While living in India as a student, I was tormented for awhile with a certain dream. I returned home to Cherry Valley after a year of wandering the world and the house I grew up in was gone. I could not find my parents.
The dreams stopped the day I realized the house was gone! I was remembering the house where it used to be. Dad moved it 900 feet east when Route 11 came through our farm. My dream was a mixture of reality and fantasy. My subconscious mind had not adjusted to the reality of the move.
I was experiencing what, in the modern age, we like to call a paradigm shift. The rules and circumstances had changed.
The grain business is in the middle of one of those shifts, and it is not pretty.
The shift was to unlimited demand by the booming ethanol industry last year. The boom exploded prices until corn was worth over $7. The industry analysts talked like this was a shift that would forever change the landscape of agriculture. Corn acres increased sharply, resulting in exponential growth in input costs, limiting the profit growth for the producer.
That was then and this is now.
Now we have ethanol plants bankrupted by those high corn prices, and sitting empty.
Now we have the increased acres and good projected yields that have us with nearly a 2 billion-bushel carryover in corn coming.
Now we have the high input costs to plant this crop that we cannot recover from the reduced prices, as the new shift has us back to less demand.
December corn futures made another new low on the Monday overnight, at 3.02. As recently as Aug. 3, we were at 3.76. November soybeans touched 9.10 overnight, although they also traded at over 9.35. There is a lot of volatility, even in one day.
Harvest is close, and we should expect lower prices unless we are surprised by last-minute problems or yields. The real surprise though, would be conditions that would cause us to boom again.
We are stuck with the shift in mood, the shift in conditions.
The house I grew up in is still there, in its new location. Mother rode along, playing the piano while it was moved. She is gone now, and Dad before her. The house went outside the family. I can’t go home again.
And, we can’t go back to the markets of 2008.