Outlook for Crop Farm Income, Cash Rents, Farmland Prices, and Agricultural Credit September 1st, 217 Outline Outlook for Crop Farm Income, Cash Rents, Farmland Prices, and Agricultural Credit Gary Schnitkey, David Klein, and Todd Kuethe Net Income on Illinois Grain Farms, 1996-216, 217P Farm Income Gary Schnitkey Cash Rents and Price (ISPFMRA Survey) David Klein Agricultural Credit Todd Kuethe U.S. Corn Yield, U.S. 2 18 16 Bushels per Acre 14 12 1 8 6 USDA release 217 forecast on August 1 USDA forecast = 169.5 bu. per acre Trend yield = 166.9 bu. per acre 4 2 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 16 1
September 1 st, 217 Illinois State Yields, Corn U.S. Soybean Yields 6 2 5 Bushels per Acre 15 1 Bushels per Acre 4 3 5 USDA release 217 forecast on August 1 USDA forecast = 188 bu. per acre Trend yield = 178bu. per acre 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 16 2 1 USDA release 217 forecast on August 1 USDA forecast = 49.4 bu. per acre Trend yield = 46.9 bu. per acre 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 16 Market Average Prices and Forecasts Time Period 6-13 14 15 16P 17P 18P Corn ($/bu.) 4.7 3.7 3.61 3.35 3.3 3.6 Soybeans ($/bu.) 1.91 1.1 8.95 9.5 9.3 9.3 Wheat ($/bu.) 6.25 5.99 4.89 3.89 4.8 4.5 Projection for 216 and217 are WASDE projections, 218 are looking at future markets Fall 217 bids (east-central Illinois, August 31): $3.2 corn $9.5 soybeans ARC-CO Payments, Corn, McLean County Input County MYA Benchmark ARC ARC Yield Price 1 Yield 2 Price 3 Guarantee 4 Payment 5 Payment 6 29 186 3.55 21 17 5.18 211 16 6.22 212 125 6.89 213 189 4.46 $/acre $/acre 214 218 3.7 172 5.29 783. 215 199 3.61 173 5.29 787 54.39 1 * 216 218 3.35 183 4.79 754 18.39 38 217 195 3.3 22 3.95 686 36.29 46 218 191 3.7 24 3.7 649. National loan rate equals: 1.95 Agricultural Risk Coverage (ARC) - County Five- Average 21.81 19 Reference price equals: 3.7 Price Loss Coverage (PLC) 2
September 1 st, 217 216 ARC-CO Payments (received this fall, still estimates) Corn Payments From $ to $6 per base acre, more of the highs in southern Illinois Soybean Payments Mostly $ per base acre Wheat Payments From $ to mid $ per base acre Table 1. Projected 216 ARC-CO Payments per Base Acre After Sequestion by Crop, Illinois. 1,2,3,4 Soy- Soy- Soy- Corn Beans Wheat Corn Beans Wheat Corn Beans Wheat Adams 9 Hardin NA NA Morgan 29 35 Alexander 53 39 28 Henderson 25 2 NA Moultrie 39 NA Bond NA NA NA Henry 49 Ogle 4 4 Boone 69 21 Iroquois 35 Peoria 8 1 NA Brown 15 NA Jackson 56 NA NA Perry 49 NA Bureau 66 NA Jasper 48 33 Piatt 33 35 Calhoun NA NA 18 Jefferson 49 NA Pike 4 33 Carroll 11 4 Jersey 62 32 Pope 57 39 NA Cass 37 3 Jo Daviess 24 34 Pulaski 58 14 33 Champaign 1 42 Johnson 5 NA NA Putnam 18 2 Christian 51 35 Kane 31 39 Randolph 49 34 Clark NA NA 34 Kankakee 29 Richland 52 35 Clay 22 31 Kendall 26 NA NA Rock Island 31 NA Clinton 54 33 Knox 18 34 St. Clair 56 33 Coles NA NA Lake 57 28 Saline 6 32 Cook NA NA LaSalle 45 NA Sangamon 5 NA Crawford NA 32 Lawrence NA NA 32 Schuyler 14 28 Cumberland 49 35 Lee 35 3 37 Scott NA DeKalb 35 39 Livingston 35 Shelby 49 32 De Witt 64 1 NA Logan 8 NA Stark 31 34 Douglas 44 36 McDonough 11 12 Stephenson 37 4 DuPage NA NA NA McHenry 31 38 Tazewell 35 Edgar 51 NA McLean 18 2 Union 51 2 NA Edwards 55 32 Macon 3 Vermilion NA Effingham 6 33 Macoupin NA Wabash 57 23 Fayette 5 NA Madison 33 33 Warren 5 NA Ford NA Marion 56 36 Washington 54 37 Franklin 54 34 Marshall 45 NA Wayne NA NA Fulton 11 NA Mason NA NA NA White 61 35 Gallatin 61 37 Massac 58 31 Whiteside 43 NA Greene 2 32 Menard 