Get Used To $4 Corn

[Jim Meade / Iowa City]

That is not me talking, that is Ray Wyse of S.W.A.T. Here's his argument, which was also heard more or less on the Comm Stock report on Friday. http://www.producer.com/2013/12/fao-growth-predictions-questioned/ "Ray Wyse, grain strategist and partner in S.W.A.T. LLC, doesn’t believe global demand will be anywhere close to what the United Nations agency is forecasting or that supply will be as constrained as it is projecting. It means farmers should get used to $4 corn and other lackluster commodity prices."

"Wyse said the UN’s 9.1 billion population estimate has become gospel in farm circles and beyond. However, when he delved into the report he discovered it was the medium estimate in a range that went from a high of 16 billion to a low of six billion people."

He says there is a lot of land availabe, incluidng the former Sovie Union, Congo and other places.  Yield increases are siginificant in much of the world, even if they are leveling off in the U.S.  He says most of the new mouths will be so poor they can't aford any more than subsistence food. 

His point is you should not chase high priced land with $4 corn but put any extra money into improving yields on land you have.  His advice is when prices are high to lock in a couple of years sales.

[Shaggy98]

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Jim Meade / Iowa City wrote:

His point is you should not chase high priced land with $4 corn but put any extra money into improving yields on land you have.  His advice is when prices are high to lock in a couple of years sales.

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That is exactly what I am intending to do, actually I've been working on this for a few years but the drought hasn't been helpful.  I had a recent discussion on another thread (can't remember who with) about not letting up on the fertilizer application due to the lower price trends going into the 2014 production year.  I've never boughten into the fact that quantity is a replacement for quality.  If I can't reach maximum production from existing acres, why would I want to add additional acres that might only break even?  I can't control the market, but I can control the production coming from my farm.  If you haven't got the time do do it right, when will you find the time to redo it?

[roarintiger1]

Whew!    That's good to know!   Here I was expecting $3 and even $2 corn.   Now, this guy is telling me to get used to $4 corn.  Boy, is that a load off my mind.........thanks!  

[Palouser]

The whole argument is so speculative that the conclusion itself is just a wild assed guess for sure. I'd rather look at the current  production/consumption/inventory trends now and project out the possibilities for a few years. Even then you wind up with only possibilities just because of weather.

PS - I should become a licensed real estate dealer for Congo. I could also sell vaccines and help you contract out local militias to help you farm it.

[BF2012]

predicting the future.   That should be the headline.  Predicting future yield and extrapolaitng huge crops out over future years is utterly asinine. 

I put this nonsense into the same category as the folks who predict the date of the Second Coming of Christ.  Fools all. 

I think you can pretty much rest assured of one thing.   A whole bunch of folks won't, or can't afford to feed themselves.   In fact roughly 65% of the US is on Food Stamps.   That will likely rise to 99% soon....and the 1%ers might find there is no place to hide.

$ 300.00/acre farmground might be a pretty good deal if you can manage to hang on to it once the Govt. starts confiscating it for the greater good.

[Jim Meade / Iowa City]

Yes, BF21012, you are saying just what he is saying - there are a lot of unthinking people predicting the future and their facts are wrong.  He is pointing out with some specific examples where and how they may be wrong.

  I don't think the government will confiscate our land anytime soon - it will simply print more money.  The same thing?  Well, I won't argue with you.

[Jim Meade / Iowa City]

Well, Tigger, I can imagine $3 corn but I doubt if any of us will be in business long enough to grind it down to $2 corn without some major shake-ups.  Sure, we had the Great Depression, but Keynes showed us how to spend our way out of depressions, didn't he?  Farming will be different and probably governmnet directed when we get to $2 corn - or, maybe Cargill will just lease it all.

[Jim Meade / Iowa City]

The point of his discussion is to warn against buying high priced land with the idea that there is no more and that more middle class mouths will support supply.  He says the new mouths can't afford to pay for what we want to produce and there is more land in the world that can grow crops, granting that some of it is politically unstable or has security issues.

He is advising against the warm and fuzzy supply and demand scenarios we've seen bruted about for a couple of years.  A contrarian.

I'd say he is a voice of reason or at least of caution.  

Interestingly, the tiling binge that has been going on for 4-6 years is evidence to me that many local farmers are trying to improve their yields as much as buy more land.  The grid sampling that you see and hear more of and the precision ag seems to me to be more of the same.  Maybe he's only talking on the big picture of what we see on many individual farms.  Still, I find it refreshing to hear someone in a position to see the big pciture offer an alternative view.

[farmer46]

I would believe inflation will be a big factor in the future prices.  Will $4.00 corn be the new $2.00 corn.  Inflation can and has caused higher prices. 

[BF2012]

huh?