Welcome to Moving Iron with Casey Seymour and Greg Peterson. The podcast for anyone and everyone involved and interested in the business of equipment. If you want to understand what trends and market forces are impacting the price of your iron, you've come to the right place. Buckle up. It's time to move some iron.
Hello and welcome to Moving Iron Podcast. This edition of Moving Iron Podcast is brought to you by John Deere. I've got Greg Machinery Pete Peterson on to talk about what's happening in the marketplace. Greg, how you doing today?
Well, I'm doing okay, Casey. Sorry I missed you last week, but you can probably see I have vestiges of my fall. So it's starting to look a little better finally. At least I don't scare people when I walk around town now.
So yeah, last week you looked like you'd had a couple beers and got in a bar fight, and now you're back to normal now.
Yeah, that would have been a better... I got a lot of good suggestions for a better story than tripping over a puppy gate down the hallway and hitting into an end table. But yeah, a bar fight or hockey fight or something. But it was what it was.
Yeah, you should go with Mrs. Pete in a frying pan. That would have been a good one.
You know, Mrs. Pete, she's a tough cookie, but no, thankfully no issues there. But yeah, my favorite... when I went, of course, living in Rochester here, so Mayo Clinic, and that's great. 28 stitches in my eyebrow. Can't even really see it too bad at this point. But so they're doing their thing, and at one point they ask you, you know, because you had a fall and there's blood and all this stuff looks terrible. They're like, 'Do you feel safe at home?' I went back and you were sitting there, and I kind of looked sideways. I have blood coming down my face. I said, 'Yeah, for the most part.'
Oh, yeah. That's... I love that question. They asked that, too. Like, if I didn't feel safe at home, you think I'm going to answer that question with the person that makes me feel unsafe sitting in the room?
My favorite response... I posted a picture on Facebook of my purple face, and someone... my favorite response, someone on there hopped on and said, 'Pete, blink twice if you're okay.' Yep, I'm okay. I'm okay.
Well, glad you're on the mend here, and next week you won't even be able to tell. So you'll be right back in the game.
Okay. All right. Well, so last Tuesday had a couple auctions roll through, saw some pretty good pricing. Talk about what you saw, Greg.
Yeah. I actually wrote a column just about last Tuesday, February 24th, for Farm Journal magazine, Casey. It was... February is not really one of the busier months, but this year we are seeing an uptick. Definitely through the end of February, and March is going to be crazy, crazy busy. And we're seeing... I'm seeing kind of this split with auction pricing. So if it's good condition stuff, we're seeing again really strong pricing. So just a couple highlights from last Tuesday. So Big Iron and Sullivan had an online retirement auction in Arcola, Illinois. I think the guy's name was Randy Huber. And just a couple highlights, he had a really nice grain truck, an '07 International 4400 with a MaxxForce. I think it had a 20-foot box. 278,000 miles and change. Went for $76,350 for a 19-year-old grain truck. Was the third highest price in three years on a 4400.
Probably the star of that auction was the '18 model 9570R Deere tractor. Of course, four-wheel drive, 1,510 hours. So for an eight-year-old tractor, pretty low hours. That brought $318,250, which is the highest auction price ever on a 9570R, over $1,500. Also last Tuesday had a Marshall Landon auction down in Kearney, Nebraska. Had a really nice farm auction. The farm auction was actually in Litchfield, Nebraska. It was for Seth and Angie Cusira. Hope I got that last name right. But they had a '23 model Cornhusker 48-foot grain trailer that brought $58,250. I think that's the third highest auction price ever on a Cornhusker grain trailer. So I thought that was pretty good. '22 model Westfield MKX 139-4 auger that brought $35,750. Highest auction price I've ever seen on a 94-foot Westfield auger. So that was Nebraska.
Then there was a high-interest auction, Casey, in Allons, Tennessee last Tuesday. That was for Eric Reed. A guy, kind of a younger guy. He has a big social media following. He goes as the Crop Critic. A lot of people wondered why Eric was selling. And I talked to him two days before the auction, had a nice long chat. But Eric had a Sale by Clayton auction, and he had a '92 model 4455. So kind of vintage, but 2,404 hours that run $80,000. So that just cracked into my top 20 highest auction prices ever on a 4455. You also had a '13 model 7760 six-row cotton picker, which a lot of pressure on cotton pickers, of course, right now as we'd understand. 1,602 fan hours. That went for $197,500, which actually was the highest auction price in just over three years on a 7760.
And maybe wrap it up, last Tuesday there was an online auction by Tractor Tuesday, Zach Bosley out in Hastings, Nebraska. They had a pair of '22 model 8250 Case combines from, I think it was from like a used dealer. One had 468 engine hours, went for $312,000 when you factored in the buyer premium on that. And that's the highest price on a '22 model 8250 in 14 months. So that was pretty good. And they had an older '19 model 8250, 870 engine hours, did $244,000. So again, just a couple of the highlights last Tuesday. Good condition stuff was doing pretty well, I thought.
