It's the time of year for bad news in the markets.
Seems every year at about this time is when most news in grains is negative, and this year is doing it's best for bad news.
1. Grain stocks show a rebuilding of supplies
supply greater than demand is lowering prices
2. Longshoremen on Pacific coast in contract dispute are slowing shipments
increases costs of exporting grains
3. Dollar is stronger than other currencies
overseas buyers need more of their currency to buy each bushel
The result is $3.60 corn in February 2015 down from $4.50 Feb. 2014 and $7.00 Feb. 2013
The question for farmers this year is how to balance the budget at these price levels.
Switch crop acres? Reduce rents to landlords? Reduce fertilizer, seed, etc. expense?
Probably all at some level. But at lower prices we also need high yields per acre to make up shortfalls in price so reducing possible bushels is a problem. Rents will need to be lower but if the farmer looses that farm to another farmer his cost per acre just went up (less acres to cover fixed costs). Switching crop acres? I think few farms have completely decided their acre mix and will delay this as long as possible. Which crop Corn or Soybeans produce the greatest return is the easiest to evaluate and also the last decision that needs to be made. Rents are being put in contracts before March 1st and most before that.
Serving together, Dean
No comments:
Post a Comment