Back in January 2014, I warned that U.S. farmland prices had jumped to the peak of a parabola and were ripe to plunge down the other side. Today farmers in the Midwest and Plains struggle with a 20-30 percent drop in land values amid collapsed commodity prices. For most of 2017, though, it’s been a Tale of Two Aggies: Cattle, broiler, and pork prices can go up; but soybeans, corn, and wheat are stuck in a rut. In other words, Cheap Grain–Firm Meat.

Why? That shaking sound you hear is the sound of bumper crops pouring into silos. After Russia reported a bumper crop in July, wheat prices in Chicago dropped almost 25 percent. Russia now exports more wheat than the U.S. That’s a historical somersault. Back in 1980, Jimmy Carter blocked U.S. farmers from selling grain to the Soviet Union to punish the country for invading Afghanistan. As a result, many Soviets went hungry, and many American farmers went to the poorhouse.

Today, the dynamic of “Cheap Grain–Firm Meat” explains why Tyson Foods could unveil strong earnings, pushing shares up about 3 percent on Monday. Chickenfeed is cheap. So it costs less to pump up those big-breasted, oven-stuffer roasters. Further, when Tyson sells poultry appendages to Buffalo Wild Wings, those tangy wings yield a bigger profit.

American farmers are feeling whiplashed by the switch from Obamanomics to Trumponomics. They like deregulation but loathe trade wars.  Here’s an interview I gave to Farm Credit Mid-America that explains the forces pushing and pulling at them.  By the way, I am not the guy in the photo wearing boots and looking like a small Klitschko brother!

 

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