Cash Rent and Crop Progress - Friday, 19 August 2016

The USDA has left the corn crop rated Good to Excellent at 74% from last week into this week.  Some states saw improvements in their corn crop conditions from the previous week while other states saw a decline in ratings balancing the assessment which keeps the 2016 rating well above typical rating levels for this point of the growing season.  Harvest continues to advance across the South with Texas reporting 38%, Georgia 36%, Louisiana 30%, Mississippi 11% and Arkansas 5% harvested. 

Prices have remained in a narrow trading window following the big decline just prior to the June, USDA report.  Kevin VanTrump of the Van Trump group finds there to be a lot of resistance on the charts at the $3.50-$3.60 price and cautions that “Fundamentally, even though demand is seen as extremely strong the recent record setting yield and mammoth production numbers thrown into the mix by the USDA is going to make any sustained rally extremely difficult to find follow through.” As always though an unseen event somewhere in the world can have the ability to spark a rally, he also suggests that the last 3 months of the year may bring better selling opportunities.

 

Demand for soybeans has helped move prices higher than prices in early August.  That continued strength has traders a bit nervous about supplies, according to Van Trump “bottom-line is the bulls are still a bit nervous and uncomfortable, just the slightest production hiccups either here at home or in south American could cause the balance sheet to get extremely bullish.”

 

Rabobank reported that they expect to see an expansion in Brazil’s soybean acreage over the next 10 years+.  Brazil currently has 185 million acres of “underused pastureland” that they feel will likely be turned into valuable cropland.  The countries inability to export grain due to a shortage of capacity at the nation’s ports is in the process of being overhauled.  The country has made some necessary adjustments to its regulations regarding port use which has stimulated investments in port capacities.  Due to this change in regulation and the expected growth in export capabilities Rabobank looks for vigorous growth in soybean acreage especially in regions nearest these ports.

September 1st is quickly approaching and as usual cash rent prices have been on everyone’s minds. On August 6th figures regarding U.S. cash rental rates from USDA’s National Agricultural Statistics Service were released. The agency explores per acre rates for irrigated and non-irrigated cropland and pastureland by state, region and national levels (county figures won’t be available until the second week in September).  It’s not at all surprising that the overall national average rental prices fell from $144/acre in 2015 to $136/acre in 2016. I have listed a few of the nearby state rental rates, the figures listed below are for the 2016 crop, the map also gives you a visual representation to study as well. (Green=increase in cash rental prices, Red=a decrease and gray=unchanged)

  • Iowa fell from an average of $250/acre in 2015 to $235/acre in 2016.
  • Illinois saw prices fall slightly from $228/acre to $221/acre.
  • Minnesota saw a reduction from $181/acre to $170/acre in 2016.
  • Nebraska prices declined from $206/acre in 2015 to $196/acre in 2016.

Get your sweatshirts out of the closet, you will likely need it this weekend across the eastern half of the U.S. A strong cold front is expected to move through the Midwest bringing much cooler temps and severe thunderstorms in some areas Friday into Saturday and then continue its trek to the east into the Mississippi Valley and Great Lakes regions Saturday.

This cooler trend is not expected to be long-lived though as the map from NOAA indicates below.  Overall temperatures are predicted to remain above average for the U.S. for the next 3 months.

 

 

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