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Truth, even selling milk. Oil price goes up, drives up corn price pretty directly because of that very strong ethanol component....In the US at least, about the same amount of corn is used for ethanol production as is used for livestock feed! That is huge! Together accounting for something like 80 to 85%.... I'm going by memory and not looking it up so feel free to correct me....Chart is correct. Average and total for the year is less in 2020 than 2019 if you drill down. Main reason was Covid and work at home policies that reduced demand. Still, it did not get cut by half when Biden took over.
I don't care for Biden and his policies. That being said, he does enough harm for most to realize without resorting to exaggerating facts.
Oil prices have impact beyond what you see at the pump. I know people in TX with oil leases that will not produce if barrel of oil is less than $70 due to cost etc.. Farmers I know in SD start making money if the price of oil goes up beyond a certain point as they sell more crops for ethanol production. So, for some high oil prices are a good thing.
But our costs go up dramatically as we purchase more corn than we produce. Both in the form of Silage (forage), and grain. Plus most other feed follows corn on pricing. Soybeans are often thought to be their own market but corn will take acres from beans and vice versa so they are closely tied together.
We also purchase very large amounts of diesel fuel. The difference between a Trump period semi load of fuel and a Biden period load will pay for a basic safari!
However we like to think we are more efficient than average and as most of our feed is still procured in the Upper Midwest we have a feed price advantage over places like California, the South East and even the North East.
End result being yes, oil goes up, fuel cost goes up, feed prices go up, and milk and beef go up. So yes my observation has been that we have had very good profits follow $100/barrel oil prices. However it is the lag effect that can be tough! Good banking relationships are important
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