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Galahad, Alberta | Had a young neighbour come this morning to get the last load of barley that he had bought from me. He bought a hundred feeders this fall and had a buyer coming to look at them this week. He figured that with the cost of feed going way up ($3.85 is what I charged him) and the market price tanking, he would lose about $10-12,000. It won't sink him, as the family has dairy and grain land. I told him that I had locked in some barley to sell next fall at $4.55. He got a pained look and said, "well, guess that answers my question about whether to buy feeders for next winter."
These prices are great, but not sustainable. Just as high inputs and low returns drive farmers off the land, these high feed prices and low returns are going to force feeders to either sit on the sidelines for a while, or retire completely. The number of animals on feed will decline until the supermarket price goes up, and the feeders can then justify the feed cost, or wait until the feed price comes back into line before starting up again. Either way, the demand inside the continent must decline. As for outside the continent, I can't believe that other nations are willing to pay what they are for feed grain. One would think that these prices would stimulate production in these other nations as well. Could we be heading for over production in the next few years?
I think that things are happening way to fast in the pits for rational people to think through. The big jump in our commodity prices will do us far more harm in the long term than the short term gain. If you can lock in profit, do it. Don't worry about "it might go higher" 'cause it just puts one more feeder like my young neighbour out of the game. I think that I am going to sell some more barley if the price is still there, take the profit and lock it away so that I have it when the feed price swings back the other way.
Rosco
Note, this is the Canadian feed scene, and while not the same as south of the line, I'm sure the principle is similar. | |
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Hang on to your profits
