Wheat Prices up WHATS NEXT ???

[fstedy]

I just read an article in the newspaper that wheat prices have risen from $15 per 50 pounds to $50 a bag. Evidently the Bakers are really having a hard time holding their prices. It seems like the whole economy is going NUTS. How long can this country continue on this road? Are we dealing with our economic problems by making false adjustments to it ( rebates which we can't pay for ect. )? We just can't keep shipping our industry and raw materials overseas. Can we  subsist on service alone?  Sorry for the rant but I get so frustrated I hate to read the paper anymore.

[SwampDonkey]

I look at who is actually benefiting from the increased price. Anyone that has farmed knows full well that it's time for an increase, but is the farmer getting it? In my experience the farmer gets a pennyworth and the seed suppliers and flour mills get the real benefits. All you have to do is mention a price increase and it gets hype. I wouldn't blame the farmer for selling all his canola for biofuel if it's a better price. A dollar ahead is better than $0.20 behind on production costs in my book.

[Dana]

My understanding on this is that the folks who were investing on wall stree
, Simply moved their money to the Chicago board of trade and are speculating on the commodity market. Run the prices up, then take a tidy profit, let it fall and do it all over again.

[rbhunter]

I have said this for years that a country cannot exist on service alone. You must produce something for export or you will eventually end up in a large debt. Our country continues to try and rely on service and to push the need of college. I think there is  a need for both those with a college education and also for those with skills to work in the production of goods. I have worked along both lines and feel that so many people who have the education have no idea what some of the workers are worth and the information they can provide who do not have the college degree.

One of the problems with college is that most of the people who go through it think there is always one best way to perform an operation without looking at all of the facts. Where I work now they are trying to put just in time ordering in place. We use the same processes and methods and machines on several models. On most of the steps the processing in about the same on each model. There are some steps in which the larger models may take roughly twice as long and some steps where the larger models take about 4 times to maybe 10 times as long depending on how things are building that day. This is also one of the first steps in the building process. The company has slowed down what it will allow on the small models and will stop at times instead of building up ahead a little ways so they have people standing around during this stage we will call the first step. Next they will go to the harder model and these people will be working hard and not getting much out but the next process will be standing around waiting on one to perform the next process. Management has calculated how long it should take to make the different models and cannot figure out why we can't hit that mark. By they also restrict the flow of the easier models so it creates more problems also.

I agree with not building up a huge inventory but if they would place the excess small models on skids they could finish those and start on the harder models and build up some of those while the smaller ones was going through the system and by the time they reached the end of the harder models things would be evened out some. They also could move people and have less people building the smaller models and have more people in another area. Instead they have people standing and talking or leaning on a broom.

In management classes and books they state the Japanesse do not worry about showing how they do things because Americans cannot follow it. I think it is because Americans from college try and cookie cutter everything into one way is always the right way. Kind of like saying place a log on the mill and take so many cuts if it is a certain size and rotate 90 degrees and cut so many boards ...ect. You have to look at the log.

There are also other factors in the price of things as well as fuel, taxes, regulations and ect.

Randy

[Handy Andy]

  I sold my wheat for 7.70 a bushel,(60 lbs). Yesterday at the elevator it was 10.40   They are contracting next years wheat for about 10.10, of course I won't do it because don't know if my wheat will be good or not next year.  Last years crop was cut in half by the late freeze.  The manager said they have 10% of an average crop already contracted.  A lot of it for less then 10.10 too.

[Cedarman]

Farming just got a lot more risky.  Here's why.  Lets say farmers used to get $2.00 for a bushel of corn. Input costs are $1.75  Profit is $.25.  Now farmers are getting $5.00 for corn and inputs are $4.00  Profit is now $1.00.  But what happens if drought, or hail, or price crashes?  The potential for bigger profits is there, but also the potential for huge losses are there also. Costs for insurance is going to go way up.
Things just aren't like the good old days. Folks, we are in uncharted territory. 

