Farmers advised to buy fuel, fertilizer now
Capital Press 12/9/08
Ark. (AP) - Prices for diesel fuel and fertilizer are about as low
as they are going to go, and an agricultural consultant is
advising farmers to buy their supplies now for the coming year.
Richard Brock, president of Milwaukee-based Brock Associates, told
rice farmers at the 2008 Rice Outlook Conference on Monday that
price volatility is likely to continue and that growers should
lock in low prices when they can.
Brock attributed swings in commodity prices earlier this year to
cash from index funds. He said futures purchases by one particular
fund, the Goldman Sachs Commodity Index, have been largely
responsible for driving agricultural-commodity prices up, and then
down. Brock said those price swings mirrored the price of crude
Brock says one result is that many farmers and commodity merchants
have stopped using futures and options. He said the markets will
lose their usefulness for price discovery and hedging if rules for
index funds are not changed.
Arkansas is the nation's top rice grower, producing about half of
the U.S. crop. The 2007 harvest was worth more than $1 billion.
Jim Wiesemeyer, a vice president in the Washington bureau of
Memphis, Tenn.-based Informa Economics Inc., said he thinks
President-elect Barack Obama will lift the U.S. trade embargo
against Cuba, which would open an important market to Arkansas
"That's probably one thing that could give you a good, sustained
bump in your cash price," Wiesemeyer told the rice growers.
Rice prices have been dropping since May, after setting a record
season-average high of about $15 per 100 pounds, said Nathan
Childs, senior rice-market analyst with the U.S. Department of
Agriculture's Economic Research Service.
When rice prices went up last year, the spike was brought by
artificial shortages created by export bans imposed by such
countries as Egypt and India, Childs said.
"We see a continued decline in U.S. and global prices" well
through the 2009-10 rice marketing year, which begins in August
and ends in July, Childs said.
He said people cutting their household budgets during the economic
crisis may wind up eating more rice, which would improve prices
Brock said that the recent Chapter 11 bankruptcy filings by
Pilgrim's Pride, a chicken producer based in Pittsburg, Texas, and
VeraSun Energy, an ethanol producer based in Sioux Falls, S.D.,
came about because of poor hedging positions. Pilgrim's Pride has
2,900 Arkansas workers, plus hundreds of contract farmers in the
More than 750 attended this year's rice conference, including
growers, millers, merchants and those in related businesses. The
event rotates annually among the six U.S. rice-producing states:
Arkansas, California, Louisiana, Mississippi, Missouri and Texas.
The Associated Press