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cropsey, il 61731 | We raise a commodity/raw material to go into something else. By definition for a commodity to be viable it needs to be cheap and plentiful. Note that high oil prices brought on lots of things like drilling for more oil, smaller cars, less driving, alternative fuels, etc. All those things increased supply and apparently took a bite out of the oil demand (regardless of what some usage chart shows) and the price dropped like a rock and has stayed low. Same thing happens all the time in grains except our production year to year is not as consistent. It's far easier to build a business around a cheap input that is always available. It's a different thing if that input goes from cheap to very expensive and hard to get. Oil price fluctuation is 'tolerated' because supply really isn't in question regardless of news or reports.
The answer for us is lots of production, consistent production and an attractive price. The problem is we can't grow 300 bu corn consistently which would work just fine at $3 (until you pay rent). Until we get there it's going to be feast or famine and likely more famine. End users need consistency. Even the slam dunk obvious ethanol idea didn't get rolling until uncle sam tossed a bunch of money into it. Apparently it was generally too risky before.
There may be a few acres that were supported by government payments and/or big prices that go back to something else, but, as has been pointed out, those acres will grow what makes money. Even though crop shortages work out for us at times, we usually pay all that money back at some point. It's like the early days of fixed wireless internet where companies charged enormous amounts for service and equipment that really didn't work that well. The door was wide open for competition and those early companies no longer exist. Sacrificing the long term for short term gains is fine except eventually you have to deal with the 'sacrificed long term'. | |
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Too much corn, marginal acres and the future
