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Senior Contributor

Re Belt tightening

Big Bob has been tightening his belt a lot lately. Good to see someone making a positive change in their health practices.

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Senior Advisor

Re: Is it 1972 again?

Why did soybeans go to $13?

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Veteran Advisor

Re: Is it 1972 again?

Think it was a combination of Nixon, wasn't the currency off gold standard around then? Russian embargo....interestingly, '74 was a low production year, not '73 though.

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Contributor

Re: Is it 1972 again?

Could have been 74, don't remember for sure.  I sold a helicopter to a guy in Collinsville, Ill. in 75.  He made a ton in beans on that run.  He said he was long all the way up, and short all the way down. 

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Senior Advisor

Re: Is it 1972 again?

Google Peru, anchovy, el nino

Probably the first time most of the world heard of el nino.

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Senior Advisor

Re: Is it 1972 again?

I would say if a farmer has crop and no futures position they are long. Hedged (with an option) it is as balanced as one get be except, w/o convergence and counting basis, there can be discrepancy with the actual physical market. 

 

I consider a sale as putting one out of the market with no risks. There is no liability regardless of what the market does in the future. 

 

One might miss out on higher prices later by a sale today - and that's the thinking behind 'reowning', which I think is always a lousy idea. I consider it speculation in the sense one is paying good money on the unknown having no stake in the market anymore. I would rather borrow money and sell later if it comes to that. It's a lot cheaper.

Senior Advisor

Russian wheat deal

In the fall of 1972 Russia had a huge harvest weather disaster, of which little was known in the west by the common person. The Russian bought the equivelant of 30% of our wheat production and the sales were financed by the USDA and exporters made $300,000,000 in subsidies - BIG money back then. My understanding was the Russians sent out many teams but no one could really tell how much they were really buying as there was no reporting system.

 

The Peruvian anchovy crash did figure in the next year after the deal on the feed side. 

 

Wheat was a little over $1.50 and two years later it was $4.50. That would be $19.25 in today's dollars. Triple that to get the soybean equivelancy.

 

There is common agreement that the farmer did not benefit much from the initial deals as the impacts came after most had sold. There was just not a lot of public info then - unlike today.

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