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| Seems like the major additional expense difference you are referring to is the higher cost of land and high rental rates. Is that correct? If so, you are really pointing out that the land prices and rents are too high down here. Granted your point that the fringe areas are not going away is likely very true.
Rental rates are falling a lot and really only went up due to $5 and higher corn that persisted for a while. The Ethanol expansion is largely over, so I have a hard time seeing the price of corn sustaining those prices for a protracted period of time in the foreseeable future. Therefore, rents are likely to continue trending lower.
As for land prices, they are trending lower as well. Maybe that is what we are really talking about. B/C of the fringe areas, our land values have to continue lower while yours might come up some to equalize things. IDK.
What I do know is that a lot of land around here does not have any debt on it, so for those fortunate farmers, fringe area corn/bean producers do not have any advantage that I can think of. All the other inputs would essentially be the same - except the likelihood of bigger and more consistent yields would be done here. Higher prices for those bushels, too, b/c the basis is smaller.
Improved hybrids are no doubt changing the landscape. There will be more pain in future for a lot of farmers for the market to re-balance supply and demand. An ever greater source of more Supply is coming from South America which exasperates the hybrid issue and makes our added fringe acres look pale in comparison.
Bottom-line to me is that tough times for Corn and Soybean producers are likely to continue in the coming years.
FWIW, I do believe in cycles and think that the charts can tell us a lot. Problem with the charts is that they are much more accurate in hindsight or for identifying short-term selling/buying points IMO. i DO think it is likely that lower lows are coming in future due to the fundamentals we are dealing with. The chartists will then be able to tell what they are not currently seeing with clarity. No doubt, the clues are there, though. | |
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Fringe acre discussion.........
