today on u-s farm report... the relentless >> today on u.s. farm report. the relentless climb in farm land prices is finally broken. but does it signal a new trend. farmers wrestle with a farm program that offers interesting possibilities for some areas. and our crop watchers ask, where is the heat? >> u. farm report, brought to you by chevy, an american revolution. ♪[music] >> good morning. and welcome to u.s. farm report. it was not a quiet week. most of the growns were from farmers like men. green producers have been late

arriving at the recession party but i think we have finally joined our fellow citizens. along the way, there will be hard work, adjusting costs to meet the low income prospects. this is hardly new stuff, but many of us were hoping for just one more year of sizzling prices. but then i'm pretty sure i said the same thing the same time last year too. let's get started with the news. >> good morning, everyone. for the first time in more than 20 years, the value of prime american farm land has lowered. according to numbers just released, the value of farm real estate which includes all land and buildings sits at $22 an acre, that is down more than 3% and the first drop since 1987. it's important to note that this report is based on data as of january 1st so it does not

reflect any market changes since the beginning of the year. now looking at national cash rents averages, they rise more than 5%, sitting at $90 an acre. the big is all saw nice bumps. iowa alone, cash rent is $180 an acre. a correction like this shouldn't come as a surprise. >> we know from our own polling and looking at results that we have seen more weakness and the primary weakness was seen in the january, february, march period. but then the market got a little firmer and some buyers returned to the market this spring. along with a little firmer corn market. and we have seen that the demand for a top quality land firm up a little bit. we may have even seen a floor put in under the top quality land already, at least in some markets. as we look ahead, we're looking for prices to be stable.

farmers have their financial house in order. it all depends on the proper margin for grains and soy beans. but it looks like farmers have their margins in order as well. if the proper margins hold up and we could see this market hold itself and be stable for a few more years yet. >> in other news this week, the sign-up deadline for acre, the crop election program is drawing near. eligible producers have until august 14th to turn in their application. if corn dips to $3 a bushel, they could see 50 crepts a bushel. growers are only protected if the prices drop below $2.35 a bushel. >> well, the acre program is i guess the best way to put it is a put option on revenue at the state level for cover commodities. so corn would be the main one

in illinois. measured at the state level, not the farm level. >> so far more than 4800 producers have already signed up for the program. that's it for the headlines. now back to john for crop watch. >> we're hearing from plenty of growers who are hoping to get some of the forecast heat to push their crops along. in minnesota, producers say the soy bean crops look good but running a few weeks behind and need growing degree days. in pennsylvania, a grower says that from the top of the silo shows promise in the corn crop. he is expecting average to above average yields. in tennessee, north of memphis, a grower says it's hard to imagine that he is asking for less rain and more sun this time of year. he says corn, cotton and soy crops are all running behind. when we come back, it's

time to talk about those markets as al-is joined by andy and gavin maguire. the discussion begins in just two minutes. stay with us.

>> round table guests, gavin maguire and andy. gentlemen, we were talking off camera about what is involving the markets. we got a go size report coming up next week. let's start with what we are anticipating this report to offer. i think i will start with you, gavin. >> i think the market's assumption is that we will probably have adown ward revision in the corn acres but not a huge jump in either direction. and probably the same size increase in the bean acreage story. that's really where the market is at right now. acres numbers, adjustments at this stage of the game is not

as important as what the yield will do. that's why we're really focusing on weather conditions and other things other than the outright age acreage. >> do you echo what he is saying. >> they would be doing a survey and resurvey of southern states if they didn't think that something was going to change. we saw adjustments in our climates as well where they moved from corn into beans. we had some stuff that was preventive plant. and it was strong in parts of illinois, where we had multiple plantings and things like that. the other thing that traders are looking for and corn has been roughed up for the later part of this week is the yield. and we go into the crop report and they expect we will see a yield increase. and fc stone put out around 160. but you look at on average when they come into this report, they figure they will have

