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Death comes to us all. Life's but a walking shadow | I was going to post this old graph from last summer yesterday in support of Too Much Doom & Gloom but first I would like to say this and it's not really appropiate on this forum.
Both cooperation and competition are essential elements for a dynamic, successful and properous society. Any economist and even the occasional thoughtful politician understands that certain important processes must function for as successful society.
One of those make-or-break activities is food production (and today fuel production). The critical element here is to "get the crop planted." As for crop insurance and now revenue protection, we all know or should know just how capricious and challenging the weather can be. The fellows in Iowa and elsewhere are being reminded this year you can be the best farmer, best businessman with the best soil in the world and it can still go very wrong. And not just over the whole area but just over your particular farm. Your neighbor ten miles down the road can catch a rain at the right time that misses you and it becomes very difficult. That's part of the cooperation element. I don't know about your crop insurance policy but I certainly can't make money on the payout, just maybe survive to try again.
On the other hand, we only have to look at the recently concluded experiment call the Soviet Union to understand that it takes real ambition and drive to actually get the "seed-in-the-ground." You don't get that in a command society. Farmers are amazingly self-motivated and self-managed. Give them half a chance and they will go out there all on their own and do the job. Have you ever talked to many factory workers, Many are so undermotivated that they need one manager for five employees just to keep the system running. It's not all their fault of course because they just get the wages never the satisfaction of doing it themselves, they rarely get the real profit from a good job done.
Finally, not long ago we had a discussion about how very large finnacial "entities" have undue influence on the markets, the "new fundamentals." I have come to believe that revenue protection insurance is designed to temper that influence. And it seems to be working. In previous years the Hedge Funds and Big Banks could sell your crop short even before you had it grown. They couldn't really do it this year. Farmers just didn't sell knowing that they didn't have to. It won't ultimately change the coming year's price. That'll be worked out between producers and end users. It just tempers the abuse by the speculators. It is a gamble that the government took and will probably win. I doubt if the insurance companies or the government will actually payout. And the premium subsidy was what $3 billion. That's chump change to pay to guarantee enough crop gets planted. And don't feel bad, the society more than got their money back in cheap food and fuel.
Enough said on that.
And now for "Too Much Doom & Gloom":
There has been some talk about $3 corn as if it is inevitable and maybe it is. But what's the evidence? Look at the chart below. Up until about 2005 production was just under 10 billion bushel, the carryout was between 1.5-2 billion bushel and price fluxuated between $3 & $4. With the advent of ethanol production has risen to between 12 & 13 billion, the carryouts have declined but not to zero and the price has risen steadily to between $5 and $6. The drop in price in 2009 & 2010 was clearly due to the very, very severe economic crisis but the economy today is doing Ok, not great but Ok. And the big runup in price last year was the result of the drought, carryout dropped to 700 million bushel, completely understandable.
So where are we? If we have a 13.5 crop this year, carryout will rise back to a more normal level, in fact it will look like the same average level of supply, 12-13 billion. Hopefully exports will go back up toward 1.5-2 billion and the price will stabilize back in that $5-6 range. That's certainly the end of the world. But why should the price stay at above $5? Two reasons, If the endusers made it work at $7 they can make it work at $5. Ethanol margins were surprisingly good even at $7. And as long as the ethanol plants continue to grind corn at the rate of 850,000 barrels a day the supply will disappear. What about Brazil, we've seen that they have not yet managed to their infrastructure going so they are a yet unrealized threat. Certainly they can export corn and compete but remember they have some limits just as we do, fertilizer price, etc. And the world coarse grain supply/demand is more or less in balance, if anything demand is increasing.
And what will happen next year. we'll plant 8 million acres less corn (1200 million bu), we'll move toward E15 and we'll adjust.
I just don't see an end-of-the-world senario.
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20 Miles West of Indianapolis Indiana | On your chart in 2010 your showing a 13 billion bu crop, 3.75ish price and almost a 2 billion bu carryout..... thats what I‘M scared of......
