Salient to Investors:
US farmers are having their most-profitable year ever because of record-high prices and insurance claims and despite the worst drought in a half century.
The government predicts food inflation will accelerate next year, led by meat, dairy and baked goods.
The UN said says the global cost of food imports will drop 10 percent in 2012 – world food prices are 10 percent below the record in February 2011.
The government predicts an 8.6 percent drop in US wheat, soy and corn exports next year. Informa Economics says global corn production may jump 14 percent next year as wheat output gains 7.5 percent.
Bullish bets by hedge funds et al across 11 U.S. farm goods declined in 9 of the past 10 weeks.
Richard Pottorff at Doane Advisory Services said insurance payouts will surge because most policies were linked to prices at the harvest.
Farm income has more than doubled since 2006, and 3 consecutive years of record profit left US farmers with a ratio of debt to assets of 10.2 percent, a record low.
Farmland in Iowa rose 18 percent in the year that ended Oct. 1. Alex J. Pollock said the surge in farmland prices signals the market may be in a bubble, vulnerable to higher interest rates and lower crop prices.