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Montana Ag Network: June 26th Report – Working capital decline, wool market

Posted: 2:20 PM, Jun 26, 2019
Updated: 2019-06-26 16:20:12-04

The agriculture sector is suffering from working capital that’s fallen to critically low levels, according to the forecasting firm Agricultural Economic Insights. The firm recently analyzed data put out by the Economic Research Service saying the declines in working capital are stark.

Working capital is projected to fall by 25 percent from last year to this year. That will be right on the heels of a 30 percent decline from 2017 through 2018. The report said the current level of working capital amounts to just 31 percent of what was available back in 2014.

The firm also said USDA’s trade aid Market Facilitation Payments are large enough to actively move the needle on financial conditions in the Ag sector. However, they will clearly not rebuild working capital to levels that are necessary to give long-term financial stability to the American agricultural sector.

Politico reported that during the first quarter of 2019, the default rate for farm loans held by banks hit its highest level in seven years. One in five farm borrowers increased the amount of debt they carried over from the prior year in the first quarter, according to the Federal Reserve Bank of Kansas City. Producers are estimated to hold nearly $427 billion in debt this year — the most since the 1980s farm crisis.

In wool news, the Australian Wool Market continues a downward slide. The 2018-2019 wool-selling season produced another week of losses, following in the footsteps of price reductions experienced during the previous two weeks.

From last week’s opening lot, it was immediately apparent buyer confidence was low. By the end of the day, most types and descriptions were selling at levels 40 to 60 cents below those achieved at the previous sale.

The Australian market influences prices here in the U.S. The U.S. Department of Agriculture reported the 2019 graded wool price for 18.6 to 19.5 micro has fallen from $5.82 in may to $5.42 cents here in June.

Looking to upcoming meetings of the Montana Department of Agriculture, the Agriculture Development Council will meet Tuesday, July 2 at 8 a.m. in Room 225 at the Montana Department of Agriculture in Helena.

The Agriculture Development Council establishes policies and priorities to enhance the future development of agriculture in Montana including distributing loans and grants offered through the Growth Through Agriculture program.

Interested applicants have until November 1, 2019 to submit applications for Growth Through Agriculture progam. For more, visit agr.mt.gov.

In other events, ranchers make sure and save the date for the 2019 Public Lands Council Annual Meeting – the premiere federal lands ranching event. The meeting is scheduled for September 25-28 in Great Falls.

Since 1968, PLC has actively represented the cattle and sheep producers who hold public lands grazing permits. Issues impacting public lands ranching will be at the forefront of the event with many informative sessions with experts from the west and our nation’s capital.

For more on the 2019 Public Lands Council Annual Meeting, visit publiclandscouncil.org.

-Reported by Lane Nordlund/MTN News