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  • A turnaround's likely in Friday's grain trade. Prices have been strong -- most for wheat -- in the last few days, with gains the sharpest on Thursday. That likely will make for a lower end to the week as money leaves the grains as traders take profits and move money into other markets, namely the equities that are surging to record levels, according to Al Kluis, analyst and grain broker with Kluis Commodities."The grain markets closed higher on Thursday with wheat and soybeans posting impressive gains. It was a choppy day of trade," he says, adding the wheat market will be the one to watch Friday. "I think the huge rally in the stock market will pull money out of the commodity markets." See the latest prices Land values see biggest 1-year drop in almost 30 years. The annual audit of farmland values in Iowa, released yesterday by Iowa State University specialists led by retired ag economist Mike Duffy, shows an almost 9% drop in values year over year. Though it's the largest 1-year drop since 1986, values are still 18% higher than they were just 2 years ago. And, despite the major drop, Duffy says he's still optimistic about a bounceback in the next couple of years, and he doesn't see parallels between today's land downturn and that of the farm crisis of the 1980s.See more on this hot topicIs your equipment winterized? You're probably done with much of your iron for the winter, right? If so, make sure you're putting it in the shop ready for its winter break. Doing so can save you a lot of time and money when things get busy in the spring, one expert says. Here are 6 steps to take to get it winterized right!See all the tips

  • High quality farmland in Iowa is worth 9% less than a year ago, according to the Iowa Land Value Survey conducted in November and released today. It fell by $974 an acre to an average of $9,854. Statewide values fell by 8.9%. “This is the biggest drop since 1986, which was the last year of the farm crisis,” says Mike Duffy, the retired agricultural economist who conducted the survey for the Center for Agricultural and Rural Development at Iowa State University.“I know this is something people are worried about,” Duffy said when he shared results with reporters. Yet, he pointed out that land in the state is still worth 18% more than it was two years ago and 80% more than 5 years ago. The drop is almost completely a response to lower commodity prices, in the opinion of the 428 real estate brokers and other experts who responded the survey.Historically, land values fall by 0.5% for every 1% drop in farm income in Iowa, Duffy said, although the decline isn’t immediate. That means that if there’s a 30% fall in prices, land could drop 15%.The national average corn price for the current marketing year projected in USDA’s World Agricultural Supply and Demand Estimate is $3.50 a bushel, a decline of nearly 22% from $4.46 a year ago and down 49% from $6.89 two years ago. USDA projects national net farm income for 2014 at $97.3 billion, down 25% from 2013.Duffy says that if corn prices stabilize and don’t fall further, land prices may not fall too much more. “We took a big chunk off with 9%,” he says. Land prices also fell in 2009 after corn prices dropped below $4, then both crop and land prices rebounded.Duffy says he remains an optimist and doesn’t see parallels with the 1980s, which followed the end of a speculative farmland bubble driven in part by rapid inflation, and what Duffy calls irrational exuberance, not farm income. This time, lenders have been more conservative about how much they’ll lend for farm ground and even last year saw many cash sales of land.“We still have a lot of strength in the market,” Duffy says.“I started with Extension in 1983. Nobody wants to go back to that again. If I think that’s happening again, I’d be the first to say it,” he said.The highest priced land saw bigger price declines, when Duffy looked at changes within the state’s nine crop reporting districts. Prices fell the most, by 13.5%, in southwest district, and by 12.3% in the northwest and 13.1% in the north central district. “We had double digit decreases across the top (northern) reporting districts,” Duffy said, and “along the Missouri River we saw some big drops.”One area of the state, southeast Iowa, saw land value rise by 3.2% last year. Duffy says that’s because that area was hit harder by the 2012 drought and land prices had not risen as much as in the west and northwest. And this year, the southeast part of the state harvested record yields.Duffy was pleased that the southeast district also saw 9% of land sales going to beginning farmers, much more than just 3% statewide. The land values survey, the oldest in the nation, is an opinion survey and isn’t based on actual sales. But studies have shown that those expert opinions correlate well with what buyers are paying.The value of all grades of land in Iowa at the end of 2014 was estimated at $7,943 per acre, which was also a decline of nearly 9%.After this year, Iowa State’s CARD will run the survey, which pleases Duffy.“I didn’t put 28 years of my life into this to see it die,” he said.

  • Grains surging on Cuba news. For more than five decades, the U.S. has had a trade embargo against Cuba, but that's going to end soon after an announcement by the Obama administration Wednesday that trade relations will normalize with the island nation in the coming year. Ag groups said the change will mean more ag products traded (Cuba bought $350 million in ag products from the U.S. in the last year), and the markets have responded to the bullish news."Grain prices ended the day stronger as an announcement about U.S. possibly going to start doing business with Cuba kick-started the wheat market yesterday," says Kluis Commodities market analyst Cory Bratland. "I think the announcement of possibly doing business with Cuba is beneficial for all three grains and not just wheat."Wheat was up double-digits in overnight trading, with soybeans and corn both also trading in the black.See more on the Cuba dealCheck the latest grain pricesBuying machinery now? Act quickly to get the Section 179 tax deduction.The Senate approved the bill passed by the house earlier this month to extend the IRS Section 179 tax deduction another year, meaning you can deduct up to $500,000 in equipment, machinery, or other big-ticket purchases made this year (it's retroactive). But, if you're going to take advantage of it, act quickly: Experts say you better get buying and file for the deduction very soon so you make the December 31 deadline. See more on the Section 179 dealHoliday trading hours. Christmas is a week away, and that's got schedules changing in Chicago for the grain trade. CME Group open outcry trading will be open next Wednesday, Christmas Eve, until 12:00 noon, then will be closed through Thursday. For the following week, New Year's Eve (Wednesday) will see normal trading hours, but the trade will again be closed on New Year's Day. Barring any more major news between now and then, traders say volume will likely be light from now until then. See more

  • The Obama administration's decision to normalize relations with Cuba, which one official called the most significant change in policy toward the country in half a century, includes easier terms for selling food and agricultural equipment to the island nation.Cuba bought nearly $350 million of U.S. farm exports last year, mostly frozen chicken, corn, soybeans, and soymeal, says the U.S.-Cuba Trade and Economic Council, which monitors binational trade.U.S. farm groups, who long regarded Cuba as a natural, nearby customer for American-grown food, applauded the move, announced by President Obama today after several months of behind-the-scenes negotiations. The American Farm Bureau Federation said improved relations "will expand access to a market of 11 million customers for U.S. agriculture."Key for agricultural exports will be revision of a Treasury Department regulation that requires payment in cash before ships leave U.S. harbors and permission for U.S. banks to open correspondent accounts with Cuban banks. The "cash in advance" rule will become "cash before transfer of title" at Cuban ports, said the White House, and the direct relations with Cuban banks will speed transactions. At present, payments must be routed through third-party banks, which takes time and adds to costs.As part of steps to encourage growth of Cuba's private sector, sales will be allowed of agricultural equipment for small farmers, said the White House.The incoming chairman of the House Agriculture Committee, Republican Mike Conaway of Texas, said the long-standing trade embargo on Cuba was undermined by "a poorly negotiated deal" that would not bring democracy to Cuba. The National Farmers Union said the embargo, which remains in place, "has made no sense for a long time" and that improved relations "will also open new markets for U.S. farmers."Cuba was once the largest market for U.S. rice exports and could become a major customer again, said the USA Rice Federation. The National Corn Growers Association said removal of regulatory and financial barriers would boost U.S. competitiveness. The American Soybean Association saw the opportunity to sell U.S. soy products from cooking oil to livestock feed in Cuba.

 

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