Commodity Cycles

[Stocker Steve]

I did a lot searching on cycles. Some confident articles were written in the 90s - - then BSE and drought and global trade policies and computerized trading seemed to confuse the situation. My conclusion is that there still is a cycle but the world and our place in it has changed. Obviously the hobby guys don't expect to make a profit so economics are not a factor for them.
I spoke with a (commodity producing) business man I respect. He said the lawyers are getting rich off of bankruptcies, sales, and mergers. He expected low prices would last for years - - till some of the less liquid producers went out of business. The ironic thing is bankruptcy usually writes down liability and over head to allow higher cost producers to keep going.

Do you see any producers shedding OH in your area?
Do you see any empty pastures or feed lots in your area?

 

[TexasBred]

You can drive for miles around here and not see a handful of cattle but it's primarily because so many people have taken advantage of the high prices. True you have some cycles in any and all markets but commodities are and always will be driven hardest by simple supply and demand.

 

[Stocker Steve]

commodities are and always will be driven hardest by simple supply and demand.

Right. So now that the 2014 special situations are behind us - - we will see the effect of a lot of creative ways to increase supply.

Question is how to counter a long term price decline due to supply increasing faster than demand/?