ten dollar wheat

[hedgehog]

is it going to happen today or tomorrow?

[charliep]

No big changes on US or world wheat supply demand.
Wheat will remain a follower of corn/feedgrains and
soybeans. More wheat will replace corn in livestock
feed use. $10/bu wheat will only come because of a
continued rally in corn. Won't do go there on its own.

[bucket]

Are you kidding? Replace corn with wheat and see how the numbers pencil out.

[bucket]

Shut down a few ethanol plants and the corn goes direct to the feeders instead of through the e plant and sending ddgs to the feeders. Might slow the price rise but the enduser still runs short.

My thinking is the world is coming up on a shortage that can't be fixed quickly.

[charliep]

The cows will go before the ethanol plants shut down. The issue will be pasture. Killing a cow has 3 year plus implication - simple biology.

I should learn never to argue with a bullish farmer that has been right to date - 50 % increase in corn values. Still trying to reconcile the differences between your attitude on farm land values/investors and the crop price forecasts. If you are right on prices, investing in farm land is good thing.

My experience in life is rallies don't last for ever. Perhaps to your point, debt on assets last at least 20 years. Mind you, if pay for land with cash and have a 20 year view (are comparing to other investments, can live with changes in the value of the asset), your decisions are different again.

Corn is a supply side rally. It will impact consumption. Europe (perhaps to hedgehogs question on wheat) will have to find other cheaper sources of feed including wheat.

Soybeans are a demand side rally. China continues to buy like crazy. You had better hope this continues. Vegetable oil side remains a weak link tied to biofuels/crude oil.

Nothing special about wheat. Will be a follower of everything else.

[ASRG]

Any lowering of cattle prices will result in more tame pasture and hay being broke up. Even today with high cattle prices land is being broken up, because grain/canola are paying better.

Of course eventually this will ruin feed grain markets and the shift might go back to cattle? The only problem with this scenario is: There aren't many young people willing to go into cattle. When the old cowboys quit, they aren't going back into it?

Just about everyone you ask who has packed it in say they would never go back into cows. Too much work for the return and after the BSE gong show, too much risk! The government created a lot of gun shy people!

[charliep]

The situation in Canada in that pasture and hay look good at least in Alberta - lots of forage. Feedgrains - will be expensive. Not disagreeing with anything you said but a different reality than in the US where drought has moved cows out of Texas/Oklahoma farther North in the past couple years and all of sudden Nebraska/some of the other cow calf states are being hammered. The cow will continue to shrink in the US for this reason plus the changes in demographics/who is willing to raise cattle you talk about.

The scenarios coming out of the rally will have many implications on businesses and the supply chain that we can't even guess at this point. Food inflation has been mentioned yet and political instability. General economic weakness. Many things will play out. Perhaps what keeps life interesting.

[jensend]

the charts for oct and nov feeders are scary. suppose it could be partly a reflection of more cows being liquidated. could also be a reaction to price resistance that some say we are seeing at the meat counters. take ethanol out of the equation (with rising corn prices and falling oil prices) and shrink the cow herd and it won't take so much corn to make a big crop. charlie was asking about biodiesel in europe the other day. what i read in german newspapers about two years ago was that as subsidies to their plants were phased out the plants were dismantled and shipped to developing countires for them to see if they could make a go of it.

[charliep]

ASRG

To put what you highlighted into context, Canadian feed barley consumption used to be 9 to 10 million tonnes. The last couple of years, feed barley consumption is under 7 MMT. Cattle numbers are down that much. Barley has been replaced by canola.

[ASRG]

Charlie: Quite often cattle were kept to use "junk land" not much good for anything, like a coulee or swampy land? The farmer might add some good land for hay, or just to get enough numbers to make sense?

There is a lot of unused "junk land" pastures these days. Not worth the effort of keeping the fences up or water for a few cows? I'm not sure that is a bad thing....it creates a lot of "green space" for the deer and birds!

Cows can be a lot of nuisance. You can count on them getting out just about everytime you want to do anything or go somewhere. I've never had canola or grain escape when the oil lease operator left the gate open!

[charliep]

Something you like or don't like. My Dad and brother both enjoyed the cattle side of a mixed farm better than crops (maybe sadistic). My Mom and Sister in Law - a differents attitude (home every night, impact on holidays, nuisance, etc.). In my generation, a mixed enterprise operation was what kept a family farm going.

Sorry hedgehog. Way off topic.

[errolanderson]

charlie . . . agree with your wheat
assessment. Is all about corn, not wheat.

believe corn prices are now high enough to
create demand destruction. yes, cows will
leave, before ethanol plants . . . but
this will be a rough period for plant
operators.

[carebear300]

The ethanol plants will close till the price of crude rises over 100 dollars per barrel. Just a dumb old farmers musing tho, have been wrong before but that never stopped me from being interested or making predictions.

[errolanderson]

carebear 300 - believe that subsidies have
dried up and oil companies may be subject
to penalties if ethanol % isn't maintained
in fuel production.

Anyway you cut it . . . U.S. corn demand
is apt to drop over the next year.

[ianben]

Errol
OIl companies pay penalties/tax for reduced
ethanol
Oil companies sell more oil governments gets
more tax consumers cant tell what comes out of the
pump.
I think the economic climate in the world will over
rule the green issues.
Government ministers and companies chairmen
are just one election or share price failure from
oblivion.

When your country is going broke do voters care?

I think the ethanol plants will close and not be
reopened unless they make real economic sense.