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Re: xcslewis

By: Cactus Flower in ALEA | Recommend this post (0)
Thu, 15 Dec 11 8:12 PM | 79 view(s)
Boardmark this board | The Trust Matrix 		Msg. 06433 of 54959
(This msg. is a reply to 06432 by Down And Out Man)
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Hi D&O,

Here's an excerpt from the CPI report for October. Looks like the only two drivers of inflation in the economy (which likely affect the value of agricultural land) are lapsing. As a non-expert, I'd say your timing looks pretty good myself.

"Consumer Price Index Data for October 2011
Food
The food index decelerated in October, rising 0.1 percent after rising 0.4 percent in September. The food
at home index, which had risen 0.6 percent in each of the last three months, rose 0.1 percent in October.
The deceleration was largely due to the fruits and vegetables group, which fell 1.7 percent as the indexes
for fresh fruits and fresh vegetables both declined sharply. The other five major grocery store food
groups all posted modest increases. The indexes for nonalcoholic beverages rose 0.5 percent, as did the
index for meats, poultry, fish, and eggs. The indexes for cereals and bakery products and for other food
at home both rose 0.4 percent, while the index for dairy and related products increased 0.1 percent. The
food at home index has risen 6.2 percent over the past 12 months with all six major groups up between
4.9 percent (nonalcoholic beverages) and 9.0 percent (dairy and related products). The index for food
away from home advanced 0.2 percent in October and has risen 2.7 percent over the past 12 months.
Energy
The energy index fell 2.0 percent in October following a 2.0 percent increase in September. The
gasoline index, up 2.9 percent in September, fell 3.1 percent in October. (Before seasonal adjustment,
gasoline prices fell 4.3 percent in October.) Despite the October decline, the gasoline index has risen
23.5 percent over the past 12 months. The household energy index also declined in October, falling 0.3
percent. The electricity index rose 0.4 percent, but this increase was more than offset by a 3.0 percent
decline in the index for natural gas and a 0.5 percent decrease in the fuel oil index. The household
energy index has risen 3.1 percent over the last 12 months. The fuel oil index has risen 26.8 percent and
the electricity index has increased 2.9 percent, while the index for natural gas has declined 2.2 percent."

The sense of inflation that some folks have is surely driven by exposure to these two product categories.

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The above is a reply to the following message:
xcslewis
By: Down And Out Man in ALEA
Thu, 15 Dec 11 7:03 PM 		Msg. 06432 of 54959 

Likely will buy a farm.

Wanna buy mine before I engage a realtor? Wink

Planning to put it on the market in the next few weeks. The farmland bubble is becoming unsustainable and I can't stand to think about riding this all the way up, and then back down again (like some of us did with Wave.)

Bought the place during the last big farm crisis in the mid eighties. I saw good crop land selling in '85 for way less than half of what it had been in '81 and couldn't pass it up.

Several years ago I started seeing land up there selling for more and more each year. Then about three years ago, it started going absolutely insane. Our government has seen to it that you can't make a dime on CDs, the farmers (and everyone else) are scared to death of the stock market, and they see no other place to put their large bounties but farmland. Many of these farmers are literally paying cash for the land they're buying, but those that borrow get interest rates of near nothing, as you know.

Ag times have been good lately, with MUCH higher (but don't call it inflated) grain prices, and the farmers (along with some "investors") have been running the land price up about 25% (and more) each year lately. Totally out of control. You ought to see them go nuts at a land auction this year!!

So now, I suddenly see neighboring land selling for more than ten and twelve times what I paid for it. That's a bubble. It may not burst til it doubles again, or it may burst tomorrow, but I've seen enough. I'm going to let someone else have it, buy a vacation home, and be stuck with the "problem" of trying to figure out how to invest the rest of it.

Good luck with your farm purchase, but it sure seems like you're buying into an overheated market. Depending, of course, on where you are talking about. I'm familiar only with the "heartland".

D&O


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