Yeah. Yeah. I know this is a weird time of the year for like that first quarter of the year. It's always, especially January, February, there the values that you see on equipment typically isn't... this isn't the high point of the year by any means, right? And usually you see an uptick through the end of the year. Now you also... I've also seen it where coming out of the November, December time frame into January, February, you see some carryover there and you see some big uptick in values and maybe it tapers off a little bit to the end of the year. But typically January, February time frame is not the peak time to do that. Usually end of the year is when you start seeing more of that, especially in the times that we're in right now. That's typically that last end of the third quarter going into the fourth quarter, typically the biggest dollars that you see associated with a value during that time frame. You know, as you, Greg, as you're watching these things move along, as you've been through this, you know, for 30, 30-plus years, as you're watching these things tick along, what are some of the things that you're paying attention to now with the time that we're in as we kind of, you know, you've hit a leveling out point? I think everyone can acknowledge that it's not getting better, it's not getting worse. So we're kind of in the middle somewhere. When you're in these kind of time frames, what are some of the stuff that you've seen happen during these time frames that people should be paying attention to?
Well, one thing that I watch pretty closely is the volume, the raw volume of auctions, which I know you, you know, you kind of bird dog the same thing, volume of listings on the dealer side in aggregate. So I think that can tell tales. And right now when I look in our system at machinerpete.com, I look through and March is always... it's the busiest auction month on the calendar usually. But what I'm seeing right now is outsized busy. So we came off the end of '25 with I think our data showed like a 4.5% jump in the number of auctions. I think that's accelerating here a little bit into first quarter of '26. And you're not surprised. I mean, basically the average age of the American farmer is what it is. And I'm just seeing a lot of auctions, Casey, in the pipeline where a lot of nice equipment. And you can kind of tell that it's either older farmers just deciding, well, you know, maybe now is just... I maybe would farm another two, three years if corn and beans were higher, but ah, you know, rather than lose a little equity, I'll just retire.
And also in the middle age range like that sale last Tuesday in Allons, Tennessee for Eric Reed. You know, Eric is very known on social media, high-yield corn guy. And so people were surprised. They're like, 'Eric, why are you retiring?' And it was a retirement is what it said. And you know, there's always chatter about that stuff. Eric actually called me two days before the sale and we had a nice long chat. And what it boils down to for him is that, you know, he just said, 'Pete, math is math.' And you know, I'm looking at what it's going to cost me to put the crop in the ground this year and where the prices are, and it just, you know, this just doesn't work. And he's looking out two, three years ahead. Optimistic guy as you have to be as a farmer, but also being a realist. And now his wife has a very good job. And he said, 'Pete, all my equipment's paid for.' So it's just... he said, he actually said something really interesting, Casey. He said, 'My wife told me it was okay to stop.'
And that's interesting because, you know, farming is generational. You grew up in it. Your dad, your grandpa, your fourth, fifth, sixth generation. And you know, working through the bad times. Don't quit. Don't quit. Keep at it. That runs up against math is math on the finance side. And so I think there's more folks in the middle age range like Eric that are doing the same thing. I just saw a sale coming up in Arkansas, and it was a sale by Witcher Auctions, a great auction company, and you know, they always have a little description on the sale bill, and it said... I can't remember the husband and wife's name, but it just said they've just decided to discontinue their grain farming operation. That's the harsh reality of our economy right now, I think.
Yep. Yeah, for sure. It's a tough marketplace and you hate to see this kind of stuff happen, but every time that something like this comes up, you see those kind of things happen and, you know, unfortunately it's just... it's hard. It's hard right now and unfortunately it's not getting any easier. And that stuff, even after you come on the back side of this, just everything associated with it is so much more difficult.
So Casey, last week I couldn't because my face was all black and blue and purple. I didn't go down to Commodity Classic in San Antonio, but you were down there with Ty and Clinton, our Farm Journal crew, and Chip Flory. What was the vibe you picked up on just generally speaking from folks all around North America there?
