Never Summer. It’s the name the indigenous peoples gave to the mountain range in Colorado that the snow never melts on in the summer. We visited the mountains four or five years ago during the first week of June (Nearly Summer) and the Rocky Mountain National Park was closed due to many feet of fresh snow. I asked them when didn’t it snow up there and the locals simply said August. One month of spring / autumn and eleven months of winter. It’s never summer up there. Every year. You have to admire the native Americans, they didn’t waste words. There reaction to the European plow, ” Grass no good upside down.” The same can be said of commodity markets. We’ve under paid producers of raw materials over the years to the tune of sixteen trillion US dollars and counting.
When the cost to produce and or extract raw materials is not recovered in the market the difference has to be loaned into the economy to make up the difference. If raw materials aren’t paid for they won’t exist. A bankrupt producer can’t produce raw materials. If raw materials don’t exist the jobs created to process raw materials no longer exist. As with the jobs that use raw materials to manufacture products. You have to pay the first dollar first. The term to express this fair price is called it’s parity price. That parity price is enshrined in the 1948 permanent law for agriculture. That’s why the farm bill always has to be renewed or the program will divert back to permanent law if not kept updated. The parity (fair) prices as of November 2112 according to the government’s own data are
Corn parity price ……….. $12.00 per bushel ……. current (unfair) price ……. $3.63 per bushel
Soybeans parity price ……. $28.90 per bushel ……. current (unfair) price ……. $10.83 per bushel
Wheat parity price ……….. $18.30 per bushel ……. current (unfair) price ……. $5.38 per bushel
Beef Cattle parity price ……. $292.00 per cwt. ……. current (unfair) price ……. $159.80 per cwt
Hogs parity price ……….. $160.00 per cwt. ……. current (unfair) price ……. $123.62 per cwt
Milk parity price ……….. $52.10 per cwt. ……. current (unfair) price ……. $23.30 per cwt
Now you know why America is at least sixteen plus trillion dollars in debt. Don’t blame social programs, blame Chicago. That’s why Congress shut them down during WWII. It takes honest prices to win a world war. Producers need paid the fair price. When Chicago says they’re taking profits that’s exactly what they’re doing. These commodities are never paid for with debt free money. The nations accounts will be never balanced. The USA will be never prosperous.
Never summer. The July that wasn’t. Cool, some would say cold nights. Cool days if your not working too hard. The forecast for August is more of the same. Never Summer. The grain traders are calling for record grain production due to the perfect pollination weather. I wonder if they have ever heard of growing degree days. Gdd’s are the accumulated number of days at a certain temperature or above. A plant needs so many days at such and such temperatures to accumulate enough energy in itself to produce it’s seeds. Those seeds are our crop to sell into the marketplace. I’ve heard a lot of weather references comparing this year with 1994. 1994 was the first never summer I lived through. And farmed through. I never saw it coming.
Neither did the boys in Chi Town. They didn’t know we were short on corn that year until January 1995. They were surprised that rain didn’t make grain like their little saying says. They had no idea that you needed the sun too. Test weights were way off. A ten pound change in the test weight of a bushel of corn spread over 14,000,000,000 bushels can really add up. It can amount to between 16% and 20% of the total amount depending on which direction you’re figuring from. I don’t think there’s too many of the ol boys left in the trading pits to remember 1994. So it might be January 2015 before the realization that never summer means never bumper crops. But we’ll have fun watching the entertainment that is Chicago until then. I’ll admit that I got burned on a couple of bins of corn this never summer. In my defense I thought everyone remembered ’94. But when rumors of corn going bad in the bins came around I emptied them all. Barely in time. Racing the market down. No dock but with prices as depressed as they are, what’s the difference.