Let’s Start with Corn
Well it was a wild ride on the commodities market this past week as corn hit $7.40 and soybeans hit $15.71. We haven’t seen prices like this in something like ten years or more, and a lot of people are puzzled by why the commodities prices have spiked up this high, this fast. There are no natural disasters or reports of extreme shortages that would cause this, so what’s going on?
It’s a combination of things that have made the markets a wee bit nervous. China is trying to rebuild its pig herds after they were decimated because of culling from African Swine Fever, so there is increased demand there. There are weather problems in parts of South America that are interfering with some corn production down there. USDA announced that US farmers are going to plant less corn this growing season. The reduction isn’t much, but enough to make people think it might make supplies tight. They think people are going to be driving a lot more this summer which is going to mean increased demand for gasoline which, in turn, means more demand for ethanol to meet the blending requirements.
So here we are with corn at 7.49 at the moment. Extended out into the future commodities prices get more reasonable, but not by much. July corn is sitting at 6.73 which is still high but not utterly horrible, and September corn is at 5.92
So, why should you be interested in corn prices? Because volatility in corn prices ripples through the whole economy. High corn prices mean it costs a lot more for the dairy, beef, chicken and pork producers to feed their cattle. That’s going to put pressure on consumer food prices across the board, not just dairy products and meat. High corn prices can force producers to look at other grains like wheat to substitute. That can push wheat prices up, increasing costs for flour, which increases the cost of baked goods. Well, you get the idea.
It also puts pressure on fuel prices. The government mandates that refiners blend a certain amount of ethanol into their fuels, and in the US the majority of that ethanol is made from corn.
Now the markets can absorb some of these increased costs, but not a lot and not for long, and sooner rather than later it’s going to result in increased prices on consumer products. So if corn prices stay this high for much longer, you’re going to see that rippling out into increased prices on food, fuel and other products that you buy yourself. Some companies like General Mills and a few others have already already announced that they’re going to have no choice but to start raising consumer prices. Wholesale beef prices have gone up about 33% already this past month.
And it isn’t just food. Just look at the craziness going on with lumber. And speaking of lumber…
What The Hell Is Going On With Lumber?
That’s a question a lot of people are asking because lumber prices have gone nuts. Prices on lumber have spiked up around 360% in just the past year. That is not a typo. 360% in one year. I was paying under $2 for 2×4 studs last year, now that’s up to around $7 each. MrsGF and I have pushed back plans to do a few remodeling projects here at the house because not only have prices skyrocketed, it’s hard to get materials even at those prices. I talked to one contractor who builds houses. he bid on building one house late last year at $350K and now the same house would be closer to $450K.
Why this abrupt spike in prices? It isn’t because there’s a shortage of trees or something like that. Nor are the people growing trees getting the money. They’ve seen only a 2% increase in the price they’re getting for the logs. It’s all the haulers, sawmills and processors in between that are the cause.
The claim is that it’s being caused by a labor shortage. They can’t find truck drivers, workers at sawmills, tree cutters, etc.
Herbicide and Plastic Shortages
As if corn and lumber prices weren’t enough to worry about, we’re also seeing shortages of herbicides, insecticides, fungicides and, believe it or not, plastics. Farmers are having trouble finding things like field drainage tile and the plastic wrap used to protect bales. There are reported shortages of glyphosate and some other herbicides, some fungicides and insecticides that are used to prevent weeds and protect crops.
What this all adds up to is considerable pressure to increase prices. Someone has to pay for all of these increased costs and in the long run that’s going to be us, the consumers. How bad those increases will be, well, I have no idea. It is going to depend on how long commodities prices remain high and how much of the cost increases the industry is willing to absorb before they have to raise prices. As I said earlier in this, a lot of companies have already announced price increases.
Dairy Pride Act
So, let’s talk about plant based “milk”. I didn’t really want to talk about things like almond milk and all that, but it’s in the news again thanks to the Dairy Pride Act being pushed by Sen. Baldwin from Wisconsin and a few other politicians.
The whole problem revolves around that one word, milk, and how it is defined. There are two real definitions of the word, one biological, and one legal. Biologically speaking milk is the scrections of the mammary glands from mammalian animals and which are used to feed their young. The legal definition is, well, here’s a direct quote from federal government regulations:
“Milk means the lacteal secretion, practically free from colostrum, obtained by the complete milking of one or more healthy cows, which may be clarified and may be adjusted by separating part of the fat therefrom; concentrated milk, reconstituted milk, and dry whole milk. Water, in a sufficient quantity to reconstitute concentrated and dry forms, may be added.”
You will undoubtedly note a lot of problems with the above. The most glaring problem is that it claims milk only comes from cows, ignoring the fact that goats, sheep, horses, oxen, even beavers, give milk. (Mmmm, beaver milk. Yum. Wasn’t there an old Monty Python joke about Peruvian beaver cheese?) (Sorry, my mind just flashed up an image of a farmer trying to milk a beaver. That’s just the way my brain works. It scares me sometimes. My brain, not beavers.)
