Harvesting the Headlines: Week Ending March 17
Between the 24/7 demands of running an agricultural operation and the blinding pace of our world today, there is little time to sift through all the headlines. The good news is that you no longer have to!
Our goal is to point you to some of the most important headlines in agriculture, so you can stay informed on the forces shaping your livelihoods.
To save you time, here are the week's top links and news items:
1. From FBN: 4 Financial Priorities for Farmers in March
This link highlights the financial priorities to consider keeping top of mind this month.
Watch for Interest Rate Changes Following the March Fed Meeting
Conduct Equipment Maintenance Before Planting Begins
Finalize Your Insurance Coverage
Assess the Future Value of Your Farmland
2. What Does the Failure of Silicon Valley Bank Mean to Ag Markets?
FDIC records show SVB's failure is the second largest in US history.
Companies at risk of losing money in a scenario of higher interest rates and lower returns typically carry high debt loads and earn a low return on assets.
The primary concern for the ag markets is that this is the type of event that causes traders to trim their long positions.
Corn, soybeans and cattle have large net-long positions held by specs and look vulnerable.
Corn prices look the most vulnerable as specs were already stressed by May prices that have fallen 60 cents in the past three weeks.
3. Growth in Farmland Values Slows Amid Higher Interest Rates
Farm real estate values increased in 2022 but showed signs of softening during the final months of 2022 as interest rates rose sharply.
The average rate charged on agricultural loans increased nearly 150 basis points from the previous quarter and were about 300 basis points higher than a year ago.
Rates rose to the highest level since 2008 and pushed up financing costs considerably.
Benchmark interest rates surpassed returns to farmland owners in recent months, which could put some downward pressure on growth in farmland values going forward.
Capitalization rates, calculated as the ratio of cash rents to farmland values, have decreased continuously over the past 15 years.
4. Texas Supreme Court Rules in Favor of Ag Retailer in Drift Case
This recent court case highlights the requirements of farmers attempting to prove financial damage from exposure to pesticides.
Demonstrating visual damage is not sufficient in these cases.
Farmers must show what amount of the pesticide reached the crop and whether that amount would reduce crop yields.
Expert testimony is required for corroboration, as the farmer's experience is not sufficient.
Farmers must show reduced crop yields for the entire area for which he seeks damages.
5. For beef-on-dairy, Angus performs best
Penn State is conducting a feedlot trial to determine optimal beef genetics of steers born to Holstein cows.
Because the cattle that consumed less feed grew slower, no breed differences existed in feed conversion to gain.
Angus-sired steers were heaviest at feedlot entry and were fed at the center for the fewest days.
The Angus-Holstein steers reported the best profit/hd.
Wagyu-Holstein steers had the worst profit/hd due to inferior average daily gain and dry matter intake, greater days on feed, and reduced carcass weights.
Get in touch
If you have any links you'd like to share or have any questions, please contact Travis Carlstrom, Sr. Ag Credit Analyst at FBN.
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