lock limit down

[muldoon]

Today prices for corn and wheat fell - with corn falling the maximum allowed by the exchange.  lock limit. 

"Corn futures for December delivery tumbled by the maximum of 30 cents, or 7.6 percent, to $3.6725 a bushel on the CBOT. In the second quarter, the price dropped 9.3 percent, the fourth straight decline.

The most-active contract has slumped 51 percent in the past year. On June 27, 2008, the price rose to a record $7.9925. "

http://www.bloomberg.com/apps/news?pid=20601087&sid=ashJl713Ms1I


http://www2.barchart.com/mktcom.asp

Corn prices from 1 year ago are down 50%.   is this what wheelbarrows of money to buy a loaf of bread looks like?

[Windpower]

Well the corn crop looks great here in the MidWest from what I have seen in my travels


Good spring

and now getting plenty of rain

[ScottA]

I'm sure more acres where planted after the good prices last year. Also I suspect demand is down worldwide due to a general lack of money. The banks are hording it. There is no food shortage in the world there is a money shortage.

[Virginia Gent]

I don't see a problem with lower corn & wheat prices. Doesn't that mean the foods that use those will be cheaper too?

[muldoon]

I don't see a problem with lower corn & wheat prices. Doesn't that mean the foods that use those will be cheaper too?

Prices below the cost to produce will bankrupt the farmers, that is the problem. 

[ScottA]

Perhaps that's the goal?

[Virginia Gent]

So then, you all are in favor of FDR's intiating quota's, which our government continues to do if I understand correctly, on what farmers can grow and how much of it ... all so they can make more money through artificial manipulation of market forces? Isn't artifical manipulation of market forces part of the reason we are in this mess to begin with?

Perhaps it's because corn & wheat were such good investments due to the high prices, that more people (farmers) began planting those crops & have saturated the market, thus driving the prices down? Or perhaps yet, it's because people have no money to spend, and so are saving instead of throwing their money around, thus lowering demand, & prices, for each respective crop?

Just some ideas is all. If y'all are privy to information I'm not, please share so I can revise my opinions. 

[ScottA]

Well it's whole lot more complicated than that Gent. I belive the free market should set the prices but we have nothing even close to a free market right now. I come from a farming/ranching background and I've watched the government systematicly destroy the small farmers. many large farms are subsidised by tax dollars which gives them an unfair edge.

That's just one tip of the iceberg welfare is another. People think wefare was created to help the poor. It's not true. Welfare was created to rob farmers of needed labor and force them to mechanize thier operations. To do this they had to borrow money from the banks. All part of the master plan. As the farms switched to machines this drove many people into the cities where they could be tapped to work in factories and pay taxes. years ago most farm workers paid little or any taxes because they where paid partly in room and board and recived little cash. It sounds like slavery and it was in a way but it also wasn't that bad of a life. It was no more slavery than a factory woker who has part of his pay confiscated in taxes.

Then came enviromental regulations, most of which where designed to control land use. The list goes on and on. Markets are controled. Who and where you can export crops to are controled. Bottom line is there is no food shortage. There are infact too many acres in production when you factor in fertilizer and pest control chemicals. If you took away those more acres could be farmed. As it stands now we have surplus land and surplus capacity. Just like oil the price of corn can be moved up or down by a few key players in the futures markets.

[peternap]

 That's pretty good Scott.

The sad part of it for people that farm for a living (I don't, I'm a gentleman farmer ) is that if I discount all my labor...I'll break even with the current prices. This has been a good growing year too.

My best bet at actually making a living at it is, grow what we eat and plant a small cash crop...then work another job.
Unfortunately, that's what many small farmers have to do.

[waggin]

Well it's whole lot more complicated than that Gent. I belive the free market should set the prices but we have nothing even close to a free market right now. I come from a farming/ranching background and I've watched the government systematicly destroy the small farmers. many large farms are subsidised by tax dollars which gives them an unfair edge.

That's just one tip of the iceberg welfare is another. People think wefare was created to help the poor. It's not true. Welfare was created to rob farmers of needed labor and force them to mechanize thier operations. To do this they had to borrow money from the banks. All part of the master plan. As the farms switched to machines this drove many people into the cities where they could be tapped to work in factories and pay taxes. years ago most farm workers paid little or any taxes because they where paid partly in room and board and recived little cash. It sounds like slavery and it was in a way but it also wasn't that bad of a life. It was no more slavery than a factory woker who has part of his pay confiscated in taxes.

Then came enviromental regulations, most of which where designed to control land use. The list goes on and on. Markets are controled. Who and where you can export crops to are controled. Bottom line is there is no food shortage. There are infact too many acres in production when you factor in fertilizer and pest control chemicals. If you took away those more acres could be farmed. As it stands now we have surplus land and surplus capacity. Just like oil the price of corn can be moved up or down by a few key players in the futures markets.

Well put economic analysis, Scott.  There are those who would love to see a return to feudalism, but then again, most independent farmers probably already feel like serfs on their own land for the reasons you discussed above.  More & more, it takes an ideal year every year just to service the debt on equipment,seed, and fertilizer.  The trend toward consolidation of farmland in a few corporate hands will continue.

