The MetLife Agricultural Finance research team is dedicated to providing you with strategic market perspective and actionable market insights related to the agricultural markets. The research team produces the Agricultural Quarterly, Agricultural Market Insights, and Special Reports to communicate important insights and to differentiate our work from other publications in the agricultural asset class. The Agricultural Quarterly highlights the most current views on three key topics of interest in every issue. We cover a wide array of topics from agriculture production to agribusiness and the timberland space.
In the Agricultural Market Insights, we provide concise, industry-specific, views and analyses. Our goal is to offer a unique perspective to industry partners and others to support their business endeavors. In the Special Reports, we leverage our research capabilities to provide in-depth analysis of special problems or opportunities in an industry and disseminate our findings in a user-friendly and understandable format. We hope you find these reports both insightful and practical, and we look forward to being your reliable and trusted source of financing.
This study presents our U.S. housing starts forecast through 2020. We argue that the members of the Millennial generation are too young to buy homes and that credit conditions remain tight. We forecast housing starts to reach 1.5 million by 2020, 16 percent below consensus. In our view, the weakened demand for lumber will continue to weigh on pricing and demand over the near term. However, the long-term timber deficit leads us to have a continued favorable view of the timberland asset class.
Released in April 2016, we forecast Iowa farmland values could fall 12 percent this year as a result of lower cash rents and one interest rate increase by the Federal Reserve. We also discuss how demand for agricultural commodities remains strong, but commodity prices remain low due to three years of large harvests. We believe that a recovery in grain and oilseed prices is contingent on a supply pullback, and that the possibility of a La Niña event this fall could support grain and oilseed prices.
In this report we discuss the impact of disease and geopolitical factors on our outlook for the U.S. broiler industry, and analyze two leading indicators of production.
Strong demand and the industry’s defensive nature are the main factors behind our positive outlook for the cold storage industry. We also discuss the industry lifecycle and our expectation for continued merger and acquisition activity in the space.
Short term headwinds face the dairy sector due to large global inventories and adverse currency moves. Lower input costs have had a mitigating effect. We believe signs point to improving long-term demand for dairy products.
The summer issue covered (1) Low Prices not about to Dethrone Major Crops, illustrating the flat acreage environment for specialty crops despite relatively better pricing, except for the expanding tree nut and grape sectors, (2) Headwinds in Commodities, Opportunities for Investment Managers, in light of the recent decline in farmland values giving active managers a leg up over those with a passive approach, and (3) Smaller Pecan Industry Aiming to Emulate Larger Tree Nuts, addressing the recent approval of a Federal Marketing Order and its ability to increase consumer awareness and build a larger demand footprint in the long-term. The issue also includes quotes from Phil Thompson, Managing Partner at Phil Thompson Associates in Minnesota, Eric O’Brien, Co-founder and Managing Director at Fall Line Capital in California, as well as Dan Zedan, President of Nature’s Finest Foods in Illinois to add industry perspective.
The spring issue covered (1) US Ag Exports – More Resilient than They Appear highlighting the relative strength of global demand despite a strong US dollar affecting US exports, (2) El Nino to La Nina – Bullish for US Agriculture, suggesting the risk of lower yields along with higher crop prices relative to current market expectations, and (3) A Turning Point in US Beef Consumption in light of large domestic supplies and low prices supporting demand increases, with quotes from Dr. Glynn Tonsor from Kansas State University.
The winter issue covered (1) Crop Inventories Approaching Peak Levels, addressing the potential turning point in major crop markets and including quotes from Professor David Kohl of Virginia Tech, (2) Tree Nut Sector Navigating New Challenges, discussing the attractive demand fundamentals despite a strong US dollar and more challenging water access, echoed by borrower Skip Hubbard, President of the Chico Nut Company, and finally (3) High Hopes for Hops, highlighting the rapid demand growth in light of the craft beer culture becoming mainstream.
The summer issue covered (1) Pork Expansion Drives Lower Prices, Higher Demand as the industry enters a period of abundant supplies amid the need for disciplined growth – with quotes from professor Chris Hurt and borrower Bill Pridgeon of Pridgeon Farms, (2) Farm Commodity Prices Facing New Influences discussing how agriculture’s performance can diverge from the rest of the economy, resulting in rising volatility lately, and (3) Opportunities in Timberland Amid an Improving Economy looking at timber markets and recent transactions suggesting upside in US timberland sales.
The topics covered include (1) Farm Leverage on the Rise, But From Record Lows discussing the benefit of a low debt-to-asset ratio amid low commodity prices and moderating land values, (2) New Trade Deals to Boost Agriculture highlighting the latest developments on the trade policy front to benefit US agriculture, and (3) Staying Power of Latest Food Trends illustrating the consumer appeal of convenience and health foods as evidenced by borrower quotes on citrus and milk products from Wonderful Citrus and Fair Oaks Farms, respectively.
The winter issue topics included (1) US Farm Prices Weathering the Drag of Strong Dollar addressing how global supply and demand conditions facing agriculture supersede the dollar as the most influential role in setting farm prices, (2) Fertilizer Pricing Following Lower Commodities? Discussing recent downward trends in many commodities keeping similar pressure on fertilizer prices, and (3) Steady Egg Industry Faces Big Change in 2015 discussing the impact of Proposition 2 in California being a key driver for change in the usually low-key egg industry.