New Year and the Ag Economy ?

[Oldtimer]

I saw several commodity traders on TV last night (an Aussie TV show) from all over the world (US, Canada , Europe, Australia, and Asia) and there was pretty much a concensus that wheat prices will slowly drop- down to around $7-8 bushel in the shortterm-- but then take a jump back up and by next August be in the $14-15 range...Thats the good news...
BUT
They also think that the US's economy is going to tank- causing worldwide runaway inflation that will leave that $14-15 wheat with less buying power than $3 or $4 wheat of a year ago-- and the $9-10 wheat of today ...

I went shopping today with Grandma--let her go shopping while I met all the husbands that were also shopping at the Waterhole ;-) ........

Anyway while there I let the owner of the local implement dealership buy me a couple of Christmas cheers-- and we got talking about those commodity (wheat) price predictions...He said he just came back from a national dealers meeting where the corporate ownership was predicting much of the same...In fact they said the economy was in the dumps so bad that they were looking at possibly 8- 10 years of bad times for the total US economy-- but that those 10 years of bad times for the economy on a whole could mean 10 years of good times for the farmer/grain producer/ ag equipment dealer...

Good times for the farmer-- means questionable times for the cattle producer -especially with the new energy policy payments/requirements, which will take up so much more farmland over those 10+ years for renewable fuels.... Which to me also points more to those breeds/types of cattle that can finish out the fastest on the leastest and on marginal type grassland/pasture/feed.... But how much a pound will those cattle have to bring - to pay the costs of this upcoming new global economy where the current administration is trying to get our dollar to the value of yuan or the peso????? :? ........

 

[Brandonm2]

I think that EVENTUALLY we will have to go to stockering calves to 800-900 lbs and then sending them to the feedlot. It just does not pay to send 400-500 lb calves to the feedlot and put 900-1000 lbs on them with $4.25/bu corn. I may be bad wrong; but as the economic noose around the neck of the consumers tightens they are going to be eating out less and paying less premiums for "grass fed" or "CAB" or "Laura's Lean". A lot of us are going to find that our "life styles" just aren't affordable any more.

 

[ga. prime]

Fertilizer cost is what's killing me.

 

[bigbull338]

with the high grain prices you cant expect the feedlots to put 500 to 700lbs on the calves.they are going to have to go into the feedlots at 900lbs or better.grass is the cheapest way to put the pounds on feeder cattle.the feedlots may have to send them at 1100 to 1200 insted of 1300 or better.also the price of feed will conrol to an extent the placement of cattle in feedlots.

 

[Oldtimer]

Fertilizer cost is what's killing me.

Those "commodity experts" were not too optomistic there either--predicting that oil, like wheat, will drop in the shortterm to maybe around $80 barrel- but then head upwards again next year...And depending on what happens in Iran- they were predicting it could go as high as $200 barrel..... :shock: :shock: They were also thinking that gold will hit $1000+ oz- but that one commodity that will fall will be copper because worldwide house building/construction (copper wiring) will take a big slowdown ....

 

[rkm]

I think predicting the economy is like the weather. A guess. I just dress for bad weather and if it turns out good, I can take some off.

 

[Oldtimer]

Double blow puts wheat at record peakBy Javier Blas in London

Published: December 18 2007 02:19 | Last updated: December 18 2007 02:19

Wheat prices on Monday surged to fresh all-time highs above $10-a-bushel amid fears that strong demand from emerging countries will eat into depleted global cereal inventories.

The market gained additional support after Argentina confirmed that its wheat crop had suffered heavy losses after frosts last month hit the Buenos Aires region, which makes up more than 60 per cent of the country’s production.

Extreme weather this year damaged the crops of other leading exporters, including Australia and Ukraine.

The CBOT March 2008 futures contract, that on Monday became the market’s benchmark after the expiration of the December contract, jumped to an all-time high of $10.09½ a bushel, after hitting its 30 cents daily trading limit.

It was later trading at $9.80 a bushel, up ½ cent on the day.

Tobin Gorey, a commodity strategist at Commonwealth Bank of Australia in Sydney, said that the seriously depleted harvest in Argentina had acted as a “catalyst” for the price jump.

“There is not an obvious stop for the price. The market is very tight,” Mr Gorey said.

Strong demand and tight supplies have nearly depleted cereal stocks.

US wheat inventories are set to fall to a 60-year low at the end of the current crop season, while global stocks, at 9.3 weeks of consumption, have not been so low since at least 1960, according to the US Department of Agriculture.

Rising agricultural commodity prices are boosting inflation worldwide, constraining the ability of central banks to mitigate the slowdown in their countries’ economies.

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“The rise in poor countries’ income from $1 to $2 per capita per day triggers the largest increase in an individual’s calorific intake â€" what is known as the second dollar theory,” Mr Brodie said, referring to the large increase in demand in countries such as Vietnam that have reduced poverty significantly in the past few years.

Rising incomes in emerging countries have boosted meat and dairy consumption, increasing demand for agricultural feedstock.

The UN’s Food and Agriculture Organisation estimates that China’s meat consumption per capita per year has risen from 31 kilogrammes in 1990 to about 60kg.


http://www.ft.com/cms/s/0/ede382d4-acf6 ... ck_check=1

 

[hillrancher]

I am not in a cattle area as you all are I started last year holding until at least 750 lbs and up. It was worth while for me. I have all my calves from this year weaned now will hold until June. Just feeding enough to hold them together until grass.

With the above said our economy here is going down fast the banks are on edge the first time I can remember they are worried. They pay no interest anymore. Auto dealers are closing down. It has been good while it lasted. I have been looking for this for the past few years hoping it would never get here.