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BA Deere
Honored Advisor

When dust settles, new price plateau?

I know "plateau" is a bad taste for many, however after the last blow off in 2015 we did have kind of a plateau, though it was lower than many of us would`ve liked ($3 corn and $8.50 beans).  But, a plateau higher than the $1.50 corn and LDPs in the early 2000`s.   I hear we need 3 years of trend and above to break this current good market, 2022 early harvest reports aren`t going to be included as one of those 3 years.  

Pro Farmer is comparing similarities of this bull with that `09-`14 bull.  2010 and 2020 bulls began at $3.50 corn and sub $10 beans, `10 and `20 bulls got rolling at the years ends, both bulls backed of initial highs in `11 and `21, both bulls had LaNina low sunspot occurrences and macro economic stress during both bulls.  The bad news, that last bull did end and that 5 years between 2015 and 2020  were extremely lean, prices of inputs were late getting the memo.

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6 Replies
Hobbyfarmer
Honored Advisor

Re: When dust settles, new price plateau?

The problem with many plateaus is the crevasses.

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BA Deere
Honored Advisor

Re: When dust settles, new price plateau?

All through that latest crevasse, I was preaching that we needed "4 & 10" on corn and beans, but $3.50 and $8.50 was bragging rights.   Inflation has complicated of when and how deep the next crevasse will be, maybe the next plateau will be $5 corn and $11 beans, but you`ll go broke raising them? 

One thing about having adjusted to raising $2 corn 20 years ago, spending and expectations were conservative.  Now we`re so accustomed to these multiples of previous expenses and living expenses takes a much bigger bite out of farm income.  We can`t forget that we are also consumers like everyone else.

BADeere_0-1663587234943.jpeg

 

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Hobbyfarmer
Honored Advisor

Re: When dust settles, new price plateau?

The divide between farm operations has probably never been greater.

Some are literally flush with cash. More are as you describe always struggling.

As this decade wears on and us oldies drop off, the few replacements will probably never know the no banker way of farming.

There is absolutely no one promoting being self reliant and responsible.

Land prices have almost guaranteed indentured serfdom.

rsbs
Senior Advisor

Re: When dust settles, new price plateau?

we may well be headed towards $10 to $15 dollar corn, and $25 to $35 soybeans, but I am not taking on any new debt as we might be heading towards double digit interest rates too.

It is a rare man that sits back, says that "I have enough" and takes it easy, but that is my plan.

I do not believe that we will see sub $3 corn again, nor sub $7 soybeans. Dollars have been cheapened too much for that scenario to play out.

$7 corn, and $15 soybeans are not causing any headaches ....so I can see them staying around for a while. I can pay my bills, pay off existing debt, and eat steak at these levels, and that is the goal, right?

Hobbyfarmer
Honored Advisor

Re: When dust settles, new price plateau?

you aren't alone.

I'm NOT buying anything I can't just write the check for.

I'm getting my first vacation since January. 

Should NOT be working that long between breaks at my age.

Problem is the farming thing is a money press right now. Kinda don't want to let loose of the crank.

The price plateau is NOT on our commodities it is on the input side.

This thing has turned disastrous before it will again.

You will need reserves and the reserves may need reserves.

 

 

 

BA Deere
Honored Advisor

Re: When dust settles, new price plateau?

The commodities we raise always has the potential to drop to zero, if we`re honest about it.  Hogs actually did hit no value, as they were euthanizing them for a short period and oil hit negative $40 because of lack of storage.  The one good thing about corn is you could store in on the ground short term if you really had to (or bag it).   In a way, farming was a easier business  20 years ago  when corn was $1.70 and you`d collect a 50¢ LDP (store until it went up to $2.50) and some how eek out close to $3.  $2000 land was certainly closer to a cashflow proposition than $20,000 currently.

Fertilizer may come down, however it will never go to 2000 levels because it`s in fewer hands of control and they`ll just layoff workers, close the mine or plant and "manage their supply".  Same thing with pickups, now that they`ve broken through the $100,000 list price (to order one 6 months out) I don`t see they will tamper with their new found "price integrity).   They are training customers of pickups and farm machinery to order their product, so they know the exact cost.  Like with selling hogs, they basically have to be contracted, that way the packing plant knows it`s supply situation way into the future, no more having to raise cash bids to keep a plant busy.

I have learned a lesson on seedcorn, buy more than what you need and take back the extra, because if you have to "buy a couple bags to finish up"  you will pay dearly for them.  The seed dealer might have pallets and pallets of extra that are a month away from going back to the company, but you won`t pay the same as what you paid back in October on your main order.  

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