A bad situation that's gotten worse due to Trump's trade distorting policies.
Tip of the Iceberg and private bone spurs is at the controls of the titanic
You guys are so ignorant about markets - it hurts.
About every thirty years we go through this. There were highs in corn prices in 1917-20, 1946-48, 1973-74, and now again in 2008-12. I saw the buildup to the last one, and if you knew what you were looking for, it was impossible to miss. I also said, even before the run up to the highs, that the downside was unavoidable, and that it would unfold very much the same as the past three cycles.
But, go ahead and blame Donald Trump. I know, for you guys, it makes it so much easier than to try to understand how markets work. Don't even consider federal crop insurance. Don't even consider that these corrective cycle lows are absolutely necessary to how a market works.
The saying is so true that explaining economics to a liberal is similar to explaining satellites to a flat earther.
"The saying is so true that explaining economics to a liberal is similar to explaining satellites to a flat earther. "
Viewing the beautiful sunrise as it comes up in the morning as the Sun makes it's daily circle around our disk shaped earth, I often wonder how so many people let themselves be convinced that the earth is round. The worst part is that they heap scorn and ridicule upon those of us who want to share the truth.
cf, if economics is so easy tp predict, why don't you explain it to farmers instead of Liberals.
Carl, you have a gift for making me laugh. I enjoy your posts. I have actually found myself occasionally thinking that it would be good if I could approach things more like you do.
(*edit*) ... I have now watched this rocket launch 23 X and it really is far, far, far out Man....
cf, if economics is so easy tp predict, why don't you explain it to farmers instead of Liberals.
I missed that line in your post.
I maybe didn't explain it very well. It was easy if you had looked at historical corn prices - and thought about each of the periodic spikes showing in the data. But, your right - having it work depends on the majority not seeing it. Back in the early 90s I would tell people that in the next cycle high, 5.00 corn should be no problem - and they would laugh and their eyes would kind of glaze over after that. When it exceeded that in 96, I said that could not be the high, as both price and time were needed, and again, eyes would glaze over. One guy, when I took a radiator in to be boiled out and repaired, actually wrote my prediction on his wall. Once day, several years later, he pointed it out to my brother.
But, the hangover after the party is unavoidable. It always happens this way. There seems to be no other way to resolve the cycle high other than to wring out the excesses with tough times. Historically, in each of the three times in the last century, it has taken 12 years to just find the cash price low for corn - for the market to just stop going lower. From the time the market rolled over in 1920, it took until 1932. From the 1948 high, it was 1960. From the 1974 high it was 1986. This is not saying it must happen exactly the same way - there are other variables - but it sure has a good start at repeating, doesn't it?
It's just the way markets work.
..... the boom to bust cycle can become even a more "powerful" force if you add cattle into the scenario... IMHO
.... sometime over-financing a bigger loss... everything gets bigger with VOLUME....
so since your are the smartest guy in the room how are you preparing for the cycle fulfilment and what will lead the farmer out of this cycle.
I to understand this cycle was going to happen and started dealing with it back in 2012 but this cycle should have been the minor middle cycle except for the stupidity of Trump.
which will cause an whole lot more pain and a much longer bottom.
so since your are the smartest guy in the room how are you preparing for the cycle fulfilment and what will lead the farmer out of this cycle.
"What will lead the farmer out of this cycle"? What has always led out of cycle lows - low prices, bankruptcies, a major psychology change in farm country, etc. On the downside, it takes price and time. While the tops are put in rather quickly, bottoms take a lot of time.
Look at the oil chart from 1980 until 1998. There are countless others - it's just the way markets work.
How did I prepare? Well, I certainly did not make the same mistakes I made back in the late 70s and early 80s. I paid taxes - rather than trying to avoid them by buying stuff. I diversified rather than have all my wealth in farming related assets. Simple stuff, really.
I to understand this cycle was going to happen and started dealing with it back in 2012 but this cycle should have been the minor middle cycle except for the stupidity of Trump.
In 2012 the bull cycle had long since run its course. The only reason why 2012 was a good year for prices was because of a drought. At the absolute latest, you should have seen what would be coming by the summer of 2011, and, if you were thinking, you would have been anticipating it back in 2008. The past three times the corn market did something like this, it took from two years to four years to put in the top and roll over. This time, because of the drought in 2012, we had the luck to have five years.
After a major bull move, it always happens this way.
"minor middle cycle"?? It's clear you do not understand chaotic systems. Hardly anything unfolds in the same way it did before.
which will cause an whole lot more pain and a much longer bottom.
It's clear from this sentence you don't understand cycles. Opportunity is directly proportional to how much"pain" there is when the cycle corrects. Without that "pain" profitability is limited when the cycle inevitably swings up again.
It looks to me like you are one of those people who like a Centrally Planned system. I don't. I like the opportunity created by cyclical swings. I've said it many times - if the government had been involved in making sure I wouldn't go out of business feeding cattle, I never would have made much money.
cf, if economics is so easy tp predict, why don't you explain it to farmers instead of Liberals.
"I missed that line in your post."
Sorry cf, I edited the post, but your response was too quick for me.
Being in the markets about 40+ years, and not being a farmer until recently, it seems those farm bankruptcies seem to occur to those that expanded at the top of the cycle in real estate prices, farm land prices, even with farms 3 or 4 generations old. Sure, low crop prices several years running would probably put you behind, but actually losing the farm came from being too aggressive in expanding the farm at the top of the cycle. Or is this too much a generalization?
Sure, low crop prices several years running would probably put you behind, but actually losing the farm came from being too aggressive in expanding the farm at the top of the cycle. Or is this too much a generalization?
Yes, this is generally the case. Of course, there is always the unusual situation, but normally it is using the increase in income to expand and assuming we have reached a "new level" of prosperity and betting on future income being similar.
See, one thing frey doesn't talk about is federal crop insurance. This makes it hard to go broke - unless you do bet on that increased income flow - and it doesn't materialize.
Of course, that same federally subsidized crop insurance that makes it difficult to go broke also makes it difficult to make much money in the good crop years too. Anytime you take away risk, you take away profit potential too.