March Ag Market Update

The deadline for ARC/PLC crop insurance enrollment past and the snow cover melting, we can feel the spring fast approaching. Seed is being delivered, equipment is being prepared, and producers are looking forward to the 2021 growing season.

Commodity markets have seen some pretty favorable numbers over the last month and without accounting for spring fever, one could assume the producer’s optimism is solely backed by good grain prices. Although that may be true, it is fair to mention the good and the bad come as a packaged deal. What I mean by that is that along with good prices for old crop, there comes a lot of uncertainty for new crop as well as an evident spike in the inputs for crop production. Fertilizer prices have increased by approximately 50%, the price of steel and the demand for labor has driven the cost of machinery higher, and expected prices for land rental and real estate sales have increased. 

It will be evermore important for producers to execute a marketing plan with diligence in order to remain profitable in the coming years. Prices in the futures markets show what information the market has already digested, rather than the uncertainties that lie ahead. Trade with foreign countries has paved the way for much of the upward progress both in corn and soybean prices, and this is noteworthy in depicting what the USDA will have in their future reports. Carry out numbers, projected acres, and projected yield all seem to be pretty malleable at this point in the marketing year. 

Some market analysts warn about the stability of the current contract prices due to weather forecasting (Drought?) and China’s influence in the global demand for our production. With much of our nationally anticipated sales already being accounted for, look at what factors will upset our current trends. Will our production numbers be low and put a squeeze on the supply? Will foreign trades fall through and knock down the demand? What influence does rising crude oil have on grain commodities? Which crops are producers placing an emphasis on for marketing? How long can producers hold onto old crop? 

 

My college professor for my futures and options class always warned “Past Success Does Not Dictate Future Results”, he noted that you must always be willing to learn from history rather than expect it to repeat. I think these charts are worthy of looking over and should be used in analyzing your current marketing situation:

Soybean Historical Price Charts

2004 – 2014

2014 – 2021

 

Corn Historical Price Charts

2005 – 2013

2015 – 2021

Tax Policy Changes

Hi All,

I hope everyone is staying warm and safe throughout this frigid weather we’ve been enduring in the Midwest.

The last blog post touched on some of the influences in the commodity markets, but today I’d like to focus on a possible tax policy change that could have a massive impact on land owners and farmers alike. Being that some of the dust has settled from the election season and the inauguration of President Joe Biden, we are now seeing running points being brought into true discussion. Regardless of your political background, it comes as a shock to learn what some of the proposed tax changes translate to in reference to our financial planning and our livelihoods. In particular, the “Stepped Up Basis” has been a buzz word across the country and is a rather serious issue when it comes to farm families and land owners.

The “Stepped Up Basis” is a term used to reference the tax code in place for inheritances and passing down assets. It has been a part of the United States tax code since 1921 and refers to the ability of the government to tax the value of an asset based on the current value at the time it is transferred or passed on, rather than the original price paid for said asset. In essence, if your parents or grandparents had purchased land in the 80’s when the economy was in somewhat of a turmoil state, they might have paid $1000/acre for a good parcel. Today, that same parcel could be worth upwards of $10,000/acre. If in fact you were to inherit that land today and you wished to sell, the “Stepped Up Basis” incurs that you are not liable to pay for the $9,000/acre that the land has increased in value from the time it was originally purchased, simply whatever amount is determined as capitol gains from the sale after the basis has been “stepped up” to current value. In other words, if the asset is sold after it’s inherited, then the stepped-up value is the base that gains are measured against for taxes. Any gains in value from the time of original purchase to the time the asset is “stepped up” to market value when inherited are not taxed.

What Does This Mean For Land Owners And Farm Families?

This could be devastating to current farm families with a land base built by generations of hard work and thoughtful planning, just the same for people with investments in land or other portfolios comprised of stocks, buildings and so on. It would see a very large tax bill for anyone who inherits assets or plans to leave an inheritance. The shift would impose long term capitol gains taxes and increase the record keeping needed to be done across the board, limiting the abilities of estate plans, and forcing many people to make changes to their financial strategies. Case in point, I encourage you to keep a watchful eye on this issue and think about contacting your tax professional and local representatives.

