Fewer than 5% of farms saw an improvement in income this year, a drastic downturn compared to the same time last year when one in four farms saw better year over year income, according to Rabobank’s Farm & Ranch Survey.
Concern about the
Of those surveyed, 75% believe their answers regarding their outlook would be different if the general economy was better.
Regardless of acreage,
Additionally, higher input costs continue to be the most frequently mentioned economic challenge facing
Nearly all surveyed (94%) are concerned about price fluctuations. What seems somewhat positive is that the degree of concern has lessened – those extremely concerned dropped from 62% to 48%. To manage that concern, 45% have implemented or plan on investing in risk management or marketing strategies.
Hiring plans are relatively unchanged, with three-quarters of farms still expecting hiring levels to be the same as last year. However, farmers who are concerned with the economy will reduce their employee base.
Additionally, 66% of those surveyed have no plans to purchase farm equipment. However, farms in operation 40 years or more are planning to buy equipment compared to newer farms.
In terms of land purchases, nine in 10 plan to keep farms the same size. The only change in land seems to be a slight increase in those who plan to sell land – 5% vs. 2% in the survey earlier this year.
Friday, October 2, 2009
The existing empirical evidence on the response of real gross domestic product to added government spending and tax changes is thin. In ongoing research, we use long-term U.S. macroeconomic data to contribute to the evidence. The results mostly favor tax rate reductions over increases in government spending as a means to increase GDP.... The bottom line is this: The available empirical evidence does not support the idea that spending multipliers typically exceed one, and thus spending stimulus programs will likely raise GDP by less than the increase in government spending. Defense-spending multipliers exceeding one likely apply only at very high unemployment rates, and nondefense multipliers are probably smaller. However, there is empirical support for the proposition that tax rate reductions will increase real GDP.!
Thursday, October 1, 2009
Even here in Bountiful, we had a frost warning last night, with more expected tonight and tomorrow. Our tomatoes may be doomed!
Wednesday, September 30, 2009
from Christ Martenson:
This is important information. What I've found and present below is that the Federal Reserve is not just supporting the housing market, it is the housing market.
Just as important as a person's desire to buy a home is their ability to gain access to mortgage funding.
The mortgage market is a gigantic beast with many moving parts, but it is pretty easy to understand from a high level.
The process works like this: A homeowner secures a mortgage from a bank or mortgage company. Then the mortgage is sold off to another company, with the cash generated by that sale now available to lend to other potential homeowners. Ultimately the mortgage may pass through several sets of hands but ultimately it lands with a terminal holder.
In that chain, the mortgage might get sold off several times, or perhaps sliced and diced by Wall Street wizards, but all that matters is that some company (with cash) is there at the end to buy the mortgage to keep the whole chain moving along.
Lately, the "terminal buyers" in that chain have increasingly ended up being the federal government (through the GSEs) and the Federal Reserve.
And not just by a little bit, but by a lot.
Here are the numbers:
So far in 2009 (through August), a total of 3.2 million existing homes were sold for an average price of $217,000, while 263,000 new homes were sold for an average price of $264,000.
Taken together, and assuming that we live in a world where 10% is the average down payment, we get this table:
That is, a total of ~$686 billion in new mortgages were issued in 2009 (through August).
Now let's look at how many Mortgage Backed Securities (MBS) and agency debt obligations were accumulated by the Federal Reserve on its balance sheet over the same period of 2009:
It turns out that in 2009 (again, through August), the Federal Reserve has bought $624 billion of MBS and a further $98 billion of Agency debt, for a total of $722 billion in money injection into the housing market through Fannie Mae, Freddie Mac, and the FHLB.
In other words, the Federal Reserve alone bought $722 billion of mortgages and agency debt when only $686 billion in new mortgages were issued. So, through August, the Fed bought more than 100% of the entire supply of new (purchase) mortgages in 2009.
That's not a free housing market; that's a market bought, owned, and sustained by the Federal Reserve's willingness to print up three quarters of a trillion dollars out of thin air.
While the individual mortgages issued in 2009 may or may not be the exact same ones purchased by the Federal Reserve, that's immaterial. All the mortgage issuers care about is that when they issue a mortgage, a purchaser with money exists somewhere down the line. The chain needs a terminal buyer, and that buyer has become the Federal Reserve.
The impact of these purchases by the Federal Reserve is to both provide liquidity and to drive down the rate of interest for new mortgages. By lowering both the long end of the Treasury curve (which the Fed does by actively buying Treasuries) and providing more than sufficient demand for MBS and agency paper, long-term interest rates come down.
