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cowfarmer
Senior Contributor

Profitability

I am forever an eternal optimist so someone please pull the reins back. We are in such good times in row crop farming, I am also a cow/calf producer and have feeders as well. Cow/calf doing great feeders not so much LOL.  What wil stop this trend, I don't see anything in the near future doing this. I realize some guys pay higher rents and no one markets perfectly, but seriously unless you spend yourself out of business, shouldn't everyone be doing well right now. What do you guys foresee in the next 48 to 60 months.  Enjoy your feedback and debate.

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9 Replies
Jim Meade / Iowa City
Senior Contributor

Re: Profitability

You can't believe how rabid some ethanol haters are.  I foresee continued attacks on ethanol.

 Input costs are likely to increase a good deal.

EPA seems intent on imposing quite draconian restrictions on farms and farmers.

Disruption of energy supplies could create chaos in a few weeks.

China is getting stronger and more belligerent.  War in Asia could rock the world.

A nuclear weapon in the hands of a rogue state or NGO could create great uncertainty.

War in the Middle EAst is not impossible.  Saudi Arabian succession is one issue, radical Islam is another.

Farming is likely going to change radically in the next 10 years as many older farmers die, rent or sell the land.

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nwobcw
Advisor

Re: Profitability

   I think Jim hit it pretty good.

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Canuck_2
Veteran Advisor

Re: Profitability

Everything in farming is of course impacted by weather, here and elsewhere in the world.

That said I think we have to have confidence in farmers to do what they always have done when they are offered profitable numbers. All farmers will put just a little extra input into their crop because the prices allow it. Many will find just a little bit more land that they can plant and we 'the farmers' will bring prices down with a good if not bumper crop within 48 months.

Do not forget that rising prices will also do the job of reducing consumption. Somewhere someone will say I can not afford to feed, burn, process or otherwise use the crops at these prices.

All these factors will one day bring prices back down and inventory up.

We also run the risk of a mass exodus from the futures market of the 'funds' and that could give us a down turn that will go lower than it should.

 

That said we stand a good chance of a final blow off of prices as the markets try to make sure all commodities have enough area planted.

1 thing different this time than some previous run ups is so many commodities have low inventory not just 1 or maybe 2. This fact may extend our good prices just a little longer.

It is also true that a lot of the good prices will be spent by farmers on more dear land, high rents and new paint. Net for many will be little more in the bank account at the end of the year.

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cowfarmer
Senior Contributor

Re: Profitability Great replies guys interesting points

Really appreciate the insight fellas.

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Kay/NC
Advisor

Re: Profitability

At some point, idling land in CRP or any other reserve has to lose its appeal.  The government's ability to pay for non-production has to wane in these down times, too, with fewer people paying into the tax coffers, more collecting entitlements like unemployment, etc. 

I am into the second installment of "Zeitgeist" (The Addendum), and it's not a pretty sight.  The fractional reserve design of our banking system apparently means that ninety percent of all the funds issued by the US Treasury and deposited in banks are built on and of thin air...and 97% of all US money is "digital" now, too. 

I wonder how we'd track all of that in a real cyber-meltdown.  Between that and the electrical grid cyber-switches that have been inserted by "someone" fro "some reason," I think we are very vulnerable to systemic instability.  I feel certain that creditors would tend to keep straight now much we owe them, but who will be there to prove what our banks owe US? 

Oddly or not, some of the posts above are totally remiscent of the chapter I am reading on the beginnings of agricultural stabilization programs in the Great Depression.  (That is in the Revolution book I wrote about last week.)  Farmers of that era did not pull together, except in very limited situations like the grape growers in California.  I doubt they'd do better now. 

Stabilization efforts then kept attrition down to 25 % of farmers lost to pressures of falling economics.  We were not dependent upon foreign energy supplies then, or held largely on paper by our former enemies, either.  We had some domestic supplier of almost everything we needed...not so much anymore. 

I am not optimistic that we have maintained national independence in any meaningful way, shape or form.  Are you? 

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wt510151
Senior Contributor

Re: Profitability

With all this push towards plastic money (credit cards and debit cards) will cash and coins be simply denied currency value? Federal Reserve Note may be on all cash, but it doesn't mean much when the Treasury is beholden to such a large debt.

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fernwood
Frequent Contributor

Re: Profitability

What will stop the good times?   We have several choices.   My top five are higher interest rates, spec money leaving the markets,  a change in the government ethanol mandate, inflation in the input side on the farm and increased grain production due to higher prices.  

 

Much could be and has been written about each of the above so I will not bore you repaeating it.  

 

 

 

 

   

 

 

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Kay/NC
Advisor

Re: Profitability

Federal Reserve Note really means nothing at all.  Our currency has had no intrinsic value since we left the the gold standard. 

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cowfarmer
Senior Contributor

Re: Profitability Ethanol is never going away

Our governments attitude about ethanol isn't going to change., They are in so far on this product they will never get out. We also have fake conservatives like Grassley who think the government should pump money into it. My opinion take it or leave it.

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