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Honored Advisor

Re: Net Cash Farm Income At 9-Year Low

How to cope with low net farm income..hmmmmm.  Well, I`ve had 4 years of practice, so you`d think I`d be getting good at it   Smiley Happy    China has proven to be an "unreliable buyer" for 30 years now, maybe if we extort them, they will exclusively buy grain from us to partially make up for our over buying from them.  But that may be 3,4 months after harvest and the bill collectors and bankers will be tired of knocking at the front door, for some the auctioneer will be lining up machinery.  Farmland that sold for $8,000 last year is now selling for $6,000, the bloom is off the rose.  

 

I think we`ve put too much dependency on China...well it`s like a big farmer that rents half his land from one landlord.  If that landlord has a bad weekend in Las Vegas or has a nephew that wants to farm, all of a sudden that farmer`s land base changes overnight and contingency plans should`ve been made.  We`ve also become too dependent on fancy machinery, how many acres of $2 corn do you have to harvest with a class 9, 16 row combine to pay for it or is that a trick question?

 

The risk is are we looking at another 2 years of this before we settle into a "new normal"?  I really did think that $5 corn with occasional dips to $4 was a "new normal" but I was wrong, it wasn`t.  I have a poor crystal ball but it looks like a honest $3 (after all the gimmicks) will be the "new normal" if it`s higher for a short time like a hedge-to-arrive Black Swan (1995) you`d better snatch it, just don`t be promised to deliver $3 corn when the once in a blue Moon $5 comes along.  

 

I think China will come around and maybe 2019 will be dry and "manage our supply" for us.   I once subscribed to (the late) Larry Akker`s long term weather forecasts, he did the Sun spot thing and "Dalton minimum" and other things I don`t understand and said the 2020`s would be a "mini ice age" and food would be scarce.  That`s one thing, but can you grow it and can people afford it, if that black swan occurs?   And there`s always "Yellowstone.

 

But there you see, I`m speculating on armageddon scenarios for profitable prices  Smiley Frustrated      Enough gloom & doom! Coffee break`s over, everybody back to standing on their heads.

 

Hobbyfarmer I agree Tuesday`s Farm Progress Show was a rip off.  I think when they heard lightening, the show`s bigwigs didn`t want the liability of a group of attendees getting fried.  I had to drive through crazy rain in the Garner Klemme area to get there, then the morning was nice in Boone, I thought the rain would come at 3:00 or so.  But that was the day I picked to take off work   Smiley Sad   Found a nice buffet in Boone, Saints Avenue Café (old Golden Corral) so the day wasn`t a complete waste, highly recommend it if you`re in the Boone area.

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Honored Advisor

Re: Net Cash Farm Income At 9-Year Low

Talked to neighbor that was there Tues, went back Thursday, let him in no charge.

I didn't have the option of going back.
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Honored Advisor

Re: Net Cash Farm Income At 9-Year Low

That’s like being charged for a commercial on tv. Why is there a fee to get in. Was there a metal detector & search?

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Honored Advisor

Re: Net Cash Farm Income At 9-Year Low

Although the chemical and seed commercials might offer more entertainment value than profit potential of their products.

Did they offer free lunch or afternoon discounts on seed— then kick you out by 10:30am?
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Honored Advisor

Re: Net Cash Farm Income At 9-Year Low

Funny thing, I used to think only saps paid to get in the Farm Progress Show, the Polaris dealer, Pioneer dealer, Wyffels dealer, they would all say "how many tickets do you need?  Here`s some $10 meal tickets too"   but this year Bupkis!   All I got was the $5 off coupon on the cover of Wallace`s Farmer.  

 

But I understand they have to charge or the place would be overrun with freeloaders looking to let their kids smear ice cream in the new $600,000 combine and get free yardsticks.  Smiley Happy

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Honored Advisor

Re: Net Cash Farm Income At 9-Year Low

Year before last we had free get in tickets courtesy of Prairie Brand seed. No more Prairie brand, no more tickets from there.

 

Only found one and a half things of interest to me in the varied industries tents. Went through a couple of tool tents then it was over.

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Veteran Advisor

Re: Net Cash Farm Income At 9-Year Low

For most grain farmers, marketing is still in a commodity environment.  That means income and outgo will tend to a net sum zero.  It should not surprise us that net income trends lower after a temporary increase.  It's called regression to the mean.

 

USDA reports provide a big-picture perspective that we can use as a backdrop for local information.  The information may not be actionable to us on a section or so of corn ground, but it may inform those like John Deere, ADM, Cargill and China who's actions do affect us at least peripherally.  Ag media provides a valuable service in providing this background and perspective information for our use as we see fit.  Does the firm that makes tire chains complain about the NWS when the NWS says there is no snow in the Rockies?

 

The Iowa grain farmer of today is a far cry from the farmer of the 1950's.  Today's farmer is so dependent on monoculture that s/he is terrified to not have the support of the federal farm programs.  In a word, today's farmer feels entitled to a life-style and rushes to sell out his/her independence and autonomy to maintain that life style.  Thus the intense focus on the government as both the provider and withholder of benefits.  No wonder the farmer wants only positive, supportive ag media reporting and disdains and dismisses objective data which doesn't further the farmer's comfort level.  Ah, that's old news!  Bah, who cares about that stuff.  If you are on the dole, why would one indeed care about it?

 

Mike, your problem is you are reporting to a vanishing audience - the farmer who wants to and believes she can market her production.  The farmer who understands that this is a commodity business and does not expect the government to be able to predict prices - but who expects the government to insure them.  

 

There is precious little actual discussion of marketing on this forum or on the internet in general.  There is a lot of coffee shop bushwhah about how bad things are, how it's not our fault and how someone else is to blame.

 

Wanna talk about a strategy to increase net income by accepting reasonable risk?  Wanna talk about whether selling futures, using a hedge-to-arrive agreement or forward contracting a crop is the best hedge tactic?  Wanna know if there is a difference between marketing the crop before it's planted or after it's in the bin?  Wanna know how to sell the carry or even what the carry is?  This is not the place, friend.  There I go, complaining again.  I feel like I fit right in.  Smiley Happy

 

 

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