**Astromet's Advice For Farmers: 2015-2016**
Feb 5, 2015 21:08:43 GMT
sigurdur, glennkoks, and 2 more like this
Post by AstroMet on Feb 5, 2015 21:08:43 GMT
ASTROMET ADVICE FOR FARMERS: 2015-2016
AGRICULTURAL RISK OR PRICE LOSS INSURANCE COVERAGE?
By Theodore White, astrometeorologist.Sci
Several deadlines are coming closer for decisions that U.S. farmers need to make to comply with provisions of the new federal government farm legislation.
I have a range of problems with the new Farm Bill, since it was delayed for so long and then when passed causes several problems for farmers, who continue to feed the over-sized stomachs (and egos) of those policymakers and powerful agri-business interests in Washington DC.
Without farmers they would all be dead. However, I digress.
After my analysis of the general climate for American farmers, this post is to help farmers make those decisions in advance of the deadlines that are approaching.
Farmers have until February 27th to update yield history and/or reallocate base acres.
Farmers also have until March 31, 2015 to make a one-time choice between Agricultural Risk Coverage (ARC)or Price Loss Coverage(PLC) for crop years 2015 through 2018.
Then, from mid-April through to summer 2015, farmers will be signing contracts.
This is an important time, so I urge farmers to be at their best and on the ball when it comes to dealing with the new provisions of the Farm Bill.
After my calculations on future climate and economic conditions, I offer the following advice to farmers to help them out. Without all of you, the entire world would starve. You are all heroes and heroines in my book.
UPDATES ON YIELD HISTORY & REALLOCATION OF BASE ACRES
Since you cannot build base and if you have say, 200 acres of base on a farm serial number that is for a particular kind of crops, then when you get done you are still going to have 200 acres of base. So, if can’t build it, you CAN reallocate it.
Yield updating is a moot point, and that's due to past programs and the inability to update base yields. There are many farmers who still have relatively low base yields.
With the new Farm Bill there is the opportunity to take 90 percent of what you had during the 2008-2012 seasonal averages and in many instances that will be a higher number so really take a hard look there.
ON ARC OR PLC INSURANCE:
The Agricultural Act of 2014, also known as the Farm Bill, brought the most sweeping changes to American farm policy in nearly two
decades.
Among the biggest changes for farmers:
Direct payments have been eliminated. Farmers will no longer receive fixed payments per acre, whether crop prices are high or low - even if farmers didn't plant at all. Instead, farmers must choose one of two (2) primary commodity programs:
Price Loss Coverage (PLC)
Farmers will receive payments if a covered food commodity's national average marketing year price is below its 'reference price' (a new term for a target price.)
Under PLC, the payment to a farmer is triggered when the American marketing year average price falls below that reference price
specified in the Farm Bill.
The payment, when triggered, will equal the maximum of either the reference price minus the average marketing year price or the reference price minus the loan rate. The payment is on 85 percent of base production (i.e., base acres x program yield) for a particular crop.
Payments will be made on a crop-by-crop basis (using the farm’s base acreage and program yield for the particular crop) and only cover from the reference price down to the market loan rate price.
Example - Suppose a farmer has 100 base acres of soybean that has a program yield of 25 bushels per acre. The marketing year average price has fallen to $4.50 per bushel. What would be the total PLC payment?
Well, as the marketing year price is below the loan rate of $5.00/bu, the payment would equal the difference between the reference price and loan rate, or $8.40 - $5.00 = $3.40 per bushel.
The farmer's base production is 100 base acres x 25 bu program yield = 2,500 bushel. The payment rate is 85 percent, or 85
cents on the dollar.
So, the total payment would be 0.85 x $3.40 x 2,500, which would = approximately $7,225.
Now, suppose that the marketing-year average price for American soybeans was $7.00 per bushel?
That means that PLC payment would equal the reference price, minus the marketing year price, or $8.40 - $7.00 or $1.40 per bushel.
That means the farmer's payment would equal 0.85 x $1.40 x 2,500, or approximately $2,975.
Agricultural Risk Coverage (ARC)
Farmers who choose ARC then must choose one of two (2) ARC options:
(1) ARC-County Option — Crop revenue will be estimated using average county yields. (Called rolling the dice.) Farmers will receive payments ONLY if the ARC-County actual crop revenue is LESS than the ARC-County revenue guarantee.
