Two weeks ago I attended the annual American Society of Farm Managers and Rural Appraisers meeting. This is our professional, national organization for people who do what we do. I listened to many of our peers throughout the Corn Belt as well as presentations from the Kansas City Federal Reserve Bank and our Washington lobbyist and here are some high level themes to watch over the next few months.
- Crop yields are generally pretty good. In Indiana we have many farms that harvested all time record yields. Throughout the Corn Belt the yields were above average, however harvest lasted a long time due to wet and cold weather and the later harvested crops fared worse.
- I suspect 2018 harvest numbers will continue to decline in coming reports, which will be bullish to a slight degree.
- Farm incomes project to be low. This is due to much lower commodity prices resulting from excess production in the US and the tariff situation in China (resulting in very little Chinese purchases of our soybeans and corn the past 6 months).
- Farm financial liquidity declines further creating more challenges for financing the 2019 crop.
- More farm operators are expected to sell intermediate or long term assets (equipment and land) to generate liquidity.
- Pressure on land rents will be present and creative cash flex leases might create a win-win scenario for landowners and tenants.
- The 2019 Farm Bill likely is passed during the lame duck session going on right now. The Washington “experts” gave this a better than 50% chance of happening versus restarting the entire process in January with the new Congress.
- Farm sales continue to indicate a stable marketplace. Our auctions in September were the softest with a slight rebound in the latter half of October and November so far. If you have an interest in selling something this winter, now is the time to get to work on it!!
The tariff relief passed by Congress ($1.65/bushel for soybeans and $.01/bushel for corn) will help shore up the financial situation for farmers this early winter. There is zero guarantee this happens in 2019 so watching the outcome of the Farm Bill will give you an indication of the support offered going forward.
Volatile times indeed. If you need help working through these difficult pathways Halderman Can Help. Call your local Halderman Area Representative or me in our main office at 800-424-2324 to talk about your specific needs, your property and your options.
Howard Halderman, President
Halderman Real Estate and Farm Management