Top Cropper: Views Needed Help Appreciated

Hi this post is directed at Top Cropper, and also anyone else out there in 'farm land'.

Do you think the drought is breaking?
Do you think agricultural input costs are droping?
Do you think finanal agricutural prices are droping?

Specifically for australia.

are there any links to any recent data trends on this? prices of inputs and final selling prices, not the drought.

I know sugar prices are droping now.
what about wheat?
what about grain? (is livestock prices sensitive to grain prices?)
how about fruit and vegetable?

thanks help and views very much appreciated.
 
i try to think that i have a clue about most things, but i am sorry i will resighn my self and say i have no idea what your talking about, sorry. :confused:
 
Do you think the drought is breaking?
.


No idea. But I haven't been effected by drought all that much. I'm running at slightly above average right now. I got less than average rain last year, much above average the 2 years previous, dry before that, etc, etc, blah blah. The noughties decade was right on average total rain for me.

Chart of 130 years of rainfall for Quirindi,.....





Plenty of areas west and north of me now have received a years worth of average rainfall in 4 months. Is that good? Yes, but it means that soon there will be 4 months worth of rain in a year to even things up. It's all just normal if you ask me. The Darling river is running a torrent and will soon run into the Murray river. All good. I live in a summer dominant rainfall area.

The southern parts of Australia with winter dominant rainfall have certainly received less than average rain in many parts. And many cropping areas received no rain during crucial growing periods, then got big rain when it was too late. So winter crops have failed in many areas.

The rivers don't run as much water now as they used to so irrigation is down. The creeks around here are mostly dry now, but when I was a kid they always ran. Get used to it. There is much more water being saved on farms due to better and more productive farming practice's and too much mining and irrigation allocation.


See ya's.
 
Do you think agricultural input costs are droping?.

Input prices were very low for me last year, after record high prices the year before. My biggest input costs are fertilizer and roundup herbicide. Fertilizer was down to about $450 per tonne for urea which is back to about normal. It was over $1000 per tonne the year before and peaked at $1200.

Roundup was down to $3.50 per litre, which was cheapest in history. It was $13 per litre the year before, and $20 per litre 20 years ago before China started manufacturing it after it went off patent. Roundup is still significantly cheaper than normal.

Other herbicide costs were OK. Some are as cheap as they have ever been and some go up steadily.

Diesel was back to normal. Diesel is our third biggest input cost.


I think input prices have bottomed out and will rise again now. Herbicides and fertilizer and diesel is all rising now.



Do you think agricutural prices are droping?

Specifically for australia.

are there any links to any recent data trends on this? prices of inputs and final selling prices, not the drought.

I know sugar prices are droping now.
what about wheat?
what about grain? (is livestock prices sensitive to grain prices?)
how about fruit and vegetable?

thanks help and views very much appreciated.


Farm commodity prices have dropped heaps from the top a few years ago. The big prices led farmers to increase plantings and increase fertilizer. This increased production. It was a typical price led supply/demand increase.
10 year Wheat prices in $US per tonne,.....



So prices are back to about normal. Prices took off with the commodity boom and oil prices. The last big spike in prices was when oil peaked nearly 40 years ago in the oil crisis back then.

Another chart showing real wheat prices [inflation adjusted] and wheat stocks,.....



You can see the 1973 high with the oil crisis. Global wheat stocks are still lower than normal so it would only take a hickup somewhere in the world for prices to take off again.



I think farm commodity prices are at a low now. Australia has the added problem of our high dollar. But this means lower input costs of course, so it's not all bad for us.

Livestock runs a different course to grain. Cattle are bad at the moment. Sheep are good. Sheep are good because they have been bad for a long time and farmers got out of them. Supply and demand again.

Fruit and veges are almost totally weather related. Plus, unlike other farm commodities grown in Australia, they have a high labour input, so fruit and veges are under pressure from low cost imports from Asia with low labour costs.


See ya's.
 
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Farm commodity prices have dropped heaps from the top a few years ago. The big prices led farmers to increase plantings and increase fertilizer. This increased production. It was a typical price led supply/demand increase.

Livestock runs a different course to grain. Cattle are bad at the moment. Sheep are good. Sheep are good because they have been bad for a long time and farmers got out of them. Supply and demand again.

Intrinsic Value,

TC has highlighted the most important lesson you can learn about agricultural commodity markets.

