Predictions and Observations

[Hamloc]

My apologies Errol but I wrote down the first thought that came to my mind after reading your post.

There are certain outlooks I share with Errol. The amount of debt piled on through and after Covid by governments is beyond reasonable. And I certainly agree at least Canada will be flirting with recession in the first 2 quarters of 2024. And I do think there is an overall bearish tone in the commodity markets. In response to Crestliners original post, it certainly looks like the highs were in at harvest for wheat. The elevator companies are certainly digging in their heals and trying to push the price down based on competition from cheaper wheat supplies like Russia and Ukraine. Canola is certainly undervalued in comparison to Soybeans in my opinion, regardless there seems to be little optimism for canola prices coming back. Land prices in my area still seem to have upward pressure and the price of farm equipment new or used makes no sense. Staying or being optimistic is difficult. But I consider myself very fortunate living in the country and I am thankful everyday when I look out my kitchen window.

[LEP]

My apologies Errol but I wrote down the first thought that came to my mind after reading your post.

There are certain outlooks I share with Errol. The amount of debt piled on through and after Covid by governments is beyond reasonable. And I certainly agree at least Canada will be flirting with recession in the first 2 quarters of 2024. And I do think there is an overall bearish tone in the commodity markets. In response to Crestliners original post, it certainly looks like the highs were in at harvest for wheat. The elevator companies are certainly digging in their heals and trying to push the price down based on competition from cheaper wheat supplies like Russia and Ukraine. Canola is certainly undervalued in comparison to Soybeans in my opinion, regardless there seems to be little optimism for canola prices coming back. Land prices in my area still seem to have upward pressure and the price of farm equipment new or used makes no sense. Staying or being optimistic is difficult. But I consider myself very fortunate living in the country and I am thankful everyday when I look out my kitchen window.

I did my thesis in University regarding the link between the price of wheat and the price of land. It seemed that the relationship showed a two year lag between the direction of wheat prices and the price of land. It wasn't a perfect relationship but something like over 80%.

Remember this was in the age of the floppy disk, which many on here have never seen, let alone used.

I am sure a more sophisticated analysis would be able to better define the relationship between farm income and land prices.

[dave4441]

I think the closer you analysis these markets the more bearish one can get. I don't think i see any crop that is going to be worth more in Jan/Feb then it was in Dec.

I find the canola market interesting this year. It has been going down since July this summer but most growers find some reason to always stay bullish and ride it lower and lower. Yeah it may come back later but come back from what?

CAD continues to strengthen and will continue to put pressure on our grain prices as well. It may have another 2% to take from our prices but that one is a wild card. What isn't a wild card is demand and its truly terrible in some grains.

The issue though is what is positive in these markets? Land prices continue higher and higher and i just dont understand the disconnect from what you see in the grain markets and interest rates. What can you point to that makes one bullish.

[Marusko]

here's my average joe prediction

Higher interest rates last 12-16 months have pulled money into GICs and savings accounts, the popularity of cash etfs as well has been surprising. I am bullish on stocks if the rumours and forecasts of falling interest rates follow through. The high rates have pulled cash away from the stock market but that will reverse if investors can't get the 5-6% return on cash anymore. Crestliner's first post called for 8-10% interest but I really don't that's going to happen, there's too much debt in the world and the people in power know it would be a disaster if they let that happen.

commodities... I have no idea, I can't pick a direction, seems like it's gotta turn around at some point but I'm really not sure if it will before the 2024 crop is in the bin. could see 12 dollar canola before that happens. could rally into the new year. no idea. Best price was off the combine so far and there's a good chance it will stay that way.

land prices and rent will remain stable at the minimum. Despite all the complaining here on the forums there are still a lot of guys who can and will afford to lose money to increase their land base. Too much competition for a shrinking base of available land that's not locked up in generational BTOs and investment companies.

The prediction that 40% of farmers will leave soon.... That may be true but the land base those guys hold is not 40% of the farmland so it's not as impactful of a stat that it may seem. Have a few farms in my region who appeared to be shutting down with no successor... and suddenly one of the kids comes back home and is farming again.

[BTO780]

I think the closer you analysis these markets the more bearish one can get. I don't think i see any crop that is going to be worth more in Jan/Feb then it was in Dec.

I find the canola market interesting this year. It has been going down since July this summer but most growers find some reason to always stay bullish and ride it lower and lower. Yeah it may come back later but come back from what?

CAD continues to strengthen and will continue to put pressure on our grain prices as well. It may have another 2% to take from our prices but that one is a wild card. What isn't a wild card is demand and its truly terrible in some grains.

