US Large-Sized Farms Increase - Due to Input Cost Pressure // The Fall of The Petrodollar
The Commodity Report #93
US Large-Sized Farms Increase - Due to Input Cost Pressure
According to the Farms and Land in Farms Report by the USDA, the largest farms in the US that had sales of $1 million or more, now operate almost 26% of the country's farmland. The farms in this sales class have increased in size, while farms in every other sales class have either remained the same size or decreased. Roughly 3.9% of the total number of farms, or 88,660 farms, had sales of $1 million or more, which is higher compared to 10 years ago when only 3% of farms belonged in this category.
The largest farms, in terms of sales, had an average size of 2,927 acres or 4.6 square miles in 2022, which is an increase from the 2,481-acre average size in 2012.
In 2022, there were 2.003 million farms in the US, representing a decrease of “only” 0,5% from 2012, according to the USDA.
Barrons issued another strong cover story calling for a bright future for farming.
In a world where farmers have to justify producing CO2 emissions to produce our food? Is the future for farming that bright though? I have the feeling that large-scale farms doing much better than mid- and small farmers.
Wishful Thinking vs. Reality
How is the fight against climate change and emissions going? Well not that great according to the latest study by the EIA. According to the agency, global energy-related CO2 emissions grew by 0.9% in 2022, reaching a new high of over 36.8 gigatons. Amid a wave of gas-to-coal switching during the global energy crisis, CO2 emissions from coal grew by 1.6 and therefore far exceeding the last decade’s average growth rate, and reaching a new all-time high of almost 15.5 Gt.
The Fall of The Petrodollar // Intermarkets #5
In this week’s episode, Jordan and I discuss the fall of the Petrodollar and how it could happen. For us, it’s clear that it will happen during our lifetime so it is important to prepare accordingly.
I also give you guys an update on where I think the USD is headed over the next 6 to 12 months.
We already saw the first signs of a trend change with China, Russia, and also India using another medium of exchange for trading crude oil and other goods. Because its historical background is very much important, there are also rumors that Saudi Arabia would like to trade oil in Yuan as well which would be a major shift.
There are also rumors of a commodity-backed currency approach between the BRICK countries and it seems legit as those are major commodity producers, especially agricultural powerhouses.
The BRICK organization could become a better version of the EU. The organization will decide this year whether they include Turkey, Egypt and Saudi Arabia!
Countries around the world are just sick by now to buy US inflation via the greenback or wrap there heads around the potential of sanctions, as in the case of China or Russia. The US weaponized the US-Dollar and that could become a major mistake going forward. (speaking about decades not years)
Watch or hear it on Youtube Video or Spotify Podcast.
Why analyst’s estimates for commodity prices are really bad
This chart really explains why you can’t rely on the average analyst when it comes to forecasting commodity prices. Ad this is also exactly not what Kuemmerle Research is doing. What we do is tell our members and clients when the momentum in particular market changes and when it makes sense from a risk-to-reward perspective to look for trades.
Talking about price forecasts - while the price of Wheat has plunged by over 40% since June of 2022 the problem isn’t solved yet. Wheat stocks remain very tight in the US and the war in Ukraine is still ongoing. Put that together with the fact that - according to the USDA Russia and Ukraine in 2022-23 will combine for 27% of world wheat exports, up from 26% in 2021-22 - we’re probably due for a bumpy ride in spring and early summer up not down.
Check this out as well
With Kuemmerle Research and The Commodity Report, we try to cover the most critical topics in commodity trading. My friend Stephan, the CEO of AltFunds, launched a fund specializing in alternative assets. I like reading his regular blog posts about baseball cards and other alternative asset stuff. Therefore I encourage you guys to check out his newsletter as well.
This week look out for the following:
FED Chair Powell testifies on Tuesday and Wednesday (watch for hawkish surprises)
ADP Non-Farm Employment Change and JOLTS on Wednesday
Job Market Report on Friday
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Till next Monday, Lukas
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