A loaf of bread has about a dimes worth of wheat in it.  If the price of wheat doubles, then the loaf of bread should only be a dime more expensive.  Doesn't seem to work that way does it?

[scgargoyle]

What's next? Just about any food product, due to the increases in fuel, and the diversion of cropland for corn for ethanol. A lot of people have bought into the idea that ethanol from corn is the future. Seems like nobody sat down to figure out where exactly all this corn is going to come from. And it takes a lot of energy to grow corn and process it in to ethanol. Most of our meats and dairy are heavily dependent on corn, so as corn goes up, so goes these other commodities. And as more and more farm land switches over to corn, other crops, like wheat, are going to climb as well. So, instead of being at the mercy of oil prices alone, now we are also at the mercy of corn prices, and everything attached to them. Need more cheerful news? Check into steel prices in recent months. There goes the prices of cars, trucks, tractors, machinery, and durable goods.
     rbhunter touched on another big problem- the drain on our ability to produce rather than just manage. I'm sure everybody's tired of hearing me bring it up, but one only has to look at WWII, when this country was able to switch over to war production, and catch and surpass the Japanese in short order, despite their being way ahead of us at the start of the war. We've probably already lost that capability, since factories (and the people with the knowledge to man them) are fast disappearing in the US. Of course, our 'friends' the Chinese would never dream of doing anything bad to us, once they have the know-how, materials, and infrastructure to do what they want, would they?

[ARKANSAWYER]

 Large mill near here put in a scanner to scan the logs then the computer said how to saw it for the most lumber.  The reason behind this move was the equipment could be written off the taxes and the old head sawyer retired to go play with his cows.  Lumber tally grew from the same amount of logs due to the new scanner making the decisions and a new sawyer just watching the moniter.  But grade dropped so they just had more low grade to sale so they netted less profit.  Called in the scanner computer guy and dropped a few more grand to get a grade sawing program put in.  It works well but had to slow things down just a tad so it could scan the logs for defects before turning.  It started making less ties and more grade lumber while spitting out 4x6 pallet cants.  Company still making less net profit.  Could not find a good sawyer.  (they are a dying breed with all these computers)  When the company was $1.8 million in the hole and worth more in scrap metal then in any thing else they ran till the yard was empty and had an auction.  

 If you look at Wall Street no one makes money except very rich folks and brokers.  Now that they are playing with the futures in corn and wheat it will be the same again.  How  can a company like Ford Motor Co. stay in business if every quarter they lose money?  You sell more stock.  When is the last time a major company paid dividens to stock holders?  Most will just split the stock so they can sell more and you think you got a good deal because now you have twice as much of nothing as before.  It will all crash agian and the rich will still be rich and your 401 will be in the crapper.

[SwampDonkey]

That's what I've always said about company pension plans. If you aren't in control of your own money your probably in for a surprise. I've seen many a mill go down, and no more pension or substantially less than what you expect in the end. I think it has happened to many steal workers as well.

[Ron Wenrich]

So, how do you think we stack up on a productivity level?  You think we are falling behind?  Well, we're number 1.

Here's a little stat.  US factory worker puts out about $105,000/yr of goods, the Chinese puts out about $12,600.  They also put in about an extra 400 hours of work per year.

Farmers put out about $53,000/yr of output while the Chinese farmer's output was $910.

So, while manufacturing has gone out of the country, it hasn't been the high ball stuff.  Some of the stuff is pretty technical, and you need a fairly decent education just to do the regular labor stuff.  You may think that having a college education instantly transfers you into the ranks of the unwilling to get their hands dirty, but it ain't so.  Of all the really good workers I've seen in the manufacturing sector, those with college degrees were head and shoulders above any others.  

