|
Good question, the government and markets reassure us that the price for commodities including corn and soybeans are totally market (supply and demand) driven. That being said, there are numerous government programs such as the loan deficiency payments that can be “artificially” raised and lowered to meet the government’s philosophy at the time. Last year’s harvest was a good example as the LDP’s were a lot more that what the loan rate – local crop price normally would warrant. This tells me that the government wanted the grain on the market, not in the bins, so was encouraging grain not be stored. If the government wants grain stored and off the market, then the LDP can be adjusted so that the LDP is less than what the loan rate – local price would warrant, encouraging producers to store. The government also has deficiency payments that are paid to producers based on what they plant for crops. Face it, all governments (including ours) is responsible for an adequate food supply for its people. Our government’s philosophy for quite some number of years has been cheap food at the grocery store, and taking tax dollars to pay farmers subsidies for growing food. I’m not trying to beat on anyone here, just trying to give you a picture of how production agriculture works. Now if the Man controlling the weather sends drought or pestilence, then the market truly becomes supply and demand driven, because even the government can’t make it rain or make a short crop increase! I hope this answers at least some of your questions.
| 
