Weekly farm report

The weather has finally turned favorable for harvest and surprisingly the fields have dried in most areas to support combines, tractors and wagons. In Iowa we have gone from ahead of schedule for harvest to lagging about 12 days behind. Corn is about 29 percent harvested in Iowa compared to 49 percent for the national average and soybeans are 37 percent harvested, compared to 53 percent of the national average. If the weather allows, farmers can catch up fast. The corn market has somewhat stabilized, but the soybean market continues to struggle with the influx of harvest and the absence of China in the market.

Reduced commodity prices continue to dampen the prospects of increased farm income. The latest release by the U.S. Department of Agriculture forecasts U. S. farm income to decline by 13 percent in 2018. This has led to increased borrowing from farmers for operating loans in order to cover rent payments and operating expenses. Cash flow for many operations has become tight.

The Federal Reserve Bank of Kansas City just released their report on ag lending activity. Non-real estate lending increased significantly in the third quarter, more than 30 percent higher than a year ago.

On the plus side, land values have stabilized and have shown increases in some states. Iowa showed an increase of 1% in the second quarter of 2018. This has strengthened farmer's balance sheets and allowed them to refinance land debt to absorb some of their operating debt and machinery debt. This allows them to buy some time as to when commodity prices and production costs realign to a more profitable outcome.