average year rates. five-year rates are pretty hefty and we will have high population counts, somewhere in the 33,000 market you will probably see an adjustment of yield up. i don't think they will go to a big number yet, but that's going to be one of the things that if there was a surprise, it could be a surprise from the yield, i think. >> you think it will go down for the surprise. >> i don't know what the yield is going to be. they say its with be 160. i think that's wholly possible. we have to have good weather here. but the usda is not going to come out with that number yet. we could get there. >> there are some farmers that will grow well over 200, maybe 250. but that's not going to be average all over the thing. but we need to look at this point, i want to move back because we get to everybody's frame of mind into what that report might do. now let's talk about what has been happening the last week.

corn was roughed up, but soy beans went way up but then way back down. what is happening. >> i think there's a lot of influence from outside markets right now taking place in our area. we -- as andy just noted, people are pretty certain. we have an adequate size corn crop coming on stream. there's a little bit more uncertainty surrounding soy beans. and meanwhile the beans have got the stronger demand story today. >> yeah. >> and so particularly from the far east. and so there's a potential tightness that the market will not allow the bean price to weaken under until we know what the size of the crop is. that's why the beans are so liable to whip up and down. corn doesn't have the compelling picture for people to stand up and buy it strongly. >> it's hard for me to believe that this is all supply-demand related. i think there has to be other money somewhere causing it to happen, some that would have happened last year, but not as

bad as this year. >> we have seen a big resurgence in diversification, investment flows into the commodity story. this is a trade, a lot of investment advisors are telling people if you think the economy is going to pick up, we're going to see inflation. the best way to protect yourself against inflation is to own real assets. and that involves energies and involves metals and agriculture. we are seeing strong inflows of money. >> when that upper thrust comes, it's an advantage to the farmer, if he takes advantage if he can. >> we have had several selling opportunities. but the chinese have been trading dollars for beans and it has decimated the hog industry. that's part of that financial thing where they're trading those dollars. >> when we come back, we will talk more about that. particularly about the hog price because they went -- this week and it doesn't look like it will improve this way.

when we return on u.s. farm report.

>> round table guests this week, gavin ma quire and andy shissler. we were talking about how hogs are going down and how beans are going up. and then i got to thinking, you know, if hogs are going down, that means that some of the pork producers are going to get out of the business, curb some of their issues. i'm going to ask you, gavin, what will that do to the usage of corn? >> you have to assume there will be fewer mouths to feed at every level. even the cattle industry and the u.s. inventories of cattle are at the lowest levels since the 1960s. we will have something similar

on the hog side of the equation. there will be a lot less feed demand in the 2010 calendar year. >> but we will increase in ethanol. we will have a lot of corn to use. >> yes. obviously the store knee the u.s. may not be the same as it is overseas. but you have to assume what is expensive feed ingredients for u.s. producers, also means that it's expensive to overseas guys as well. we have seen a jump in hogs in the far east. what was a strong export market for us a year ago is less so this year. so we're going to see a reduction in hog production here and less consumption of feed ingredients. >> you mentioned china and what they're doing. because they have been buying beans like there aren't any more beans. >> and you can tie some of this to the dollar related activity where they're buying beans.

you had essentially a billion dollar hole in the agriculture crop. china is producing like seven times more pork than the u.s. so you're seeing this pork over there but they need it and they use it and they want to be self sufficient using pork. so our traders expect we're going to sell pork to china because we did last year. no. they ran out of grains last year. so we had to substitute using pork. but we're selling to our traditional buyers and we're up 4% for the year on pork. china is going to stay out of the market. that will not change. they will buy their monthly purchases which is what they are doing now. >> okay. i'm going to ask you -- these are going to be tough questions. we've got producers out there that rely on beef, rely on pork and corn. what are they going to do? do you have a recommendation what you think they should do. >> they want to try to stay in

