The market is sending a loud clear signal to the spring wheat belt to plant wheat. Also sending a signal to those of us in the winter wheat belt to go ahead and buy expensive nitrogen and potash to fertilize wheat.
Its classic supply and demand at work. Its not that the market wants that much more wheat, its that it doesnt want to see any more acres shift to corn.
Yet the best cure for high prices is high prices. There is already talk of letting some CRP ground bid out early (the most recent edition of Farm Journal). Already the livestock sector is feeling the hit. The hog complex is imploded. Lots of cheap pork hitting the market. Cattle cant be far behind. Breakevens are running in the high 80s right now on fat cattle. Were it not for excess capacity at both the feeder and packer level the cattle market would already be in a downturn. Yet we are still killing cows and heifers at a record pace. No sign of herd expansion.
Between fuel and food prices inflation is sure to follow. I'm not a nay sayer in that the sky is falling. Once inflation really takes hold the fed will have no choice but tighten the money supply. A strong dollar will sure kick the chair out from under the land bulls, lower energy prices, and as soon as crude gets back down under 50 dollars watch the corn market collapse since nobody will want any more ethanol than they have to have. That doesnt even address what will happen to our grain exports if the dollar gets stronger.
Without a doubt its going to be a wild ride, but thats when you can make money if you are flexible and decided to be a goat instead of a sheep. Following the crowd just gets you burned.
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Today's Featured Article - Restoration Story: 1951 Farmall H - by The Red (John Fritz). I have been a collector of Farmall tractors since 1990 when I first obtained part of the family farm in Eastern Indiana. My current collection includes a 1938 F20, 1945 H, 1946 H, and the recently purchased 1951 H. This article will focus on what I encountered and what I did to bring the 1951 NEAR DEATH Farmall H back to life.
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