Yeah. So I mean the companies that I talked to, I mean, you got a lot of the... say it's not getting any worse, but hey, it's not any better either. We're kind of stuck right here, but we were optimistic about the end of the year. Kept hearing a lot of that. You know, the vibe that you got that you talked with, you know, I had one vendor say, and it made a lot of sense to me, because I can always tell the success of my show at these shows that we're at by how much stuff I have left on my table for giveaways. He goes, 'That means that people are here to actually learn about your product, not just to get a bunch of free junk, right?' And he goes, 'Our table's still full and we've had a lot of people come through here. That tells me that people are here to learn about what we have to offer.' You know, Commodity Classic's a little bit different than other farm shows. That's one of those places where they typically see a bigger rollout of kind of what's new for the year. A lot of technology, a lot of different stuff that comes from that. And you know, I think the conversations I heard with farmers talking and things like that, a lot of this echoed a lot of the same things. It's not getting any better. It's not getting any worse. It's tough out there right now. You know, the same kind of reverberations that I saw out there. But what I did see a lot of folks talking about and looking at were, if I do spend this money, what are my efficiencies that I'm going to get, right? What am I gaining from this stuff? And you saw a lot of those conversations when they were talking with vendors like, 'Hey, here's what I'm doing already and I'm seeing this. If I spend the extra X, what's Y look like?' And a lot more conversations around technology, a lot more conversations around how those efficiencies were going to increase cash flow or whatever on the farm. And you know, the old adage is if you listen to every seed company, you probably should be growing 700 bushel of corn. But it's, you know, because it's like...
Another guy equated that to drivers, you know, or golf balls or whatever, the new driver, golf ball, you're going to get five to 20% more distance than he did before or what, you know. So, I mean, I should be crushing thousand-yard drives by now. But it's, you know...
I think you identified something on the head there, Casey. I think the ag industry should probably look to the golf industry in the marketing end of things because you're a golfer like me, we'll buy anything if we think it can make us hit it a half a yard farther or whatever. So maybe we need some of that, a little more pizzazz marketing in the ag side. But no, it's interesting feedback from the farmers there, Casey. Before we started recording, I shared that I am seeing a lot more increased negative chatter. I kind of live in the social realm throughout the day doing what I do, just interacting with people and posting and stuff. So I'm seeing a lot more people anecdotally say, 'Oh my god, used equipment values. Oh, they're awful. They're awful.' Now, I've been doing this 36-plus years, so I don't think there's ever been a sale I've gone to where someone doesn't come up to me and go, 'Oh, Pete, these prices are terrible.'
And it's kind of why I started doing this 36 years ago. Not to be defensive and refute it, but I just want to come at it from a place of truth data-wise. So, two years ago in '24, values were falling like a freaking rock, you know, 20-25% year-over-year. And we've talked about the last 18 months kind of this leveling out. I am seeing a little choppiness just developing here early in '26. I think tractors are performing much more consistently with auction pricing. Combines, we're starting to see a little situational up and down. Like those 8250s sold well last week on that online auction. Same sale had a super sharp S760 that no sale. I don't know what they wanted for it, but I did just look at S780 Deere average auction pricing, which I found a little interesting. So, actually so far this year it's coming in just over $183,000. Now, it's early in the year, but I mean last year it was about $264,000. And that leveling, see last year at $264,000, that was barely down from the year before, which would have been '24 when it was $275,000-ish. So, you know, we'll see if that continues to be a little choppy like that. But on the tractor side, we're seeing just much more consistent auction pricing is what I would say.
Yeah. And I would say on the combine front, combines are an animal of their own, man. They live... all that harvesting equipment. We're talking combines, cotton pickers, cotton strippers, combines. I mean, any of that stuff that we're talking about there, those are significantly different animals when it comes to resellability and value and those kind of things because there's so much that goes into them that's accounted for during the sale price, right? So, if you're talking about a combine, you're looking at what's it going to take for me to get it ready for the field, right? That's associated into that price. Cotton picker, stripping, all the same thing, you know, choppers, same way. All those machines eat parts. They just... it's just a different animal when it comes to that. I would also say this, if you're looking at... and I'm not going to pretend like I'm some kind of expert on the cotton side because I'm not. I got friends of mine that are, and I call them when I want to talk about cotton, but I'm not the guy. But when you start looking at choppers and you start looking at combines, those used to have three times a year where you would sell those machines ahead of, behind... so basically the first quarter of the year, you always saw a good run on combines setting up for wheat harvest, right? Spring harvest, then you would see a little bit of a lull, and then right before fall harvest started, see some other things happen, and then you would see the end of the year. And I would say in my opinion, watching how combine sales are kind of moving throughout the time frame now, it feels like to me a lot of combines get sold late third quarter and fourth quarter. And not saying that there's no sales, you know, the first two and a half quarters of the year, but it's not as profound as it was, you know, maybe five or six years ago. You know, the chopper side of it too. I mean, if you're looking at where you're at there, I mean, that's the same concept. It's that last quarter of the year into the first quarter that you see some chopper purchases being made. Now, what drives late-year, you know, summer sales to choppers, if there's a drought and things don't change, we're going to see some chopper sales because of drought situations that we see around us. But I just think the combine side of it is, in my opinion, where we're at right now, the time of the year, I'm not surprised to see some choppiness in the combine marketplace.