So, here’s the problem. For years now certain companies have been selling nut, grain or bean based liquids as substitutes for dairy milk and calling the stuff milk. This is, technically, illegal. The US has very strict labeling requirements when it comes to food, and the government has gleefully gone after a host of companies and individuals who mislabel their products. But not when it comes to this stuff. For whatever reason the agencies responsible for food labeling accuracy have blithely ignored the mislabeling of these products, despite a considerable amount of pressure from the dairy industry to do something about it.
Now you might think this whole thing is silly, and you do have a point. But on the other hand the anger of the dairy industry is understandable as well. The dairy industry has spent many, many decades and hundreds of millions of dollars in advertising, propaganda, health claims, puffed up PR campaigns and other efforts to try to make its products appear to be healthy, good for you, pure and wholesome, and even essential. And then along come these upstarts trying to cash in on all of the work the dairy industry put into making milk look good, and claiming that their products are “milk” as well, and, well, they’re pissed.
Legally speaking, the dairy industry has a valid point. This stuff does not meet the legal definition of “milk”. US food labeling laws, if strictly interpreted, should make the labeling of this stuff as “milk” to be illegal. But the court system doesn’t seem to see it that way and has let this continue, so, well, here we are then.
Politicians from large dairy states like Wisconsin are upset about this as well because, well, let’s be blunt here. The only reason they’re upset is because the dairy industry is paying them to be upset. The dairy industry pumps huge amounts of money into the coffers of these politicians and their PACs. The result is this Dairy Pride thingie which basically says that you can only label actual milk as milk.
Will this actually go anywhere? I have no idea. If it passes, will it help the dairy industry? No. Won’t do a thing to help the dairy industry. Will it hurt the fake milk industry? Probably not. They’ll just come up with something else to call their stuff, pump a few more bucks into their advertising budgets, and that will be it.
Now, let’s see, what else did I want to babble about? There was some more stuff… Oh, amateur radio! Gads, almost forgot about that.
My OCFD (that’s an “off center fed dipole” for you non-radio people out there, a kind of antenna) came down again. That is a long wire antenna, about 130 feet long in total. It had snapped before and I’d repaired it and put it back up, but it snapped again now, so I figure that years of hanging in the air and flapping about in the wind has caused metal fatigue or something in the wires, so I didn’t bother fixing it again. It’s going to come down and I already have another one on order. Why not build my own? I could, but I did mention about the lazy thing, right? Why build one when I can buy one that’s probably going to be better than I could make myself.
Meanwhile I’m using a GAP Titan DX vertical antenna which has turned out to be way, way better than I’d hoped. I’ve had that one up for some time now and it works amazingly well. I had contacts with 3 Japanese stations in the space of about 10 minutes yesterday afternoon using less than 100 watts output, plus one or two in Europe and in other exotic places like Texas, New York, etc.
My woodworking and wood turning has come to a screeching halt recently because I’ve been spending a lot of time out in the gardens hauling compost, tilling up stuff, etc. We got the onions and garlic in but it’s still too early to put anything else out. The weather hasn’t exactly been warm here except for two days when it was in the mid 80s. Generally it hasn’t gotten much above 50 here, with night time temps pushing down into the mid 30s or even a bit lower. That hasn’t kept the tulips from blooming though as you can see from that photo up there.
But back to wood working to wrap this up. I really enjoyed making decorative lamps with resin and wood and want to do some more of those, so I’ve got more resin on order and that should be coming this week yet. The few “jumble” pieces I did as experiments with odd bits of wood cast into resin, well much to my surprise people really seem to like those for some reason so I’ll probably do a few more of those. But what I really want to make are more decorative lamps. Anyway, more about that when I get into that.
4 thoughts on “Farm Catch Up: Corn Goes Nuts, Lumber Goes Insane, Dairy Pride Act Back, Herbicide Shortages, And Stuff”
I started reside my house last year in hardy board. The osb to go under it was 6 dollars per sheet. Now it is 35 dollars per sheet. I keep telling myself that eventually the housing bubble is going to burst again and prices will start falling, but maybe that is just wishful thinking on my part.
It’s gone absolutely crazy. OSB here is even more expensive. The contractor who put in our windows said the last few sheets he bought were pushing $50 each. The remodeling projects we were planning have all been put on hold until things settle down. I’m not sure how long prices can stay this high without really hammering the housing and construction market.
That’s a bit of a scary catch up. It seems like inflation is going to get bad very soon.
Yeah, I think we need to be concerned. The Fed doesn’t seem all that worried about it at the moment but if we don’t see some corrections in the markets fairly soon we could be looking at some serious inflation in some areas.