cancel
Showing results for 
Search instead for 
Did you mean: 
Veteran Advisor

my worry

i read with interest the "soft crisis" article.

 

i lived thru the 70's and 80's...and was involved in helping people in the 80's

 

i really don't know what to say anymore...i don't know if it's mental decline due to medical conditons and aging....or the "new ways"

things are done, or just how much things are out of wack...and how everyone is out to make a buck, and to heck with the other person.

 

i'm running numbers on everything right now for the comming year...and yes, i've get to get a new bottle of tums when i go to the store.

things do not look good.  Low commodity prices, higher input costs and higher cost of living cost, and a new bunch in washington, that

casts alot of uncertainty......and from what i've reading between the lines..maybe less friendly agriculture, due in part the overall economy.

 

marketing...that might be a key...i'm looking at several things there...but there is only so much you can do...and the thing, that i feel is

maybe creaping up behind us, is a crop production problem...

 

it could perhaps be "a perfect storm" on the horizon.....consider this, operations costs continue higher.....one idea might be to

pay out less for crop insurance, and get a lessor policy.  The current price in those policys look to be low....so overall there

will be a very small safety net......but then....a drought hits (i direct you to looking at the outlooks thru the whole 2017 year)

i see alot of "above normal" temps, and EC or below precip....so, we will not have the moisture in the high plains like this year

that helped produce good crops....so we are looking for lower production.....

 

imagine that situation.......we have low bushels, but higher price, but still looking at same income ....a bad situation.

 

is there an answer ?????

 

i'm looking

 

0 Kudos
4 Replies
Advisor

Re: my worry

Not really, other than what marketing opportunities it would present.

 

You probably survive that bad production year between price and insurance. Old crop gambling supplies aside, and you probably ought to still own something, it is mostly a forward pricing thing.

 

As I've said many times, if there's a 90% sure bet to argue for active marketing (there are no 100%ers) it is when you get a short crop, use if to make forward sales.

 

My rule of thumb is like 50, 25, 10% for the 3 years out. On the deferred years add modestly to the position on rallies over the months and years.

0 Kudos
Honored Advisor

Re: my worry

My rule of thumb is like 50, 25, 10% for the 3 years out. On the deferred years add modestly to the position on rallies over the months and years.

 

A hammer to your thumb.............. this thought needs sustained trends...... but then so does nearly every plan over time...

0 Kudos
Honored Advisor

Re: my worry

You might want to read this 2009 article from a competitor magazine (sorry SF Smiley Embarassed)  It`s about the difference in high profit and low profit farms..and the number one factor is "cost control", out of 5 factor yields and price are least important to being the highest profit farm...oh they`re important, just not as important as "cost control". 

 

And machinery costs is the biggy, back then the highest profit farms had $31.50 less machinery costs than the low profit farms.   It`s kind of funny because at the coffee shop or Socrates table at the coop, what do the stud farmers brag about?  Yields and what they sold their crop for and the new machinery they have.  No one brags what low cost producer they are and how they`re getting by with less machinery   Smiley Happy

 

http://cornandsoybeandigest.com/equipment/high-profit-farms-keep-machinery-costs-check

0 Kudos
Veteran Advisor

Re: my worry

With world wide grain production, there is always the chance that one has low yield and low prices.

0 Kudos