SW Wisconsin | dpilot83 - 2/28/2016 13:04
I think you're looking at it backward.
High prices fueled production and squelched demand.
Low prices will stimulate demand and squelch production.
Right now we are discovering who can produce grain the cheapest. They are the ones who will be left to enjoy the next runup in prices. Unfortunately there is still a lot of money floating around out there so it's going to take a few years of these prices or lower to discover the efficient producers.
I concur with you.
Seven dollar corn was a great fertilizer and everyone wanted a piece of that action.
Given time the market will force things into balance again.
My point is simply that at this time adverse weather seems the largest force to substantially limit supply and increase price. Demand is not keeping up.
Another year of good growing in the Northern hemisphere will likely force some into submission.
I remember the 80's when the mantra was "Increase efficiency" and "Become the lowest cost producer"!
But just like in the 80's, being the guy who can produce the cheapest can be both challenging and austere.
I'm dusting off my playbook. Good thing the Frau has a job and the kids are out of school. |
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