Posted 9/6/2014 08:27 (#4058589) Subject: $3 corn and prospective planted acres, the driver.
Death comes to us all. Life's but a walking shadow
There has been quite a bit of discussion on this forum concerning next year's planted acres with some firmly believing that farmers will plant despite the price. There was a chart showing the relationship between the post harvest price and the next year's planted acres I presented here a year ago and then again a few weeks ago that JONSWKs never let's me forget. Even I was surprised how well it predicted this past year's 91.6 million planted acres. In any event, if we make $3 lows the chart predicts that planted acres will fall to 82-83 million giving a harvested acres of 75-76 and assuming a normal yield of 162- 165 bpa a 12.6 billion bushel production.
In the two threads below, "Bankers in for a bad fall" and "beginners and old geezers hang it up" there was some pretty tough and pessimistic talk about the prospects for financing crop production and marginally capitalized producers. It occurs to me that this will be the driver to reduce crop acres. Some producers simply won't be able to finance production costs or enough production costs to plant all the acres. I suspect that despite the "so called huge equity" that the current run up in land prices supposedly provides bankers are going to be much tougher about production loans. After all they knew better than anyone how fast land prices can fall once gross returns collapse.
Like some others here I was thinking that we had at least another year of high production but depending on the bankers it might not even be that long.
$3 corn and prospective planted acres, the driver.