[Norm]

There's a lot of competition in the world market for grains. Our exports have gone way up because of the weak dollar and the standard of living being raised in countries such as China and India. They want to eat like we do and have started spending some of their money to do so. China was in the market last week for a major grain purchase and it really bumped up prices. There's also talk of a major drought in the midwest this year so that feeds it too. There's pretty tight supplies of wheat in storage now so it's simple supply and demand. As for the speculators yes there is some of that but the grain market traders are known for being very specialized, I doubt Goldman Sachs has much expertise there.

Wheat ground is not usually competing for acreage with corn but even around here we see some folks trying their hand at growing wheat even though our climate is not ideal for it. Hopefully the year will bring good crops and refill those storage bins.

We are still the breadbasket for the world in the US and the notion that China will hold their foreign reserves over our head is short sited. Our economy burps and theirs will go down the tubes long before ours. It is in their best interest to keep us happy, no where else in the world has the ability to feed like we do, and they don't want 1 billion citizens unhappy.

Pilgrim Prides' CEO was telling his investors that they were able to really raise prices lately. Had nothing to do with the price of corn, just the publics stomach for accepting price increases. If I had any major worry with our economy now it's inflation.

[bull]

This is not aimed at any member of this board or thread.... The dumbing down of America started years ago and smart Americans are a minority, we are the few that will survive and we better get our fingers out of our butts and start being heard.......  The over educated lazy A$$es that are running us into the ground need to be pushed aside and the hard working average Joe with half a brain better get it in gear and quick....... Gov't has thrown us under the bus, the hell with political correctness, speak out and be heard !!!!! We have had revolts in the past, I hope it doesn't get to it here in the US of A again...... Look at the mess in the rest of the world...... Life is too easy in this country for too many at this time...... Time for a little hard work, suck it up or get out, there is no time for crying,the time now is for action if we want to retain our #1 status....... Remember the american dream was not a Mc Mainsion it was the ability to be self sufficent and substainable......
Remember it took Stubborn Farmers to start this country it will take Stubborn Farmers to keep it going!!!

[ARKANSAWYER]

  China farmer only does $910 because he just has 3 acres and a water buffalo.  For the size of the country they really have very little farm land.
 What few production jobs left in this country do have to do very well or they to will be gone.  I will bet the profit on the China workers coin is alot higher.
 If you have a place of business and try to hire people you will soon find the problem with workers and production.  Try to hire someone to do hard work like working on the green chain.  The only ones you can get are those who can not get a job anywhere else because they can not pass a drug test or have a record.  I could offer twice the rate of any where else in the area and still not get any better workers.  My son who is 24 runs a construction crew of 4 men and he says himself that the people under 40 do not want to work.  He pays twice the going rate and all they want to do is stand on the job site and BS allday.  I work a crew of 4 and went through about 16 people last year and just James is still with me.  I am 46 and can work men half my age into the ground by lunch.  I get college kids who think they are smart but if I take the computer away from them and hand them a pencil and paper they can not figure out any thing.
 Look around at your friends and see how many work in service or in production.
 In my county there are 20,000 people.  1/4th of them are on some kind of disability, 1/4 are over 65 and retired or semi-retierd and 1/2 are to be working but we have 7% unemployment.  So of the 9,000 or so workers there are just 2,000 that are in production type employment.  So about 1/10th of my local population is doing something.  I can remember 30 years ago when that number would have been about 1/2 of the county was making something.  Just go to the store and try to buy something "Made In the USA".

[CLL]

One thing I'll never do is blame the farmers, they have been getting the shaft for years. Its the way things are done that is killing us. Everything touches 20 hands before the consumer gets it.
I agree with you Arkansawyer, we now have a generation of educated idiots. I have yet in the last few years found a young person that can figure how to make change. It's really sad how lazy young people are.

[Larry]

I dunno...record bean prices preceded Willie Nelson with Farm Aid.  We gonna go there again?  Don't look much different now than what it was like close to 30 years ago.

[WH_Conley]

Larry, I was farming hot and heavy ( before Farm Aid ) got bit on the but, scares me too.

