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Crop Forecasts And Their Reliability As A Planning Tool For Agricultural Investors

Benedict T. Palen, Jr. is principal of Ag Management Partners, Benedict T. Palen, Jr has a lifetime of experience with agricultural investments, operations,management. <br>

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Crop Forecasts And Their Reliability As A Planning Tool For Agricultural Investors

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  1. Crop Forecasts And Their Reliability As A Planning Tool For Agricultural Investors There is always much anticipation when the USDA issues long term forecasts for grain supply, demand, and prices.    Some market participants seize on trends that they believe they detect when, say, acreage of a certain crop declines over a couple of year period, or when there is an apparent large amount of over supply of one grain or the other.

  2. Crop Forecasts And Their Reliability As A Planning Tool For Agricultural Investors From the perspective of a farmer, and market participant for 40 years, all of these forecasts need to be taken with a grain of salt.    One need only look at, say, the USDA price forecasts for a 10 year period for a commodity, and then look back to compare the actual prices during that period, to see, that these long term forecasts are inherently flawed.    As another example, there were articles in some publications within the last year predicting the demise of wheat production in Kansas (which has long been a leading wheat producer in the USA), all because of low prices for wheat, and shifts to other crops.  Ah, some writers have not been around long enough to know how quickly things can change in agriculture! This year, the crop in Kansas was large, and wheat prices have rebounded to profitable levels for growers.

  3. Crop Forecasts And Their Reliability As A Planning Tool For Agricultural Investors Some of this makes for great headlines, such as when Asian investors announced plans to develop enormous acreages for farms in remote parts of the world, with the suggestion that that would somehow adversely impact grain prices in established areas.  But, unless one digs into the details, it would not be known to most that those plans were not much more than pipe dreams.

  4. Crop Forecasts And Their Reliability As A Planning Tool For Agricultural Investors Agriculture is, and always will be, a long term asset.  Investors should not be swayed by short term trends, or by the efforts of some to predict prices over a long term horizon.   My advice is to look back over, say, the last five years, and understand supply, demand, and their relation to pricing—that is the most sensible predictor, in my view, because over that time period there will have been any number of events in some parts of the world that have impacted prices in a good or negative way.  It is not the perfect approach, but at least it offers a sound rationale for making investment decisions.

  5. Crop Forecasts And Their Reliability As A Planning Tool For Agricultural Investors Learn more: https://medium.com/@benedicttpalenjr/farmland-investment-strategies-by-benedict-t-palen-jr-f2ba81a0f80b https://www.levo.com/benedict-t-palen-jr https://readymag.com/BenedictTPalenJr/1127143/ https://readymag.com/BenedictTPalenJr/1129383/ https://www.dailymotion.com/video/x6kda96

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