Katie Geerdes

Headlines from Bloomberg are a little bit misleading, making vague announcements that Brazil is having its worst drought in 40 years. Brazil is still in the middle of its dry season. Other than some first crop corn, the row crop season has not yet begun. The dry weather can affect perennials crops like coffee and sugarcane, but a certain level of drought is expected each year. All of our coffee is irrigated, and my brother-in-law says he wouldn't grow coffee without it. It is way too expensive.   The weather forecast for September shows little if any precipitation in major growing regions. Mato Grosso has historically not been allowed to plant soybeans until September 16th. But this year they have reportedly pushed the date forward a week, allowing producers to begin planting by this Saturday, September 7th. Considering the dry forecast, I don't think it will make much difference. There will always be some courageous grower that will begin planting in the dry dust, waiting for it to rain. But the bulk of the planting window takes place in October. The long-term outlook does show precipitation arriving by then. This would give us an early indication that planting in the…

In over 5 decades of farming one occurrence repeatedly observed, based upon my past experience, is if our yield was down the price went up and vice versa. If I produced 100 bpa corn and the price was $3 bushel… then if I produced 150 bpa corn the price may be $2 bushel. While the yield and price may have varied greatly, the gross dollars per acre remained relatively stable.  While I have not given up on this relationship yet for this crop…currently both my yield and the price are down, starving the gross dollars per acre. My downside risk stops at my $955 acre corn crop insurance revenue coverage so significant crop revenue insurance indemnities are likely. Yes, the yield challenge in our region (NW IA) has not been recognized by the market. I expect that yield and price are out of line and will adjust toward a more historical relationship with the coming harvest into early 2025. We swept our bins a while ago but those with old crop left in supply deficit regions, with storage available, if finances allow, could profit from holding it at this point until early in the next marketing year. After all, end-users…

September corn futures entered the delivery period on Friday with a spread against the December contract that was around 24 cents, which measured well above 100 percent of any basic "fully carry" calculation. Historically wide futures spreads have specifically signaled a current lack of demand for physical delivery on the Illinois and Mississippi River, which is part of the relative weakness for basis in the Eastern Corn Belt. Compounding the basis and spread pressure, lower water levels on the Mississippi River also look threatening again for Gulf export demand after that same logistical headache was faced during the last couple of fall seasons. Basis in the West has been expected to maintain relative strength due to better competition that fuel processors there have with the feed and export sectors.   Further logistical troubles on the river system do not have to materialize for worries to remain about Gulf export demand. While low water levels on the Mississippi River and around the Panama Canal have been problematic, more grain export share has also shifted from the Gulf to the Pacific Northwest because of lost business with China being offset by gains for countries such as Japan, South Korea, and Columbia.  …

Every so often I get asked what I think about farmland prices. Farmland ownership works as a long-term investment. At least farmland can be physically walked upon while stock values in some instances disappear entirely. There have been better times than others for best opportunities to buy farmland but the timing for selling is most often dictated by other factors such as settling estates and alternative investments opportunities. Farms are often called family farms because families do own most of them. Our family received the state recognition for having a Century Farm at this year's Iowa State Fair. We were late in our application as my great-great grandfather bought the farm in 1896. The farm must be 40 acres or more of Iowa farmland held by decedents of the original owners. The award, given by the American Farm Bureau Federation and the Iowa Department of Agriculture, was created in 1976. 277 Century Farm awards were added in 2024 so that they now total over 21,000. They also give Heritage Farm awards to families that have owned farms 150 years. They added 162 Heritage Farm awards to a total of over 2,000. As time goes on the number of Heritage Farms…

Inflation makes politicians do crazy things. That is because voters are hypersensitive to the rate of inflation blaming politicians.  I assure you that Richard Nixon was not a socialist or communist but he did attempt to use government dictates to control prices when they rose too much for his political comfort. "Nixon issued Executive Order 11615 (pursuant to the Economic Stabilization Act of 1970), imposing a 90-day freeze on wages and prices in order to counter inflation. This was the first time the U.S. government had enacted wage and price controls since World War II. At the time, the U.S. also had an unemployment rate of 6.1% (August 1971) and an inflation rate of 5.84% (1971). To combat these problems, Nixon consulted Federal Reserve chairman Arthur Burns. An import surcharge of 10 percent was set to ensure that American products would not be at a disadvantage because of the expected fluctuation in exchange rates. Politically, Nixon's actions were a great success. The American public believed the government was rescuing them from price gougers (Wikipedia)" …but otherwise economically not so much including his export embargo on soybeans. The dollar collapsed and oil priced in dollars soared. Nixon-omics had a long-lasting disruptive impact on the US economy. Then…

