLE ON THE HORIZON?

Tuesday, November 17th, 2009

It’s been quite a while since widespread “financial blood” has flowed in the streets of agriculture.  Very high (and well publicized) profit levels – brought on by strong corn, soybean, and wheat prices in recent years – have most grain farms in a relatively healthy condition financially.  However, the same cannot be said in the livestock business.  Livestock operators – and especially pork and dairy producers – have been suffering significantly in recent months and years because of poor profitability brought on by a myriad of factors including higher grain prices, which translate into higher feed costs.  As a recent article by DTN points out, even “efficient, well-established operations” are being brought down by financial distress.  To read the article, click here.  How this might impact the agricultural industry in general remains to be seen.  However, livestock producers are still one of the largest demand sources for grain – and if that demand source stumbles, it brings into question the trickle-down effects for grain prices, and grain farm profitability.

Are the financial struggles in the livestock sector a sign of things to come for cash grains?  I’d like to hear your opinion – e-mail me at doug@loranda.com with your thoughts.

Source: DTN

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OUTLOOK FOR 2010 CASH RENTS STILL UNCERTAIN

Tuesday, November 10th, 2009

With harvest dragging into November and with the Midwest still getting soaked with rain showers, 2010 cash rents are probably not the first priority for a lot of farmers right now.  However with Thanksgiving only 2 weeks away, the 2010 planting season is going to roll around before we know it.  Throughout the fall, we have posted several discussions about where experts think the 2010 cash rent market may end up at.  In a recent article on FarmWeekNow.com, University of Illinois Extension farm management specialist, Gary Schnitkey, weighs in with his opinion.

In the article, Schnitkey admits that setting 2010 cash rent levels is going to be tricky.  Schnitkey suggests that even if commodity prices are higher in 2010 than they were in 2009, they will still be below 2007/2008 prices – which was when many of the multi-year current cash rent contracts were locked in.  Schnitkey goes on to say that when taking estimated commodity prices into effect, one would assume that cash rents would decrease, however Schnitkey thinks we will more than likely see rents remain stable in 2010.

To read the entire article, click here.

Farmers and landlords – have you locked in your cash rents for 2010?  In what direction are you seeing rents move?  Let us know at eric@loranda.com

Source: www.farmweeknow.com

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HARVEST PROGRESS SLOWEST IN YEARS

Tuesday, November 3rd, 2009

As if the wet spring weather wasn’t frustrating enough for many Midwestern farmers, now we’re having one of the wettest falls on record.  Unfortunately, wet harvest conditions create more than just ruts in the fields.  It also creates mold, fungus and other diseases that can impact the quality of the crops.  And don’t forget an increase in field loss (good for wildlife, not so good for the bottom line), a substantial increase in drying costs, and finally – an increase in blood pressure.  All in all… not the most ideal scenario.

If there is a positive in all of this, grain prices have recovered lately: Commodity Prices Moving Up.  This should provide farmers and landowners an opportunity to catch up on some sales that they may have missed out on earlier in the year.  It may be a slow and tension filled harvest, but it will get done eventually and farmers may end up with more dollars than they had expected.

How will this impact land prices? I think it will support prices in most areas, once the bins are nearly full.  I think we will continue to see a real divergent marketplace – large tracts that are well drained and easy to farm will command a premium.  And farms that are traditionally wet and difficult to operate will be discounted.  It’s really not that much different as in the past – it’s just the price spread between the “A” quality and the “C” quality will be exacerbated.  2009 is the year when you can really see the impact of timeliness and farming efficiency on the bottom line.

Feel free to send your thoughts to loranda@loranda.com.

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