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NO, I don't know that there is Zero chance of supplyies running naked. In a market of your choice we would. At $4.00 corn the supply would be ALL used up. Just my thought. I am thinking you are wanting a controled market where the endusers are your's of choice. The market can be furious and has no friends. Speculators do not cause shortages. Demand is the cause. You say,"In the end we will never export our entire crop and domestic sales have to work for the end user" That's correct we will never export our entire crop but we would export more than we have or can afford if the price stayed low to meet your expectations. There is nothing said that domestic sales have to work for the enduser, The enduser has to make grain prices work in his budget, input expenses to livestock growers. Even the Livestock producers who have grain enterprises will come to a point of decision do they feed their own grain or sell their grain in the market and end livestock production. /Many livestock producers won't have that choice because they already have the overhead. The old debate was that neighbors would tell me that they could raise livestock cheaper than the pork factories because they raise their own corn and thus their price of feed is cheaper. Robbing Peter to pay Paul.
When grain prices were low, $4-$4.50 and livestock producers could have locked the prices in and didn't, is it any differant than locking in cask rent price or fert and seed prices. The livestock producer who didn't was looking for lower feed prices. In a way as you put it trying to win the lottery? The reason for such volatility is that the grain supply is on the edge of having enough or not. Any hiccup in nexy years production will cause even more volatility as the prospects look favorable for a larger grain supply according to demand, price will tumble. A market that's not for the faint of heart.
"We're not making a living playing poker after all - both sides have to win in every business decision or the relationship goes away" The rerlationship goes way because of failed bussiness. As a grain producer I am able to sell my grain any day of the working week only because there are specs willing to take the risk if there is no imediate buyers. Everone blames it on the spec but when the prices run up or down there is always a buyer or seller. Are you willing to give that up for a more controlled socialistic market? | |
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Purdue's C. Hurt 29 yr Ag price cycle...what phase?