there if they can. you're probably putting your five-year cycle low in here right now. the last time we were down here was 2002. >> you think it will turn around. >> it definitely will. you're making people go away where you create shortages down the road and the whole thing changes. it will change -- i think you will put your cycle low here within a month or so. as gavin was talking about, the liquidation. this will be the lowest price that you have seen since 2002 where we had 30-cents a pound back then. >> that's pork. gavin, what would you recommend a producer who has corn -- corn prices may go down? >> it does lookalike we have pretty strong chance of some pretty weak corn prices going in the fall. we're going to see a record amount of on farm storage this year. that's a reflection of producers viewing corn as an

asset that they want to hold on and are only going to part with it at attractive looking prices. every producer has a rough ride over the last couple of years but there have been chances to sell corn at profitable levels. the key is for any producer, even if he is sitting on half a million, he has to know when to take a chance when he sees it and pull the trigger. what we don't want is producers watching great opportunities go by and then they come into the next harvest still with plenty of old crop in the bin. those kind of sales can be painful and you're leaving money on the table. producers shouldn't be dispondent they just need to be prepared to sell when they have to. >> i'm going ask you about beans. what should we do with beans. >> we're in a sell signal at roach ag. it's one of those times that

it's overheated. they usually don't last long. >> so take advantage of it. >> oh, right now. >> i'm going to ask you about cattle at this point in time. >> the beef story i think looks brighter down the road. we will see a huge amount of cheap pork coming on the stream soon. no surprise there. that will compete against beef for a quite a few months. after that we will be looking upwards in that market. >> thank you very much, gentlemen for being here today. and we will return with more u.s. farm report in just a moment. >> trying to locate new or used equipment? www.mymachinery.com has the largest list of classifies anywhere on the web. neigh you're searching for, you can find it on www.mymachinery.com.

>> the drought monitor looks similar this entire season. the worst area is southern and southeastern texas. basically from san antonio to the cot. you can see in the extreme to exceptional drought there. it has extended farther southward. there are pockets of change and you can see parts of dry area. oklahoma has seen rain recently. let's check out the situation then the jetstream shows this ridge that has been parked over the west over the month of july has shifted eastward. that has brought the heat this weekend. most of you folks in the great lakes and the northeast have finally felt a prolonged heat event here. it looks like it will still be tempered a bit with a weak cold front coming through. and then the ridge pops back to the west. it remains to be seen if we see

any troughs coming. i don't see any big cooldowns so it will be the warmest period of the summer. here is monday. you can see a weak cool front. still warm behind this front. it's hot and humid to the south and east of it. areas of showers and thunderstorms along the front from the western great lakes down no kansas. hot throughout most of the corn belt as you can see. by wednesday, that first threat does sag into the mid-atlantic. but it's warm in this area, just not quite as hot as south of that front. this is the cooler air, not making much progress by wednesday. by friday, it stalls in and out the great lakes. also along this stationery front between the real heat and humidity. we'll check the longer range forecast coming up in the next half hour.

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>> this week, along with many of my neighbors and probably some of you, i visited my local fs. and got the paperwork to sign up for the acre program. as part of the farm programs, i have to admit they have come up with a real puzzle this time. i have this at least a dozen conversations with peers as we pool our ignorance. the variables of this program make the prediction of the outcome almost impossible. under those circumstances, there is a certain amount of comfort in knowing that you're not the only one wandering blindly through the minutia of

government policy. the daunting task of explaining something that we don't really grasp to our landowners. mostly we relied on advice there our computers, economists and a roll of the dice. it sounded like a move in the right direction, close tore a revenue safety net and simple payments for being the farmer of a right crop. but building a program to accomplish this goal proved to be more complex than anyone expected. in the end, many of us pondered for hours and finally shrugged and took a shot. i'll let you know how it turns out. as always, we want to hear from you. send comments to info@usfarmreport.com. coming up in our next half hour, can county fairs weather recession? stay with us. the second half of u.s. farm report is coming right up.

