Good, Bad and Ugly
Published: 29 June 2013
I don’t know about you, but I think there are a lot of ag people out there with emotions that are racing up and down like a roller coaster. One minute, we’re walking on air, happy as all get out with hardly any cares in the world. It’s warm out, we’ve have had some rain and it looks like there is enough grass for another year. But then there are some that are not so happy, it has warmed up, but they haven’t had much precipitation. Something has to happen soon, or they’re in real trouble. Then there is what is on everyone’s mind, what is the rest of the summer going to look like? That could be ugly.
We’ve been through droughts before, and we’ll be around after this one is over, but it is hard not to be a pessimist at some point. They say the optimist invented the airplane, but the pessimist invented the parachute. In the livestock business, one has to be a little of both, I think. I like to think most of us are optimistic. Remember, they say the average pencil is seven inches long, but it only has a half-inch eraser.
We could fill up pages with the good lately in parts of the state. Some have taken ill, and good friends have had events to help raise dollars to help those ill with costs. Those ill soon found out they are very rich with friends, and they would do the same. Prices for agriculture supplies and fuel are high, but prices for livestock haven’t tanked. You are still making money, especially in cattle. Interest rates are low – way down thanks to some aggressive monetary policies by the Federal Reserve that have really helped with agricultural loans or all loans for that fact. The good news for livestock producers is some say grain prices have peaked and may start down, but that’s bad if you grow corn or other grains.
Land prices for farmlands have stabilized. That’s good if you want to buy and take advantage of low interest. If the Federal Reserve changes their policies, we may be in trouble. History has shown that a combination of falling profits and rising interest rates drive land prices lower, and so the stage is set for another leveraging cycle in the U.S., not unlike the 1920s or the 1980s.
If it stays wet, grazing lands may go up as livestock numbers increase, but they will not if you can’t afford to buy livestock. Wyoming and the region has lost enough livestock because of the drought, it’s time to move in the opposite direction.
Now the ugly part. Last week I read a weather update that said, “Compared to 2011 and 2012, the hottest and driest weather this summer should be shifted towards the west and extend from Texas into Nebraska and then westward. With a strong high pressure system likely to develop across the dry soils of the west, the jet stream will be displaced north of normal and this should favor the wettest weather along the Canadian border.”
But then I realized weather predictors are only right 50 percent of the time.