Price Trends and Margins

[Stocker Steve]

The Chinese are not even close to agreed upon 2020 purchases. Ag products are at $6.5 B thru June vs. a $33.4 B 2020 target. I think they are stalling as much as possible till after the election, and this is helping to hold down grain prices.

Talking heads are excited that cattle prices are almost back to 2019 levels. Not sure that that is something to celebrate. Key thing is they don't project beef price upside for the next couple years.

Hay costs are up here this year. So the average cow/calf op is looking at negative margins. Seeing some herd liquidation in NE MN which experienced a major drought this summer. I think young cows will go west to water in the Dakotas.

Are you seeing herd liquidations?

 

[sstterry]

I read an article about China pouring $1 billion into Argentina for Hog production. If this Admnistration could get its act together China is in desperate need of Protein!

 

[Stocker Steve]

Long term China will never allow the US any significant control. So they will continue to invest in ag related infrastructure in South America and Africa. This will increase supply and reduce shipping costs.

So one of the longer term impacts of the trade war are increased ag supplies in the world... Are we winning yet?

 

[TennesseeTuxedo]

The Chinese are not even close to agreed upon 2020 purchases. Ag products are at $6.5 B thru June vs. a $33.4 B 2020 target. I think they are stalling as much as possible till after the election, and this is helping to hold down grain prices.

Talking heads are excited that cattle prices are almost back to 2019 levels. Not sure that that is something to celebrate. Key thing is they don't project beef price upside for the next couple years.

Hay costs are up here this year. So the average cow/calf op is looking at negative margins. Seeing some herd liquidation in NE MN which experienced a major drought this summer. I think young cows will go west to water in the Dakotas.

Are you seeing herd liquidations?

China is very serious when they say "China First" so its only logical they would wait to see if we're dumb enough to elect a President who will agree.

 

[Stocker Steve]

Ag Policy Analysis Center published a recent article looking at grain exports and farm subsides. Basically we have been losing share to lower cost exporters since 1996. "Temporary" farm programs prop up prices but the loss in export share continues.

A previous article pointed out that since we were high cost and have a lot of storage - - we act as a supply buffer for poorer countries. Anyone building bins or coolers?

 

[Brute 23]

The way I see it the govt has been subsidizing a failing farming industry for way too long. No matter who the president is there has to be a change in how things are done in the farming sector to compete, globally.

I've had my fill of this poor farmer ****. It's about time they stand on their own two feet like the rest of us.

 

[Stocker Steve]

Many of this "temporary" USDA programs become semi permanent.

 

[TennesseeTuxedo]

If the China virus pandemic did nothing else it should have taught us the importance of our medical and food supply chains.

 

[Brute 23]

Its taught us how fragile they are and many other business sectors. The fact that we have to run govt programs and bail outs for a 6 mo down turn is embarrassing.

People need to really rethink these business models all these so called financial experts have been pushing.

 

[Stocker Steve]

There are always trade offs. If you go to an extreme seeking the worlds lowest cost producer you may give up a lot of quality, service, safety, surge capacity, or...

 

[JMJ Farms]

Its taught us how fragile they are and many other business sectors. The fact that we have to run govt programs and bail outs for a 6 mo down turn is embarrassing.

People need to really rethink these business models all these so called financial experts have been pushing.

I agree. But there's no reason to rethink your business model if the government is gonna bail you out. For the economy to function properly people and businesses have to be allowed to fall on their a$$. Sounds cold, but this stimulus crap is no different than rewarding bad behavior. And worse than that is the fact that all the stimulus packages are doing is kicking the can down the road. It's not fixing anything.

 

[Dave]

There is a main east / west rail line about 4 miles from my place. Normally on a regular basis we would see grain trains well over a mile long running west to ports at Portland, Kalama, Longview, etc. This got me to thinking. I haven't noticed any of these trains in the last month or two. China may not be buying as much but the other Pacific rim countries should be.

 

[sim.-ang.king]

I read an article about China pouring $1 billion into Argentina for Hog production. If this Admnistration could get its act together China is in desperate need of Protein!

It was going to happen no matter who is in office. Who knows if someone else was in office, China might own 90% of US food production, would you want that?
Sad to say, but China is more capitalist minded than the US.