Great post and chart though. I see all of bulls points, but i just think that we are in "too good of times" and that they just cant last.... i was talking with my granddad last night about two farms for sale. His exact words were "i dont see how you can get em paid for..... but i dont see it getting any cheaper if thats what your waiting on"
Edited by GrainTrader 9/22/2013 08:18
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USA | Graintrader $3.75 corn is nothing to be scared of as long as you have costs under control.
160 bu x $3.75 = $600
$100 fert+ $40 seed+ $35 chemical+ $75 fuel and mach+ $30 labor + $30 drying+ $20 ins= $330
$7500 land @ 2.7% = $202.50 acre. + $20 acre tax = $222.50
$600- $330- $222.50= $47.50 @ 160 bu = $.30 bu
With above numbers would need to get to less than $3.45 bu corn for the pain to start.
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20 Miles West of Indianapolis Indiana | Would you give an example of what your using for prices/profit/cost today Coup? |
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| Where are you gonnA find 200 land. Thelandcostgoes down when farmers lose 200 anacre |
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Ontario's middle east | I think we can agree, it's the amount we have been debating here. Here's some history....insert your own number.
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20 Miles West of Indianapolis Indiana | Its interest cost on a loan for $7500 an acre ground.... |
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WC MN | Why do you not include principal in loan? If I could buy land for $7500 and only have a $200 an acre payment then that would work. Also please direct me to the $40 an acre seed and I will place an order. It must yield well preferrably in the 90-100 day maturity. |
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| 160 bushel corn will need more than $100 worth of fertilizer if not all you are doing is mining the soil. |
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Death comes to us all. Life's but a walking shadow | I have to believe that the 2009 & 2010 prices were a direct consequence of the prevaling economy, Remember the price of gasoline at the time. Take a look:
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| I'd like to know where you are buying 100$/bag seed and putting enough npk on for 100/acre |
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WC MN | That number is not too far off, maybe $20-$30 high right now for here, but we have to remember up in the northern plains that we are on the wrong end of the country to get cheaper anything or sell more expensive anything. |
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WC MN | coup - 9/22/2013 08:25
Graintrader $3.75 corn is nothing to be scared of as long as you have costs under control.
160 bu x $3.75 = $600
$100 fert+ $40 seed+ $35 chemical+ $75 fuel and mach+ $30 labor + $30 drying+ $20 ins= $330
$7500 land @ 2.7% = $202.50 acre. + $20 acre tax = $222.50
$600- $330- $222.50= $47.50 @ 160 bu = $.30 bu
With above numbers would need to get to less than $3.45 bu corn for the pain to start.
Where do I sign up for $100 fertilizer and $40 corn seed and make 160 bpa? The rest looks good to me. |
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| Maize, Would be interesting to see CPI on that chart (including food and energy). A way to compare the purchasing power of the dollar over time. Even better would be the price of crude. |
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| Must be banding fertilizer an using non gmo. :) |
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| coup - 9/22/2013 07:25 Graintrader $3.75 corn is nothing to be scared of as long as you have costs under control. 160 bu x $3.75 = $600 $100 fert+ $40 seed+ $35 chemical+ $75 fuel and mach+ $30 labor + $30 drying+ $20 ins= $330 $7500 land @ 2.7% = $202.50 acre. + $20 acre tax = $222.50 $600- $330- $222.50= $47.50 @ 160 bu = $.30 bu With above numbers would need to get to less than $3.45 bu corn for the pain to start. I don't disagree, but those numbers get pretty skinny if you plug 125 bpa instead of 160. If Mother Nature serves you a poop sandwich when the majority of the corn belt has a good crop causing lower prices, you are going to burn some equity in this scenario. |
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Eastern ND | Those numbers are a joke. $100 for fert? Real world $130-150. $40 for seed? Real world $100. How about running with just these two changes, then the pain starts. Up in the great white north, new corn is under $4. Yea, should have sold a bunch last year @ $5 local for this fall delivery, but with the way land rents and fert, etc, have been rising, $5 looked to be breakeven. |
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20 Miles West of Indianapolis Indiana | Those numbers on imputs I agree are low, but in a $3.75 corn environment they would be a little more in line. Especially if you did use minimum levels of NPK and grew non GMO or at least only RR seed....
