21st Century Equipment Flyer March April 2016

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Making Farming Easier

March – April 2016

March 15, 2016

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Gaining even greater control over what happens in your operation. 21st Century Equipment is pleased to present Dr. Michael Swanson, an agricultural economist and consultant for Wells Fargo. Dr. Swanson provides insight on the commodities market and the market influences that affect your profitability. One only has to read the following brief commentary from Dr. Swanson to understand how little control we have over global politics, international markets for our products, and currency fluctuations.

and economic structure, but who would trade with out in the global economy? The European Union has its demographic and over regulation challenges that aren’t going away. Japan faces long-term stagnation for the same reasons. The vaunted BRICs (Brazil, Russia, India and China) have been exposed to the reality of centrally planned economies as one trick ponies. Their economies will have to suffer before they get back to growth that attracts foreign investment and currency strength. China is a story on to itself. Everyone knew and knows that their statistics mix fact and fantasy, but we don’t know or agree on the proportion. When the story was of overwhelming growth, the global commodity markets politely averted their gaze from the dubious ratios and claims. Now, doubt has forced the traders and investors to question those same issues. If China

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ISG News..................................... Page 2 Green Iron.................................. Page 4 Tech Talk..................................... Page 7 Making Every Drop Count.........Page 16 Latest in Leasing...................... Pages 21

In this issue, we look at the various ways we can partner with you to help you gain even greater control over what happens on your farm or ranch—and how managing the small stuff can result in big returns.

2016 Outlook for Agrictulture

US agriculture runs through long cycles that often have very little to do with agriculture itself. For the last decade, we have heard that rising populations and increasing incomes will force agricultural commodity prices higher which will benefit producers. The problem with this story was it forgot that cycles always occur around the trend. When the cycle benefits us, we tend to confuse it with the trend as the added bonus. When the cycle hurts us, we start to doubt the trend and question the our decision to participate in the process.

Right now three things have swung against agriculture. First, interest rates and exchanges rates which are tied at the hip have turned against US exporters. Why should the dollar be getting stronger now? The United States’ economy is the cleanest dirty shirt in the pile of the global economy. We might not like our growth rates

In this Issue...

That means you absolutely must take control of the aspects of your operation over which you have considerable influence—and there are plenty: Cash flow. Operational decisions. Improved efficiency. Data management. Self-education. Optimal use of technology. Preventive maintenance. Every minute and every penny count in today’s marketplace.

doesn’t grow like expected, then the supply and demand numbers need to be reworked in a big way. Conclusion, there is too much supply at the previous prices, and a need to adjust to a different number. One of those commodities to be reevaluated is crude oil prices. Both China demand and fracking supply have become the center of the debate. At the moment, the market thinks $30 a barrel crude oil makes sense. It’s a certainty it will pick a new number tomorrow. However, the US uses 5.3 billion bushels of corn to make ethanol. At the current prices of crude oil and gasoline, ethanol prices are simply too high for a reasonable value to the driving public. There are strong historical ratios for values of substitutes. These ratios will certainly cap corn until we see a new and higher price for crude oil.

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2016 National Ag Day

Volatile Markets? Control what you can control.


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21st Century Equipment Flyer March April 2016 by 21st Century Equipment LLC - Issuu