We’ve got one of those little forests across the road that a neighbor planted oh, probably in the mid-1960s. Smack dab in the middle of wheat and alfalfa fields for miles. I think the funding ran out years ago, but the new owner (as of 1972) decided to let it be, and its a nice little refuge now for deer, owls, songbirds and racoons. I would “guess” that it was under the wheat program funding, but there’s all sorts of USDA programs for conservation, windbreaks, habitat, and water control, and it might well have been something else. It would certainly qualify as acreage out of production for wheat …
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I’m not sure that you understand what the high prices for wheat means. High wheat prices generally means a more limited supply of market wheat (as opposed to wheat moving under existing contracts). Leasing costs were at a peak in October, 2007, and currently, according to the USDA “non-shuttle bids/offers dropped $49 from last week and bids are $86.50 below the peak. Shuttle bids/offers dropped $38 from last week and shuttle bids are $113 below the peak.”
Michael: How do bids/offers work on shuttle trains for grain? I had believed that they were somewhat ran on a schedule between shippers and buyers, as in your reference to existing contracts.
The bids are for leased covered hopper cars, as opposed to railroad-owned covered hopper cars. The shipper gets one shipping rate if he supplies (i.e. leases or owns) the hopper cars; a different rate if the railroad supplies the railcars. The difference is also found in that the railroad might supply its own cars when it is good and ready, which may or may not be an advantage to the shipper; and so the shipper may elect to lease the railcars to expedite service to the elevator. There are lessors that will lease a whole shuttle train of railcars for those shippers seeking to take advantage of shuttle rates. A third approach, for a price the railroad will guarantee the railcars and the time frame. On BN, it is the COTS program. Somewhere in there is a cost-benefit ratio of what the shipper wants to do.
But, that’s separate from the shipper arranging shipment over the railroad for the grain cars or the train itself if its a shuttle; the only difference is that the shipper may be able to get better service if he can supply the railcars – through the bid system.
wheat prices maybe at an all time high. Input Costs are also rising at a very high rate (30% in the last 3mths in the UK); so nobody I know is making a vast fortune from ploughing the fields and scattering the good seed on the land (non GM of course!).