This is the time of year when windshield road trips by farm fields can give deceiving perceptions of crop condition. Often, tall green corn along the road ditch shields blemishes further out in the fields. N loss, uneven stands and even potholes are masked from view. Even in 1993 there was a time in summer when crops looked better from the road so as to cause questions as to whether they were really as bad as they had looked earlier. Hope would be raised that yield expectations were too pessimistic. Then when the combines rolled, they confirmed that nothing had changed. They were terrible.   The ProFarmer crop tour confirmed that the top 2-3 tiers of Iowa counties were water damaged while very good crops existed south of Highway 20. The top 3 tiers of counties in Iowa produce 11% of the nation's corn crop so it is a key region. The damage is progressive as you travel north to south from MN into IA. Crops north of Highway 10 and west of I-35 are the worst. The 2024 corn crop has wounds that have not healed. In the extreme ECB in Ohio there is drought impacted corn that is…

There has been much ado about the central bank conference in Jackson Hole this week. It is always an interesting event to think about, if largely because of many people's fondness for Wyoming and that part of the Rocky Mountains. This year's economic symposium seemingly carried higher significance because of the approaching interest rate cuts, which are left open for prediction as to how large the first cut will be and to what eventual low rates will fall.   Federal Reserve Chair Jerome Powell delivered his speech to the conference on Friday morning. Stock futures and gold liked it that interest rates were trading lower before the speech, and this continued after Powell stated directly that "the time has come" for interest rates to drop, except then the dollar index broke to a new low for the year. The grains and other commodities such as crude oil took it positively that the dollar was down, but buyer enthusiasm would wane.   Focus stays on the Federal Reserve after central bank officials were recently suggested to have "encouraged" speculators to be short in the corn market. This was a paraphrased view of DTN analyst Todd Hultman by an article on the…

It took a while but America has now come of age where there is generational wealth. Just a few hundred years ago, no one, not even the indigenous peoples of North America had a lock on the title to their lands. The waves of immigrants that arrived in America intended on establishing generational wealth by their presence. They survived hardships including wars and quickly established the legal system that embraced private ownership as the law of the land.  A 60 Minutes program caught my attention about a family, the Gardineers that was bequeathed an island in Long Island Sound by King Charles who made a deal with the Montaukett tribe in 1639 that they have managed to maintain in the family. Their ownership survived the French and Indian War, American Revolution and the War of 1812.   Not all Billionaires in the US are public figures such as Buffet, Gates and Musk. Those familiar billionaires are all present generation new money. Warren Buffett and the late Charley Munger both attributed their longevity as one of the reasons for their wealth. Both said that they benefited from having "extra innings". All old money started out once as new money. There are…

The current September – November 2024 seasonal IRI forecasts show ENSO-neutral is expected to continue in Brazil for several months.  This would indicate a below normal precipitation for Brazil's Center West growing regions heading into the early planting season next month.  Growers in Mato Grosso have been pushing for an earlier start to planting to help them get an earlier start to second crop corn.  This has worked well in previous years, but it did not work well last season.  The rainy season was slow to develop, causing drought losses of up to 10 MMT, much of which the USDA has yet to account for.  Growers may be a bit more hesitant at such an early start.  One grower said he would rather plant later, ensuring that he would have one really good soybean crop, than have two mediocre crops.   It is still early, but some farmers are known to begin planting first crop corn in RGDS by the end of the month.  The dry forecast will likely keep them from an early start.  Brazil's first crop of corn has been on a slow and steady decline since topping out in 2007/08 at 40 MMT.  CONAB's has pegged the…

Trade may soon not be as globalized as it once was but the world financial system still is. The US increased interest rates more than other countries which incentivized an inflow of foreign capital to take advantage of our higher returns that firmed the US dollar. As US interest rates begin to decline, the cost of financing the US debt should incrementally be reduced as well. The need for less foreign capital inflow should allow the value of the dollar to ease accordingly. The dollar has been recently showing some anticipatory weakness of the coming interest rate cut next month by the Fed. China has been pulling its money out of US Treasuries to fund its own problems so this capital does have to be replaced. The use of the US dollar as the predominant trade currency and the fluctuation of the value of the dollar being impacted by fiscal issues are two different things. We do not think that the use of the dollar as the world trade currency is at this point seriously threatened. However, diversification of capital investment into the gold or cyber currency are underlying trends. (I will discuss the fiscal impact in a subsequent report)…