The months-long decline in corn and soybean prices has begun to take a toll on land values. Our summer newsletter discussed a steady to slightly stronger land market earlier this year. That corresponded well with the corn market which reached a high on May 8th. Bean prices held up until about July 1st. Both have since declined sharply, now approaching the lowest levels we’ve seen since the “ethanol era” moved prices to a new plateau beginning in October 2006.
Crop Revenue Insurance has become quite popular over the last several years and is carried by a high proportion of farm operators. This form of insurance locks in a floor of revenue, with the amount dependent on the farm’s yield history and the level of coverage chosen by the operator (typically 70 to 85% of proven yields, depending on how much you want to spend). The other variable is crop prices, which are set in February based on new crop price (December contract) averages over that month on the Chicago Board of Trade. This year’s corn price in February was $4.62 per bushel and soybeans were $11.36 per bushel.
Cool temperatures and abundant rainfall throughout most of August and September resulted in a late start to harvest this year. Soybean harvest did not get started in most of Northwest Iowa until the second week of October. Good conditions since then will allow most soybeans to be harvested by the end of October. Soybean yields are highly variable. Poorly drained fields in areas that received the heaviest June rains are showing poor yields as expected. Better drained areas are much better, with some farms achieving their best yields ever. In general, farms south and west of Storm Lake are seeing the best results.
Our expanded newsletter allows us to delve a little deeper into subjects such as the latest World Agricultural Supply/ Demand Estimate (WASDE) from USDA, released October 10th. The report in full may be found at http://www.usda.gov/ oce/commodity/wasde/latest.pdf. The report includes final production and usage statistics from the two previous crop seasons, as well as the September estimate as compared to the October numbers. We’ve included the world statistics as well, which are reported in million metric tons instead of million bushels. Below are a few items of note highlighted in the most recent numbers.
Tile drainage has long been considered the most beneficial investment over the years on many of the heavier, flatter soil types. Some of these tile systems are now 75 or more years old. The main tile systems that were set up by counties have been fed by privately installed laterals over the years, which overloaded the entire system. If your property has direct access to a drainage outlet such as a ditch, you have some advantage over your neighbors since you can add lateral lines without the concern that you might still have to wait until the main line drains your upland neighbors.
