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  • Pre- and post-holiday market volatility. Watch for market volatility the remainder of the week in the grain trade. That's typically the case on the days surrounding tomorrow's Thanksgiving holiday. "The day before, and the day after, Thanksgiving are sometimes noted for being a bit thin and volatile in futures trading," says Cargill senior grain merchandiser Ray Jenkins. "It may not hurt to have some selling offers in place should we get a surprise move to the upside between now and Friday’s close." Feeding that potential volatility could be South American weather, as Kluis Commodities market analyst Bob Linneman says, "Weather scares usually trump technical analysis."Chat Wednesday's marketsCheck CME Group's holiday schedule for ThanksgivingFalling crude oil prices. Overnight trading saw crude oil slip below $74/barrel into the critical $73 range. That's the low end of a trading range that, once prices break out of it, oil's influence on other markets could grow immensely, Linneman says. "Crude oil continues to be range bound between $73 and $78. Once it breaks out of this range, I will be watching for any influence the move will have on grains, ethanol or the stock market," he adds.Tricky travel weather. A lot of folks are hitting the road today -- or have family hitting the road to come to them -- for tomorrow's Thanksgiving holiday. In the Midwest, that may mean some winter driving conditions, with around 3-4 inches of snow having fallen -- and still falling -- through the region. The good news, MDA Weather Services senior ag meteorologist Kyle Tapley says, is that once this system moves through, the forecast is relatively dry through the next week while temperatures remain below normal. Beyond the next week, look for more winter precipitation. "Confidence is rather low during the 6-10 day period, but some warmth is expected across the southern tier of the U.S., with above normal precipitation across most of the Mid-west," Tapley says.Get more weather info

  • Don't want to lock into a multiyear fixed cash land lease, but don't want to commit to several years of flexible lease rates based on volatile grain and crop input markets? A new land lease type in Illinois bridges the gap between the two and makes rental agreements based more on year-to-year financial conditions that, in recent years, have fluctuated about as much as they can.Economists at the University of Illinois have introduced a one-year fixed cash lease form. The two-page form is short but includes all the key factors that are part of any fixed cash lease. The biggest difference: While it does lock the renter into a fixed rental rate, it's only one year long. Economists Donald Uchtmann and Gary Schnitkey say the hybrid lease type eliminates much of the risk for both parties stemming from a flexible agreement in times of volatile crop and input cost markets, but because it's only one year, it still allows for adjustment if markets shift dramatically from one year to the next."Longer lease forms evolved in part to address a variety of possible circumstances that might arise over many years into the future. But the volatility of farm prices in recent years has made it difficult to predict what would be a fair cash rent several years from now. Thus, commodity price volatility has discouraged the use of multiyear fixed cash rent leases. When the lease is for only one crop year, it is less important to address within the written lease the many circumstances that might arise over multiple years. Thus a short form lease (one that doesn't address the many contingencies that might arise sometime in the future) makes more sense when the term of the lease is just one year," according to Uchtmann and Schnitkey. "The form allows for extensions to be made at the end of the one-year term. Many of the issues that have to be dealt with in longer-termed leases do not have to be dealt with in a lease of one-year in length. Terms and performance can be evaluated at the end of each year. As a result, this lease form is fairly short, only requiring two pages printed on front and back. This lease form was developed based on comments from landowners and farmers who desired a shorter lease form."See an example of a fixed cash lease 1-year short formJust because it's only a one-year agreement doesn't make this lease type any less legally binding; in fact, like any lease, this type "creates and alters legal rights," Schnitkey and Uchtmann say in a university report, making it critical to discuss the pros and cons of a potential deal for your specific circumstances."Most attorneys and farm managers would agree that a written lease, even a short-form lease, is better than a verbal lease," the economists say. "A farm lease creates and alters legal rights; thus, landowners and operators are encouraged to discuss the advantages and disadvantages of a shorter or longer lease, and specific lease provisions, with their respective legal advisers. All extensions of the lease should be made in writing. If the lease is extended verbally instead of in writing, the lease arrangement may become a 'tenancy from year-to-year' under Illinois law and would require 'notice' to terminate."

