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St. Gregor, SK, Canada | Corn is going up. Beans are going up. Wheat is going up. Canola is going up.
Farmland has "nowhere to go but up". Talk of 6 & 7 corn, 15 - 18 canola and beans... Seriously, guys let's step back a minute.
This is a retracement of 2008, we are headed for another crash in global commodity prices.
"The World Needs to Eat". Yes, it does. Higher grain prices will bring more land into production. Russia has massive amounts of land in the "Black Earth" region of the country that are not being farmed, or farmed inefficiently. High grain prices will drive these acres into production and drive down prices.
High grain prices will cause high inputs. We will have another round of Agflation.
There's so much talk of "inflation" and "hyperinflation" on here... Having lived through it once, and having parents who have gone through it half a dozen times, I can see it coming... Fertilizer going up $100 / mo, chemicals doubling or more. Land going through the roof. Shortages of everything from baler twine to roundup... That my friends is inflation.
What will it do? Unemployment is high. Wages aren't going up. Food can't become more expensive, because consumers can't afford to buy it... Printing more money to help them pay for food simply devalues currency and creates more inflation.
On the front of land prices... Everyone agrees that they have nowhere to go but up. This means we are in a bubble and we are ominously close to it popping....
Farmland is a hot commodity right now... why? It's seen as a safe investment - like gold. Except, right now, with darn near $1,300/ ounce pricetag, gold is over-valued. If you buy it now, it's not a safe investment, it's a guarantee that you will loose your money - simply because it will devalue again.
Land is the same thing... "The world doesn't make more land". Indeed, that's true... But there's a couple hundred million acres of extremely productive land that has yet to be tapped....
Everything must have an inherent value farmland derives its value from the value of what can be produced on it... and it will return to that value after every bubble, with short period of time where it is undervalued...
Just some food for thought... | |
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Let's Step Back 5 x 5.
