Ag Businesses Reporting Big Gains In First Quarter of 2020

Agribusiness

Ag Businesses Doing Well on Wall Street

With reports topping headlines on Wall Street this week, many ag businesses appear to be doing well. Syngenta reported sales of $7.1 billion, up 20% from last year. BASF reported sales at $2.4 billion, a 23% increase. ADM reported a record earnings in its agriculture services sector, up 84%.

  Tractor Supply Company says sales were up 42% to $2.8 billion. CME group reported $1.3 billion in revenue for the first quarter of 2021. Its C-E-O says that’s back to pre-pandemic levels.

Livestock Insurance Policies

The U-S-D-A announced updates to its livestock insurance policies for next year. The department says the updates are designed to improve options for producers and create more opportunities for participation.

Ensuring the class pricing option is available for purchase for milk prices and relaxing record requirements for some parts of the dairy industry. The livestock gross margin is available for cattle, dairy and swine producers and gets protection against the loss of gross margin.

Tax on Millionaire Farmers Criticized

  The American Farm Bureau claims farmers and ranchers will pay more taxes under the Biden Administration infrastructure and social spending package. President Biden says he wants to get rid of loopholes. However, Pat Wolff with A-F-B says the plan could still mean higher bills for producers.

Stepped up basis would still apply under new limits and estate tax exemptions don’t change. but gains on like-kind real estate swaps will lose exclusion.  Ultimately Wolff thinks some will have higher tax.

“The capital gains tax rate is nearly doubled, from 20 to 39.6 percent. But that higher rate will only apply to households making over $1 million. The second change is that capital gains will be imposed at death. This is a new tax at death. However, there’s an exemption for this tax, this new tax, too, of $1 million, or $2 million of gain per couple,” says Woff.

  However the U-S-D-A says more than 98% of farm estates will not owe any tax at transfer if the farm stays in the family.

Market Analysis

  Some slight movement at the end of the week. Analyst Alan Brugler has this recap:

“Well, we’ve had a pretty impressive pop in the corn, the old crop may contracts jumped as high as 7.25 – that’s the highest prices since 2012-2013 period – the definitely commercially led, people scrambling for cash corn, basis was strong in the inverse. In the soybean side, the market was more sideways. The bottom line is the soybean oil has driven beans higher, that has to do with tightness in global supplies and a renewed emphasis on biodiesel. Cash cattle market was mostly steady with last week, we saw few lower trades but for the most part steady. Hogs went to new life of contract highs again, that’s been a tremendous bull run in the hogs, the bottom line is pork stocks in cold storage were still extremely tight, export sales are still pretty good, export shipments were close to the highest of the year again.”

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