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West central IL | Here's where I think you miss the point, because yes you're right, every farmer's situation is different. In one given area, maybe one farmer is paying $400 cash rent, one is paying $200 cash rent, and one may be on a flex lease or crop share. So their break even points are going to vary wildly.
Forget the farmer, because if $400 cash rent doesn't work and that farmer goes broke, the farmer dowm the road comes in and rents it all for $350. If that doesn't work and he goes broke, the next guy comes in at $300. You get the picture. The point being, cash rent is the margin of profit above the variable costs of farming a crop.
Average cash rent per acre for a given area is far and away the best indicator of how many gross dollars over and above the cost of inputs an acre produces. (I get that there's other factors like competition for acres and willingness of an area's farmers to walk the line of profitability)
You made good points and I get it. There's areas where basis dictates corn be grown. Or logistics. Or whatever.
Long story short this just proves my point. My area is profitable at current prices. Your area is profitable at current prices. Everyone's area is profitable at current prices. So regardless of whether or not we have 16 billion bushels of demand, we are going to grow 92 million acres of corn next year. And the next. And the next. Because every acre is profitable. I've yet to see a single poster chime in and say yes, we got into corn because it was $5, and had some good years, but if demand is lowered and price is going to sink down into the 2's then a ton of acres around here will switch back to running cattle. So here we go, 92 million acres of corn and 16.5 plus billion bushels will be produced every year. The US better be building some storage.... | |
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Looking forward.