Without the Fed's activities, it is a rock-solid certainty that mortgage interest rates would be higher than they are, and possibly a LOT higher.
What all this means is that when (not if) the Federal Reserve begins to try and unwind itself from all of the magnificent interventions of the past year, it must contend with the fact that it is the housing market.
Where the Fed is hoping that it can gently release the soft chubby fingers of the housing market, which will then toddle off under its own power, it will discover that it is actually carrying a helpless newborn.
by James Quinn. God bless the man!
- To declare War, grant Letters of Marque and Reprisal, and make Rules concerning Captures on Land and Water;
- To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years;
- To provide and maintain a Navy;
- To make Rules for the Government and Regulation of the land and naval Forces;
- To provide for calling forth the Militia to execute the Laws of the Union, suppress Insurrections and repel Invasions;
- To provide for organizing, arming, and disciplining the Militia, and for governing such Part of them as may be employed in the Service of the United States, reserving to the States respectively, the Appointment of the Officers, and the Authority of training the Militia according to the discipline prescribed by Congress;
- The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
- To borrow money on the credit of the United States;
- To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
What struck me in my conversation with Bob /Pisani/ was a paradox that has been bothering me. He indicated that while many of the traders he talked to were bearish, most of them had long positions because that’s the direction the market was going.
U.S. stocks took a sharp turn lower Wednesday following a starkly disappointing reading of midwestern manufacturing activity.
The market had been shaky thanks to surprisingly weak jobs data released prior to the opening bell. Then the losses in major indexes piled up after the Chicago Purchasing Manager's Index showed a surprising decline. The measure fell to 46.1 for September, down from August's reading of 50.0, which is the level at which the index signals an overall expansion in activity.
Economists were expecting the index to show continued improvement, to 52.0, but instead got a fresh reminder that the U.S. recession isn't quite over.
The Dow Jones Industrial Average was recently down 126 points, or 1.3%, at 9615.99. The Nasdaq Composite Index was off 1.3%. The S&P 500 was down 1.2%, hurt by declines in every sector.
Tuesday, September 29, 2009
Monday, September 28, 2009
Arlan Suderman tweets on crop conditions:
Both corn & soybean condition index scores dropped 1 pt this week, but still at historically high levels for late Sept.
25% of ND corn still not in dent stage as of 9-27; Potential freeze yield loss in early dent stage is up to 40%.
63% of soybeans mature & dropping leaves vs. normal pace of 77%; IL is 41% vs. 77% norm; ND 73% vs. 85%; MN is 81% vs. 84%
USDA - 5% of nation's soybean crop has been harvested; down from 18% avg; Greatest progress in LA & MS
6% of US corn harvested, dn from 18% 5-yr avg. pace & slowest of past 25 years. 37% mature vs. 72% normal; ND 6%, SD 34%, MN 17%, MI 19%
94% of US spring wheat is harvested, including 91% of North Dakota. USDA will tell us how big it was Wed. AM.
It appears clear to me that a freeze could still create tremendous damage to the corn and soybean crops!
WASHINGTON (AP) - Big job losses and a spike in early retirement claims from laid-off seniors will force Social Security to pay out more in benefits than it collects in taxes the next two years, the first time that's happened since the 1980s.
The deficits - $10 billion in 2010 and $9 billion in 2011 - won't affect payments to retirees because Social Security has accumulated surpluses from previous years totaling $2.5 trillion. But they will add to the overall federal deficit.
Applications for retirement benefits are 23 percent higher than last year, while disability claims have risen by about 20 percent. Social Security officials had expected applications to increase from the growing number of baby boomers reaching retirement, but they didn't expect the increase to be so large.
What happened? The recession hit and many older workers suddenly found themselves laid off with no place to turn but Social Security.
"A lot of people who in better times would have continued working are opting to retire," said Alan J. Auerbach, an economics and law professor at the University of California, Berkeley. "If they were younger, we would call them unemployed."
Job losses are forcing more retirements even though an increasing number of older people want to keep working. Many can't afford to retire, especially after the financial collapse demolished their nest eggs.
Sept. 28 (Bloomberg) -- The steepest rally in natural gas prices since 2006 is coming to an end as the 400 salt caverns, depleted oil fields and aquifers used to store the fuel in the U.S. reach capacity for the first time.
Stockpiles may surpass the record of 3.545 trillion cubic feet by as much as 350 billion cubic feet this fall, Energy Department estimates show. Gulf South Pipeline Co. says its fields in Louisiana and Mississippi are so full that customers will have to pay penalties for exceeding their limits. With no place to go, producers will be forced to dump excess fuel on the market.
