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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 374.35+0.7%Nov 18 4:00 PM EST
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To: Joan Osland Graffius who wrote (107188)8/24/2014 2:54:26 AM
From: Haim R. Branisteanu  Read Replies (3) of 217868
 
Thanks Joan, I would like to ask for clarification as to what you deem as cost of growing crops, and if the study provided extension.iastate.edu indeed correctly reflects the actual cost of growing corn.

The forward price for corn was above $5 for only a brief period this year, mostly thanks to the Ukrainian situation during the month of April 2014 and I presume that most farmers as you write covered their cost possible at a small profit. Those farmers that decided to grow corn after soy beans indeed where able to lock in nice profits by selling their crop 20% above Iowa State cost calculation, which may not represent farm to farm production cost.

What you actually write is that the farmers are forced to "swim with the sharks" of WS, and this is almost always a loosing proposition.

By evaluating the long term chart of corn it seems to me that farmers where not always as lucky and where better off by not hedging as the prices rose due to the low yield of their crops, that may have not being sufficient to cover the shortfall of their hedging strategies.

If compared to other businesses with just in time deliveries of production inventory it seems to me that being a farmer is a very high risk - high investment type of business and only the love of farming within the person character gives him satisfaction.
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