Southwest Iowa Crop Conditions

Strong export demand, a weaker dollar, tight inventories in China at a time they are rebuilding their hog herd, and a slightly reduced US crop have all factored to push corn and soybean prices to their highest levels since 2014. Corn did have a few weeks over$4.00 in June/July of 2018, but that’s been it in the past 6 years. The tough part is that for months during mid-year, prices dwelt in the bottom side of the six-year price range asearly-planted crops sprinted to a mid-season high point in crop conditions. However, the expanding drought beginning in west-central Iowa was starting to take its toll while the other factors (plus widespread derecho all conspired to start pushing prices higher. Many bushels were sold at lower price levels. When one has not had $10 beans in years, it is easy to sell many to most bushels at such a price. When the crops leave farmer’s control,that’s usually when prices really takeoff. We watch the weekly Commitment of Traders report, in particular the Managed Money column. When they exceed ownership of 200,000 contracts, that’s pretty bullish and maybe ripe for a pullback sometime soon. They’ve exceeded that for weeks now, but all trade indications are pretty favorable. South America remains dry in key growing areas, so China may not have a substantial an alternative for US beans as they normally would.

Land sale results have been stronger on good land. Reasonable crop yields, improving crop prices, government stimulus payments, and lower interest rates have all helped to add some to land values. Farm income will be pretty respectable in 2020.