The worst economic slump since the 1930s will cut demand from chemical plants to carmakers to households by 2.4 percent this year, according to government estimates. The November futures contract will drop about 19 percent to near $4 per million British thermal units, said Stephen Schork, president of consultant Schork Group Inc. in Villanova, Pennsylvania.
“I don’t know where all of this gas is going to go,” said Schork, a former natural gas trader on the New York Mercantile Exchange, who in June forecast inventories would reach near 3.8 trillion cubic feet. “We’re a month away from significant heating demand. Something’s got to give.”
The November contract has climbed 35 percent from its low of $3.662 per million Btu on Sept. 3 to $4.948 on Sept. 25 after economic reports signaled that the recession is ending and fuel demand will rebound in 2010. October futures, which expire today, have risen 59 percent from a seven-year low of $2.508 in the same period.
Employers cut fewer jobs than expected in August, a report from the Labor Department on Sept. 4 showed. Output at factories, mines and utilities climbed 0.8 percent, in August, according to the Federal Reserve. The economy will probably expand 2.9 percent this quarter and 2.2 percent in the fourth, the median estimates of 61 economists surveyed by Bloomberg.
The signs of improvement haven’t translated into a turnaround in gas demand.
Consumption by factories and manufacturers will decline 9.8 percent this year, according to the Energy Department. Fuel production will increase 0.9%.
Even with this month’s rally, futures have dropped 71 percent from a 30-month high of $13.694 on July 2, 2008. The 29 percent decline this year makes gas the worst performer on the Reuters/Jefferies CRB Index of 19 commodities. The index has risen 9 percent, led by gains in copper, sugar and gasoline.
Natural gas will average $3.90 per million Btu in the third quarter, according a Bloomberg survey of 20 analysts, compared with $3.39 since July 1. Forecasts have retreated through the year. In March, the prediction for the third quarter was $6.
The outlook for the fourth quarter, when demand for heating fuel typically increases, has also declined. Gas will average $5 in the next three months, according to the survey. The price expectation was $7.38 on Jan. 2 and $5.36 on Aug. 3.
With the U.S. economy recovering from the first global recession since World War II, some investors say gains will occur sooner. November futures will probably trade between $4.50 and $5.50 as demand strengthens, said Peter Linder, president of the DeltaOne Energy Fund in Calgary.
“We’re not going to see a collapse in gas prices over the next two months,” Linder said in a telephone interview. “We’re going to see significantly less production,” which will boost the fuel into 2010, he said.
The December contract is likely to climb to around $6 from $5.66 now, Linder said.
“The entire move to the upside is predicated on recovery and stimulus, and if those two things hesitate or fail to materialize, so will higher prices for natural gas,” said Michael Rose, a director of trading at Angus Jackson Inc. in Fort Lauderdale, Florida.
Inventories rose to 3.525 trillion cubic feet in the week ended Sept. 18, 16 percent above the five-year average, and 91 percent of estimated peak capacity, according to Energy Department data. The previous record was reached in November 2007.
Supplies may hit maximum capacity of 3.899 trillion cubic feet before November, when utilities and power generators begin to withdraw the fuel for the heating season. The Energy Department will come out with the latest totals on Oct. 1.
The excess would be enough to meet almost a month’s worth of average daily consumption by households, factories and power plants across the nation during the cold-weather months, when demand peaks at an average of about 12 billion cubic feet a day, according to government data.
Storage site operators take gas from producing wells through pipelines, usually from April through October. Using compressors, they force it down wells drilled into permeable stone, which are covered by a cap-rock to contain the fuel. A year ago, the caverns were 80 percent full.
The stockpiles have grown even after companies cut back on exploration. The number of rigs drilling dropped 56 percent to 710 as of Sept. 25 from a peak of 1,606 a year ago, according to Houston-based Baker Hughes Inc., the world’s third-largest oilfield-services provider.
Lower prices will keep a lid on rigs, said Cameron Horwitz, an analyst at SunTrust Robinson Humphrey Inc. in Houston.
The total fell to 665 on July 17, a seven-year low, after stockpiles rose to the highest for any week in July since 1994. The surplus helped send gas to the lowest level since March 2002 earlier this month.
“Gulf South is reaching full capacity,” said Allison McLean, a spokeswoman for the company’s parent, Boardwalk Pipeline Partners LP, in a Sept. 22 interview. “We don’t have flexibility to go above and beyond what customers have contracted for.”
The company, with about 83 billion cubic feet of storage, said Sept. 4 that it may “subject offending customers to penalties.”
Southern Natural Gas, a unit of Houston-based El Paso Corp., owner of the largest U.S. network of natural gas pipelines, said on Sept. 21 that 96 percent of its available 60 billion cubic feet of space was in use as of Sept. 17. A year earlier, it was at 78 percent.