The county-level revenue benchmark, for a particular year and for a covered food commodity is equal to the previous five-year Olympic average of the American marketing year average prices multiplied by the previous five-year Olympic average county
yield reported by the National Agricultural Statistics Service (NASS)
This so-called 'Olympic' average is calculated by taking the past 5 years of observations, throwing out the highest and lowest observations, and then averaging out the remaining three years.
However, before the Olympic average is calculated, a minimum plug price and yield are used. The plug price is equal to the PLC reference price, and the plug yield is equal to 70% of the county T-yield.
Let's break this economist rocket-science fancy talk down.
Say that a particular county had a previous 5-year history for corn yield along with the marketing year average American price.
The county T-yield is 180 bushels per acre (bpa). Therefore, the plug yield (70% of T) is 126 bpa. The plug price is the corn reference price of $3.70 per bushel.
Now, on the price side, say one year (2009-10) is replaced with the plug price of $3.70/bu.
On the yield side, one year (say 2012-13) is replaced with the plug yield of 126 bpa.
For the price Olympic average, they drop the minimum of $3.70 (2009-10) and the maximum of $6.89 (2012-13) and average out the remaining three($5.18, $6.22, $4.60) to get an Olympic average price of $5.33 per bushel.
For yield, they drop the minimum of 126 (2012-13) and the maximum of 178.8 (2013-14) and average out the remaining three (177.0, 186.4, 174.6) to get an Olympic average yield of 179.3 bpa.
Therefore, after all this rocket science economic gibberish, it appears to me that the county revenue benchmark equals out to $5.33 'Olympic' average price x 179.3 'Olympic' average country yield, which comes out to $955.67 per acre.
ARC-County says that it will provide 'shallow loss coverage' only when the actual county revenue falls below 86% of the revenue benchmark.
So that means that the maximum per acre payment is equal to 10 percent of the revenue benchmark, so the insurance coverage basically extends from 86% back down to 76% of the revenue benchmark.
Using that example, ARC-County would trigger program payments when the actual county revenue falls below $821.88 and would
pay a maximum of $95.67 per acre (i.e., that the 'actual' county revenue equals $726.31.)
To calculate the actual county revenue, it appears to me that the price cannot fall below the loan rate, so the formula is the maximum of the American marketing year's average price or meaning that the commodity loan rate is multiplied by the actual county average yield per acre (as reported by NASS.)
Also be mindful that for counties where both irrigated and non-irrigated yields are reported by the NASS, it seems that ARC-County
will allow for separate benchmark and actual revenues.
Also, the ARC-County program says that it will cut checks out on the per-base-acre for a program crop at an 85% rate, or 85 cents on the dollar.
Essentially, the ARC-County program is a county-level 'revenue option' offered to farmers and program payments will be triggered under three (3) possible scenarios:
1. Low U.S. average prices and low county yields
2. Average U.S. prices and low county yields
3. Average county yields and low average U.S. prices
So, this correlation between the 'county-level yield' and 'marketing year average' price is a major contributing factor to the frequency of program payments.
In cases of a strong negative correlation between price and yield, the odds of a payout will be very low due to the natural 'hedge' effect between the yield and the price.
That means that if price and yield have a strong positive correlation, then the odds of a payout will be quite good, as low
prices correspond to low yields and vice versa.
Unfortunately, in the real world, the laws of supply and demand tend to favor negative correlations rather than positive ones for most agricultural commodities.
(2) ARC-Individual Option — With this option, farmers will receive payments ONLY if the actual revenue from all covered commodities is LESS than the ARC-Individual guarantee. (More rolling of the dice.)
ARC-Individual uses farm-level yields instead of county-level for calculating the 5-year Olympic average yield in the benchmark revenue and for determining the yield for the actual revenue for each covered crop produced in a particular crop year.
Farmers can use 70% of the county's T-yield as a plug-in their 5-year yield history. The U.S. marketing year average price is still used for the price component of revenue in both calculations and is calculated the same way as for ARC-County.
So, to determine total farm level revenue, a weighted average of the per-acre revenue is calculated where the weights are the relative percentages of total planted acres of covered crops allocated to the particular crop.
EXAMPLE - Say a farmer planted 60% of his total acres to soybean (with benchmark revenue equals $350 per acre) and 40% corn (benchmark revenue equals $650 per acre) so that the total farm benchmark revenue would equal (0.6 x $350) + (0.4 x $650), which would equal a farm revenue benchmark of $470 per acre?
Well, that means that the ARC-Individual would trigger program payments when the farmer's actual revenue fell below 86 percent of $470, or approximately $404, and would pay up to a maximum payment of $47 per base acre (or 76% of $470, which equals $357 per base
acre.)
