Crazy weather patterns have totally upended agriculture economics this year, notes Dennis Gartman:
We are told that in Illinois only 33% of the wheat that would normally have been seeded by this past weekend has been seeded, and this compares to 82% as measured by the last five year’s average. In Indiana, 43% has been seeded compared to 83%. All of this is Soft Red Winter wheat. At the same time, the USDA said last week that 76% of the nation’s “winter wheat” crop has been planted compared to the five year average of 85%.
…there is a goodly number of farmers in the Illinois-Indiana-Ohio region who’ve taken out “prevented planting insurance” that will pay then 50- 60% of the “expected revenue” they would have received from their normal plantings of SRW wheat. Those who’ve bought that insurance may indeed chose not to plant wheat at all; take the insurance payment and let the land lie fallow through the winter.
Farmers giving up on crops and collecting insurance checks? Maybe they should swap agriculture for derivatives trading at Credit Suisse.