Let’s face it – the past few years have been good for agriculture. As demand for crops has increased worldwide, growers have enjoyed record commodity prices. This has translated into strong sales for everyone who makes a living in the agricultural marketplace, from equipment manufacturers to ag retailers.
Yet, despite this good fortune, I’ve heard many a market analyst predict the boom times would soon come to an end. Indeed, I remember hearing such a “doom and gloom is coming” message at the 2011 Mid America CropLife Association (MACA) meeting. In a nutshell, the speaker believed that another strong harvest during 2012 would provide ample crops to meet global demand and this would depress corn and soybean prices back into the “$2.50 and $7 range, respectively.” This would continue to be the norm for the next five years at least went this line of thinking as U.S. growers gathered near record harvests in the fall.
Of course, if you’ve checked the latest commodity prices, you know we are a long way off from $2 corn. Because of the nationwide drought, which has effectively “toasted” half the U.S. corn crop – along with a good portion of the soybeans for 2012 – commodity prices are at record highs ($8.50 for corn and $17 for soybeans as of this writing). According to USDA, the amount of carryover for these important crops will be at near record lows for the year. Furthermore, long-range weather forecasts predict the “hot and dry” conditions of 2012 could persist well into 2013 or 2014.
This week, I will be at the 2012 annual MACA meeting. One of the speakers at this event will be Jim Farrell, president/CEO of Farmers National Co., addressing the question “Will the Golden Era of Agriculture Continue?”
I will be very interested to hear Farrell’s view on this, but I suspect I already have my answer – at least based upon this morning’s commodity price report.