Wednesday, November 3, 2010

The Election is Over

Well the election is over and hopefully not too much will be taken for granted in the Republican landslide. Likewise the incumbent survivors need to not be in glee for their past record. The fact is the American people have sent the same message they sent two years is time for Washington to listen to the will of the people.

Gridlock and finger pointing is no longer acceptable and if it continues there will be a new bunch of folks in 2012 as well.

Now how does the sweeping change in Washington play for Agriculture and Peanuts?

With sweeping losses in the south, with those losses went seniority. Our new team will be spending a lot of time learning the system and frankly, the system will consume them if they are not careful. There has been somewhat of a power shift from the South to the Midwest. The South used to keep incumbents there forever and therefore we had power.

It is no secret the Midwest has always believed Southern Agriculture had it too good for too long. There is not a really great understanding of the higher cost structure farmers in the South face.

It will be interesting to see how this shift plays out.

Issues to keep an eye on include payment limits, direct payments, disaster assistance, and more.

It is pretty evident that over time if the market is going to have peanuts they are going to have to assume more of the responsibility.

I don't really see this happening right now.

It seems that no-one in the industry past the grower ranks has a clue that cotton for next year is almost a dollar a pound and soy is over eleven and corn at over five. Once financing is arranged and inputs locked in and forward sales contracted for those other commodities, there will be no turning back.

Currently, cotton prices would indicate from the representative farm model and with significant agreement from farmers, peanut contracts will need to be in excess of $550 to compete for acres. Dollar cotton would command a price in excess of $600 to compete for acres.

Complicate all of this with the fact that the 2010 crop had increased levels of damage and aflatoxin which will further reduce the supply and the prediction from the Georgia State Climatologist that the current weather pattern of hotter than normal and drier than normal conditions will continue through much of 2011 and the market should be exciting.

If the industry fails to make a reasonable offer before mid December farmers will have made their decisions and someone will do without peanuts before the 2012 harvest.

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