If the farmer had actual revenue of $300 for soybean and $400 for corn, the farm actual revenue would equal (0.6 x $300) + (0.4 x $400), or $340 per acre. In this case, it fell below the 76% threshold, so the farmer would receive the maximum payment of $47 per base acre of all covered crops.
However, note that ARC-Individual pays out at a 65% rate (or 65 cents on the dollar)so the farmer would receive a net payment of 0.65 x $47, or $30.55 per base acre.
Essentially, what we have here is lawyer-economist talk for farmers. That's when those hired by the federal government try to make farming even more difficult than it already is.
We should apply those same nickel-and-diming rules to them before a delicious farmer's meal is delivered to their sniveling mouths. The food grown out of the sacred dirt that their pretty little soft hands are so adverse to digging into themselves. They don't much like to get their hands dirty in Mother Earth's real soil, the little jerks.
However, I digress... excuse me.
Anyway, the ARC and PLC coverage is a 'one-time decision' that is effective up through 2018, that's the year when the new Farm Bill will expire.
So, these programs claim that it will provide income support to farmers under adverse price or crop yield conditions at levels above where their regular crop insurance coverage applied. The hard part is choosing which coverage to take.
After calculating the general climate conditions for 2015-2018, I urge farmers to choose the PLC, or PRICE LOSS coverage for crop years 2015-2018. In some cases, the PLC coverage will have to last to the year 2020.
My reason for this is that the climate conditions for the years 2015-2020 overall, will be stable enough to provide enough protection against crop loss due to climate conditions. But by the time we get to the next decade, make the switch to Agricultural Risk Coverage due to my forecast on the coming of global cooling.
However, before then, market conditions are those that will see a deflationary climate that will cause food commodities to suffer and due to this fact that means that Price Loss Coverage is favored.
Farmers need to keep in mind that they can be in the PLC program and the Supplemental Coverage Option (SCO) but if a farmer takes the ARC Option then you cannot buy SCO insurance.
SUPPLEMENTAL COVERAGE OPTION (SCO)
The SCO is a new supplement to crop insurance choices.
Only crops under PLC (but not ARC) are eligible. The SCO will be available for the 2015-2018 crop years - but not 2014.
There are two (2) versions of the ARC program that are, in reality, a shallow-loss revenue program:
Those that are a county-triggered program are called 'commodity specific' and that will pay out 85 percent of base acres.
The area-triggered program pays on 65% of base acres, so it is going to lump in your farm serial numbers all together across all of your commodities.
The problem with the Farm Bill is the fact that when it was written there were higher commodity price levels, but as it goes into effect this year, the fact is that deflation will have set in and commodity prices are going to fall considerably.
You cannot put on and wear those previous size-12 boots when your food foot has shrunk down to a size 8. There's going to be plenty of sloshing around inside that over-sized boot.
For those who grow cotton, you can buy the Stacked Income Protection Plan (STAX) or the SCO on cotton.
Now, STAX is only for cotton and is similar to the SCO, but it has a higher premium subsidy (an 80 percent subsidy and a 90 percent guarantee.) I believe that cotton producers will prefer STAX to SCO.
Anyway, on the SCO, you will be able to top off your individual coverage policy with an area-trigger policy.
What happened before is that you were not able to purchase two (2) insurance policies on the same acre, but now you can as the coverage was designed to cover layers of loss so that farmers can have two policies that insures the same acre.
Still, I foresee falling prices on a range of food commodities, including corn, wheat and soybean. Also livestock commodities will fall as will beef, chicken and pork. I also expect dairy prices to fall as well.
According to my forecast, there will be major price declines, but with an oversupplied market. There will be too much grain and oil seed around and there is a glut that is already building.
My calculations show that there are ample wheat inventories and that means that buyers from nations like Brazil, China and Nigeria will be receiving less wheat from the U.S.
Demand, which includes overseas sales in my forecast, will see the weakest demand in 20 years.
Also, know that the rising dollar will make American grain less appealing than food supplies from other countries. Also complicating the situation is the fact that domestic cattle producers have gone back to using more corn in their livestock feed rations.
Moreover, there are more factors that add to the deflationary climate that will force food prices downward, such as the glut caused by Russia's ban on US and European food imports.
There is also going to be a supermarket price war as well as food prices fall in 2015 and 2016 as consumers search for the lowest prices and best bargains out there.
With the coming declines in food commodities, it is wise to choose the Price Loss insurance coverage to protect your interests in the years ahead.
