Food for Thought Catalysts Video

[wheatking16]

This video has been well received, and I don't think I shared it here before.

It is dry as talking into a camera is surprisingly challenging, but there are some gems in it if you can last long enough.

The intention is to bring awareness to potential catalysts of a correction.

(This is the fundamental carryover from AgEc.)

If a correction is to happen.

Many people believe it won't, but one should be aware of possible catalysts and prepare accordingly.

IMO

Food for thought.


[VIDEO]https://youtu.be/iti7tUO84fo[/VIDEO

[bucket]

Interesting. The only one that hasn't occurred to me is 7 population.

Every thing else I had thought about. What he fails to mention is most other industries are given government support .

examples : Algoma steel - many times over the years the latest being $420million to install EAF and the current ask of 500million for tariff relief.

The auto sector - where does a guy begin

Dairy - same but they received billion due to the trade deals

etc etc

If regular agriculture was helped the same way the crisis he talks about may be small bumps similar to the other industries that are supported.

[SmallTimeOperator]

Thanks Trent for offering your insight and sounding the alarm. I agree fully with all the points you have made. I appreciate your courage to step out and talk about what others don’t want to hear.

To be honest, the current cost structure of farming (machinery comes to mind, fertilizer, chems, seed, land cost) is unsustainable for everyone, but most don’t know it yet, or if they do, they are in denial and hoping that high grain prices will return and save the day.

As much as I hate to say it, the good times are already over. Tough times lie ahead.

My prediction is that smaller or medium size farms will take it hardest if they are overextended financially as the banks and FCC will pull the pin on their loans first because it’s “easier”. Their bigger customers, will be allowed to continue at financial ratios that the smaller operators wouldn’t be allowed to continue at for a couple of extra years maybe. But once their cashflow gets too tight, the banks will be asking for their money back too. However, smaller operators or anyone who has kept debt levels low or has no debt, will be ok.

Current crops are mediocre at best in many areas. Local BTOs in my area that throw everything they can at their crops, will have yields just above their crop insurance coverages. That will cause a cashflow tightening for most. Anyone who is complaining about the grain prices of the past year has already felt the cashflow tightening and is now headed into year 2 of the same.

I believe every farm will have a turning point or a personal catalyst that they will look back on with regret. And that turning point is a decision made during the good times that comes back to haunt them later. It could be a land purchase at too high a price, upgrade of equipment that could have waited, or simply taking on too many acres. These are things that become financially unsustainable when cash flow gets tight and are hard to undo.

Good luck to everyone. I’m going to mind my own business and not worry about what the neighbours are doing.

[AlbertaFarmer5]

Thanks for posting. I do need to give my favourite technical analyst a hard time about looking for fundamental reasons to justify his technical forecast...

I agree with all.
# 6 causes me the most anxiety. While the biofuel policies would cause the most immediate impact, I think fiscal policy is an ever bigger threat.
When Trump was first elected and his team was making bold promises about being fiscal conservatives ( which turned out to be a false alarm), I postulated that if the worlds largest economy suddenly discovers responsible monetary policy, and encourage investment into productive assets instead of speculative real estate bubbles, their closest neighbors can't help but do the same. No more deficit spending and borrowing would be the end of inflation. Could even be deflationary ( in a good way, unless you happen to be a paper millionaire land owner...). Farmland as a productive asset may not fall as far as residential real estate, but it wouldn't be pleasant to be on the wrong side of it.

I think the last US election proved that voters have the appetite for this, even if they didn't get what they voted for this time. Sooner or later, either by prudent choice or by the force of economic reality, this will happen.

#7, could go either way. When you compare the calories that affluent people ( and especially their pets) consume compared to impoverished 3rd world people, there is a lot of room for increased demand, even with a smaller population. And considering that the factor that drives smaller families is affluence, I'm not as worried about this one for a long time to come.

#5, the baby boomer wealth transfer reminds me of the story I've been hearing since I was a kid, that when all these old farmers retire, there won't be enough young people to take over. Somehow, all of the old farmers I knew have managed to retire or pass on, without causing any blip in the market. Glad I didn't wait. This might be another government policy story, if bankrupt governments enact wealth taxes, or change the capital gains taxes, or income taxes on rental income, that would bring a lot of land to the market. And that might be a good thing in the long run.

In the end, I think it will simply be a technical sell off. And we will posthumously assign any or all of these reasons. Once it starts falling, it will cascade for the same reasons that human nature has been causing booms and busts since markets were invented.

[wheatking16]

Thanks for posting. I do need to give my favourite technical analyst a hard time about looking for fundamental reasons to justify his technical forecast...

I agree with all.
# 6 causes me the most anxiety. While the biofuel policies would cause the most immediate impact, I think fiscal policy is an ever bigger threat.
When Trump was first elected and his team was making bold promises about being fiscal conservatives ( which turned out to be a false alarm), I postulated that if the worlds largest economy suddenly discovers responsible monetary policy, and encourage investment into productive assets instead of speculative real estate bubbles, their closest neighbors can't help but do the same. No more deficit spending and borrowing would be the end of inflation. Could even be deflationary ( in a good way, unless you happen to be a paper millionaire land owner...). Farmland as a productive asset may not fall as far as residential real estate, but it wouldn't be pleasant to be on the wrong side of it.

