Published on: Nov 16, 2015 @ 10:35 am
WSJ – farmland prices decline across parts of midwest
Farmland values fell in parts of the Midwest in the
third quarter, reflecting a downdraft in the
agricultural sector driven by three years of lower crop
prices, according to Federal Reserve reports on
Thursday. The average price of “quality” farmland in
the St. Louis Fed’s district, which includes parts of
Illinois, Indiana and Missouri, dropped 2.6% from a
year earlier, as farm incomes weakened considerably,
the Fed bank said. In the Kansas City Fed’s district,
which includes Kansas and Nebraska, irrigated-cropland
values declined 1%, while the average price of
nonirrigated land rose 0.4%, the bank said. Irrigated
farmland depends on man-made water systems rather than
rainfall. In the Chicago Fed’s district, which
includes Illinois and Iowa, prices for farmland
remained largely the same in the third quarter compared
with a year ago, and rose 1% versus the second quarter
of this year, the bank said. The reports largely
underline a slowdown in the agricultural economy that
has softened farmers’ demand for cropland after a
years long run-up in prices. Both crop prices and land
values rose sharply for much of the past decade, driven
higher by drought and burgeoning demand for grain from
ethanol producers and overseas buyers. That led flush
farmers to bid up land values. This autumn, however,
farmers for the third straight year are harvesting
bumper corn and soybean crops, further elevating global
supplies and adding pressure to prices that have fallen
by more than half since 2012. Midwestern bankers
surveyed by the Fed banks in both the St. Louis and
Kansas City districts said farm income fell
significantly in the third quarter, and many expect a
continued cooling of land values in the current quarter
as farmers adjust to leaner times. “Because of some
concern about the fall harvest and the recent dip in
livestock prices, agricultural bankers have a rather
dour view of farm income prospects in the fourth
quarter of 2015,” the St. Louis Fed said in its report
on Thursday.
The Chicago Fed said most Midwestern lenders it
surveyed think farmland values will drop in the current
quarter, implying that the lack of an overall decline
in the third quarter “was merely a pause in a
longer-term correction,” wrote David Oppedahl, senior
business economist at the Chicago Fed, in Thursday’s
report. The report cited stable prices for corn in the
third quarter, as well as a lack of available farms for
sale as likely factors propping up land values in the
Chicago region. Agricultural land values in Iowa and
Illinois, the two largest corn-producing states, both
declined from a year earlier, though the losses were
offset by higher prices in Wisconsin and Michigan.
Average ranchland values rose both in the St. Louis and
Kansas City Fed’s district, though bankers in both
regions expect prices for the land used to raise
livestock to decline versus year-ago levels in the
current quarter. Both the Chicago and Kansas City Fed
districts said financial conditions for farmers
weakened in the third quarter, with loan repayment
rates down and expected to decline further as the year
wraps up. Mr. Oppedahl said an index of repayment rates
for loans excluding real estate in the Chicago region
could drop to the lowest level since 1999, while more
farmers facing financial strain could be forced to hold
farm sales or sell off assets in the next three to six
months compared with year-ago levels. “Land values
have definitely been declining,” said Brandon Rutledge,
34 years old, who grows corn and soybeans and raises
livestock in Le Roy, Ill. Less farmland than normal is
going on the market in Mr. Rutledge’s area because
nearby land prices have dropped, he said. The farmer
added that he plans to drive a hard bargain with seed
suppliers and apply less fertilizer to his cropland to
cut costs and stay profitable for this year. Still, he
said, “it’s going to be tight.”
Empire State manufacturing activity rooted in
contraction
Business conditions in the state of New York continued
to deteriorate in November, declining for a fourth
straight month despite recent signs of stabilization in
the US manufacturing sector, according to the Federal
Reserve Bank of New York. The Empire State’s business
conditions index came in at -10.7 this month, compared
with -11.4 in October and -14.7 in September.
Economists surveyed by The Wall Street Journal expected
the gauge to improve to -5. A reading above zero
reflects expansion; a reading below that level denotes
contraction. The index is still firmly in
contractionary territory and again fell short of the
bounce economists expected. The US manufacturing
sector remains under pressure from weaker global demand
and from the stronger US dollar, which makes exports
more expensive. Recent reports from some pockets of the
country have shown modest improvement, though producers
in the northeast have continued to report unfavorable
conditions. The gauge follows the government’s latest
employment report, which showed no change in overall
manufacturing hiring activity last month but a slight
improvement in the length of employees’ workweek. The
New York Fed survey is the first monthly factory report
released by regional Fed banks. Economists use the Fed
surveys to forecast the health of the national
industrial sector as captured in the monthly
manufacturing report released by the Institute for
Supply Management, next due out Dec. 1.
