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NW Montana |
I'm talking about the average price. Commodities by their very nature adjust to a level created by the low cost producer. Of course there will be events that allow producers to capture profits but there will also be times of over production.
What the market will bear is a two edged sword that cuts both ways, up and down.
Look at corn in the roaring twenties, post war boom, early 70s when the dollar was devalued, 96-97 drought, after each of these run ups there was a period 2 to 3x as long of depressed prices. A good portion of that time bellow the cost of production. The trend line will adjust down as we go forward with lower prices.
When I look at it I see that every 30 years we devalue the dollar and raise commodities to a new level. I'm probably wrong.
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US corn average gross sales per acre (chart)