I think the last US election proved that voters have the appetite for this, even if they didn't get what they voted for this time. Sooner or later, either by prudent choice or by the force of economic reality, this will happen.

#7, could go either way. When you compare the calories that affluent people ( and especially their pets) consume compared to impoverished 3rd world people, there is a lot of room for increased demand, even with a smaller population. And considering that the factor that drives smaller families is affluence, I'm not as worried about this one for a long time to come.

#5, the baby boomer wealth transfer reminds me of the story I've been hearing since I was a kid, that when all these old farmers retire, there won't be enough young people to take over. Somehow, all of the old farmers I knew have managed to retire or pass on, without causing any blip in the market. Glad I didn't wait. This might be another government policy story, if bankrupt governments enact wealth taxes, or change the capital gains taxes, or income taxes on rental income, that would bring a lot of land to the market. And that might be a good thing in the long run.

In the end, I think it will simply be a technical sell off. And we will posthumously assign any or all of these reasons. Once it starts falling, it will cascade for the same reasons that human nature has been causing booms and busts since markets were invented.

Old habits are hard to break......


I felt I needed to bring some awareness to potential catalysts, as "because all asset price charts move in a similar fashion" and is not widely understood or believed.

It will be interesting if the price chart gives us a heads-up before the catalyst and "News Follows Price".

Time will tell.

[wheatking16]

Thanks for posting. I do need to give my favourite technical analyst a hard time about looking for fundamental reasons to justify his technical forecast...

I agree with all.
# 6 causes me the most anxiety. While the biofuel policies would cause the most immediate impact, I think fiscal policy is an ever bigger threat.
When Trump was first elected and his team was making bold promises about being fiscal conservatives ( which turned out to be a false alarm), I postulated that if the worlds largest economy suddenly discovers responsible monetary policy, and encourage investment into productive assets instead of speculative real estate bubbles, their closest neighbors can't help but do the same. No more deficit spending and borrowing would be the end of inflation. Could even be deflationary ( in a good way, unless you happen to be a paper millionaire land owner...). Farmland as a productive asset may not fall as far as residential real estate, but it wouldn't be pleasant to be on the wrong side of it.

I think the last US election proved that voters have the appetite for this, even if they didn't get what they voted for this time. Sooner or later, either by prudent choice or by the force of economic reality, this will happen.

#7, could go either way. When you compare the calories that affluent people ( and especially their pets) consume compared to impoverished 3rd world people, there is a lot of room for increased demand, even with a smaller population. And considering that the factor that drives smaller families is affluence, I'm not as worried about this one for a long time to come.

#5, the baby boomer wealth transfer reminds me of the story I've been hearing since I was a kid, that when all these old farmers retire, there won't be enough young people to take over. Somehow, all of the old farmers I knew have managed to retire or pass on, without causing any blip in the market. Glad I didn't wait. This might be another government policy story, if bankrupt governments enact wealth taxes, or change the capital gains taxes, or income taxes on rental income, that would bring a lot of land to the market. And that might be a good thing in the long run.

In the end, I think it will simply be a technical sell off. And we will posthumously assign any or all of these reasons. Once it starts falling, it will cascade for the same reasons that human nature has been causing booms and busts since markets were invented.

There is an 8th, which I did not mention, as it falls into the 6th, but is a little bit out there.


I anticipate a podcast guest in the near future will bring attention to the idea.

How is that for a teaser?

[furrowtickler]

Thanks for sharing Trent

[blackpowder]

Interesting the flack recieved over a clearly described speculation.
The Seducer of course interviews the coyote about the horrible taste of raw chicken meat.
When predicting the future, using words like "can't" is an instant fail.
"This time is different" is a common one through history as well.
Which indicators are just the gauges and which are the actual product being measured. We could debate various so called indicators all day.
I have experienced a cycle that had interest, prices, and policy. Both down, and up.
Trent clearly states the studies as historical, possible, and unknown timeline.
To argue with the possibility is ignorant.

[blackpowder]

Interesting. The only one that hasn't occurred to me is 7 population.

Every thing else I had thought about. What he fails to mention is most other industries are given government support .

examples : Algoma steel - many times over the years the latest being $420million to install EAF and the current ask of 500million for tariff relief.

The auto sector - where does a guy begin

Dairy - same but they received billion due to the trade deals

etc etc

If regular agriculture was helped the same way the crisis he talks about may be small bumps similar to the other industries that are supported.

Call me a pessimist and contrarian.
Western Canadian agriculture excluding dairy and poultry, is unlike other industries in Canada or ag in other nations.
But that's another thesis altogether.

[AlbertaFarmer5]

Which indicators are just the gauges and which are the actual product being measured. We could debate various so called indicators all day.

I question the published values of land. It appears to me that only a small minority of sales are true arms length transactions. The rest being generational transfers, or private sales between related parties or other non arms length connections.

How does the FCC data correct for that? If 2 properties per year in the entire county sell by auction to the highest bidder at astronomical prices, while 20 properties changed hands privately outside of public view, which is indicative of the true market value?

Neighbor just had an appraisal on his home quarter and was quite upset at how low it came in. He had much higher values in mind based on the coffee shop talk and public auction prices. But the appraiser compared it to all of the other private sales as well, and there were big differences.

I suppose maybe the absolute values could be wrong, but the trend is still correct if the methodology is consistent?

20 years ago it looked like most arms length land sold through a realtor, now most sells by auction. Has that affected the data?