The office of Lynch Livestock, Iowa. We sold cull sows last week. Leroy always treats us well, but I was shocked with our price. He paid $.61 per pound for the heaviest sows weighing over 600 pounds. It was about $370 per sow. I can remember when I was pleased with $200 per sow.
Hog, cattle, corn, and other commodity prices are at or near historic highs. I’ve been trying to understand why this is happening and if it’s going to continue. Our direct-market meat used to be priced at a premium, paying us for the extra costs involved with hoop-house pork and grass-finished beef. But the commodity markets have narrowed that premium, and I’m rethinking it. Maybe grass-finished beef should be cheaper, since the cattle aren’t being fed high-priced corn?
A buddy turned me on to Chris Martenson. Chris says there is unprecedented levels of money and debt. Inflation is just more money chasing after the same amount of resources. The USA and world carry so much debt, there are only two ways out; default, or print more money. If more money continues to enter circulation, inflation will ensue. Inflation erodes wealth, because a dollar today buys less in the future.
Is this what’s happening in agriculture? We are certainly handling more money. But the costs of our inputs: fertilizer, corn, soybean meal, metal, wood, machinery, have all risen. Should we save for a rainy day or buy now?
Toasted Tofu sent me a link about how Goldman Sachs created the food crisis. It said that these huge hedge funds have been buying commodities, and only buying, and this has driven up the price of commodities. An error in the article says that corn prices just kept going up. Actually, in the last few years, corn went up to $7 per bushel, dropped back under $4, and then went back up over $7. There is definitely more volatility. My grandfather remembers when corn was $1 per bushel, only moving a few cents up or down for years and years.
As you can probably tell by this disjointed post, I don’t really understand what’s happening, or what’s going to happen. I guess I’ll continue to use this blog to post what is actually happening to me, and the prices I incur and receive. History always becomes a clear, concise, obvious story, but the future is always uncertain, with only fools and experts making obvious predictions.