Are grain prices too High?

A couple of older farmers  and also my local machinery dealer,told me this a couple days ago, they say everything else (expenses) goes  way up and never go back down unlike the grain market. Just wondering

It's already gone up, crashed and gone back up.  This one I didn't expect but is due primarily to foreign shortages and seed and chemical companies fighting for Spring acres.  It'll go down.  Big thing is don't overspend or do something foolish.

Yes, It could get real ugly real fast. These higher prices give farmers a warm fuzzy feeling while they last, but in the end nobody wins. Had prices stayed in the $4.75 corn and $9 to $10 bean area everyone would have made money and things wouldn't be so wacky on the consumer end.

Edited by John (C-IL) - 17 Feb 2011 at 8:28pm

And then the high prices for corn and beans attracts acres away from fruit and vegetable production.

Gerald J.

I remember a $20,000 note @ 23% in 1982, I think. Survived it with old Allis equipment. The good old days??????

 I read on Monday that Goldman Sachs 6 to 12 month outlook for beans was $16.00.

Near to us they are cleaning off old usable ground that went to brush as the prices stayed down, now it will go back into production; the big talk here is for soybeans as they took such a jump and supplies are even lower than corn.

I was watching an analyst on FOX Business last week, she said that those in the know are saying that today's prices are fundamentally  sound. Personally I wonder how the livestock and pet food industry can absorb these prices.

Cover your expenses, make a good profit and don't try to be too greedy.   Remember, trying to time the grain prices is just like timing the stock market.  It is pure and simple gambling.  Cover last years costs and next years planting costs, and if there is anything left over, gamble with that.  that being said, do as i say, not as I do!!!  LOL!

Not being an ag economist, I have a question. How might all of this affect land value in the next couple of years? I ask because I am friends with some people whose father passed away recently. They are trying to decide whether to sell the farm in the near future or hold on to it and keep renting it (they break even on current rents) and let it appreciate as investment property. I know there are probably a ton of variables for locality, etc. but is there any sort of typical trend to these things?

A very wise old man told me what goes up now will come down,thats farming.He also told me "dont put all your faith in one crop" With beans being $13.50 +/- everyone will plant beans this year in my area,except me,I'll plant wheat,oats,corn,beans and hay on my 108 acres just like last year.Make a little on everything and wont lose my shirt if the price falls. Oh who was the wise old man? My grand father who farmed during the depression..

 I think this year is going to be interesting times. Cattle are high in price as there is a shortage. Corn , Wheat and Soybeans are also in short supply. Cotton is also very high.The only crop that is cheap is hay. Some local cattle guys are going to sell high priced cattle and plowing down hay to plant corn and beans.  I think there is going to be a lot of hay plowed down to plant all of the grains and cotton. If you buy hay I would buy it now and store it for next year. I buy 30,000 bushel of corn a week. I don't see corn dropping below 6.00 till the harvest of 2012. I don't think there is going to be many times in the future that corn will be below 4.50. The real problem is there is only 3 ways to pay for the vast amounts of money spent by the government . 1. raise taxes. I don't think the Republicans will allow it.  2. borrow more money from China, not likely. 3. Run the printing presses and devalue the dollar. I think this is the most likely as nobody has to take the direct blame. All the politicians will point at the other party . The inflation will drive up taxes and cover the debt. The nice thing about inflation nobody gets away without paying. I just hope I can survive the short term. As the world has more mouths to feed we farmers might actually make a reasonable living.

Right now hay is cheap around here because there was a boom last year.  I just started in hay with ground that I can't plant to crops or isn't good crop ground and sold what I had last Fall. 

As far as when to sell land it depends on how much interest you are paying on other loans.  Even if it's zero now though I'd think this coming year would be as good as any to sell unless they want to hold onto it long term.  But I imagine it'll peak this year then level off after that but I'm not an expert.

As far as when to sell I don't know.  But, I learned a saying from a smart Southern man who made candy delivery systems.  We did work for him as an engineering firm, (when I was one), and he would always say "Pigs get fed and hogs get slaughtered."  It's now one of my favorite sayings.  It's also a decent Proverb.  Point is, just be happy that your getting fed, if you get greedy you'll get slaughtered. 

Embellem, That is a loaded question. When my Dad passed, the majority vote was to sell what land we could at the time. It was worth 16 times what Dad paid and there would be no capital gains tax. If we waited 10 years and the value went up 20% we would have to pay capital gains of 40% on the difference. I guess somebody has to pay taxes.