Posted by paul on August 08, 2008 at 11:42:24 from (66.60.197.207):
In Reply to: OT Grain prices posted by Big M on August 08, 2008 at 04:51:59:
If people are allowed to buy & sell what they want, we find the value of the item, and enough of the item to satisfy demand.
If the govt controls the price of something, we will end up with shortages (typically) or surpluses of things, and neither is a good thing.
If the govt controls the amount of a thing, then we will end up with very high or very low prices, typically on the high side.
Some of the most terrible years for farmers were when the govt encouraged huge expansion in grain production, followed by grain embargos to control the supply of grains. Our input costs still fluctuate, and will cripple us all - including those who think they are getting cheap food because of the govt controls.
The current system works the best. For the last 20 years we have had mostly cheap grain, and farmers barely make anything. No one was complaining then, as grains were priced too low....
Now, for 18 months, grain prices are up some, and it is some sort of national crisis. Huh? People stopped paying for grains what they were worth, so tree-huggers paid more for wildlife areas, others paid more for housing developments, roads, and grain production slowed down. No one cared, crops got too cheap, and farmers quit trying for record crops....
A real crisis would happen if the govt gets involved and tries to 'help' the situation.
Let a little bit of volitility happen, let the production match up with the demand, and all will work itself out just fine.
I'm in what is classified a near-drought area, I'm waiting for my fields to dry out so I can spray the aphids in my beans. Those buying & selling beans - what should they make of that situation? Too wet, too dry, too many bugs, too good or too poor bean crop????? They are real confused, and don't know what to make of the market or 2008 crop. Such big questions leads to prices see-sawing back & forth, until it sorts itself out.
Next spring, we will need to know if people want more beans or more corn or more wheat. If we do not allow the market to buy & sell those rumors, we will not know what crop to plant, and we very well could run out of one or the other. These big up & down markets are a part of the cure of tight grain supplies - they are not the problem.
If we think it's a problem & try to cure the market swings - _then_ we have a problem. What do you do when prices are controled by the govt, but we are out of soybeans???? No one will plant any more, because the govt has the price controlled. You go hungry..... Even tho bean prices are cheaper - you can't buy any cheap food, none left now.
Good deal huh? :)
Hey, rumor is that a huge chunk of soybeans got cought by a big investor group in a bad way, and the beans on-paper are getting sold off to change this company holdings around. This is really hammering bean prices, and dragging the rest down with it.
As fall comes, many feel we will have a much poorer crop of beans, and be short of them, so prices may likely spike right back up again. These lower prices are keeping buyers still buying beans, so the fall spike is more and more likely as the price drops now. It is an oppertunity for livestock growers to lock in a more sane price right now, and keep using all that corn & bean meal. Keep demand up, and we still have a very low carryout margin of both crops........
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