So then, you all are in favor of FDR's intiating quota's, which our government continues to do if I understand correctly, on what farmers can grow and how much of it ... all so they can make more money through artificial manipulation of market forces? Isn't artifical manipulation of market forces part of the reason we are in this mess to begin with?

Perhaps it's because corn & wheat were such good investments due to the high prices, that more people (farmers) began planting those crops & have saturated the market, thus driving the prices down? Or perhaps yet, it's because people have no money to spend, and so are saving instead of throwing their money around, thus lowering demand, & prices, for each respective crop?

Just some ideas is all. If y'all are privy to information I'm not, please share so I can revise my opinions. 

Unfortunately, there are still subsidies for farming certain products that distort the supply, keeping it from matching demand and keeping the normal balance of nobody producing if it doesn't make economic sense.  Some people get paid to overproduce, while others get paid to leave arable land fallow. (believe that's still happening, anyway)  Of course, agricultural subsidies are based on acreage, and if you're a large corporation with several hundred thousand or millions of acres, you're subsidy is a lot larger than an indvidual family, and you can afford to contribute to politicians who will make sure policy is skewed toward benefitting you and your ilk.  Sadly, expect more and more family farms to disappear.  Big agribusiness and the politicians win; the rest of us lose.

[Virginia Gent]

I knew about large agrobusiness farms getting subsidies while the family farmers got the shaft, and don't worry ScottA, I know welfare is anything BUT helping society, so you're preaching to the choir. I'm also aware that our economy is anything but a free-market economy. I know there is a lot of regulation in every aspect of our economy, not just farming, so again, preachin' to the choir. Don't let my age fool ya, I think I have a better grasp on things than most people my age 

As I said, I'm not a farmer so I didn't know the ins & outs of the system, just the basics and what I have been able to gather myself through research. I actually like the idea of farming and have considered doing it myself, if not to make a living off of it, to at least be able to grow all my own food. Speaking of, can any of you give me an idea of how big of a farm/piece of land I might need to grow enough food to feed, say, a family of four? But I digress, I had no idea that the prices of crops could be manipulated like the oil prices, so I can understand why y'all are upset. At work we get a paper called "Virginia Small Business" (I think that's the name of it) and one month it was dedicated to Virginia's family farmers. It covered the falling prices of crops such as corn, wheat, and soy. It also went on saying that the prices of supporting services, like fertilizer and such, haven't fallen as well, which would support what y'all are saying now.

Sorry, I'll stop rambling, but if y'all could answer my one question that would be great. Also, and this is more directed towards Peternap since he lives in Virginia too, where do you suggest I try to by land to do this? I also have it in me to have a few animals as well, mainly goats & chickens. Basically ... I'm lookin' to homestead sometime in the near future.

[peternap]

Sorry, I'll stop rambling, but if y'all could answer my one question that would be great. Also, and this is more directed towards Peternap since he lives in Virginia too, where do you suggest I try to by land to do this? I also have it in me to have a few animals as well, mainly goats & chickens. Basically ... I'm lookin' to homestead sometime in the near future.

It depends on what you want to pay. Good farmland is still bringing a premium.

Your most bang for the dollar is Southern Va (Piedmont) Find some land near Danville (Which has been particularly hard hit by the economy to the tune of 14-15% unemployment), that has been recently logged. Getting the land ready to farm is work. The stumps have to be pulled and burned and the soil has to be adjusted and deep plowed.

But when your finished, you have something to be proud of!

[muldoon]

I'm sure more acres where planted after the good prices last year. Also I suspect demand is down worldwide due to a general lack of money. The banks are hording it. There is no food shortage in the world there is a money shortage.

This is a great comment, and quite relevant and accurate.  Here are some more examples of this showing up in other areas - from today:

from http://www.newyorkfed.org/markets/omo/dmm/fedfundsdata.cfm



The above is the overnight loan rate from the federal reserve bank.  Out of nowhere, someone somewhere paid 7% interest to borrow overnight.  They did not go to the discount window and pay the 0.01 - 0.10 % rate as everyone else does.  The only reason not to do so is not having sufficent collateral.  It says loud and clear that some big financial entity needs cash, and has few if any options availble to it.  money shortage.

Take a look at something else.

source: http://www.gmtfo.com/reporeader/OMOps.aspx
select a date from May 8th to today, click view TAF and chart it. 



It seems the last 6 weeks our illustrious federal reserve has removed some 155 billion dollars in liquidity from the open market operations.  It has pulled funds out of the market, (by not rolling over the debt), and this CONTRACTION in the immediate money supply has a huge liquidity drain on all of the market. 

As companies NEED operating cash, they must sell. 
note the dow down since mid June
note gold/silver down since June1
note the dollar flat, but down today
housing/mortages/construction down
foreign exchange markets - down but not flowing. 
rising credit card rates - across the board.
rising mortgage rates

-- all this leads the same place.  not enough money.  agriculter futures are just one example of something getting SOLD hard to raise cash.