Weekly Market Summary - August 10, 2008

August 10, 2008

Written by:

Chad Faller

Prairie State Bank & Trust

Virden, IL

www.PSBank.net

Wow, what a week in the ag industry.  There has been a whirlwind of information flying past our eyes and ears over the last few days.  We've watched the commodity markets retract almost $.40 cents on nearby corn futures and almost a $1.00 for nearby soybean futures.  We are seeing $900.00 per ton for Potash, $1,100.00 per ton for DAP and NH3 in the neighborhood of $1,000.00 per ton, with the seed companies talking that they will follow suit for the 2009 crop year.  As a silver lining to the Midwest storm cloud, the FED decided to keep key interest rates at their current level.  We also watched the stock market finish the week on a strong note, while crude dipped below $115.00 per barrel.

Despite the retracting commodity markets and ever-increasing input costs, we have appearances of +$500.00 per acre cash rents from a few of the big players across central Illinois.  As investors and land owners hone in on diversification of portfolios, we are computing gross returns of 7% at these cash rent levels.  Given the normal benchmark of 4%, would this mean that we could see "Class A" soils at $10,000.00- $12,000.00 per acre?  I'm not sure if anyone knows that answer. 

Given the overall outlook on all of these factors, many still believe that it remains an attractive time to add some farmland to your investment portfolio.