Monday, September 30, 2013

Why are farmers morose?

 It is harvest time and farmers in the US Midwest may not be happy. The harvest will be good for both corn and soybeans, yet it will not be at the price levels seen last year. Corn is down over $1.5 per bushel. Soybeans are at about the same level as a year ago, but there is the consensus that prices will fall further as we move into the harvest. Grain prices are mean reverting. The high prices of last year on bad weather will be reversed on larger planting and better yields this year. This mean reversion is part of the life of being a farmer.

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