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KC Fed

previously reported that 30% of farms in the district had difficulty revolving their production credit lines.

 

Given generally good yields I don't see that increasing greatly although the $100+/acre marketing swing will loom large on a case by case basis.

 

As it stands now the problem will be with financials on new crop where I don't see average production costs dropping more than about $25/acre- rent, fert, seed all included. that may put a lot of people in the situation of having to present financial projections with significant red ink already penciled in.

 

As per the discussion at marketing about land prices, the weak link this time around is production money, not land values.

 

Land values probably only give in reluctantly as average rents slowly get cut in half from the top with a lot of producer working capital is bled off in the process.

 

As I've said, the last time I had coffee with a 95 year old farmer friend back in 2008 he told me that $7 corn would break a lot more farmers than the $2 variety. And as I've said, that is technically impossible as there were a lot more farmers to break back then. But he had a point.

 

PS. As Hobby said, I think in general it is going to be tougher for farmers in general to hold on tight with grain inventories.

 

 

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5 Replies
BA Deere
Honored Advisor

Re: KC Fed

The $7 corn in of itself isn`t what breaks farmers, it`s the accompanying tulip mania that comes with it that breaks farmers.  You have the funds or so you believe to store $7 corn thinking it will go to $10.  Where $2 corn, you need every penny for the stack of bills on the table and gladly sell at $2.04 or $2.07...the bills get paid, you see what machinery can be afforded and move on to next year.

 

$7 corn means taxes and we are notorious for spending $100 to save $5 in taxes.  Well, that infamous Section 179 that misinformed idiots belive is some kind of "tax loophole" for farmers...NOTHING could be further from the truth!  You buy a combine that is more than you need because Hey, corn is 7 bucks, it`s so high priced that you pay no tax on your $7 corn...but corn goes to $3 and you still have payments on that combine AND you`ve rapidly depreciated it, so you no longer have deductions on it, so you`re making payments on the damned thing with AFTER TAX DOLLARS!

 

Also, the input suppliers rape us with a rusty T-post on prices and we are soaked "$7 corn" input prices for two years too long before they come down to reality on their prices.  And in many cases the input suppliers got overly exuberant and spend too much on their business too (I`m sure it`s hard to drop seedcorn from $320 down to $160 where it belongs).

 

But the guy with the same M Farmall and $100/bag non-gm seed, that stayed the same through $7 corn and just paid the damned taxes, now has the bank full of money   🙂

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Re: KC Fed

You can't have one without the other.* That's a fantasy.

 

BTW as far as the plain 'ol GOP moderate prudent government policy that neither party currently practices, it would have been wise to lean into the boom a bit- not let the delinquents get near the punchbowl with the acid.

 

A more modest ethanol goal, more regulation of commodity speculation, a more prudent monetary policy that didn't serve to drive the $ into the dirt.

 

Things would have been plenty good enough for those on the train and the other train coming from the opposite direction (always is after a boom)  might have at least slowed to a stop before the crash.

 

The belief is that the gubmint will do something becasue they have to and they always have. Probably true but would have been cheaper and less painful to do it better in the first place.

 

*Could certainly have slowed the consolidation of the chem/genetics and fertilizer oligopolies, preferably before the robbery. Also a Good Government issue.

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k-289
Esteemed Advisor

Re: KC Fed

It will be interesting to see what kind of   ''' FESTIVE  MuuuuDE '''''' with the display folks at HUSKER  HARVEST  DAYS  are in  ??  

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BA Deere
Honored Advisor

Re: KC Fed

K-289, Farmfest was very subdued, especially compared to 4,5 yrs ago.  The Farm Progress Show will be a big test, it`ll be interesting how many visitors from other countries.  Many times there`ll be Brazilians, Chinese, Japanese, Africians in attendence.

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elcheapo
Senior Advisor

Re: KC Fed

prices are down...........

outlook not good...........

 

husker harvest days is pure advertisement...................yet......you have to pay $12 to get thru the gate to be flooded with advertisement...........

 

 

in my humble opinion, it should be free, or just a few dollars..............i've talked to people with booths there........they pay a pretty

penny to have a booth/tent there.........so they pay.......you pay.........someone is making money..........hummm, sounds like

a government show !!!

 

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