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| just some food for thought for those that think inputs will come down if corn does.............and for those that think demand overall is going away with higher grain prices.............
quote and link to one of many stories the last week or so..........
"If China’s statement about its yields being just half US yields is true, that is potentially very good news for fertilizer makers and equipment machinery makers. Potash Corp., Mosaic, and Deere, among others, could benefit as China seeks to improve its yields.
Read more: China, Agriculture and Corn (ADM, DE, POT, MOS, CORN, MOO, DBA) - 24/7 Wall St. http://247wallst.com/2011/06/07/china-agriculture-and-corn-adm-de-p...
I can't find the other article I wanted to link in..........but the jist of the column was a statement from MOS and POT in relation to signing a deal for potash with India.............apparently India is trying to hold out for lower potash prices, and the fertilizer companies are not giving in.............and a word to the size of India's business, and don't quote me on this, again I can't find the article but it was something like 5-10% of the worlds consumption of potash, so something like 5mmt, or something like that, its a sizeable account..............the fertilizer companies reasoning for not bargaining, they say the worlds yearly supply of potash will basically be gone without India's business this year............again a game of cat and mouse, however I would probably be careful playing with too much of that...........MOS and POT have both stated they are basically running flat out and demand is growing................and any expansion in industry capacity is not set to come online for several more years, and its a more costly product due to several factors................figure I heard was $650-$700/ton potash to make it work................potash is not even at those levels yet, RIGHT NOW...............additional capacity is more expensive...........so too will your input bill............
This is just one example of why being short sided on your line of thinking could be dangerous..........I would caution those that think $3 corn is fine because inputs will match to do some homework.............fertilizer is likely only going to go up...........seed too...........chemicals probably somewhat static........machinery likely static to up........and land is a toss up, but sale prices are still rising and barely paused after 2008.............and did anyone's rent go down after 2008, around here it was static and now increasing...............fact is the world is going eat, maybe alittle less at times, maybe alittle more, livestock is not going to die, someone will make it work.............but the cost of food is going to go up because the cost to produce more and more is going to go up...........
I will reiterate this point again..........bigger yields have helped keep ahead of the higher input, static grain price curve...........if yields slow and prices are static the margins get thin.............the rest of the world has the bigger yield thing in the cards still............IMO the US does not..........
last thought..........some sort of intervention maybe on its way...........lotta problems going on...........I won't go into what I see to make me think this, but we might just get to see what things look like if demand or supply is toyed with............see just how far corn slides if it happens.........we will also see just how far inputs slide............
good luck to all.............
Edited by Mizzou Tiger 6/12/2011 18:42
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Inputs and demand.........