“The storage situation is a pretty serious one,” said Tom Orr, director of research at Weeden & Co., a brokerage in Greenwich, Connecticut. “There’s no real remedy in sight.”
Futures advanced this month after Fed Chairman Ben S. Bernanke said on Sept. 15 the recession may have ended already. A report on Sept. 1 from the Institute of Supply Management showed manufacturing expanded for the first time in 19 months.
Price gains accelerated as traders who had sold expecting declines bought the contracts back. The rally was helped by speculators who were betting against U.S. Natural Gas Fund LP, the world’s largest exchange-traded fund in the fuel, according to Adam Felesky, chief executive officer of BetaPro Management Inc. in Toronto.
When those bets failed, speculators canceled positions by buying October futures, sending the contract higher, said Felesky, whose company manages exchange-traded funds.
The gain in the October contract was the biggest over a three-week span since September of 2006, after hedge fund Amaranth Advisors LLC lost more than $6 billion in bad bets in the gas market.
Futures in 2006 initially dropped, reaching a four-year low on Sept. 27, partly because the fund was forced to unload its holdings. Prices then surged 62 percent by Oct. 18.
Gas may have to climb above $6 or even $7 to ensure producers pump enough to meet demand, Aubrey McClendon, chief executive officer of Chesapeake Energy Corp., said in a presentation to investors on Sept. 10.
Chesapeake, the fourth-largest producer in the U.S., has been selling assets to conserve cash and reduce debt during the drop in prices. Anadarko Petroleum Corp., the second-biggest, reported a second-quarter loss of $226 million
Weeden cut its 2010 forecast to $4.25 per million Btu from $5 in a report on Sept. 14, saying that stockpiles at the end of the heating season in March will be at a record high for that time of year.
Sept. 28 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke has some good news for investors: Treasury bondholders will lose money for the first time in 10 years amid an unprecedented decline in the gap between the interest rate on 30-year mortgages and government notes, signaling an end to the worst financial crisis since the Great Depression.
Sunday, September 27, 2009
Sept. 27 (Bloomberg) -- World Bank President Robert Zoellick said the U.S. shouldn’t take for granted the dollar’s status as the world’s main reserve currency.
In remarks set for delivery tomorrow, Zoellick said the “next upheaval” in the international economic order is under way as emerging nations gain greater influence.
“The United States would be mistaken to take for granted the dollar’s place as the world’s predominant reserve currency,” according to excerpts released by the World Bank.
Policy makers from China to Russia repeatedly have called for an alternative to the world’s main currency in foreign- exchange reserves.
Zoellick’s speech to the Paul H. Nitze School of Advanced International Studies at Johns Hopkins University in Washington echoes his previous comments about the dollar’s standing.
The trade-weighted Dollar Index has fallen 11 percent since President Barack Obama’s inauguration in January, in part because of a budget deficit projected to rise to $1.6 trillion this year as the government increases spending to boost the economy. The index measures the currency’s performance against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona.
Defense of Dollar
U.S. Treasury Secretary Timothy Geithner last week defended the dollar’s role as the world’s reserve currency. The U.S. has a “special responsibility” to preserve confidence in its financial system, and “sustain the dollar’s role as the principal reserve currency in the international financial system,” he said at a press conference Sept. 24 in Pittsburgh, where leaders of the Group of 20 nations met.
Zoellick also will urge intensified coordination among all countries to be sure that economic growth continues while they recognize that there are still 1.6 billion people in the world without electricity.
The G-20 should become “the premier forum for economic cooperation,” Zoellick will say.
At last week’s summit, officials agreed to establish a “framework for strong sustainable and balanced growth.” Countries with significant deficits in their trade accounts promised to save more, while those with surpluses pledged to strengthen domestic demand.
The G-20 also established a peer-review process to monitor efforts to rebalance economies and to hand emerging nations a greater say in managing world growth.
“The G-20 summit is a good start, but it will require a new level of international cooperation and coordination,” Zoellick will say. “Peer review will need to be peer pressure.”
In the U.S., he called for a bigger role for the Treasury Department in pulling together the authority of federal agencies to regulate financial markets. Leading up to the financial crisis, “regulators and supervisors of financial institutions were no longer grounded in reality,” he said.
He also criticized central banks, saying they failed to address growing risks in the economy in the last several years.
Central banks “argued that damage to the real economy of jobs production, savings and consumption could be contained, once bubbles burst, through aggressive raising of interest rates,” Zoellick said. “They turned out to be wrong.”