That is, do the opposite to what everyone else is doing.

If you chase the market that is good at the time you invariably end up buying in high, missing the best of the market and then selling out when prices are low.

If you were looking to invest in agriculture it's smarter to be looking at what's performing badly, rather than what is performing the best.

Buy in gloom and sell in boom applies to agricultural markets just as much as any other market. Sounds easy in theory but most farmers still follow the flock and get their fingers burnt time and time again. It's just human nature.


RC
 
If you were looking to invest in agriculture it's smarter to be looking at what's performing badly, rather than what is performing the best.

Buy in gloom and sell in boom applies to agricultural markets just as much as any other market. Sounds easy in theory but most farmers still follow the flock and get their fingers burnt time and time again. It's just human nature.

Hmmm that's what my FIL though ten years ago when everyone was getting out of sheep in the area. He thought he would stay in sheep as the price was bound to rebound. Kept saying that everyone was silly for the last ten years. He was right too - he was just ten years or so off... unfortunately these things are never simple!

TC - love your work! Good stuff.
 
If I may add something....Agriculture is a long term investment, same as resi property.
You need to take the long term view and therefore benefit from the highs as well as cop the lows...but be patient enough to ride until you have more highs than lows...

As TC said, it's all Supply & Demand and right now sheep are in demand while supply is low. Cattle are holding ok.
I think there will be a bit of a spike in livestock investment in the coming year(s) due to the really low grain prices.....and then the supply demand ratios will swing back the other way....ho hum stuff.
 
I think farm commodity prices are at a low now. .


I was reading THE LAND today and some bloke reckons wheat prices could drop another 20% yet. That would put it at or below cost of production. He could be right too, who knows. If it did drop another 20%, farmers globally would pull their heads in, slash inputs and acres, production would slump and so would start the next upturn.

If I really knew what was going to happen I surely wouldn't tell anyone else, I'd make millions from futures.



Grain prices have jumped maybe 5% or so in a week on the iceland volcano. Whats happening now is really very irrelevant as this volcano is very small and insignificant. But it historically can mean that a much bigger volcano erupts, Laki. Laki erupted in 1783 and caused havoc with global climates. It lead to smaller crops in Europe and the US due to a few cooler than normal years.

One cool year with an early or late frost could wipe out a hundred million tonnes of grain, or 5% of the global crop, and that would cause grain prices to triple or quadruple.



http://www.glgroup.com/News/Iceland...opean-Crops--Repeat-of-1783-Famine-47825.html

http://www.jordantimes.com/?news=25941




See ya's.
 
So TC...do you suppose that taking a futures position when wheat is at or below cost of production would be a good idea...?

Surely a no brainer.... How long can wheat be produced at cost...?
You guys produce year in year out so what's the diff....I'd be taking a position for sure.

Mind you there is always the issue of subsidisation around many nations to factor in.....

Futures is the way to go for you Mate...bugger this producing stuff.....you could be sitting in your penthouse on the GC with the computer fired up...imagine....!;)
 
So TC...do you suppose that taking a futures position when wheat is at or below cost of production would be a good idea...?

Surely a no brainer.... How long can wheat be produced at cost...?
You guys produce year in year out so what's the diff....I'd be taking a position for sure.


Yeah, your probably right. We'll discuss this plan at the footy tomorrow then. :D

Where the hell were you last week? I'm beaming the first grade video into the clubhouse now while the game is on. You can get a beer and not miss the action :p


See ya's.
 
Surely a no brainer.... How long can wheat be produced at cost...?
You guys produce year in year out so what's the diff....I'd be taking a position for sure.

Futures contracts far out (over 6 mths) can be expensive, futures options may be better.
And of course the question is below who's cost of production?
Given our high currency and some nations subsidies it may be only a few that will be selling below cost.
Putting all that aside and thinking trading, if the national media says it's going down, I'd start looking at reasons to buy.
 
Hmmm that's what my FIL though ten years ago when everyone was getting out of sheep in the area. He thought he would stay in sheep as the price was bound to rebound. Kept saying that everyone was silly for the last ten years. He was right too - he was just ten years or so off... unfortunately these things are never simple!

TC - love your work! Good stuff.

Nothing is good all the time.

The best you can expect over the long term is a typical boom/bust cycle.

The blokes who chop and change all the time and chase markets largely end up caught in a bust/bust pattern.

RC
 
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