133 – What if commodity prices stay low???

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Now, remember it is never so good it can’t get better and never so bad it can’t get worse.  That is a saying from a World War 2 combat veteran.  And, the cure for low prices is low prices, and the cure for high prices is high prices.  Unless of course it is the U.S. stock market and the Federal Reserve does everything to keep it up.  Off topic, high much higher would the Trump rally be if we would have let the stock market settle down a few years ago?????drought monitor 2016

And, commodity prices are like the weather in the Midwest, wait 24 hours and it will change, unless you are in the middle of a drought.

I also believe with the oil price deal, or attempt at a deal, and the possibility of a Southeastern drought moving into the Midwest this coming year we may get some positive movement in commodity prices.

One thing that is very real in production agriculture right now is the income to debt ratio is back where it was in 1985.  That is bad.

So maybe we get a rally next year, we still got to market the bulk of 2016 crop and the cycles point to a major low next fall.  Possibly early fall and a smaller low this coming January.  Not good, not good at all.

So, how does your farm stack up if the long term average for corn is not $4.30 but $3.40??????

It is a corn world because corn also affects every other crop out there.  It is also the major component in much of the feed we feed in the U.S.

How does this affect your agri-business if your customers have 25% less gross dollars in the foreseeable future.

I discuss this and more in this podcast.  To the smartest audience in agriculture.

Thanks for listening.

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One Comment

  1. JOHN GREENWOOD said:

    I am a small vegetable farmer in the midddle of corn and soybeans country. I have to follow what big ag does. What I see going on is similar to the late 70’s early 80’s. High prices and lots of new machinery followed by low prices and machinery to pay for. Will land prices follow the same pattern as that period? I know a farmer that sold a lot of his land for $4500 an acre and bought it back in less than 6 years for $1200 an acre. Today the numbers are different but patterns the same. Scary

    December 1, 2016
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