48 NA Will NA NA Grundy NA Mercer 31 NA Williamson 57 NA Hamilton 56 NA Monroe 54 33 Winnebago 5 37 Hancock NA Montgomery 9 NA Woodford 12 31 Non-land Costs, Corn and Soybeans $ per acre $7 Corn Soybeans $6 $5 $4 $3 $2 $1 $ 1 2 3 4 5 6 7 8 9 1 11 12 13 14 15 16 17P 18P Costs and Changes, Corn, Central Illinois Change 26 213 216 6-13 13-16 Seed Costs, Corn farmdocdaily, July 18, 217 $/acre $/acre $/acre $/acre $/acre Non-land costs 32 615 566 313-49 Fertilizer 82 193 154 111-39 Seed 55 114 118 59 4 Pesticides 4 66 64 26-2 Mach. depreciation 23 63 65 4 2 Mach. Repair 16 22 22 6 Fuel 18 24 14 6-1 Non-land interest 17 11 13-6 2 Seed Costs in Central Illinois and the U.S. 199-216 Cash rent 15 29 273 14-17 3
September 1 st, 217 Operator and Land Returns, and Cash Rents, Central Illinois, High-Productivity Farmland Midyear Survey Conducted By Illinois Society of Professional Farm Managers and Rural Appraisers University of Illinois www.ispfmra.org 217 Illinois Farmland Values & Lease Trends Understanding Our Farmland Categories Using the Productivity Index from the University of Illinois (Bulletin 811). Excellent Productivity 147 to 133 Good Productivity 132 to 117 Average Productivity 116 to 1 Fair Productivity Less than 1 Recreational Tracts Transitional Tracts Illinois Farmland Prices Land Class Midyear Price $/acre Change First Half of 217 Excellent $1,9-1.6% Good $8,9-3.% Fair $6,9-3.8% Average $5, -4.4% 4
September 1 st, 217 Farmland Market Similar volume during the first half of 217 as last half of 216 If tight inventories continue, farmland prices may stabilize Farmers continue to be major buyers of farmland, 131 interest increases Illinois Cash Rents on Professionally Managed Farmland Land Class 216 Average Rent 217 Expected Rent Excellent $35 $3 Good $26 $255 Fair $22 $21 Average $166 $16 Most farm managers expect production costs in 218 to be similar to that in 217 Most farm mangers seem conformable that variable cash rent leases are adjusting rents properly March release of land values booklet Registration information at www.ispfmra.org 5
September 1 st, 217 Agricultural Credit Update Credit market appears to be strengthening Short-term agricultural interest rates increased slightly in 217 Further interest rates expected as broader economy strengthens Illinois Federal Reserve Districts Quarterly surveys of agricultural bankers Credit market conditions Interest rates Credit Market Conditions What changes occurred in non-real-estate farm loans at your bank in the past three months relative to a year earlier? Demand for loans Rate of loan repayments Renewals or extensions Higher, lower, same Index: Higher Lower (i.e. net higher) Credit Conditions (Chicago) 8 6 4 2-2 -4-6 -8 24 25 26 27 28 29 21 211 212 213 214 215 216 217 6
September 1 st, 217 Credit Conditions (Chicago) 8 6 4 2-2 -4-6 -8 24 25 26 27 28 29 21 211 212 213 214 215 216 217 Credit Conditions (Chicago) 8 6 4 2-2 -4 Loan Demand -6 Repayment Rate -8 Renewals and Extensions 24 25 26 27 28 29 21 211 212 213 214 215 216 217 Credit Conditions (St. Louis) 6 4 2 Fixed Interest Operating Loans 12 1 8 6-2 -4-6 Loan Demand Repayment Rate Renewals and Extensions 212 213 214 215 216 217 4 2 Chicago St. Louis 1991 1993 1995 1997 1999 21 23 25 27 29 211 213 215 217 7
September 1 st, 217 Expect Fed to raise discount rate FOMC participants assessments of appropriate monetary policy: Midpoint of target range or target level for the federal funds rate 217 218 219 Longer run June 217 FOMC Meeting Percent 5. 4.5 4. 3.5 3. 2.5 2. 1.5 1..5. Thank You For Your Time Question? 8