[Dan_Shade]

people have thought young people are idiots for generations.

I used to have old SOBs tell me how young kids couldn't count change while I was counting it back to them.  There are plenty of smart folks left out there.  If things get bad enough we'll adapt.  Our food here is cheap, very cheap.  you can live on pennies a day in the US if you want to live on eggs and oatmeal, and other cheap foods.

[Haytrader]

Norm,

You are exactly right...supply and demand.
Price of wheat is high, just nobody has any to sell.
I would venture to say the average farmer here sells from 1/4 to 1/3 of his wheat at harvest time just to pay the custom cutter. The price was under $4/bushel at that time.
We had a bad year so not near as much wheat was raised.

We (my brothers and sisters) sold my dads wheat when it was $6.60 thinking it couldn't possibly go higher. One BIL runs the elevator and his SIL is the manager. Shows what we know.

With all the alcohol plants built or being built, there is a tremendous demand for grain. We deal with several large feedlots in our hay business and many grain trucks make daily trips there also. One feedlot we haul to has 65,000 head capacity. Last week they brought in 16,000 head in 5 days. They use several loads of grain a day. The company who has this yard has several others with total numbers around 250,000 head.
They have to have a lot of grain so there is meat at the grocery store.

[SwampDonkey]

The Canadian prairie soils are among the richest in the world along with the Peace River Valley  make a pretty huge bread basket to. I think any country producing way more food than they consume is a pretty good bread basket. ;D

[pigman]

I think it has happened to many steal workers as well.

SD, was that a Freudian slip. ;)

[Don_Papenburg]

Don't worry about the price of grain . It has not kept up with inflation ,even with todays prices .     The dry distillers grain from the ethanol process will feed the cattle as well as thew whole kernal corn would . Cows are not efficiant corn prossesors.If you want efficiancy you need to run chickens behind the cows.
One other point raised about how the price of corn and other grains would raise the price meat. Will never happen because the farmers input cost can not be added to the price of outputs .   Someone in Chicago prices the raw commodity and the Mecentile puts a price on what they will pay the farmer for the beef .  They could care less what it cost to produce.

[fstedy]

Let me clarify one thing about my post in no way would I imply the Farmer was the cause of rising prices. You folks work too hard for your money and are at the mercy of the middlemen. Everything does seem to be tied to the price of oil. I don't even want to think about the years to come.

[Kansas]

High priced grain most certainly will raise the price of meat. Already, Smithfield farms announced a reduction of their breeding hog herd of 5%. Wether they will remains to be seen, but you cant lose money forever. The cattle herd actually contracted slightly over the last year, at a time when normallyl it would be in an expansion phase. Eventually, low prices will filter back to the cow/calf operator, who will start culling more cattle. If 5 dollar or more corn becomes the norm, all meats are going to get a lot more expensive. Also, I would expect that marginal ground that was put into pasture will begin to be put back into grain production. It is already happening around here. Less pasture means less cow/calf.
The dried distillers grain is an excellent byproduct for feed rations. However, you can only use so much of it in finishing cattle, where the bulk of corn is used. You still have to feed a lot of corn, or similar grain, to finish out  for the beef we are used to finding in the store and steakhouses.

[SwampDonkey]

I think it has happened to many steal workers as well.

SD, was that a Freudian slip. ;)

Surely  ;D

[bull]

I am a direct marketer, told the middle man to go fly a kite..... Massachusetts is a leader in Agricultural direct marketing, we go back and forth with California for 1st place.... I sell direct to customer and make more money and don't have to wait for my money,all cash sales, no credit cards or vouchers.... I can pay my bills on time....

The USDA policy on cheap food is what hurts farmers, Also farmers are only assisted by 2.8 % of the entire USDA budget, the other monies fund food stamps and rural development all on the backs of the farmer....... 

If you can't afford a Mecedes you don't need one, If you can't afford the price of good food buy a cemetary plot.....