report... the dairy industry culls the herd to support unprofitable milk >> today on u.s. farm report. the dairy industry calls the herd. county fairs struggle with economic and demographic challenges. and we meet another farm family working to keep the heritage alive. >> u.s. farm report brought to you by chevy, an american revolution. ♪[music]

>> good morning and welcome to u.s. farm report. i'm john fips. dairy operators are hanging tough in falling prices and high feed costs. but conditions could be looking up as economic factors are changing in many areas. recent research shows three quarters of american children don't get vitamin d should prompt more people to make milk the first choice of beverage if nothing else. corn farmers are unwillingly about to lend help by selling a huge crop at significantly lower prices it appears. let's get started with the headlines from al- >> thanks, john and good morning, everyone. in an effort to lift prices and stabilize the industry, thousands of dairy cows will be retired from production. the national milk producer federation has tentatively accepted nearly 3 had hundred bids as part of the third herd

retirement effort in the last nine months. in all, more than 86,000 cows responsible for producing 2 billion pounds of milk would be removed from the system. nearly 5 billion pounds of milk have been taken out of the pipeline. this effort, along with price increases from the fda, should drive milk prices in a more positive direction. oregon is the latest state to require a 2% blend of biodiesel. the mandate went into effect this week in nine counties of the state. all other counties must comply by october 1st. in all, oregon produces about 5 million gallons of biodiesel annually. it's not cheap to raise a kid these days. according to the study, a middle income can expect to spend $221,000 for a child born

in 2008. housing accounts for about a third. food and child care, including education were the next two largest expenses. it does not include the cost of college education. the usda has generated this report since the 1980s. in what should come as no surprise for those living in the mid section, july was one cold month. according to the national weather service office, the average temperature was just shy of 71 degrees, the fifth coldest july on record. des moines office says this is the coldest ever. in illinois, the average temperature was just under 71 degrees. more than 4 degrees below normal. in south bend, indiana, average just over 68 degrees, more than 4 degrees below normal. and in flint, michigan, 55.6 was the average temperature,

another all-time low. >> that's it for news. time now for the forecast from meteorologist mike hoffman. >> for a change we don't see the jetstream dipping into the east like we have seen most of this summer. as a matter of fact, a little bit of a ridge on the southern great lakes into the northeast. that's bringing the hottest period of thesummer basically to those areas. you folks from the southern plains have seen a hot summer. part of the great lakes have seen the coolest july ever. that has changed a little bit as we move into august. you see the thunderstorms, the best chance for anything heavy would be closer to the front and northern great lakes. that's a little bit something that we have to watch. here is wednesday, a weak trough starts to develop in the northeast. i say weak because it won't bring cool air, it will just

bring the else off of the heat that you see this weekend. some will get heavy rain but it will be hit and miss over much of the tennessee valley and into the central plains. similar areas of scattered thunderstorms. it's kind of a stationery front in that area. the jetstream is building up into the plain states. that will send the heat surging northward into the northern plains. let's check out the week ahead. august 16th through the 22nd. so one week away, we're going to continue with that above normal trend that we're seeing right now from pennsylvania to new york, across the great lakes, ohio valley, through the southwestern states. as far as precipitation, it will be normal there because you have hit and miss thunderstorms in the afternoon. boo he low normal from texas to the western plains and parts of the west. let's go out 90 days. the only below normal area that i can pick out is minnesota, iowa and wisconsin. above normal in the far

northeast, and parts of the southwest. precipitation above normal from the ohio valley back into the central plains. it depends where the front actually sets up. john. >> thanks, mike. before heading to break, we want to tell you about a special event coming up in just a few weeks. farm journal is holding a one- day corn college on monday, august 31st. the event will be hosted by ken and held at the campus just outside of bloomington, illinois. preregistration is required. call (800)909-3681 to take advantage of early bird rates. the two sessions held last month sold out quickly so don't delay. when u.s. farm report returns, just how much can a down economy impact a summertime tradition? a trip to the county fair is next. can you imagine

can you imagine summertime without a county fair? with reduced state funding and a >> can you imagine summertime without a county fair. without corporate sponsor ships, some county fairs with are in trouble.

