August 2008 Archives

August 27, 2008

Written by:

Chad Faller

Prairie State Bank & Trust

Virden, IL

www.PSBank.net

In a time of indecisiveness, the commodity markets have not provided enough support to make anyone feel comfortable.....you get the feeling of riding a rollercoaster, without stepping foot in an amusement park.  We are seeing December corn with common daily trading ranges of 17 cents and November soybeans with daily trading ranges of 40 cents.  Farmers seem to have quit selling old and new crops due to the lack of market stability.  The Midwest is dealing with a below normal precipitation forecast over the next 7 days, which could impact the filling of the soybean crop.  Hurricane Gustav continues to be a threat to the Gulf's petroleum production, causing crude to trade close to the $120 level.  In the financial markets, short term rates continue to slide with 12 month bonds and 2 year bonds yielding 2.18% and 2.39% respectively.  Diligent risk assessment with a conservative game plan seems to be the prevailing attitude of the majority of investors.

The ILDNR has recently posted the initiative of a House Joint Resolution to create a Joint Task Force on Deer Population Control for Illinois.  There are mixed emotions to this announcement, but most hunters feel that it may loosen permit restrictions for resident and non-resident applications.  Albeit for financial reasons or simply to keep the insurance companies somewhat happy, I feel it is good that our legislators have identified that we have a whitetail population control issue.  As hunters, we know that overpopulation will ultimately jeopardize the quality of the Illinois Deer herd.  It will be imperative that the Illinois hunters have a say in the proposed population control measures.  Here is the link to the actual resolution:  http://www.ilga.gov/legislation/95/HJR/09500HJ0065.htm

As promised in last week's blog, here are a few pictures of a nice Illinois buck that we captured on a trail camera in Montgomery County.  Take a look at the tremendous mass and structure this buck has to offer.

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August 15, 2008

Written by:

Chad Faller

Prairie State Bank & Trust

Virden, IL

www.PSBank.net

The wake trailing the Tuesday's USDA Crop Report may not have been as large as the wake trailing U.S. gold medal swimmer Michael Phelps, but the effects are certainly weighing on the minds of traders and farmers alike!  An increase corn yield of 6.6 bpa pushed the expected production to 12.288 billion bushels or 155.0 bpa.  Ending stock estimates were up 300 million bushels.  Although soybeans acres increased by 1.2 million, the yield estimates dropped 1.1 bpa to a level of 40.5 bpa, with ending stocks slipping 5 million bushels.  Most of the speculators liquidated long contracts before report came out, but it still provided for an interesting trade week.  Nearby corn futures finished Friday down $.28 and nearby soybean futures off $.53-$.55.  Likewise, Friday's lower crude prices and higher Dollar valuation certainly didn't help the markets.

We're actually seeing a dip in some of the interest rates, mainly short-term rates.  If you are a potential borrower with a project or an acquisition coming up, you may want to think about solidifying that low finance rate.  The inflation numbers certainly don't look favorable to a borrower's ability to keep these rates low.

On a much lighter note, it is just 64 days and counting until opening day!  Hopefully everyone has repaired any levy issues from the massive spring rains and are seeing a good stand in the feed plots.  Once again the USFWS Service Regulations Committee approved another 60-day duck season in Illinois.  Below is a brief glimpse of the season dates:

Illinois Duck Seasons - 2008/2009

North Zone - Saturday, Oct. 18 - Tuesday, Dec. 16

Central Zone - Saturday, Oct. 25 - Tuesday, Dec. 23

South Zone - Thursday, Nov. 27 - Sunday, Jan. 25

Illinois Canada Goose Season - 2008/2009

North Zone (85 days) - Saturday, Oct. 18 - Saturday, Jan. 10

Central Zone (85 days) - Saturday, Oct. 25 - Sunday, Nov. 9 and Monday, Nov 24 - Saturday, Jan. 31

South Zone (66 days) - Thursday, Nov. 27 - Saturday, Jan. 31

For more detailed information on seasons, bag limits, etc. click on the ILDNR link:

http://www.dnr.state.il.us/pubaffairs/2008/August/2008.htm

Check back next week for a few pictures of the Montgomery County buck caught on the trail camera.  He's young and still growing!

August 10, 2008

Written by:

Chad Faller

Prairie State Bank & Trust

Virden, IL

www.PSBank.net

Wow, what a week in the ag industry.  There has been a whirlwind of information flying past our eyes and ears over the last few days.  We've watched the commodity markets retract almost $.40 cents on nearby corn futures and almost a $1.00 for nearby soybean futures.  We are seeing $900.00 per ton for Potash, $1,100.00 per ton for DAP and NH3 in the neighborhood of $1,000.00 per ton, with the seed companies talking that they will follow suit for the 2009 crop year.  As a silver lining to the Midwest storm cloud, the FED decided to keep key interest rates at their current level.  We also watched the stock market finish the week on a strong note, while crude dipped below $115.00 per barrel.

Despite the retracting commodity markets and ever-increasing input costs, we have appearances of +$500.00 per acre cash rents from a few of the big players across central Illinois.  As investors and land owners hone in on diversification of portfolios, we are computing gross returns of 7% at these cash rent levels.  Given the normal benchmark of 4%, would this mean that we could see "Class A" soils at $10,000.00- $12,000.00 per acre?  I'm not sure if anyone knows that answer. 

Given the overall outlook on all of these factors, many still believe that it remains an attractive time to add some farmland to your investment portfolio.