Agriculture economists say for many farmers the new safety net provided by the Agriculture Act of 2014 may help offset the negative reaction of falling corn and soybean prices.
Favorable growing conditions and high productin estimates contribute to declining corn and soybean prices.
Isaac Newton may have been a pioneering scientist, but he must have known a little something about the laws of supply and demand of commodities and their effect on wholesale crop prices. Or so it would seem.
Newton's Third Law of physics, you might remember, states that for every action there is an opposing reaction, and if you are a corn or soybean producer carefully watching the falling prices of those commodities in recent days, then you know the rule certainly applies to your current crop.
Favorable weather conditions for many farmers this year across large crop-producing areas has been a welcome development for corn and soybean producers who were just beginning to celebrate early estimates of a bumper crop and better-than-average yields.
That would be the action of Newton's Law.
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But because market experts a now think there may be a greater supply than world demand for the commodities, prices have been slumping, what we might call the opposing reaction to an otherwise bright outlook for the crop year.
Truth be told, almost every farmer knows the principle of supply and demand—or action and reaction—isn't just a law of science, it's one of agricultural economics as well, and has been since the beginning of commercial farming.
But two Purdue agriculture economists say for many farmers the new safety net provided by the Agriculture Act of 2014 may help offset the negative reaction of falling prices, depending on the insurance options they have chosen or plan to choose for the years ahead.