Dan Basse, the founder of AgResource Company the company’s president and market Research manager, has spent more than three decades monitoring commodity trends and forecasting price swings to help his farmer-clients stay profitable even when volatility rocks the marketplace.
When he speaks, farmers listen. His Chicago-based company has a database going back to the early 1900s and has an extensive research portfolio covering global production, supply-demand and trade trends and agricultural price forecasting. Basse provides market information to farmers, elevator operators, grain and food processors and trading companies, among others. Perhaps more importantly, AgResource provide vital marketing guidance for farmers to help them maintain profitability during volatile market swings.
Dan Basse: ‘Farmers could be laughing all the way to the bank.’
“A recent study by USDA showed that two-thirds of net farm income these days is due to the business decisions farmers make, not to crop yields or livestock conversion ratios,” he explains. “The marketing of farm products has become more difficult, but it needs to be an important feature of every farm operation.”
That requires getting a handle on pricing trends, of course, and to discuss some of his firm’s forecasts for the months ahead, Basse spoke with Dan Murphy, AGNETWORK.COM’s Contributing Editor.
AGNETWORK.COM: Let’s start with key trends over the next six to 12 months. What are you focusing on?
Basse: We’re looking at factors such as the biofuel industry, livestock production and even consumer expectations about food prices. Cattle and hog prices seem to be headed toward record levels, while the dairy sector is going to be struggling under higher grain prices, since they don’t participate in the expansion of the export markets. All those factors are important [in our research], but the most critical factor is the movement in grain prices.
AGNETWORK.COM: What’s your prediction?
Basse: Grain prices could soar; that’s what we’re looking at.
AGNETWORK.COM: How so? What are the causative factors?
Basse: Weather, primarily. We just can’t afford any adverse weather affecting crop yields, otherwise we could see corn going to $7, $8 or even $9 or $10 a bushel. It’s all about supply. We just don’t have a surplus, right now. It’s the same with soybeans. Soy oil is one of the hottest commodities being traded, especially as Asia is struggling with palm oil production. The bottom line is that if there’s a weather problem in North America, Latin America, China, Europe, Russia, Canada—and of the producing countries—the world doesn’t have enough of a cushion on the supply side, and that’s going to cause dislocations and drive up prices.
AGNETWORK.COM: How would that affect U.S. farmers?
Basse: Well, if you’re a grain grower and you’re not affected by any weather events, you could be smiling all the way to the bank. But on the other side of the fence, [high prices] could be detrimental to a lot of other producers in agriculture. If prices do inflate, it’s likely to be a situation that won’t be resolved in a single season or two.
AGNETWORK.COM: Is there any potential for increasing grain production on global basis?
Basse: We might see an increase in acreage in Brazil or Russia, but neither of those countries is looking too favorably on agricultural expansion right now. That puts a lot of pressure on biogenetics and yield improvements.
AGNETWORK.COM: When food prices rose so dramatically a few years ago, there was some significant pushback on continued diversion of corn into ethanol production. Do you see the political climate on biofuels beginning to shift?
Basse: It would take a severe—and lengthy—price shock to shift Washington’s view, I believe. Just a few weeks ago, all parties signed off on continued tax credits for ethanol blenders, as well as production subsidies. The biofuel lobbies are very strong; they were able to get what they wanted despite lots of opposition.
AGNETWORK.COM: If commodity prices do rise to much higher levels, would a curb on biofuel production be a means of dampening that increase?
Basse: Possibly, but here’s the problem with that scenario: If we eliminated the 13.9 billion gallons of ethanol, which represents about 9% of total fuel supply, most experts estimate that the added gasoline we would need would drive up prices by as much as 50 to 70 cents a gallon. That’s not going to be accepted by consumers, but it represents the kind of choices that surging grain prices could force us to make.
AGNETWORK.COM: If global grain supplies remain tight, and biofuel production continues to ramp up, is it fair to say that U.S. farmers stand to benefit?
Basse: If you’re a grain grower, yes. But we like to think of agriculture as a system that’s balanced between livestock producers and crop farmers. However, because of the rapid build-up of biofuel production—which now consumes about 42% of the total corn crop, by the way—we don’t see any stopping a surge in grain prices that could reach record levels. That could initiate a profitable period for growers, but not so much for the livestock producers who have to buy that high-priced grain.
›› To learn more about the services of the AgResource Company, visit http://agresource.com/Default.aspx.