Any farmer who wants a detailed analysis of future weather, climate and economic conditions for their particular region and farm can contact Astromet at astrowhite360@gmail.com
AGRICULTURAL RISK OR PRICE LOSS INSURANCE COVERAGE?
By Theodore White, astrometeorologist.Sci
Several deadlines are coming closer for decisions that U.S. farmers need to make to comply with provisions of the new federal government farm legislation.
I have a range of problems with the new Farm Bill, since it was delayed for so long and then when passed causes several problems for farmers, who continue to feed the over-sized stomachs (and egos) of those policymakers and powerful agri-business interests in Washington DC.
Without farmers they would all be dead. However, I digress.
After my analysis of the general climate for American farmers, this post is to help farmers make those decisions in advance of the deadlines that are approaching.
Farmers have until February 27th to update yield history and/or reallocate base acres.
Farmers also have until March 31, 2015 to make a one-time choice between Agricultural Risk Coverage (ARC)or Price Loss Coverage(PLC) for crop years 2015 through 2018.
Then, from mid-April through to summer 2015, farmers will be signing contracts.
This is an important time, so I urge farmers to be at their best and on the ball when it comes to dealing with the new provisions of the Farm Bill.
After my calculations on future climate and economic conditions, I offer the following advice to farmers to help them out. Without all of you, the entire world would starve. You are all heroes and heroines in my book.
UPDATES ON YIELD HISTORY & REALLOCATION OF BASE ACRES
Since you cannot build base and if you have say, 200 acres of base on a farm serial number that is for a particular kind of crops, then when you get done you are still going to have 200 acres of base. So, if can’t build it, you CAN reallocate it.
Yield updating is a moot point, and that's due to past programs and the inability to update base yields. There are many farmers who still have relatively low base yields.
With the new Farm Bill there is the opportunity to take 90 percent of what you had during the 2008-2012 seasonal averages and in many instances that will be a higher number so really take a hard look there.
ON ARC OR PLC INSURANCE:
The Agricultural Act of 2014, also known as the Farm Bill, brought the most sweeping changes to American farm policy in nearly two
decades.
Among the biggest changes for farmers:
Direct payments have been eliminated. Farmers will no longer receive fixed payments per acre, whether crop prices are high or low - even if farmers didn't plant at all. Instead, farmers must choose one of two (2) primary commodity programs:
Price Loss Coverage (PLC)
Farmers will receive payments if a covered food commodity's national average marketing year price is below its 'reference price' (a new term for a target price.)
Under PLC, the payment to a farmer is triggered when the American marketing year average price falls below that reference price
specified in the Farm Bill.
The payment, when triggered, will equal the maximum of either the reference price minus the average marketing year price or the reference price minus the loan rate. The payment is on 85 percent of base production (i.e., base acres x program yield) for a particular crop.
Payments will be made on a crop-by-crop basis (using the farm’s base acreage and program yield for the particular crop) and only cover from the reference price down to the market loan rate price.
Example - Suppose a farmer has 100 base acres of soybean that has a program yield of 25 bushels per acre. The marketing year average price has fallen to $4.50 per bushel. What would be the total PLC payment?
Well, as the marketing year price is below the loan rate of $5.00/bu, the payment would equal the difference between the reference price and loan rate, or $8.40 - $5.00 = $3.40 per bushel.
The farmer's base production is 100 base acres x 25 bu program yield = 2,500 bushel. The payment rate is 85 percent, or 85
cents on the dollar.
So, the total payment would be 0.85 x $3.40 x 2,500, which would = approximately $7,225.
Now, suppose that the marketing-year average price for American soybeans was $7.00 per bushel?
That means that PLC payment would equal the reference price, minus the marketing year price, or $8.40 - $7.00 or $1.40 per bushel.
That means the farmer's payment would equal 0.85 x $1.40 x 2,500, or approximately $2,975.
Agricultural Risk Coverage (ARC)
Farmers who choose ARC then must choose one of two (2) ARC options:
(1) ARC-County Option — Crop revenue will be estimated using average county yields. (Called rolling the dice.) Farmers will receive payments ONLY if the ARC-County actual crop revenue is LESS than the ARC-County revenue guarantee.
The county-level revenue benchmark, for a particular year and for a covered food commodity is equal to the previous five-year Olympic average of the American marketing year average prices multiplied by the previous five-year Olympic average county
yield reported by the National Agricultural Statistics Service (NASS)
This so-called 'Olympic' average is calculated by taking the past 5 years of observations, throwing out the highest and lowest observations, and then averaging out the remaining three years.