Yeah, it is. I mean, early March, it's, you know, like you say, it's not one of those sweet spots where your hair's on fire as a potential buyer. It is interesting on the cotton equipment side again. As a Minnesota boy, it's not really in my wheelhouse, but from a data side, it's been interesting. The ramp-up in auctions, we do see, I would say, a higher increase in the mid-South. So, in that Kentucky, Arkansas, down in Mississippi area, Carolinas. And I just got looking at some numbers, Casey, if you take like a late-model Deere, say a CP770, and we just saw a pair of them sold within the last month here at auction. I think it was Jamestown, Mississippi. '23 models. 858, 876, I think, engine hours. One for $597,000, one for $598,000. And those are the two lowest hard cash, I mean auction prices I've ever seen on a CP770. And for comparison, if we wound this back to middle of '24, we saw a sale in Mississippi, Tunica, Mississippi, that had three CP770s, all '22 models, but the hard cash numbers on the two highest ones were $695,000 and $701,000. So you're talking $700,000 to $600,000 in about a year and a half hard cash. So that, you know, that's getting to be kind of a big drop. But again, I think that's indicative of just the pressure that's in cotton country right now.
Yeah. Yeah. That's a tough market. You think everything else is tough. Cotton's in a really, really hard spot right now. We're looking at what it looks like to grow cotton right now. That's for sure. It's going to be...
I was, I think two Saturdays ago, I was in the office and I was monitoring a bunch of sales like I do on Saturdays often, and I had the audio for the online bidding on one. I think the sale was down in Tennessee or down south of there maybe, but it had a 7760 six-row cotton picker. And I think that might have been the one on Eric Reed's auction that did $197,500, which that was pretty strong. But Jamie Clayton, the auctioneer, who is really good, as good as they come, the bidding went along and it got to about almost to the end, and then like a lot of good auctioneers do, Jamie interjected and he said, 'Guys, this is how you make money growing cotton, buying a good machine like this at this discounted price.' And then it got a few more bids and off they went. But it reminded me of... I think it was in Palmyra, Missouri, back in like 2014 or 2016. It was in one of those down periods, and I was covering a Sullivan auction, and it was back when 24-row planters were just brutal at auction. And the whole sale was great. It was a retirement sale. All the prices were up here, but they got around to the 1770 24-row and it just wasn't going anywhere. Dan Sullivan, back when he was in the truck, live in-person sale, he stopped. He stopped and he said, 'Guys, guys, guys, guys, Walmart has a 20% off sale. You guys are all first in line.' And then he got two, three more bids because that's how good Dan is. But yeah, sometimes things, you know, they just drop harder, faster, and it is what it is.
Yeah. Yeah. You just got to pay attention to that. And you know, there's times, you know, there's that old saying, you know, you make all your money when you buy it. And I think that's where we're at right now. So interesting to watch how things play out. We're going to continue to see pressure on the upside of the used equipment marketplace, that one or two-year-old stuff, because again, there's not that much stuff coming into the marketplace. Which when there's not a lot of stuff coming into the marketplace, the downstream effects of that is it creates opportunities to have to retain more value. By no means am I going to say and tell you that I think we're going to see a COVID-style explosion and all this premium is going to be added back. I think for the first time in my 20 years doing this, Greg, we're looking at an inventory that's right-sized for the situation that we're in. And as things begin to heat up and you see things move, I think we're going to have the ability to bring things back online to put stuff in. But the thing about it, Greg, is that the top end of that is so expensive that you're isolating buyers into certain groups. And those groups are, what do you really need to spend your money on right now? And unfortunately for the equipment space, the equipment marketplace is not one or two anymore. It's five or six or seven in the line of succession when it comes to how I'm going to spend my money. And I think we're starting to see that. That to me is setting up the marketplace to have the right amount of equipment at the right amount of time at a value that everybody, depending on where you're at on the buying scale, can afford to buy it.
Yeah, I would agree. You know, 36 years covering it, I don't know that I've... well, I haven't seen that balance you're talking about, which is, you know, it was a lot of blood in the water to get to the balance from the dealer side two years ago. And now on the farmer side, it's obviously a lot of pressure on the grain side. But yeah, I think overall, which is why Commodity Classic... I was sorry I couldn't be down there for some of the new product releases, which, you know, people might at a glance say, 'Wow, that's pretty optimistic for manufacturers to be releasing new into this.' But, you know, really it's probably perfect timing because of the footing that we've been talking about for the last, you know, going on a year and a half on the used market. So, yeah, it'll be really interesting. Like I say, March is going to be busy. We'll see come up. We'll just keep talking every week here and try to let people know what's yanking. But yeah, I would totally agree. I think the market's in a better place, more efficient, and definitely the most balanced I've seen it in three and a half-plus decades.
