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bulk grain prices
The world is starting to use up the cheap grain we have had for the past decades.
Mind you, the world has ample ability to create a surplus again in a couple of years.
However, decades of govt policies across the world that have forced very cheap grain prices (wheat, corn, soybeans) have also created laziness at protecting the grain surpluses that we have. A good 30 million acres of USA farmland has been put into various non-productive native grasses, artificial wetlands, and so on. This is not the best farm ground, but it used to be productive. Tree huggers are pushing for more land to be idled. It's a big chunk of land not used any more.
At the same time, Asian countries have started movining into the big time, with many people demanding - and able to afford to pay for - a higher protien, bigger food supply.
Europe & Egypt & surrounding areas also are demanding more grains, and have the funds to pay for them. At the same time, these regions are devoting more land to buildings & recreation, & less to agriculture. Europe has resisted technical advances in grains, leading to flat yields, not rising like the rest of the world.
Austrailia has had a cronic drought for 5 years, in a country that is typically dry in good times. Their wheat crop is failing - again - this year.
This past year in the USA has been difficult, with late frosts, very dry or very wet in larger areas. It would seem the highest yielding areas of the USA are being harvested now; the 'big picture' of USA production likely will look like lower & lower yields from here on out. We will get into the severe drought of the upper midwest, and the severe flooding of the eastern part of that region. Yields will likely be less than hoped for in those areas.
USA dollar is historically low in the global money exchange. Even if our crop prices double in USA dollars, that will not look too expensive to other countries with strong currencies. The sub-prime intrest rate housing issues likely will keep our dollar in the basement for some time to come, our grains will look cheap on the world market.
Ethanol, which everyone in the media blames as the only reason for rising crop prices, has a small part to play in rising crop demands too. Not as big as the other issues actually, but certainly a part of the big picture.
Last year, & perhaps the next 2 or so, are going to be a perfect storm of rising crop prices, _especially_ here in the USA. The world _wants_ more wheat. Badly. They will bid the price of wheat up up up to get it.
We want more corn to be produced next year than was produced this year. It will have to rise in price to get us farmers to plant more. Fertilizer prices have gone up 25% in the past 6 months, corn will _need_ to rise in price to get anyone interested in planting more.....
Soybeans - we always have too many soybeans in this country, they were so over produced there was a glut & the prices were miserable. This past year USA farmers cut back on soybeans because corn & wheat offered better returns. So, finally, soybeans are in 'proper' supply, and people who use soybeans will need to bid a better price for them to ensure we plant enough of them.
Hay in the south west of the USA has just burned away. People are paying serious $$$ for hay in that part of the country, making hay farming a good $$$ plan, if you get rain. The corn, beans, etc. will need to match prices with hay to get farmers there to keep planting grains.....
In order to get enough of each grain, enough needs to be planted. So, this price bidding will happen now, over winter. Before planting time. Wheat is rising _now_ so enough winter wheat gets planted this fall. Seed & fertilizer is ordered for corn & soybeans by Feb or March, so the bidding of those crops needs to happen by February.
All in all, if you buy grains to feed critters, be prepared for a _very_ bumpy ride this winter. Grain prices might hit historical highs, as well as lower than average, as buyers go through wild swings of wanting more or less of one type of grain vs another. If they see enough intentions to plant one type of crop, they might drop the price on it - by a lot. It will be a choppy, up & down ride.
Remember that Chicago Board of Trade prices are people who don't own grain, they are just trying to guess if prices are going up or down.....
Those of us who own grain or need to buy grain have a different price to follow, the local one, which can be $1.50 or more different from the CBoT price.
Where you are located, and when you buy or sell grains, will be _real_ interesting in the next year.
Corn was up 13 cents today per bu.
Soybeans were up 25 cents per bu.
Wheat was up 30 cents - I believe the max it is allowed to go up in one day.
It will be a wild ride. Many ups & downs in the grain market.
If harvest is happening in your area right now the local price of real grains might be a little lower. You might want to consider locking in a good feed price for the winter.....
Be prepared.
(Markets are a funny thing - something happens & it goes all to heck, prices drop like a rock. Don't take my thoughts as the way it _will_ be. But - consider the possibilities...)
--->Paul
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