KC Fed: Less uncertainty about corn prices highlights liquidity

decrease font size  Resize text   increase font size       Printer-friendly version of this article Printer-friendly version of this article

A high probability of lower corn prices in 2014 is leading to prospects of lower incomes for U.S. corn producers.

The latest issue of the Main Street Economist from the Kansas City Fed explains that markets appear more convinced that corn prices are unlikely to match the levels of the past few years. Expectations of lower corn prices and reduced profitability for 2014 corn production underscore the importance of liquidity for agricultural producers.

Though crop producers often characterize price uncertainty as a nuisance to be managed through various risk management strategies, less uncertainty is not automatically better for producers. Expected future corn prices are significantly less volatile now than in recent years, but the decreased uncertainty is accompanied by prospects of considerably lower prices. The variability of expected harvest prices mirrors that of a decade ago as diminishing ethanol growth has curbed demand potential.

Liquidity allows producers to combat potential short-term risks of significantly weaker, or even negative, profit margins. Overall, farmers have greatly improved their cash position in the last several years, suggesting that a crisis in 2014 is unlikely. However, some less-liquid operations may be more exposed to short-term risk than others and weaker profitability could intensify challenges beyond 2014.

The article is available here


Buyers Guide

Doyle Equipment Manufacturing Co.
Doyle Equipment Manufacturing prides themselves as being “The King of the Rotary’s” with their Direct Drive Rotary Blend Systems. With numerous setup possibilities and sizes, ranging from a  more...
A.J. Sackett Sons & Company
Sackett Blend Towers feature the H.I.M, High Intensity Mixer, the next generation of blending and coating technology which supports Precision Fertilizer Blending®. Its unique design allows  more...
R&R Manufacturing Inc.
The R&R Minuteman Blend System is the original proven performer. Fast, precise blending with a compact foot print. Significantly lower horsepower requirement. Low inload height with large  more...
Junge Control Inc.
Junge Control Inc. creates state-of-the-art product blending and measuring solutions that allow you to totally maximize operating efficiency with amazing accuracy and repeatability, superior  more...
Yargus Manufacturing
The flagship blending system for the Layco product line is the fully automated Layco DW System™. The advanced technology of the Layco DW (Declining Weight) system results in a blending  more...
Yargus Manufacturing
The LAYCOTE™ Automated Coating System provides a new level of coating accuracy for a stand-alone coating system or for coating (impregnating) in an automated blending system. The unique  more...
John Deere
The DN345 Drawn Dry Spreader can carry more than 12 tons of fertilizer and 17.5 tons of lime. Designed to operate at field speeds up to 20 MPH with full loads and the G4 spreader uniformly  more...
Force Unlimited
The Pro-Force is a multi-purpose spreader with a wider apron and steeper sides. Our Pro-Force has the most aggressive 30” spinner on the market, and is capable of spreading higher rates of  more...
BBI Spreaders
MagnaSpread 2 & MagnaSpread 3 — With BBI’s patented multi-bin technology, these spreaders operate multiple hoppers guided by independent, variable-rate technology. These models are built on  more...


Comments (0) Leave a comment 

Name
e-Mail (required)
Location

Comment:

characters left


Conveyor Equipment

Adams Fertilizer Equipment manufactures several styles and types of conveying equipment including: chain drag conveyors, bucket elevator legs, stationary and ... Read More

View all Products in this segment

View All Buyers Guides

Feedback Form
Feedback Form