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SW Iowa | I agree with you those numbers would be more in line with $3.75 corn prices---but---they are not there yet. May take several broke years to get there. Suppliers don't want their incomes to go backwards. Let the farmers eat the losses. --
Seed corn is not coming down, NH3 is down to $650-$700/T (A ton does 10 acres), Diesel fuel is the same, interest costs are up, iron is going up, rents are still high, and land taxes are up to $30/a. Where is the give with input prices and $3.75 corn? I don't see it. It is a loser |
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| If you are going to use non-gmo your pesticides cost is going to be more then 35/a. Added cost of rootworm control and european cornborer and other insects. The 35/a would mostly likely account for only the herbicide. |
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Death comes to us all. Life's but a walking shadow | If someone has the time and easy access to the data it might be very interesting, indeed. |
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NW central IL | pretty sure he is running starter with the planter and gen. capture is really cheap. in furrow....has his own nh3 tanks so hes prob buying 550ish nh3 |
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Casey Iowa | $50 an acre profit.......hmmmm........some people have forgot about $30-$50 an acre profit years or worse. Lots of people don't know how to sharpen their pencils that sharp. There will continue to be lots of oppurtunities for those that do though. |
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| From what I know his $40 seed deal is he goes to seed RSM's and negotiates buying wholesale with no programs and no warranty and buys 2-3 years worth of seed. Then when something happens goes back to them and tries to squeeze help out of them. Then won't verify any results when they offer to help them. Then when they remind him that he bought the seed with no warranty he comes on here and tries to smear them. That's his way of cutting the fat. He is also a chemical broker using people like Logan Ag, Saale's and others to Resell to Farmers in order to make enough his is free. |
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| Coup get real. You have more respect on this forum that to go putting out BS numbers like that. I have bought fertilizer from the same salesman as you and you are using BS numbers to grow 160bu corn. Even if you use maintenance rate dry on corn on corn and use 150lbs of NH3 you are well over $100 fert. The only place you can get $40 seed is well I don't want to discuss it here. I know the game. |
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| Nah, too distorted by all the subsidies granted to higher education by taxpayers. I like to use crude as my inflation gauge. Consumable product, pretty well known available quantity, with stable production. |
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| I actually got by for around $30./a for non gmo pesticides this year, used a full rate of insecticide, bought it from Coup. Guy at the pioneer field day said we should consider using insecticide on gmo corn as the traits are losing effectiveness, also said you need to have your rib order in and paid for by Oct. 1 Wtf are we just drones that labor for the man. |
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| I bought non gmo corn for right around Coups number from two reputable Co's, numbers were at top of Osu extension's test, beat there gmo siblings bad last year. I am fairly small time so am guessing you could do better than me. |
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| Cutting through all the seed Companies b.s. games and programs is nothing to be ashamed of, big seed production this year and less corn acres next means there will be some deals come feb and march. |
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USA | I own about 65% of next years seed corn @ present from 2013 purchase.
Have never asked any seed company to stand behind or make good on any carryover seed, if there was a problem. Only time have had an issue with carryover seed was in 12 on Wyffels 8680, that had a 95 warm germ, 72 cold. I knew better, but planted in April anyway, was warm @ the time, but turned cold and wet, had to replant it, never asked for any replant help from Wyffels on this hybrid.
Only got replant help on the 7800 and 7210 that was new seed from Wyffels according to their replant policy.
