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3 Big Things Today, February 22

Soybeans, Corn Little Changed Overnight; Cropland Values Outpaced Farm Profitability.

1. Soybeans, Grains Little Changed Overnight on Lack of News

Soybeans were slightly lower overnight, while corn and wheat were almost unchanged.

There’s little fundamental news to trade on this morning. It’s still dry in Argentina, but buying in soybeans dried up as investors await any bullish catalysts after earlier this week closing at the highest level since July.

For wheat, the Southern Plains is still suffering from a drought, but that’s already been priced into the market, according to analysts.

Cory Brantland with Kluis Commodities said in an overnight note that traders are looking for “fresh bullish” information to boost prices.

While dry weather is dominating headlines recently, export sales have been down from year-ago levels. Export sales of soybeans so far this marketing year are down 13% from the same time frame a year earlier, according to the USDA. Sales of corn are off by 14% and wheat sales are down 12% year to year.

Soybean futures for March delivery fell 2¼¢ to $10.43 a bushel overnight on the Chicago Board of Trade. Soymeal fell 80¢ to $380.20 a short ton, and soy oil lost 0.01¢ to 32.18¢ a pound.

Corn futures for March delivery was unchanged at $3.65¾ a bushel in Chicago.

Wheat fell ¼¢ to $4.47 a bushel, while Kansas City futures lost ½¢ to $4.81¼ a bushel overnight.


2. Farm Profits Didn’t Support Rise in Land Values 2000-2016, USDA Says

Farmland profits didn’t support real estate values from 2000 to 2016 when the price of land more than doubled, but real estate appreciation led to fewer financially stressed farms, the USDA said in a report released Wednesday.

Land values jumped from $1,483 an acre, on average, in 2000 to $3,060 an acre in 2015, according to the USDA. Cropland appreciated faster than pastureland, and values increased most in the Corn Belt, Northern Plains, Lake States, and the Delta.

The commodity-price drop led to depreciation in some areas and slower acceleration in others, the government said. The rate of increase wasn’t supported by returns generated by farmers, but it wasn’t all bad news.

“With the exception of two brief periods of high net cash farm income in 2003-2005 and 2011-2014, national-level farm real estate values in 2000-2016 were higher than economic theory would predict,” the report from the Economic Research Service said. “However, when broken down by region and land use, farmland values varied significantly. Interest rates declined substantially over this period and played a major role in supporting farmland values by keeping borrowing costs low.”

Along with lower interest rates, the increase in land prices led to fewer financially burdened farms, the USDA said. Still, cash rents in a time with high land values and low crop prices will play an important role in financial stress for operations.

Rising farmland values also allowed producers who owned the land to borrow more to increase their holdings. The government noted a difference, however, in how large and small landowners responded to rising prices.

“During periods of land price appreciation, owning a larger share of land led to greater growth in real estate-secured debt and land purchases,” the report said. “However, owning a larger share did not lead to an increase in harvested acres – that is, an expansion of the operation.”


3. Winter Weather Advisories Issued From Texas to Canada as More Snow, Ice Expected

The weather maps are extremely active this morning, with a winter weather advisory stretching from central Texas to the Canadian border.

The advisories run through parts of 10 states including Iowa, Illinois, and Nebraska, according to the National Weather Service.

In central Iowa, the winter storm will move through the state starting today. Snow is already falling in parts of the region, freezing rain and freezing drizzle aren’t too far behind, the NWS said. Up to 3 inches of snow are expected, while two tenths of an inch of ice may fall.

Farther south, freezing drizzle is expected in much of the Southern Plains. Travel will likely be difficult and is not advised, the agency said.

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