Kansas City-Driven by strong demand from farmers and investors, farmland values in the Federal Reserve’s 10th District continued to climb in the fourth quarter and are rising at their fastest rates since the spike that occurred in 2007/08, the Federal Reserve Bank of Kansas City reported on Feb. 15. Across the entire district ?Çô which covers Kansas, Nebraska, Oklahoma, Wyoming, Colorado, northern New Mexico, and western Missouri ?Çô irrigated land increased 15 percent on average during the fourth quarter, with dryland values up 13 percent and ranchland up 9 percent from the previous year. The biggest increases came in Kansas, where dryland areas jumped nearly 20 percent, irrigated land increased 18 percent, and ranchland increased 14 percent. Nebraska saw similar increases, with irrigated and dryland values jumping 18 percent and ranchland increasing 13 percent from the previous year. The quarterly survey showed farmland values increasing for the fifth consecutive quarter since a drop in the third quarter of 2009. Brian Briggeman, an economist at the Federal Reserve Bank of Kansas City, said some survey respondents reported record sales prices, and around half expected cropland values would rise further in the coming months. “Survey respondents reported that farmers used a portion of their elevated income to prepay for next year’s crop inputs,” Briggeman noted. “District bankers also noted increased use of vendor credit to finance seed, fertilizer, and equipment purchases. However, survey respondents expected loan demand would pick up before spring planting.” One issue of concern in the Feb. 15 report, however, is that cash rent rates for cropland across the district rose only about 6 percent in the fourth quarter, which economists say is too little to justify the big spike in land prices. “Bankers in the survey were starting to raise questions about the sustainability of farmland values,” Briggeman said, and “paying closer attention to their loan-to-value ratios.” Quarterly surveys by the Federal Reserve Banks in Chicago and Minneapolis have yet to be released.

Washington-USDA’s Farm Financial Forecast for 2011, released on Feb. 14, projects net farm income to be $94.7 billion in 2011, up $15.7 billion (19.8 percent) from the 2010 forecast, despite a $20 billion jump in production expenses. The 2011 forecast is the second highest inflation-adjusted value for net farm income recorded in the past 35 years, USDA said. Cash receipts are expected to increase 9.1 percent, with cotton, soybean, wheat, and corn receipts showing the largest gains. “Today’s report predicting strong financial performance in the agriculture sector for 2011 is good news for producers and indicates that economic improvement is underway in much of rural America,” said USDA Secretary Tom Vilsack, noting that the nearly 20 percent hike in farm income is the second highest figure since the mid-1970s. “Potential record or near record prices for commodities like corn, wheat, soybeans, and cotton reflect the fact that our trading partners continue a strong demand for food and fiber produced by America’s farmers.” The report said the value of the farm sector’s equity (net worth) is forecast to rise 6.8 percent in 2011, due largely to an estimated 6.3 percent increase in the value of farm business real estate. Farm asset values are expected to have the largest percentage increase since 2007. With modest increases in debt, the report said inflation-adjusted equity should exceed 2007’s peak levels. The farm business sector’s debt-to-asset ratio is expected to decline from 11.3 percent in 2010 to 10.7 percent in 2011, and the debt-to-equity ratio is expected to decline from 12.8 percent in 2010 to 12.0 percent in 2011. USDA said this indicates that the farm sector’s solvency position remains strong. The report also projected average family farm household income in 2011 to be up 4.0 percent over 2010, to $86,352. Both farm and off-farm incomes are forecast to be up in 2010 and 2011, compared to the previous year and to the 5-year average for 2005-09. In 2011, 12.9 percent of the income of farm families is expected to be from farm sources, with the rest from off-farm income. Farm income is forecast to average $11,174 in 2011, while average off-farm income is forecast to be $75,178. “The increase in income is accompanied by a corresponding drop in government payments to the lowest figure since 1997,” Vilsack said. “This shows that the safety net, which helps producers in times of low commodity prices, is working as intended.” While noting the report’s overall positive news, particularly for producers of grains and fiber, Vilsack warned that farmers “continue to face an increase in expenses for key inputs, including feed, fertilizer, and fuel.” Additionally, after a strong recovery in 2010, the report projects a revenue decline for livestock farm businesses in 2011 and continued income and loan repayment concerns for dairy farmers, with higher feed costs as a primary factor. “Still, the report’s projection that net cash farm income will exceed the recent historical high of 2005 is an indication that America’s overall farm economy is improving, especially in the Heartland and in the Mississippi River region,” Vilsack continued. “The Obama Administration has focused on helping farmers and rural small businesses find profitability in the marketplace and success in the global economy. Today’s report is an indication that effort is succeeding.”