it's home to an unemployment rate that reached more than 20% this spring. even though the area is a poster child for the recession there, is a determination to keep the fair alive. wes mills takes us there for the story. >> reporter: the goodman family of indiana usually show their sheep at several fairs during the summer. this year they decided to shear their expenses by limiting the fairs that they visit and the number of animals they show. >> we limited ourselves to six because the price of feed has escalated. >> we didn't bring a pig or a cow. the economy is not helping out much. >> reporter: the goodmans have seen how it has flowed down to the county fair. >> we have lost a few sponsors but we have gained more than what we lost. that shows the quality of programming, 4h program has the support of the community. >> reporter: that's quite a

feet especially in a county reeling from unemployment. it is the rv capital of the world, producing half of all recreational vehicles in the country. when the economy turned south, rv sales dried up and thousands of jobs were cut. with an unemployment rate at nearly 20% this spring, it led the nation in joblessness. >> so we can't afford to wait. >> reporter: the problem caught at tension of the white house, using it as a back drop for the economic recovery plan. >> we may have had 20% unemployment. we still have 80% of our people working here in the area. >> reporter: gerber admits that the board had to pull back on the budget somewhat is offer less high-cost entertainment. like the fair board, the 4h was concerned that they would lose sponsor ship of their programs. >> when i went to pick up the checks, several of them said

that their business was down, but they were going to still support the kids because it was important that they support the kids. >> i think in these hard economic times, we have seen an increase in enrollment in year. but we also have seen it increase in the number of projects that we have in our 4h building. >> reporter: the ominous clause of the economy may be helping attendance at county and state fairs as they offer a less expensive get away closer to home. checks to local fairs show better than average attendance. >> all of us 4hers look forward to this all year. this is all of the hard work that we have put into the livestock and projects, this is the chance to show it off. >> i enjoy going to the county fair, competing with other people to be the best. and without that, it would be not fun at all for me. >> reporter: growing up in

rural illinois, the county fair was a highlight in the summer. we spent many summers at fairgrounds like this. i couldn't imagine summer any other way. >> the 4h draws nearly a quarter million visitors during its 9-day run. we hope you will join us next week as we feature the iowa state fair. find out what it takes to craft a cow from butter. a family comes together to protect and preserve a very personal legacy. >> enter at simple and true challenge.com for a chance to win a one year leafs a verse tile tractor. simple, reliable, easy to maintain. plan

last week we were proud to launch "the legacy project" >> last week we were proud to launch the legacy project here. you met the dells of

westminster, maryland, a family fueled bit desire to build a solid foundation for the future of their operation. this weekend we're headed to illinois to meet another family with that same goal in mind. >> farming in illinois river bottom, one might think that the biggest decision on this rich fertile ground would be corn or beans. but the entrepreneurial spirit also grows here. chester, along with his sons, farms about 4300 acres. the quality of the soils in close proximity to the river has helped the operation thrive over the years. along with that came other success stories, a small construction company and a truck and trailer dealership called chester enterprises. >> well, we started this dealership in 2001, when my older son ryan came back from college. we had been repairing trailers for many years at the farm shop just aacross the road there. as he started having kids, we

didn't want the truck traffic in and out by where the kids were playing so we decided that we would make it a real business and actually build a building and hire mechanics and have eye full service truck shop. >> reporter: son ryan, a partner in the operation, has been part of the driving force behind the growth of the family business. >> i would like to increase our farm ground, whether through renting or buying land. whatever opportunity presents itself. the key there is that the opportunities present themselves. we don't wanted to just headache it happen just to say we farm more. >> reporter: plans for the future also involve how the operation will succeed from one generation to the next. enter the farm journal legacy project. succession planning specialists kevin stafford is working with the esters to identify goals and help the family through the process. >> i want to try to do the succession planning with the family and not for or even to the family.