Dan Murphy is a veteran food-industry journalist and commentator
When he speaks, farmers listen. His Chicago-based company has a database going back to the early 1900s and has an extensive research portfolio covering global production, supply-demand and trade trends and agricultural price forecasting. Basse provides market information to farmers, elevator operators, grain and food processors and trading companies, among others. Perhaps more importantly, AgResource provide vital marketing guidance for farmers to help them maintain profitability during volatile market swings.
Dan Basse: ‘Farmers could be laughing all the way to the bank.’
“A recent study by USDA showed that two-thirds of net farm income these days is due to the business decisions farmers make, not to crop yields or livestock conversion ratios,” he explains. “The marketing of farm products has become more difficult, but it needs to be an important feature of every farm operation.”
That requires getting a handle on pricing trends, of course, and to discuss some of his firm’s forecasts for the months ahead, Basse spoke with Dan Murphy, AGNETWORK.COM’s Contributing Editor.
AGNETWORK.COM: Let’s start with key trends over the next six to 12 months. What are you focusing on?
Basse: We’re looking at factors such as the biofuel industry, livestock production and even consumer expectations about food prices. Cattle and hog prices seem to be headed toward record levels, while the dairy sector is going to be struggling under higher grain prices, since they don’t participate in the expansion of the export markets. All those factors are important [in our research], but the most critical factor is the movement in grain prices.
AGNETWORK.COM: What’s your prediction?
Basse: Grain prices could soar; that’s what we’re looking at.
AGNETWORK.COM: How so? What are the causative factors?
Basse: Weather, primarily. We just can’t afford any adverse weather affecting crop yields, otherwise we could see corn going to $7, $8 or even $9 or $10 a bushel. It’s all about supply. We just don’t have a surplus, right now. It’s the same with soybeans. Soy oil is one of the hottest commodities being traded, especially as Asia is struggling with palm oil production. The bottom line is that if there’s a weather problem in North America, Latin America, China, Europe, Russia, Canada—and of the producing countries—the world doesn’t have enough of a cushion on the supply side, and that’s going to cause dislocations and drive up prices.
AGNETWORK.COM: How would that affect U.S. farmers?
Basse: Well, if you’re a grain grower and you’re not affected by any weather events, you could be smiling all the way to the bank. But on the other side of the fence, [high prices] could be detrimental to a lot of other producers in agriculture. If prices do inflate, it’s likely to be a situation that won’t be resolved in a single season or two.
AGNETWORK.COM: Is there any potential for increasing grain production on global basis?
Basse: We might see an increase in acreage in Brazil or Russia, but neither of those countries is looking too favorably on agricultural expansion right now. That puts a lot of pressure on biogenetics and yield improvements.
AGNETWORK.COM: When food prices rose so dramatically a few years ago, there was some significant pushback on continued diversion of corn into ethanol production. Do you see the political climate on biofuels beginning to shift?
Basse: It would take a severe—and lengthy—price shock to shift Washington’s view, I believe. Just a few weeks ago, all parties signed off on continued tax credits for ethanol blenders, as well as production subsidies. The biofuel lobbies are very strong; they were able to get what they wanted despite lots of opposition.
AGNETWORK.COM: If commodity prices do rise to much higher levels, would a curb on biofuel production be a means of dampening that increase?
Basse: Possibly, but here’s the problem with that scenario: If we eliminated the 13.9 billion gallons of ethanol, which represents about 9% of total fuel supply, most experts estimate that the added gasoline we would need would drive up prices by as much as 50 to 70 cents a gallon. That’s not going to be accepted by consumers, but it represents the kind of choices that surging grain prices could force us to make.
AGNETWORK.COM: If global grain supplies remain tight, and biofuel production continues to ramp up, is it fair to say that U.S. farmers stand to benefit?
Basse: If you’re a grain grower, yes. But we like to think of agriculture as a system that’s balanced between livestock producers and crop farmers. However, because of the rapid build-up of biofuel production—which now consumes about 42% of the total corn crop, by the way—we don’t see any stopping a surge in grain prices that could reach record levels. That could initiate a profitable period for growers, but not so much for the livestock producers who have to buy that high-priced grain.
›› To learn more about the services of the AgResource Company, visit http://agresource.com/Default.aspx.
Dan Murphy is a veteran food-industry journalist and commentator
Aucun commentaire :
Enregistrer un commentaire