However, before the Olympic average is calculated, a minimum plug price and yield are used. The plug price is equal to the PLC reference price, and the plug yield is equal to 70% of the county T-yield.
Let's break this economist rocket-science fancy talk down.
Say that a particular county had a previous 5-year history for corn yield along with the marketing year average American price.
The county T-yield is 180 bushels per acre (bpa). Therefore, the plug yield (70% of T) is 126 bpa. The plug price is the corn reference price of $3.70 per bushel.
Now, on the price side, say one year (2009-10) is replaced with the plug price of $3.70/bu.
On the yield side, one year (say 2012-13) is replaced with the plug yield of 126 bpa.
For the price Olympic average, they drop the minimum of $3.70 (2009-10) and the maximum of $6.89 (2012-13) and average out the remaining three($5.18, $6.22, $4.60) to get an Olympic average price of $5.33 per bushel.
For yield, they drop the minimum of 126 (2012-13) and the maximum of 178.8 (2013-14) and average out the remaining three (177.0, 186.4, 174.6) to get an Olympic average yield of 179.3 bpa.
Therefore, after all this rocket science economic gibberish, it appears to me that the county revenue benchmark equals out to $5.33 'Olympic' average price x 179.3 'Olympic' average country yield, which comes out to $955.67 per acre.
ARC-County says that it will provide 'shallow loss coverage' only when the actual county revenue falls below 86% of the revenue benchmark.
So that means that the maximum per acre payment is equal to 10 percent of the revenue benchmark, so the insurance coverage basically extends from 86% back down to 76% of the revenue benchmark.
Using that example, ARC-County would trigger program payments when the actual county revenue falls below $821.88 and would
pay a maximum of $95.67 per acre (i.e., that the 'actual' county revenue equals $726.31.)
To calculate the actual county revenue, it appears to me that the price cannot fall below the loan rate, so the formula is the maximum of the American marketing year's average price or meaning that the commodity loan rate is multiplied by the actual county average yield per acre (as reported by NASS.)
Also be mindful that for counties where both irrigated and non-irrigated yields are reported by the NASS, it seems that ARC-County
will allow for separate benchmark and actual revenues.
Also, the ARC-County program says that it will cut checks out on the per-base-acre for a program crop at an 85% rate, or 85 cents on the dollar.
Essentially, the ARC-County program is a county-level 'revenue option' offered to farmers and program payments will be triggered under three (3) possible scenarios:
1. Low U.S. average prices and low county yields
2. Average U.S. prices and low county yields
3. Average county yields and low average U.S. prices
So, this correlation between the 'county-level yield' and 'marketing year average' price is a major contributing factor to the frequency of program payments.
In cases of a strong negative correlation between price and yield, the odds of a payout will be very low due to the natural 'hedge' effect between the yield and the price.
That means that if price and yield have a strong positive correlation, then the odds of a payout will be quite good, as low
prices correspond to low yields and vice versa.
Unfortunately, in the real world, the laws of supply and demand tend to favor negative correlations rather than positive ones for most agricultural commodities.
(2) ARC-Individual Option — With this option, farmers will receive payments ONLY if the actual revenue from all covered commodities is LESS than the ARC-Individual guarantee. (More rolling of the dice.)
ARC-Individual uses farm-level yields instead of county-level for calculating the 5-year Olympic average yield in the benchmark revenue and for determining the yield for the actual revenue for each covered crop produced in a particular crop year.
Farmers can use 70% of the county's T-yield as a plug-in their 5-year yield history. The U.S. marketing year average price is still used for the price component of revenue in both calculations and is calculated the same way as for ARC-County.
So, to determine total farm level revenue, a weighted average of the per-acre revenue is calculated where the weights are the relative percentages of total planted acres of covered crops allocated to the particular crop.
EXAMPLE - Say a farmer planted 60% of his total acres to soybean (with benchmark revenue equals $350 per acre) and 40% corn (benchmark revenue equals $650 per acre) so that the total farm benchmark revenue would equal (0.6 x $350) + (0.4 x $650), which would equal a farm revenue benchmark of $470 per acre?
Well, that means that the ARC-Individual would trigger program payments when the farmer's actual revenue fell below 86 percent of $470, or approximately $404, and would pay up to a maximum payment of $47 per base acre (or 76% of $470, which equals $357 per base
acre.)
