Farmland Barometer - January 2014

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Heartland Outlook

Agriculture is experiencing incredible forces from every angle - - and they are global as well. At Heartland Ag Group Ltd., we are optimistic about our future and are watching the following key areas:

World Population
All of us eat everyday and there are a lot of mouths to feed on the planet. The growth trend has been steady throughout history and will pass the nine billion people marked by 2050 (up from six billion people today)!

Net Farm Income
Thankfully we had crop insurance last year. Even with rebounding yields in 2013 and normal prospects for this year - - net farm incomes will decline for the first time. That will be negative for farmland values.

Commodity Prices
We are hopeful that $4.50 corn and $12.00 soybeans can be average prices for the upcoming year. We will have volatile trading ranges.

Bushels Per Acre
The underlying dry subsoil conditions in Illinois and Iowa cause us concern. We are projecting positive yield results if weather conditions keep with a normal pattern.

Interest Rates
Yes - - interest rates have ticked up from the lows but we don’t see higher rates in this upcoming year. Our overall economy can’t handle that shock.

Weather Trends
We are replenishing our global stocks of grain which brings down commodity prices. Weather is the crucial ingredient to that process. Hopefully weather hot spots will be elsewhere on the globe instead of the United States.

United States Economy
Although it’s propped up - - our economy is slowly moving upward. Another big election cycle is coming at us so the financials should stay stable.

Investor Demand
The flow of money has reversed - - and is now going out of agriculture as financial investments have become more attractive. The stock market just had an extraordinary year - - rising 26%.