For sure. All right, Greg. Good place to stop. Folks want to have you come talk to their group or show up at their auction, whatever. Best way to do that, just go to machinerypete.com or hit you up on your social media sites.
Our website, little contact button there. I'm happy to come out and tell you how to not trip on a puppy gate or whatever we want to talk about. So it's all good.
You do have experience for that. So it'll be good. All right.
That's right. Exactly right. That's exactly right. Well, Greg, appreciate you being on the podcast. We'll catch you again next week.
Well, there they are. Mocking you. See you next year.
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Welcome back to Moving Iron Podcast. I got Shawn Hackett on to talk about what's happening in the world of commodities. Shawn, how you doing today?
I'm doing pretty good in a wild, wild period here since the weekend, to say the least.
That's to say the least. Very much so. Yeah, it's been a crazy news cycle here of late, and we've watched a lot of movement and a lot of things that have been pretty stagnant. Oil, commodities, a lot of different stuff that was out there. Before we jump into that, I want to talk a little bit about the late February, early March cold we talked about. We saw that come through and we saw some cold, very cold weather. I was even in Florida when it was cold, cold in Florida. I was up in North Florida, up in Orlando, and there were a few mornings there where it was, you know, we're talking in the 30s in the morning, you know, low or high 30s, low 40s. And for that part of the world, obviously, that's very, very cold. So, I guess, Shawn, kind of recap that a little bit. Talk a little bit about what you're talking about here, because we're headed into planting season not too far away here in the Corn Belt as you're looking at this. Shawn, what are your thoughts on the model that you've been referring to?
Yeah, our thoughts continue to be that we're looking at a cold spring. We think some winterkill risks are high for the US, you know, as we get into, let's say, late March into late April. Dry weather risks for Casey, winter wheat areas out west is a risk. So if I was looking for weather-related catalysts, it would be winter wheat for this spring. Pretty hard to get too excited about corn and soybeans. You know, in that scenario, frost is usually not an issue that really tends to worry the market too much. The dry weather is going to be mostly west, but the eastern states are going to be fine. So I don't anticipate anything there. Looking for a very good growing season for the US on an El Niño arriving. Pacific Decadal Oscillation is kind of weakening. The negative PDO is weakening, meaning it looks like it might be actually neutral to positive, which tends to promote a good growing season. But if I was to weigh any risks for the growing season, Casey, it would be excessive wetness in the back half of the growing season and a very, very wet harvest. I could see serious delays in harvest advancement, lots of crop quality problems. And obviously, just what you don't want to hear is a lot of potentially extra expense in drying down corn and things of that nature. But that's to me, if I'm looking at where would I be worried about weather for the summer growing season, it would be India, it would be China, and it would be like Southeast Asia and Australia, your rice, wheat country. You know, that's where I would be looking for potential for pretty hot, dry weather. And those could be issues that impact the market in the fall. And then usually what happens, Casey, is India and China in August start to assess their crop production potential. And if it doesn't look very, very good, China will increase their purchases and India will start holding back exports. So I think that any adverse weather for those regions wouldn't necessarily impact price over the summer. It would impact prices from the fall going onward.
Now, we're going to be in full El Niño mode for Brazil. El Niño for Brazil means an entire growing season. The first half and the second half are going to be extremely hot and dry for central northern Brazil, where the majority of soybeans and corn are now grown these days. So if you kind of look through the timeline here, very, very wet spring for the US harvest, drought developing for Brazil. Ramifications of short rice and wheat crops and potentially even corn crops for China, increasing demand from China, reducing exports from India in the fall. The fall time frame onward seems to me to be where the next accelerator to the upside might be once we finish the uptrends that we currently have, Casey, going into the spring. Right now we've been riding geopolitics, which is going to continue to be there. We've been riding this optimism over China trade deal expansion, which I just read yesterday, everything is still on. There's no change in their meeting. They're going to be meeting with their underlings here next week, and that meeting is still going to happen. And you would have to believe some positive developments are going to come from that. And obviously, there's been a lot of optimism over more beneficial rules for renewable energy policy domestically in the US. Those three factors should allow for some more upside, Casey, going into the spring. But in my view, given a good growing season for the US and a delayed reaction from China and India into the fall, you're going to want to make sure that whatever old crop bushels you don't have priced yet, you want to make sure you get them buttoned up by the end of the spring. And you want to make sure those bushels that you cannot store and those bushels, you know, you have to sell in August and September, that you make sure you get those bushels covered here in the spring. It's going to be pretty tough to get much of a weather rally from the US weather point of view after that, after the spring. So that's kind of the general idea here of what I think is going to happen. Geopolitics in terms of, you know, day-to-day, week-to-week, impossible to predict those moves. But we can talk about the longer-term cycles and why we're feeling that this period from now into the next three or four years is going to be an extraordinarily inflationary geopolitical period for hard assets, for energy, and for grain markets, especially wheat and rice. There's a long, long history of these cycles leading to some of the most accelerated moves to the upside when you get into them. That cycle started or starts in 2026. Oddly enough, now geopolitics are kicking in right on schedule. And they're really expected to accelerate into 2030. And we can...