If the farmer had actual revenue of $300 for soybean and $400 for corn, the farm actual revenue would equal (0.6 x $300) + (0.4 x $400), or $340 per acre. In this case, it fell below the 76% threshold, so the farmer would receive the maximum payment of $47 per base acre of all covered crops.
However, note that ARC-Individual pays out at a 65% rate (or 65 cents on the dollar)so the farmer would receive a net payment of 0.65 x $47, or $30.55 per base acre.
Essentially, what we have here is lawyer-economist talk for farmers. That's when those hired by the federal government try to make farming even more difficult than it already is.
We should apply those same nickel-and-diming rules to them before a delicious farmer's meal is delivered to their sniveling mouths. The food grown out of the sacred dirt that their pretty little soft hands are so adverse to digging into themselves. They don't much like to get their hands dirty in Mother Earth's real soil, the little jerks.
However, I digress... excuse me.
Anyway, the ARC and PLC coverage is a 'one-time decision' that is effective up through 2018, that's the year when the new Farm Bill will expire.
So, these programs claim that it will provide income support to farmers under adverse price or crop yield conditions at levels above where their regular crop insurance coverage applied. The hard part is choosing which coverage to take.
After calculating the general climate conditions for 2015-2018, I urge farmers to choose the PLC, or PRICE LOSS coverage for crop years 2015-2018. In some cases, the PLC coverage will have to last to the year 2020.
My reason for this is that the climate conditions for the years 2015-2020 overall, will be stable enough to provide enough protection against crop loss due to climate conditions. But by the time we get to the next decade, make the switch to Agricultural Risk Coverage due to my forecast on the coming of global cooling.
However, before then, market conditions are those that will see a deflationary climate that will cause food commodities to suffer and due to this fact that means that Price Loss Coverage is favored.
Farmers need to keep in mind that they can be in the PLC program and the Supplemental Coverage Option (SCO) but if a farmer takes the ARC Option then you cannot buy SCO insurance.
SUPPLEMENTAL COVERAGE OPTION (SCO)
The SCO is a new supplement to crop insurance choices.
Only crops under PLC (but not ARC) are eligible. The SCO will be available for the 2015-2018 crop years - but not 2014.
There are two (2) versions of the ARC program that are, in reality, a shallow-loss revenue program:
Those that are a county-triggered program are called 'commodity specific' and that will pay out 85 percent of base acres.
The area-triggered program pays on 65% of base acres, so it is going to lump in your farm serial numbers all together across all of your commodities.
The problem with the Farm Bill is the fact that when it was written there were higher commodity price levels, but as it goes into effect this year, the fact is that deflation will have set in and commodity prices are going to fall considerably.
You cannot put on and wear those previous size-12 boots when your food foot has shrunk down to a size 8. There's going to be plenty of sloshing around inside that over-sized boot.
For those who grow cotton, you can buy the Stacked Income Protection Plan (STAX) or the SCO on cotton.
Now, STAX is only for cotton and is similar to the SCO, but it has a higher premium subsidy (an 80 percent subsidy and a 90 percent guarantee.) I believe that cotton producers will prefer STAX to SCO.
Anyway, on the SCO, you will be able to top off your individual coverage policy with an area-trigger policy.
What happened before is that you were not able to purchase two (2) insurance policies on the same acre, but now you can as the coverage was designed to cover layers of loss so that farmers can have two policies that insures the same acre.
Still, I foresee falling prices on a range of food commodities, including corn, wheat and soybean. Also livestock commodities will fall as will beef, chicken and pork. I also expect dairy prices to fall as well.
According to my forecast, there will be major price declines, but with an oversupplied market. There will be too much grain and oil seed around and there is a glut that is already building.
My calculations show that there are ample wheat inventories and that means that buyers from nations like Brazil, China and Nigeria will be receiving less wheat from the U.S.
Demand, which includes overseas sales in my forecast, will see the weakest demand in 20 years.
Also, know that the rising dollar will make American grain less appealing than food supplies from other countries. Also complicating the situation is the fact that domestic cattle producers have gone back to using more corn in their livestock feed rations.
Moreover, there are more factors that add to the deflationary climate that will force food prices downward, such as the glut caused by Russia's ban on US and European food imports.
There is also going to be a supermarket price war as well as food prices fall in 2015 and 2016 as consumers search for the lowest prices and best bargains out there.
With the coming declines in food commodities, it is wise to choose the Price Loss insurance coverage to protect your interests in the years ahead.
Any farmer who wants a detailed analysis of future weather, climate and economic conditions for their particular region and farm can contact Astromet at astrowhite360@gmail.com