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Grain Prices Could Be The Nail in the Economic Coffin

By George2 Wrote: Jul 18, 2012 6:46 AM

I have just completed a motoring venture through the corn belt of the mid-west i.e.: Missouri, Kansas, Nebraska and S.D.. It is in a severe drought. Daily, temps. rose to 100 deg. plus and shockingly, corn was only three feet high in most places when it should have been 6 - 7 feet. We're in trouble folks and it happend on Obama's watch. He was supposed to stop the seas from rising, the earth from warming and make us all happy. He has failed on all accounts and canot blame Bush.

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Reginald10 Wrote: Jul 18, 2012 9:00 PM

No, the hot weather is all the Republicans' fault. If they would only let him borrow a couple of trillion dollars more for a bigger stimulus, everything would be just fine.

/sarcasm

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Jeff3820 Wrote: Jul 18, 2012 8:52 AM

No President can control the weather. Important to remember that. However, they do control farm policy. Problem with farm policy is the subsidies, and ethanol policy. Ending them would cause the price of grains (and sugar) to drop.

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J352 Wrote: Jul 18, 2012 1:08 PM

Farm subsidies in the form of direct payments, counter-cyclical payments, and loan deficiency payments do not effect market prices directly; they are completely decoupled from the market. Direct payments are simply another check to the farmer. Counter-cyclical payments haven't been disbursed in a long time. So, short-term price effects of getting rid of payments (this is the last year for them by the by) are nil. Long term price effects depend upon how cropping systems diversify once the incentive to grow so much of one thing is removed (there are 6 crops that receive most subsidy payments). However, revenue insurance (proposed in the new farm bill) will really incentivise grains - more so than commodity payments.

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Jeff3820 Wrote: Jul 18, 2012 6:12 PM

The family farmer is really no longer. Most checks go directly to corporations, which are in effect a subsidy.

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Grain Prices Could Be The Nail in the Economic Coffin

The economy is definitely sputtering. Clearly, all the stimulus, cheap money and extraordinary market manipulation by the Federal Reserve and US Treasury haven’t worked. Heck, they even let banks lie about the rates they were exchanging money at and that didn’t work! With all the money that we have printed and spent, it’s amazing we are still in trouble.

But there is a new storm brewing. It’s in the grain market. If you haven’t been paying attention, corn prices($CORN), soybean prices($ZS_F) and wheat prices($ZW_F) have gone through the roof this...