 

Best Regards,

Scott Buboltz

Ag Market Update 2/22/21

Hello All,

 

In the recent months we have seen a lot of action in the agricultural markets, as well as the national position in terms of policies. With the president elect releasing statements about his plans for energy, changes happening with COVID-19 policies and new ag programs rolling out, along with activity from China’s ag purchases, the corn and soybean markets have shot up from a lull seen over the past 4 years. Corn and soybean prices alike have hit trade prices not seen since the tail ends of 2014-2015 (Figure 1.). These prices will most certainly impact the livestock producers as well as influence what we see in the grocery store and at the gas station.

Figure 1. Historical Prices by Month – provided by the USDA -NASSPrices Received: Corn Prices Received by Month, US

As we look into the upcoming crop year, both markets look to follow a slightly bullish trend as both supply and demand favor positive increases in the futures markets. Estimated ending stocks for corn showed to be outlandishly higher than realized and the increased demand for soybeans proves to be somewhat steady as the global economy begins to recover from the influences of COVID -19. Ethanol stocks have gained volatility as the debates over fuel mandates continue, adding uncertainty to corn production values across the country. Like always, some of the main factors that will have an effect on producers ability to forward contract and lock in a profitable return still depends on the ever changing weather, most importantly the current weather in South America as their soybean crop is determined, and the planting intentions of the North American producers. See the CME chart for prices on the day this was posted (1/22/20).

MAR 2021 MAR 2021 Show Price Chart 506’2 -18’0 524’2 522’4 522’6 506’0 142,040 11:23:47 CT
22 Jan 2021
MAY 2021 MAY 2021 Show Price Chart 508’2 -18’0 526’2 524’6 524’6 508’2 47,816 11:23:47 CT
22 Jan 2021
JUL 2021 JUL 2021 Show Price Chart 504’2 -18’0 522’2 520’6 520’6 504’2 36,244 11:23:45 CT
22 Jan 2021
SEP 2021 SEP 2021 Show Price Chart 456’6 -16’0 472’6 470’0 471’0 456’4 7,322 11:23:42 CT
22 Jan 2021
DEC 2021 DEC 2021 Show Price Chart 435’0 -13’6 448’6 447’6 447’6 435’0 28,259 11:23:47 CT
22 Jan 2021
MAR 2022 MAR 2022 Show Price Chart 442’2 -13’0 455’2 453’4 453’4 442’2 2,313 11:23:38 CT
22 Jan 2021
MAY 2022 MAY 2022 Show Price Chart 445’6 -13’0 458’6 456’4 456’4 445’6 486 11:23:41 CT
22 Jan 2021
JUL 2022 JUL 2022 Show Price Chart 449’2 -11’6 461’0 459’4 459’4 449’2 970 11:22:59 CT
22 Jan 2021
SEP 2022 SEP 2022 Show Price Chart 416’2 -7’6 424’0 424’0 424’4 416’2 194 11:23:42 CT
22 Jan 2021
DEC 2022 DEC 2022 Show Price Chart 404’2 -4’6 409’0 409’4 409’6 404’2 1,048 11:23:46 CT
22 Jan 2021
MAR 2023 MAR 2023 Show Price Chart 412’2 -4’0 416’2 412’2 412’2 412’2 1 08:25:01 CT
22 Jan 2021

Producers and consumers alike should be cautious jumping head first into a position, but as the saying goes, “One in the hand is worth more than two in the bush!” Keep an eye on where prices sit as we approach the next WASDE reports and lower your expectations for consistent market direction while information is being processed across the board.

Best Regards,

Scott Buboltz

Hello and Happy New Year!

Hello and Happy New Year!

     As many of you may know from the Heller Group mailings or updates on our website, I am a
fresh face in the business of Farm Management and Real Estate. I am a recent graduate of the
University of Minnesota -Twin Cities, and a newly licensed real estate agent proud to have
signed with Heller Group Land Company LLC. Many of you may recognize my name or know
my face, whether or not you’ve seen me all cleaned up without a cap lately may be another
story. Therefore I’d like to share a little bit more about myself and what I’ve been up to the last
few years.