NAR – drone landscape still evolving as realtor, other
commercial use grows
The Federal Aviation Administration continues its work
to integrate unmanned aerial systems, also known as
drones, into the National Airspace System, and Realtors
stand ready to take advantage of their many benefits.
That’s according to panelists at the “Using a Drone in
Your Business: Knowing Your Risk” session held as part
of the 2015 REALTORS Conference & Expo. “This
technology is an incredible tool for real estate
professionals, but can be dangerous if the wrong person
is in control,” said session moderator Kolleen Kelley,
Realtor and 2015 Risk Management Committee vice chair.
Other panelists included Eric Myers, vice president of
Victor O. Shinnerer & Company; Lesley M. Walker,
National Association of Realtors associate counsel; and
Dean Griffith with FAA’s Office of the Chief Counsel.
The panelists spoke about the extensive benefits of
using drones in real estate, but also warned the
audience that following the rules is of critical
importance to mitigate potential risks and liabilities.
Wide-scale commercial use of drones is currently
prohibited, but the FAA has streamlined a waiver
process for individuals and businesses interested in
using drones for commercial purposes. So-called Section
333 waivers are already in use by dozens of Realtors
and other operators currently using drones for their
business.
Panelists widely agreed that the use of drones for
commercial purposes will only grow with time, even as
issues related to safety, privacy, insurance and the
regulatory framework continue to evolve. They advised
the audience about the importance of hiring approved
operators with strong risk management practices,
sufficient insurance coverage and, most importantly, a
Section 333 waiver from the FAA. The speakers also
reminded Realtors to be thoughtful about agreements
with outside companies to ensure that ownership of any
photographs taken is clear, as intellectual property
laws and rules still apply. Walker pointed to NAR’s
policy statement in noting that the association
supports the integration of unmanned aerial systems
into the National Airspace System, or NAS, and a clear
regulatory framework for interested Realtors to
responsibly make drones a part of their business. This
includes making safety a top priority, and earlier this
year NAR joined an industry “Know Before you Fly”
campaign and partnered with the National
Telecommunications and Information Administration’s
“Multistakeholder Process: Unmanned Aircraft Systems”
to further highlight the importance of safety,
security, and privacy in commercial drone use.
The FAA is currently moving through a rulemaking
process to address the integration of drones into the
NAS, which Griffith noted FAA hopes to complete by June
2016. In September, NAR President Chris Polychron,
executive broker of 1st Choice Realty in Hot Springs,
Arkansas, testified before a US House Judiciary
Subcommittee on the value of drones in real estate.
“Commercial drones represent an opportunity to create
jobs and businesses, as well as to support the business
of real estate,” said Polychron. “NAR is pleased to see
this important issue get the attention it deserves and
will continue working with the FAA to advance clear
regulations that are affordable for users, safe for
their communities, and mindful of the safety and
privacy of individuals.”
Global oil prices mixed
As of 9:30 a.m. ET, US crude oil prices slid 0.59% to
$40.52 a barrel, while Brent, the international
benchmark, declined 1.01% to $44.02 a barrel. Oil
prices edged up on Monday on geopolitical concerns
after Friday’s deadly attacks in Paris claimed by
Islamic militants, but gains were muted due to a global
crude glut. France carried out large-scale air strikes
against Islamic State sites in Syria overnight, giving
oil market investors reason to step up buying activity
after a week in which crude benchmark prices fell as
much as 8%. “Some risk premium is factored into the
market after the terror attacks in Paris. We had an
oversold market, so it is a technical recovery as
well,” said Frank Klumpp, oil analyst at
Stuttgart-based Landesbank Baden-Wuerttemberg.
Front-month Brent crude prices were up 34 cents at
$44.81 a barrel at 0415 ET. US futures traded 36 cents
higher at $41.10 a barrel. An OPEC delegate from a
Gulf producing country said he believed that in the
mid-term oil prices could get some support due to
rising tensions especially if the international
community takes more steps to reduce smuggling of oil
and hits oil facilities under Islamic State’s control
in Syria and Iraq. But oil and other commodities could
also come under renewed pressure on fears the attacks
will further slow the global economy. Many analysts
also continue to believe prices will remain under
pressure due to abundant stocks of oil and slowing
economic growth. “Our outlook is skewed negative into
(the first half of next year). Macro headwinds remain,
crude oil inventories are building,” Morgan Stanley
said.