  • Heading to a machinery auction soon? Don't go in unprepared! Used equipment prices have changed in the last year, and those changes are expected to continue into the next year. Auction prices, for the most part, are falling; some machinery and equipment's fallen in price, on average, by double digits. And, that trend's expected to continue in the next year, with things like combines, for example, expected to fall in price on the auction block by as much as 20%. Does this trend have you heading to the next auction in your area with buying in mind? If so, these features can help you get ready to bid smart! "We could be looking at a brisk rebound of late-model machinery sales late next fall and beyond, and this, in turn, would boost used values," says Successful Farming Machinery Director Dave Mowitz. "If this occurs, it may leave you wishing you had snapped up the good deals on used iron lots available in 2015." See more trends   How have prices changed in the last year? What's expected in the coming year? Find out the latest price projections for everything from 4-wheel-drive tractors and combines to semi trucks and balers. And, see what collectors may be looking to pick up at auction in the next year and how that could affect prices overall. Comparing used prices   Updating harvest equipment out-of-season, watching seasonal trends and keeping an eye out for low-hour late-model iron at auction are just a few tips auctioneers say are good things to keep in mind when heading to your next auction. See what else they recommend to get the best deal you can! 7 auction tips What you pay for a big-ticket machinery item like a tractor may be quite a bit different than another farmer buying the exact same thing at another dealership. So, what's behind the differences in dealer asking prices? Get the facts from the Machinery Insider. Shopping dealers' lots   This was one whale of an auction! It featured a mix of the old and new, including a lineup of late-model Deere tractors, all with fewer than 300 hours on them. What did they go for? Check out the sale!Can you guess the machinery?   Join the chat in Machinery Talk

  • The hog market has been a good place to be in the last year. Live hog prices in the last few months have trended almost $20 a head higher than the same period in 2013. So, what's the outlook heading into winter? Feed supplies remain low, and that's likely to be the case through the next year, likely underpinning profits for the hog sector through that time. And, with consumer demand continuing strong, there's not a lot of incentive for the market to slide sharply lower, though some moderation from recent skyrocketing prices is likely in the next few months, says one economist."Wholesale pork prices reached their highs in July and have now had three months of moderation. Retail prices tend to lag wholesale prices by three to six months, but the official October estimate of retail prices shows some consumer relief as prices fell 7¢ per pound, the first sign of lower prices in nearly a year. Retail pork prices should continue to moderate somewhat through 2015 as pork supplies increase," says Purdue University Extension livestock economist Chris Hurt. "Consumers have not complained much about retail pork prices, which averaged $4.14 a pound in October according to USDA's estimate of the average grocery store price of pork. The reason is because beef prices were at $6.24 a pound, making pork look like a bargain at $2.10 a pound lower than beef."The key to sustaining overall higher prices despite a moderation from the market's spike earlier in the year is in how the industry handles something that was behind a lot of panic-induced market action earlier this year and late last year: PEDv. The porcine epidemic diarrhea virus caused major knee-jerk reactions in both how the herd was handled and how the market reacted late last year and through the first half of 2014. Now that the disease is seemingly under control, a sigh of relief has washed through the market. However, supply levels resulting from major culls stemming from the disease will continue to pace the industry moving forward."Looking back on the year, it seems clear that the old adage of buy the rumor, and sell the fact may be the best way to characterize this year's price pattern. The 'rumor' that PED might greatly reduce pork supplies was an important factor in the elevated prices. But the 'fact' that PED was not a major disruptor of supplies has now allowed prices to return to more realistic levels," Hurt says. "What do 'more realistic' hog prices mean for the remainder of this year and 2015? PED is still having an impact and is still killing some baby pigs. However, markets are treating PED as something that can be managed unlike last spring and summer when the 'rumor' mill was creating grave uncertainty for pork supplies. Pork supplies are expected to be down 1% in December-January-February, and then increase by 3% in the spring and 5% in the summer."So, despite continued tight supplies and persistent strong consumer demand, profits will be lower in 2015, Hurt says. That shouldn't be too much of a surprise, though, considering the year saw record profits. With supplies expected to remain on the low side, watch feed costs in the next year. Though they'll likely stay low, they'll be part of an overall equation that will yield profits possibly as much as $20 a head lower than 2014 in general."The most profitable year on record will be 2014, with estimated profits near $55 per head. Those will remain strong for the first three quarters in 2015, averaging around $44 per head, before tailing off to around $10 per head in the final quarter. Profits for the entire year of 2015 are still expected to be $36 per head which would be the third-highest profit year of the last 26 years dating back to 1990," Hurt says. "High hog prices and lower costs are the keys to current profitability. Estimated annual costs of production have dropped from a high of $67 per live hundredweight in the drought year of 2012 to $56.50 for this calendar year and to $52 anticipated for 2015. Notably, corn prices declined sharply in the fall of 2013, but meal prices did not decline overall until the fall of 2014. So, 2015 will be the first calendar year when both corn prices and meal prices have moderated, dropping feed costs to five-year lows."