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| 1) Yields will be good enough. Those with bad crop areas the avg. and below avg. is still better than historical trends would otherwise indicate. 2012 was a lesson that has been farmed away from over the last decade. Populations, tillage, row spacing, hybrids it’s all been farmed away from the edge that is a repeat of ____…
2) Growing regions have evolved. More beans corn and beans in all directions. North, south, etc. Everyone’s banker wants a more stable income statement and grains and storage showed much advantage in the last 8-10 years. Cheap prices aside, grow it, bin it, sell it strategies for grains have sold many regions on more grain in the mix.
3) What exactly is being fed and who is buying it? Phrased as a question for a reason. Regardless of animal protein preference or connection to “your” marketing plan, energy and protein going into livestock feed that is largely at a point of moving out of range for low/mid income households is unsustainable and represents a huge stress over the next two quarters. Socially we’ve moved beyond a chicken in every pot, to an out to eat chicken dinner on every corner….but it’s out of touch with income levels so the “chicken only” restaurants could see some stress very soon (2 quarters)
4). Interest. Interest. Interest. Most still try to get something paid for but the good years (not that long ago) of upgrading/updating still have a payment attached. They are at cheaper interest but other things that have or “need” to go on the books are at higher rates. The cost of capital will have a purging effect and more grain will get moved quicker to align cash flows and demonstrate repayment ability/ qualify for better rates/ low rate incentives etc. people will make moves they might not have otherwise made because they are more sensitive to interest rates. So for that reason more grain gets sold/ marketed with a more robust timing. Incentivized you might say.
5) Geopolitical ebb and flow. The new global economy demands less of governments and large MNC’s and more of the citizenry. In essence you gotta take less so they can build the governments and institutions they want you to have/need. They know better than you and ultimately it’s a war on private wealth/independence. More here than I can unpack but at the basic level there just are more pawns on a chess board and they are generally put in harms way so that more valuable pieces can hold onto their piece of the board longer.
That’s just 5. I’m sure there are more but I say things keep sliding lower. | |
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5 reasons why price continues to erode from here
