Wednesday, July 04, 2007

Bridle that enthusiasm...

Has recent corn market action got you down? Well, have I got a scholarly report for you!
"Bioenergies have become a key factor in the functioning of agriculture markets," Loek Boonekamp, a senior OECD official, told reporters after the release of the study.

"In the medium term we believe that they could lead to prices on international markets rising quite considerably, at higher levels than what we had predicted in former outlooks and above the average of the last 10 years," he added.

Boonekamp said that farm prices, mainly grains, would likely rise by 20 to 50 percent over the next decade. [More happy economic talk]
There is a reluctance to embrace the idea of a looooong run of good times here on the farm. I suspect the nature of this commodity price boom - mandated, not market-inspired - is confusing our economic instincts.

The largest risk may be loss of political support for mandates - something I think is very, very remote. Every plant that opens and FFV that's sold adds to the ethanol constituency. Hence those "fools" bidding too much for land and rent could look like geniuses a couple of decades from now.

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