in other words, when i and my wife pass on, i don't want the kids to go to the will reading and just go in cold. i want everybody what to expect. but also i want the kids to know what is expected of them. and while the boys are still young, i want to give them the opportunity to manage and to actually run it and not have me be here until hopefully i'm 70 or 80 being the manager and them not really getting the reigns until they are in their 50s or 60s. >> reporter: younger son chaz returned after working in the forestry work. >> i will transition into being the cfo, where i monitor our assets and liabilities and do most of the accounting work and work directly with our accountant. but right now i'm still learning that and i still get to do a lot of the field work.

i did a lot of the planning this spring and i will be there at harvest as well. >> reporter: he hopes to buy into the partnership with his brother and dad and create a legacy for had his own children. and so as fathers, sons and even grandchildren envision their roles in the coming years, it becomes clear that the process of succession planning is as important as the end result. >> maybe more important to me than the assets is doing it the right way where the sons will understand, appreciate what they have got and to look past them to the grandkids and their grandkids is maybe more important to me so that the farm will live on. >> reporter: to learn all about the legacy project, head online to www.farmjournal.com. up -- up next, tractor trails and the salute.

this week takes us back to the elkhart county fair in northern indiana...there we met a collector >> tractor tails takes us back to the fair in indiana. we found someone ready to show off his red beauty. >> the v means that the taller version of the a for planting and cultivating nursery crops. it was from a local nursery. all they used it for was cultivating. at one point it had rolled over and bent the steering down and it set there until i bought it. the sheet metal was solid rust on it. it has turned into a good tractor. still has the original tires on it. we changed it over to 12 volts. it starts easier than it did when we got it. they put a lot taller wheels on it to get the back end up.

but they never changed the gearing so it's faster than the regular a with the tall wheels on the back. we basically just show it now. >> what do folks say when they -- a guy that knows a little about tractors, what do they say? >> they say it's really cute. or they say it's real unusual. they wonder why it's so tall. it's tall and short. but it makes it real easy to hall to shows. that's one thing that is a plus. >> today on country church salute we honor the church that began in 1884. new buildings followed in 1897 and 1911. as a real country church. they donate time and effort to the coach land. they will celebrate their 125th anniversary this sunday.

the second how much is the roberts united meth district church in montana. they started with occasional services in the school house in 1906. regular services began in 1909. by 1914, after much effort and sacrifice, a new church home was completed. one of their long-standing traditions was the harvest supper begun under the ladder ship of charles rodes it continues today. we would like to learn about your home church as well. salutes can be sent to the address on the screen. please stay with us. the mail bag is next.

time now for our weekly look

inside the farm report mail bag... jerry peterson >> time for a weekly look inside the mail bag. jerry peterson asks question about astrology. do most farmers plant by the almanac. at least in my area, the farmer's almanac have been

replaced by a soil thermometer, the 15-day forecast and seed treatments. the need to get thousands of acres in the ground as soon as possible overrides the strategy of finding the optimum time. as for cultivating, few of us do any that prune roots and risk crop damage. many of the ideas according to certain signs arose as a way of passing on vital information to peasants los angeles ago. they can refer to records and compare results, not to mention take los angeles of careful research by seed companies. however keeping such old habits alive is also a way to stay in touch with happy memories for many so we plant potatoes. personally i have a hard time with the idea of the handful of

planets and their gravitational forces on my date of birth or any time of day have any impact on the earth here. please let us know what you think. feel free to contact us directly, send us an e-mail or call (800)792-4329 and leave us a voice mail. for al-and mike, thank you for watching u.s. farm report. be sure to join us next week. we will be working to do even better.