The issue though is what is positive in these markets? Land prices continue higher and higher and i just dont understand the disconnect from what you see in the grain markets and interest rates. What can you point to that makes one bullish.

There will be lots of demand if prices keep plummeting. $10 canola, $8 durum, $7 wheat would create big demand. Barley is cheap but not cheap enough yet.

[dave4441]

There will be lots of demand if prices keep plummeting. $10 canola, $8 durum, $7 wheat would create big demand. Barley is cheap but not cheap enough yet.

If Canada has a average durum crop in 2024 and Turkey had a similar crop in 2024 i don't know how $8 durum does not shake out of this situation. Half my farm is going into durum this next year due to herbicide use in 2023, a situation i created in fall 2022 that limits me in 24. New crop wheat is already at $8 so suspect that pushes durum acreage in itself in Canada.

And you are correct, demand will come at lower values for all grains. Just going to be painful for the high expense growers.

[foragefarmer]

Strap-in 2024 . . . . Power of U.S. Federal Reserve fades quickly. Money printing gig no longer effective. U.S. money supply crashes to 1930s levels as debt crisis implodes.

And for stock market investor relying on the Fed backstop for the party to roll on? Well, those days numbered. Fed power greatly diminished. Central bank rate cuts in-desperation to re-inflate.

Stock market has to live within its means, without manipulation, on its-own-merit. Liquidity crisis inevitable. My opinion . . . .

Possibly 3 rate cuts this year in the USA, GICI 5% now but wait. Lots of good stocks with 3-4% dividend payment, and that's not including them appreciating.

5 TRILLION sitting on the sidelines waiting to move into the stock market.

3.8 TRILLION sitting on the sidelines in 2009.

I hope there isn't anybody on Agriville been following your advice regarding the stock market crash you've been predicting, how many years now?

IF you invested $1,000 in Apple stock 20 years ago, it would today be worth more than $536,000.00.

Buy and hold. The market is all about time NOT timing.

There ain't no farm land in Canada with that kind of return.

[Marusko]

that's cherrypicking though forage. That's 37% annualized return which is amazing, but not many were going all-in on Apple 20 years ago. S&P500 is a more fair comparison, which is around 10% in the last 20 years. S&P TSX is around 8%.

A quarter that my dad bought 20 years ago last month (and was told he paid too much for it) would have an 8% return for what it's worth today.... not including the cashflow it spun off. which would be an additional 10-20% ROI each year in the last 8 years I've been keeping track of the dollars. btos were buying multiples of what dad did back then and are well set up to keep land values propped up even if profitability drops.

I agree with you that the doom-and-gloom predictions in the stock market are unlikely, lots of money waiting to be invested, lots of incentive to keep chasing the market up.

[Old Cowzilla]

Lots of money to be invested just a big shortage of people with ambition and ideas to invest in. That's why it gets thrown at a lot of hair brain idea's promising great returns. Government red tape and gloom and doom constantly preached by news media and end of world gets a little depressing sometimes

[foragefarmer]

Marusko, you're right I cherry picked, but $1000.00 isn't exactly considered going all-in 20 years ago.

In those 20 years of holding $1000.00 worth of Apple shares you wouldn't be losing any sleep over the weather, or be pushing snow in -30 temps either.

One thing for sure it's easier holding Apple shares for 20 years compared to storing grain in the bins for years on end with the hope it appreciates while your money does squat for you, and if you missed 2022 you're moving backwards now.

Here's a solid Buffet style Canadian no risk stock.

"In the last 20 years, CNR stock has returned 1,140% to shareholders. After adjusting for dividends, total returns are higher at 1,640%. So, a $1,000 investment in CNR stock in September 2003 would be worth $17,360 today."

I'm sure there are plenty of Agrivillers who have been in the stock markets for many years.

Diversification doesn't only mean growing different crops.

[AlbertaFarmer5]

Thinking more about the land market locally.
For the first time in many years, the cattlemen are flush with money and optimism. Land that was virtually unmarketable for the last 20 years, is selling for big prices now. Some of those sales make actual farmland look cheap in comparison.
Historically, the Biggest competition in this area is money from the energy industry, and more recently the forestry industry. They are back in the market again.
We are seeing a huge influx of people moving here from the rest of canada. Many ontarians have moved into our neighborhood lately.. they can sell a house in Toronto buy a quarter section here and have money left over, and a better paying job as a bonus.
Interest rates just don't seem to be having much effect. Possibly an indication that many sales are largely cash?

[Old Cowzilla]

Trades people make about 20% less out east compared to here in western Canada. I don't know how people can afford to live out there.