St. Paul-CHS Inc. members will share in an estimated $231 million disbursement during 2011 as a result of the company’s strong fiscal 2010 earnings (GM Nov. 22, 2010). The distribution maintains a period of five consecutive years of significant cash returns to owners. Since its creation in 1998, CHS has returned more than $2 billion in cash to its agricultural producer and member cooperative owners. The $141 million distribution being made to member-owners this month consisted of cash patronage paid on fiscal 2010 business and retirement of previously earned CHS equity. Additional retirements of equity and dividends paid on preferred stock made throughout the year are expected to bring the fiscal 2011 cash return total to about $231 million. CHS net income for its fiscal year ending Aug. 31, 2010, was $502.2 million. During 2011, distributions are being made to nearly 1,100 member companies and more than 45,000 individuals and other businesses.

Perth-Wesfarmers put in an early bid for the 65 percent stake of Burrup Fertilisers Pty Ltd. held by Indian investors Pankaj and Radhika Oswal, according to a report in The Australian. The offer was reportedly to ANZ Bank, which is owed some A$830 million by Burrup and Oswal. It came before Burrup was put in receivership in December. Yara International ASA was also reported to have made an offer; however, it was lower than Wesfarmers, according to the publication. Wesfarmers was reported as saying their offer was not serious, but an expression of interest. Other Australian nitrogen makers Orica and Incitec Pivot Ltd. are also believed to be interested in the stake. A current plus is recent approval by local authorities for the company to proceed with an ammonium nitrate plant, while a con is a dispute over its long-term natural gas supply.

Salt Lake City-Black Hawk Exploration of Fox Island, Wash., says it has picked up three contiguous square mile parcels of southeastern Utah school trust lands that are directly adjacent to a known potash leasing area. Black Hawk was the only bidder Jan. 31 when Utah School and Institutional Trust Lands put up for bid five parcels in the Paradox Salt Basin in San Juan County. Black Hawk CEO Kevin Murphy stated that the company has in its possession oil and gas well data from one of its leases, displaying sections of salts nearly 3,000 feet thick containing multiple potassium beds within the Paradox salts. “The leases encompass nearly 2,000 acres of the SITLA tracts of subsurface potassium rights and include all other associated chloride minerals,” Murphy said. “Lithium was our major target for this project and is covered under our potash lease as chlorides. But having a potentially world class potash property integrated with the asset is a bonus for Black Hawk and its shareholders. Any exploration will allow us to measure lithium and potash as well as the magnesium and born resources in each well we drill.” Murphy said the potash exploration would be joint ventured with an affiliated company ?Çô Universal Potash Corp., also of Fox Island, which had been announced as the bidder. SITLA staff reported that Black Hawk paid nearly $51,000 for the three tracts. They said they were puzzled that the two others were no-bid even though they were sponsored as the procedures require.

Melbourne-BHP Billiton said last week as it released first-half earnings that the company incurred expenses of some $314 million in its failed takeover attempt of PotashCorp in 2010. However, the expense did not put much of a dent in overall BHP results, as profit attributable to the members of the BHP Billiton Group were up 71.5 percent for the first half ending Dec. 31, 2010, to US$10.5 billion on sales of $34.2 billion.