Actually got bit in the butt worse last year by trying to help Wyffels out . Told them I had excess 7800 which they were very short of, which they could replace for 2013. This is something I have done more than once to help them out of a pinch if I didn't need the corn that year, they would replace the corn for the next growing season and we were good to go.
Little did I know that I would need it later for replant and ended up replanting more of the dud 7210 they gave me to replace it. Which I was told by the RSM Brett Johnson, that Wyffels would stand behind it when he was here looking @ the corn problem and would take of the problem, which they didn't. So don't see how that is smearing the company. Still have about 90 units of 7210 in a couple Pro boxes. Offered it to Brett for free and told him he could plant it on his farm. His words where that he wouldn't plant the stuff.
Further more Wyffels was here more than once looking @ the problem, brought a weigh wagon out to weigh a long with other corn to verify the lose. Nobody from Wyffels every showed up or offered to ride the combine to see first hand what was going on.
As far as the chemical deal, majority of the chemicals I sell comes from elsewhere, than the two names you mentioned. For the most part margin is in the 3-5% range more than what I pay, sure not a get rich quick scheme. Have had more than one trim their chemical cost, by taking my price list to their supplier and getting them to get close or match what I am selling chems for. Which doesn't bother me a bit, have about got more than I can do and if I can help somebody trim their costs, glad to help.
Catman it is a free country the opportunity is there for you to do what I am doing, really isn't all that difficult, get a chemical dealer license, buy commercial insurance and you are good to go.
Edited by coup 9/22/2013 14:55
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USA | Removal fert rate on 160 bu con according to the chart I have is 135 lbs of 0-46-0 and 80 lbs of 0-0-60.
Current fert price I was quoted in the last week was $420 18-46-0 and $391 ton 0-0-60
150 lbs DAP @ $420= $31.50 acre.
80 lbs Potash @ $391 = $15.64 acre.
160 lbs N
- 27 lbs DAP= 133 lbs N , $550 on NH3 = $.335 b x 133 = $44.55 acre.
$31.50+ $15.64+ $44.55= $91.69 acre.
As for as The $40 acre seed deal, not all that hard to get to that cost area.
$120 seed cost @ 27,000 = about $40 acre or $105 @ 30 000 @ 30,000= about 40 acre. |
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USA | For 2014 budget purchase would use a $4.50 corn price x 160= $720 acre.
150 lbs DAP @ $420 ton, 80 lbs Potash @ $391 and 160 lbs N 27 lbs from DAP and 133 from NH3 @ $.335 cents a lb.
Only removal rate fert cost should be charged to the crop . Anything above removal is the same as putting money in a savings account to be used @ a later date if needed. |
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| Well funny thing is I had some of you dud 7210 in southern IL that ended up being the best corn I grew last year. And also. Did they have anything to compare to or did you pick it off before. You want to wheel and deal with these companies it is fine by me. But you coming on here naming individuals is nothing but a smear. |
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USA | Catman,
It appears you are short on facts and don't really have a clue about what the reality of the situation is or was. I didn't chase after Wyffels to buy corn they came to me. I turned the Wyffels DSM down , when he showed up to sell corn, told him they were too high. Wasn't going to pay more than $103 bag. Got a call back from him that they would sell me corn for that price. Pretty simple and straight forward .
You are the one that brought about wheeling and dealing with the RSM. What was posted that was a smear? Brett Johnson is the Wyffels RSM for SIL, never said anything that was untruthful or attacked his character, just stated what he said and what happened.
I wasn't the only one that had trouble with 7210 , neighbor planted Wyffels for the first time. Had to replant his 7800, they gave him 7210, his was worse than mine, his got zeroed out.
Yes had two different hybrid across the road from where the 7210 was, Wyffels weighed them as well. 7210 was on the higher producing dirt. To get a fair check on the 7210 shelled 16 rows left 16 rows for Wyffels to weigh when they showed up. Done 4 different weigh checks on the 7210 across the field.
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Are you guys feeling better today?
