Questions on higher feed/grain prices

[DJ in WA]

At the feed store today, 80# layer pellets over $18 when it was $13 a year ago, I believe. Gal at the counter said higher grain prices is doing it.

Sorry if this has been discussed, but why are grain prices going up so sharply?

Might make one question growing your own eggs/meat, etc, but then I assume store prices will also go up, or would this affect producers less than the little guys?

When I last counted, I got 49 dozen eggs from $32 of feed. Now it'd be that from over $40 of feed - still cheaper than the store and better quality I suppose.

[tinknal]

Originally Posted by DJ in WA

At the feed store today, 80# layer pellets over $18 when it was $13 a year ago, I believe. Gal at the counter said higher grain prices is doing it.

Sorry if this has been discussed, but why are grain prices going up so sharply?

Might make one question growing your own eggs/meat, etc, but then I assume store prices will also go up, or would this affect producers less than the little guys?

When I last counted, I got 49 dozen eggs from $32 of feed. Now it'd be that from over $40 of feed - still cheaper than the store and better quality I suppose.

As far as the reason for the increased price, I would say midwest drought, increased ethonol production, and higher fuel prices. If you have the storage space it makes sense to buy grain directly from a farmer and then have the mill grind and mix it.

[arabian knight]

Grain is going up because Corn Prices are UP~! And this is because of the Many Ethanol Plants that have come on line in the past year. in WI. we had 2 just this last year!! Which IS GOOD for the farmer. After all THEY should be able to make a profit every 10 years or so. Heck corn prices went up $1.90 a hundred in One Month as I get my Horse and cattle feed Mix up with my own recipe~ And 5 dollars different form one month to another the same 500 Pound of grain mix I had made up. Good deal for the farmer for sure. can't complain they need to eat also.

[Beeman]

Paid $8.85 for 50lbs layer pellets today.

[DJ in WA]

Beeman, sounds like you have cheaper feed there (or lower quality chickens).

So ethanol is part of it.

I suppose grain farmers will make more money, but farmers who buy grain to feed will need to get higher prices to offset the expense. Wonder how far the extra cost can trickle down.

So, what's the forecast for the future? Will the prices keep rising as ethanol production increases? Will the end of a drought bring prices back down?

As for fuel prices affecting it, seems those prices went up long ago, but maybe there's a delay in how that affects the market?

[silverbackMP]

All commodities are going up because the Fed keeps printing (or making electronic adjustment) money. It is called inflation. Anytime you have more of any item (including U.S. dollars) each unit becomes worth less than before. Input prices have risen also (fuel, fertilizer, land prices, land rent, etc).

Secondary, large emerging markets (China, India) need commodities to modernize their economies. This drives up the prices of goods.

A third reason are hedge fund speculators who recognize the equities are over bought and real estate is not going to return much, therefore they are buying commodities--real goods.

Grain is going higher because 1) input prices 2) gubbermint subsidization of ethanol (corn) 3) All other grains will follow corn higher because less farm ground is being used to farm these grains (because many acres were converted to corn production).

[rambler]

Food prices from 70 years ago in the USA, adjusted for inflation, are about 68% now compared to then.

Evertything else, from houses to cars to etc, are up about 200-300%. Energy prices much more.

So, even with the current price of grains, you and I are getting a very good deal on feed/ food.

Australia has a very bad drought.

World demand for corn is up a bit.

Ethanol production is an unknown - speculators are guessing it will take a lot more corn. But, that is just a guess. (One thing ethanol plants produce is feed byproducts....)

Fuel and fertilizer & metal prices are way, way up. All these are needed to make grain.

So, people with money are guessing we will be short on grain in 2 years or so, and are bidding the price up.

What _actually_ happens is anybody's guess.

Following grain markets is like following the stock market. Much of the 'value' is just a guessing game, depending upon buyer's confidence. Right now there is enough corn, but some folks are speculating demand will continue up, & any bad weather will tighten up supplies.

--->Paul

[tinknal]

Originally Posted by DJ in WA

As for fuel prices affecting it, seems those prices went up long ago, but maybe there's a delay in how that affects the market?

Yes but fuel price does not have a direct effect. Price is set by the marketplace, not by the cost of production, however, high fuel prices can affect how much corn gets planted. In my area I'm seeing more wheat get planted. I believe that this is because wheat takes less fuel per acre than corn.

[DaleK]

Originally Posted by tinknal

Yes but fuel price does not have a direct effect. Price is set by the marketplace, not by the cost of production, however, high fuel prices can affect how much corn gets planted. In my area I'm seeing more wheat get planted. I believe that this is because wheat takes less fuel per acre than corn.

Back in the summer when it was time to decide whether or not to plant winter wheat, it was looking very much like wheat was the only crop that might have a chance to be profitable for 2007 so a lot of people locked in extra wheat to try to hedge themselves a bit. Then with the wet fall a lot of those contracted acres weren't able to be planted, wheat prices rose even farther and corn started jumping. Now it's going to be interesting with farmers having wheat contracts they have to arrange to satisfy but couldn't get planted. Luckily we got in 140 acres which SHOULD cover our contracts, the contracts we have are a bit lower than we could lock in today but so little wheat got in in our area it looks like we should make up the difference on straw. Plus corn is looking like it might hit COP.
Fuel prices didn't have much of an impact on wheat acres, it was futures prices in the summer.

[stanb999]

Originally Posted by rambler

Food prices from 70 years ago in the USA, adjusted for inflation, are about 68% now compared to then.

Evertything else, from houses to cars to etc, are up about 200-300%. Energy prices much more.

So you are saying that a steak was more than $10.00 a pound AVG.? 70 years ago.

The thing to remember when quoting GOV. stats. about inflation is they LIE.
They now use an alternative basket of goods due to the price changes.
They for example stopped useing the statistic for 1 LB of prime Beef Steak. They did this because they figure it went up in value too much so now you eat ground beef. So the net result is meat costs 25% less.

[rambler]

Originally Posted by stanb999

So you are saying that a steak was more than $10.00 a pound AVG.? 70 years ago.

The thing to remember when quoting GOV. stats. about inflation is they LIE.
They now use an alternative basket of goods due to the price changes.
They for example stopped useing the statistic for 1 LB of prime Beef Steak. They did this because they figure it went up in value too much so now you eat ground beef. So the net result is meat costs 25% less.

I was watching a TV news show, which is a pretty poor reference point. They were buying 'similar' things, pricing them from store shelves back then, now. They pointed out houses were roughly 2.5x the price, but a house 'now' is about 2x the square footage as it was 'back then' so that would equate a bit of an increase.

I agree, statistics can be made to prove anything if you work at it hard enough.

Seems pretty much all stats I see show that food costs in the USA keep dropping - adjusted for inflation, or compared to average incomes, or as a % of gross income, or.......

I remember corn selling for $5 a bu, & beans selling for over $12. Today corn is $3.15, beans are just over $6, and that is worrying a bunch of people..... Corn has been $1.42 a bu, beans at $4.12 a bu.

Then we are told farmers shouldn't get govt subsidies, the market should pay for the crops.

But, now if grain prices go up, that is wrong too....

Yup, statistics can be made to say all kinds of things.

If you are saying that inflation is much worse than the statistics list; then the bargen of food in the USA is even better than we are told.

Typically high grain prices are a short-term thing. Farmers can always grow more.

--->Paul