Show a chart and what that has meant, and give people a bearing. Get away from day-to-day, understand the long-term trends. What it means is you do not want to forward sell any more bushels than you cannot store and that you have to sell to keep the farm going. You want to make sure you gear yourself, keep the top side open on your future production. You cannot miss a phase transition higher if that's what's going to occur like it has in the past. And we can show in the chart what that looks like.
So, okay. Yeah, bring up your chart. Let's take a look at what you're talking about.
Okay. Let's do that. Let me know when you see it up and if it's looking okay.
All right. Yep, I see it. And I scroll just a little bit. There you go. Perfect.
Okay. So, there's not a whole lot of commodities that have traded since 1860. Crude oil didn't trade in 1860. Natural gas didn't trade in 1860. A lot of things didn't trade in 1860, but wheat has. So, this is a chart of cash wheat prices. And there's a reliable cycle that approximately every 27 years we get into what's called a geopolitical instability war cycle. And for whatever reason, it takes almost three decades to harbor anger and discontent to where it leads into some type of a world issue that leads to all kinds of money printing, all kinds of trade flow barriers. Hoarding kicks in. Everybody wants to stockpile what they absolutely need. And so this is just going over this cycle, Casey. So the first part of the cycle starts right here in 1861 when the US Civil War broke out. And you can see how the wheat price absolutely spiked higher during this approximately four-year period going into the peak when the Civil War started to back off.
27 years later, we got into a Spanish-American war, for those who remember it had to do with Cuba. And you can see that, you know, that was a situation in the 1890s and saw the wheat price head vertical. Not as big of a move as the Civil War move was. Then 27 years ahead, World War I. Obviously, everyone I think is familiar with that. We also had the Spanish flu during this period of time, oddly enough, just like COVID. Spanish flu, World War One, and we had a wild spike trade higher in wheat, you know, that peaked right when World War I peaked. 27 years ahead got us into the late 1930s, early 1940s during World War II. Another wild spike trade, had the Dust Bowl that led into this, which was a wild weather volatility cycle. Then 27 years ahead we had the Vietnam War, the war over communism. We had the wild, wild spike trade in the early '70s when we had what's called the Russian grain robbery, when Russia essentially bought the entire US grain ending stocks, especially of wheat, setting a wild price spike, one of the greatest accelerations in history.
27 years ahead, we got into the September 11 attacks, the war on terror, the war in Iraq, and you know, had a wild price appreciation during this period of time. And then 27 years ahead is 2026. I titled it the war over resources: Iran, Russia, Ukraine. I mean, we already know Russia, Ukraine. We've already established that unrest. Now we're going into the Middle East and Iran, and this is setting off another accelerated geopolitical war cycle. And it's just amazing how repetitive these cycles have been. And by the way, wheat's just a proxy. All commodities have done well during this period. I don't mean to say that wheat is the only one that does well. This is a measure of commodity inflation, hard asset inflation. All commodities do well. But we went back and looked at the price of wheat relative to the price of corn, relative to the price of soybeans, relative to the price of cotton, relative to the price of all commodities. And wheat tended to outperform during these periods of time, meaning that this was one of the best performing markets during these particular four-year geopolitical phases, Casey. And so while we can't predict day to day, week to week, necessarily month to month, we can look at this and say the probabilities that this cycle is repeating is high, and that it needs to run its course, and that when it's all over, the wheat market, the commodity markets, the grain markets, which are exceptionally undervalued, the energy markets, which are exceptionally undervalued, should outperform. I will preface by saying that typically metals and precious metals tend to go first. They tend to be the first movers in these cycles. They tend to go a year or two ahead of the cycle. And of course, it's, you know, that's already happened.
