Comment: Great Crop Or Terrible?May 26, 2016 11:28am
I began thinking, or rather returned to thinking this week about agricultural economics, versus growing crops.
Now whenever anyone mentions agricultural economics, someone is bound to wonder if we are gong to predict what beans are going to do. Nope. i don’t know what the markets are going to do any more than you do.
I’m working on a side project right now, and ended up talking with a couple of people who follow the markets a lot closer than I do.
Both of them tell me no one knows. One did make a prediction for the summer. “It’ll be a weather market,” he told me.
It always is, right?
If the weather is fine prices will be completely different than if it’s dry in the corn belt or if the soybeans are sending up flares asking for flotation devices because they are getting their feet wet.
But I digress. One of my sources admitted to being a little surprised at how high soys got the last little while but being unhappy with the price of wheat.
“Wheat is a terrible crop” I was told. In fact the wheat crop looks great, and that’s the problem. The end users know there is (weather problems excepted) a big crop growing and farmers are going to have to sell it. So why bid it up.
So my contact says if current price levels continue, and it’s a world-wide issue, people will reduce plantings of wheat. Agricultural economics.
“But if you grow wheat, you get better yields of corn,” I shot back. Peter Johnson, @WheatPete, the Wildman told me that.
Yes it’s a great crop from that perspective my contact said. But if the price isn’t there… his voice trailed off.
A great crop of wheat in the field. I don’t actually, for the record, think it is all about agricultural economics to the total exclusion of growing the crop.
Maybe the takeaway is to find other ways to grow alternate and cover crops, Ways that don’t hurt the bottom line.
I don’t know.
Or maybe the bottom line is that wheat is still worth it because of the yield curve.
Like I said I don’t pretend to know agricultural economics. But I do know it’s complicated.