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I always enjoy your shows on the weekends with the comments from the many different people in the grain marketing world. Today's (June 13-14, 2009) emphasis was on the possibility of dwindling corn demand because the livestock people were in such difficult times. My question: is it the current price that is between $4.00 and $5.00 that is the problem or is it the $7.00 corn that they locked last year that is killing them? If it is the $7.00 corn, how are lower prices now going to help them? I, strictly a cash grain farmer, have had to chew through similar issues because I made the same mistake when I borrowed the money and paid for ammonia and DAP at over $1100.00 per ton. It appears to me that some of these large livestock producers have similar management problems as some of the other big conglomerates in our country. We don't seem to have any reserve, because every thing is actually run on some one else's money, i.e. the friendly banker. I know that we need the feed use to use the corn supply, but let us get it correct which pricing situation is the culprit.
When Milk is under $10.00, there is no money to made if corn was $2.50 little loan $7.00. Hogs, cattle, and poultry are in simlar situations.
There was a whole lot more corn sold at 5 than ever was sold at 7. Feeder cattle cost and demand destruction is the main problem in the cattle, some damn fool calling it swine flu instead of H1 N1 is hurting the hogs and trying to find the culprit fo low milk prices will get you one thousand different answers. When food companies and packing plants have you on the ropes, they don't let go very easily, but consumers still pay the high prices. Why didn't you use your reserve to pay for that high priced fertilizer, you know, like you're trying to preach to livestock people ??
Ive talked to more than a few farmers and they all say I hope we dont get seven dollar corn again. My cash rent will go sky high the fertilizer will go nuts etc. I was a little surprised by this. The overreaction in commodities last year I feel has created almost a protectionist type trade this year. just a thought.