So I look at this, and while this is terrible for humanity and the humanitarian consequences and the inflation and the loss of life that comes from these geopolitical war cycles and, in many cases, the famines that are caused by some of these cycles, it is very, very inflationary for those producing hard assets, for those producing wheat, corn, soybeans, cotton. So if you're in the business, if you're in the ag business, if you're in the business of growing these supplies, it's going to be a good period for you. Like I said, I don't say that with excitement or glee. My job is to try to forecast the future, try to forecast what prices are going to do, try to forecast the ag industry. And war is very good for the ag industry. And unfortunately, as much as I would like to think that we would eventually stop feeling the need to go through these phases of unrest and geopolitical instability and wars, it looks to me like we have yet to stop wanting to do that. Everything says to me that this cycle is in full force and it has to run its course. And it says to me that if you're in the business, you need to adjust your cash marketing accordingly by not forward selling more than you absolutely have to. And just keep in mind that this is a very good cycle for you. Even though it's a bad cycle for many, for those in the ag sector, it's a very good cycle for you. Having adequate storage on the farm is probably the most critical asset that you can have right now, is to be able to hold back when prices are unattractive like they are now, and then to be able to sell when the prices are good like they were a few years back. And if this cycle repeats and we see it again and we get another big run, you know, you want to have the ability to sell those bushels out and then forward sell more aggressively. That's how you're going to manage this. You can't miss dollars higher like we saw between 2020 and 22 by overselling the future. You have to participate in that. If you're going to eat the losses during the tough times, you have to make hay, no pun intended, when the times are better. And this particular cycle is the dominant cycle of this part of the move. The last cycle was more like COVID money printing that led into some geopolitical unrest. This cycle is pretty much primarily a geopolitical cycle. The cycle that comes after this is your weather volatility cycle. So in every commodity inflationary period, it's about a 15-year period, and there's three waves higher that roughly last about three years, and then you get two to three years of correction. Three years up, three years down, three years up. It's three waves up, three waves down. This is the second wave higher. Each one has a different driver. This one's geopolitical. The next one's going to be weather volatility. The last one was really a monetary story. And that's pretty typical. You get three different reasons for why something moves. But this one is geopolitical, and this one is where wheat, rice, and energy tend to outperform.
So, I was looking at your chart, Sean. There was a pretty sharp run up, and obviously, just like any sharp run up, there's a sharp run down. Typically, how long do these run-ups in price last during these time frames?
Well, in every 15-year period, each wave roughly on average lasts approximately three years.
Specifically the geopolitical cycle, when the geopolitical cycle is kicking in, if you look at all those price surges and you average the time from start to finish, it averaged about four years.
So, that's why I'm saying this period from 2026 to 2030, by the way, doesn't mean you have to wait till 2030 for the peak. The peak could occur in 2028 or '29. It just means that typically it takes around four years for that cycle to blow its top off or have a crescendo to where that geopolitical stress backs off.
Okay. And the next cycle, the last cycle of this inflationary cycle, will be the weather volatility cycle. They've talked so much about it on your show. That period from, you know, 2028-30 into the mid to late '30s where we have no sunspots, wild weather volatility based upon the solar cycle, that'll be your weather volatility cycle, like the Dust Bowl was in the '30s or like the sea surface temperature volatility cycle was in the 1970s. That will be what drives that part of the cycle, and the geopolitics will take a back seat. Whereas the last cycle was all about COVID, coming out of COVID, massive money printing that occurred that led into some geopolitical unrest, but it was primarily, most of the move in the markets occurred before the first bomb was dropped in Russia-Ukraine. If you know, in fact, the Russia-Ukraine war beginning actually was the peak of the cycle, if you think about it, when we, it really was the peak, meaning it was really a COVID monetary cycle. Whereas this one's going to be driven by geopolitics. And just amazing that the 27-year cycle starts in 2026 and now we're getting this re-ignition or this acceleration of geopolitical unrest in Iran. And it does seem to me that it is a war on every theme. You know, back in the '70s it was war on communism, and then in the 2000s it was the war on terror, right? You know, then, you know, it's to me this looks like the war on resources. You know, that we're battling for resources. We're battling for who controls these important resources. And Russia, Ukraine, number one exporter of wheat. You know, obviously the Middle East, dominant producer of oil and natural gas and liquefied natural gas. From all the reports I've seen, Russia-Ukraine has some of the biggest rare earth metal reserves in the world. I mean, you know, usually these wars have a reason for occurring where they're occurring. To me, this is a battle on resources, and obviously China is very heavily dependent on the region for energy and food. And so that's, you know, this is kind of the battle that we're dealing with. And fortunately for the United States, you know, we produce tons of energy and we produce tons of food. So for us, in terms of what it means for us, you know, we're well positioned. But if you're someone like China, if you're someone like India, if you're someone like the Middle East that lack in the areas of food or energy or both, it's a tough period coming up. And that's where the hoarding comes in. You say, 'Okay, if I'm not certain I can go to Russia and get the wheat that I need, then I'm going to stockpile what I need as a buffer against it.' So one of the reasons that all those periods you saw this spike trade in wheat, it's because of hoarding. Those that have it don't sell it, and those that don't have it panic buy it and they stockpile it, and it creates that mismatch.