Deerfield, Ill.-Terra Nitrogen Co. LP reported fourth-quarter net income of $65.8 million ($2.61 per common unit) on sales of $142.9 million for the fourth quarter ending Dec. 31, 2010, compared to the year-ago $22.9 million ($1.22 per unit) on sales of $98.1 million. Full-year income was $201.6 million ($8.01 per unit) on sales of $564.6 million, up from the prior year’s $144.3 million ($5.40 per unit) on sales of $507.7 million.

Winnipeg-A spring flood outlook released by the Manitoba provincial government in late January predicts major spring flooding for parts of the province due to already saturated soils, high stream flows, heavy snowfall, and expectations for a cooler and wetter-than-normal spring. The report said Manitoba’s Red River will likely see floods similar to those experienced in 2009 if weather conditions between now and the spring thaw are normal, but floods have the potential to equal the historic levels of 1997 if weather conditions are unfavorable. The report said flooding is also expected along the Assiniboine River, which joins the Red at Winnipeg. Manitoba has already started preparing for the flood by stockpiling sandbags, buying ice-cutting equipment, and bolstering dirt dikes. Since the 1997 flood, Manitoba has spent more than C$1 billion to improve flood protection. Local reports said Saskatchewan also expects serious flooding this spring. The province’s next flood outlook is slated to be released in late February.

Toronto-MagIndustries Corp. has confirmed that TSC Capital Ltd., Tortola, BVI, has opted to terminate due diligence that would have led to a 55 percent majority stake in Mag. Mag would have used the C$185 million in proceeds to finance the construction of the Mengo potash mine in the Republic of Congo. Chinese investors have also gone down the investment path with Mag, but have bailed as well (GM Feb. 8, Sept. 6, 2010). TSC says it does reserve all other rights granted to it pursuant to the letter of intent between TSC and MagIndustries dated December 21, 2010, including under the common share purchase warrants. Each warrant entitles TSC to acquire one common share in the capital of the company at an exercise price of C$0.32 per common share at any time until December 21, 2011. The issuance of the warrants was completed in conjunction with the issuance of one common share in the capital of the company at a price of C$0.32. If exercised in full, the common shares issuable to TSC pursuant to the warrants will bring TSC’s ownership of Mag to approximately 19.9 percent of the issued and outstanding shares. In other news last week, Mag reports that Bill Burton, the founder of the company, has resigned his position as a director effective immediately. Rich Morrow, current MagIndustries CEO, will take his place as a director.

Southport, N.C.-Archer Daniels Midland Company (ADM) has signed an agreement with the Gypsoil Division of Beneficial Reuse Management LLC (BRM) to market gypsum (calcium sulfate) produced at ADM’s Southport, N.C., citric acid plant. The product is marketed as Gypsoil brand gypsum, used by producers to improve soil fertility and structure. “Gypsoil is an excellent option for supplying calcium, a nutrient that is important to a wide variety of crops, but particularly essential for peanut growers,” said Ron Chamberlain, director of gypsum programs for Gypsoil/BRM. Calcium deficiencies in large-seeded peanut varieties, including Virginia and Jumbo Runner types, produce underdeveloped kernels, dark spots on seeds, poor germination, poor grades, and pod disease. Peanut growers typically apply gypsum at rates of 1,000-2,000 pounds per acre to avoid these problems. The companies said applying Gypsoil to cropland also improves soil structure by neutralizing the metals and chemical salts that bind to clay particles and cause poor soil structure and sealing at the soil surface. “This results in less ponding and runoff after a rain, as well as less soil erosion when Gypsoil is used on tight clay soils,” said Chamberlain. Gypsum produced at ADM’s Southport facility is a co-product of citric acid production from corn fermentation. “We are excited about serving an even greater number of Southeastern growers through our partnership with Gypsoil,” said Katheryne Rehberg, ADM product manager, Acidulants. “Gypsoil brings a broad base of technical knowledge on the use of gypsum for agricultural production.”