     I graduated from Buffalo Lake-Hector-Stewart High School in the spring of 2015, and had
high aspirations for my college years ahead. Many of my family friends and relatives had
attended the University of Minnesota including my parents and my older sister, which made my
decision to pursue an agricultural degree at the Twin Cities Campus an easier one. I was
already aware of all the different groups and opportunities that would be available to me, and
didn’t waste much time getting involved! At the end of my first semester I was a member of the
Gopher Crops and Soils Club, a newly initiated brother of the Alpha Gamma Rho Fraternity, and
was working at the UMN Recreation and Wellness Center to make a little extra cash. I spent a
majority of my time either studying or socializing, taking care of business the best I knew how.
Nevertheless I loved my role as a member of our family farm operation. I enjoyed being able to
come home and work throughout the fall along with helping out during the spring when I wasn’t
taking finals.

     As I took my first internship with South Central Grain and Energy (now Central Region
Cooperative), I was able to spend my summer living at home and getting a taste for agricultural
work in a different environment while gaining a better understanding of the true day to day
planning and operations that are involved with managing a row crop farm. After the internship
and my continued business interactions, I’ve learned to value the cooperatives and the structure
its services and employees provide to the farming community.

     With another year of various general ag/ag business courses and a bit of a struggle with
chemistry, I returned home for another summer internship with a local agronomist and great
teacher, Curt Burns. Along with taking on some of the spraying responsibilities as my father
recovered from a hip replacement surgery, it was another summer of learning! One thing that
stuck with me going into the fall of my junior year of college was the importance of the sciences
that surround the agricultural world and this pushed me into the Plant Sciences major where I
furthered my understanding of growing crops. Although I still struggle to rattle off some of the
chemistries involved with crop/pest management, the professors that taught me Soil Science,
Plant Physiology, Bio-Chemistry, and Plant Genetics earned much of my respect as I started to
connect the dots and became even more amazed at the creations that God had blessed us to
work with.

     My last year of interning was spent driving across the Southern Minnesota Beet Sugar
Cooperative and Minn-Dak Farmers Cooperative regions meeting sugar beet growers as a
sales representative for BetaSeed. Through my experiences going farm to farm and covering
such a large area, I was able to better grasp the expanse of a growing region and the impact of
the economy in various regards to the farmers themselves. It taught me quite a bit about my
personal attributes in dealing with people as well.

     As I graduated with 4 years of college under my belt in the spring of 2019, I was eager to
return to the family farm and hit the ground running. Small town living was much more enticing
and enjoyable to me as I saw the time invested into the community and people around me
seemed more rewarding than what I saw in a future anywhere else. I am committed to lifelong
learning and improving myself in order to better serve others, along with maintaining a sense of
fairness and equality to all who surround me. To me, happiness and success come from some
of the more simplistic things in life; accomplishing a task, helping a friend or neighbor, and
sharing what you believe in without angst or fear of repercussions.

     My vision for the future includes providing a service to land owners and farm operators alike
that follows the values of ethical responsibility and fairness set forth by Roger Heller and the
partners that combine to form the Heller Group Land Company. I wish to serve the surrounding
communities by dedicating my time and talents to help further improve the investments,
productivity, and goals that our clients bring to us. As much as the past year has taught us
about the uncertainty and trying times, I wish that it serves to instill perseverance, faithfulness,
and the overwhelming presence of good. May the New Year serve you well by bringing you
peace and prosperity.

Best Regards,
Scott L Buboltz

Heller Group Land Company Welcomes Scott Buboltz, Farm Manager & Salesman

Heller Group Land Co. welcomed a new Farm Manager & Salesman to our staff.  We are excited to introduce him to our clients.

Scott grew up on a farm south of Hector and is actively running his 4th generation family farm.  After Scott graduated from Buffalo Lake-Hector-Stewart high school, where he was active in athletics as well as 4H, FFA, and Student Council, he went on to graduate with a Bachelor’s of Science degree in Plant Sciences with emphasis in Crop Production from the University of Minnesota Twin Cities.  Scott was active in agricultural groups and activities while attending college.

Scott obtained his Minnesota real estate salesperson license in 2020. Besides farm management and real estate, Scott enjoys focusing his time further his knowledge while working on the farm, where they grow corn, soybeans, peas, sugar beets, and sweet corn.   Scott is committed to the family farming operation and is excited to use his knowledge in both farming and real estate to further his passion for agriculture and its communities.

 

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