Yep. So looking at your time frame there, Sean, as you go out from now to the end of the decade, looking at where, you know, we should probably go back and revisit that episode, but a couple years ago we had a conversation about, you know, how deforestation of the rainforest was causing change in weather patterns and those kind of things. And then, you know, Brazil had, I believe it was 2030, that they were going to ratchet back how much could be deforested and whatnot. And I don't know if they've actually ratcheted anything back at all up to this point. As you look at this situation that's coming up that we just talked about, and you look at what's going on in Brazil and how those weather patterns could kind of roll their way through that, as you watch that, how do you, and you start looking at countries like China that are very heavily dependent upon exports of grain and stuff from Brazil, when you look at that, how do you think that plays out for American agriculture?
Well, if we get into a, if this geopolitical cycle repeats like it has since 1860 and we get into a hoarding cycle, Brazil's supplies of agriculture are going to be absolutely critical to supplying those that don't have, right? I mean, they have been critical. Yeah. I mean, they have to be able to, like, if they don't produce or they have difficult times producing given their now prolific nature, you now have a higher order issue with how things get done. Um, the Brazilians have pulled back on their deforestation. They're still deforesting, but at a slower rate. So they haven't done anything to actually reverse. I've always felt if you looked at the precipitation patterns, that they've dropped in half over the last decade. They went from excessive rainfall, all the rain that you could need, and even though they've dropped in half, they're still barely producing enough rain. They can still produce crops, but any fall off, in our view, any fall off from here, and then they start having insufficient rainfall to produce crops in the manner with which they've been accustomed to, which makes, as I said, I've always said in all the presentations and in all my reports and all our discussions, the next four years are the test as to whether this trend stops where it's at and we just hover around 50% down, or we have another notch down to where we have a disproportionate decline or cessation of their production growth or production capabilities. And I don't have an answer perfectly for that, but if we're going to find out, it's going to be in an El Niño year. An El Niño year is where the majority, three-quarters of Brazil typically gets into a drier weather pattern normally. Okay. So this coming cycle is like a critical test plot on how the rains are going to perform now going into this El Niño cycle. It starts in October of this year, goes into May of the following year. It's the dry cycle. It's really going to be critical to gauge their rainfall versus, you know, what they've been seeing. If we see rainfall falling below the threshold that we've been seeing, and it does show that they're going to have insufficient rainfall and that they're going to have an actual crop problem here because of it, then everything has changed for the global supply chain, for who produces what and who sells to who and who's the center of the ag food chain. Again, if that rainfall trend falls further in this next cycle, it means that the US gains market share back for the first time in many, many decades. It would mean that we would increase acres. We would bring acres back into production that are out of production. It would mean throwing caution to the wind to do everything we could to increase yields, to do everything we could to, you know, like it would be hardcore push to produce everything possible to make up what Brazil might not be able to produce that the market is counting on them producing. Like I said, I don't know for sure because obviously we've never had an Amazon deforestation cycle before. All I can say is we know the trends have been down 50% consistent. We've been seeing a steady decline by 50% ever since we've been moving down this path of accelerating deforestation. And the trend is your friend until it stops. There has been no indication that the trend has stopped falling. But this next year is really a defining moment as to whether that trend is going to stop or we're going to get the next rung down. So it's a very, very, very important year coming up, and could add, you know, could add an additional agitation to the geopolitical cycle if it comes up that they're going to miss, they're going to have some crop problems, if their soybean crop's going to be off, if their corn crop's going to be off, and they get to where their supplies, their exportable supplies are going to be short. What's really interesting, Casey, while no doubt in soybeans their export capabilities has been unbelievable, but in corn, because they've decided to go down a gold rush on corn-based ethanol production in Brazil, if you look at the demand for corn for corn-based ethanol, it looks like our chart was in the early 2000s to the late 2000s where we just saw parabolic demand for corn for ethanol back then. And that was one of the drivers that made that geopolitical cycle so powerful. We're seeing the same thing in Brazil. Even though their production's been up nicely in the last three years, their corn production, their ethanol, the demand for ethanol from corn has grown so fast that their exportable supplies haven't grown at all.
So think of that. Just think of that. That we have a situation where their crop in corn has grown, yet their export supplies have flatlined. And if their corn production flatlines or falls and they keep their corn-based ethanol policy, the corn situation is really interesting. Soybeans, not as much, but corn, really, really interesting what could happen there, Casey. You know, really, really interesting what could happen there.
All right, last question I have for you. I know a lot of guys have already booked us for the year. So this is just more of a kind of the situation that we're in right now. With, you know, 20 to 25% of the world's oil coming through the Strait of Hormuz, with the situation with Iraq, you know, a ton of natural gas comes out of there as well. When you're looking at fertilizer prices right now, how do you see the volatility there associated with natural gas?
Well, we know Russia-Ukraine created a spike in fertilizer prices because of the large exports that come from China, that come from Russia, Morocco, the Middle East. You know, there's a lot of fertilizer that comes out of that region. And we've seen fertilizer prices spike already. There's nothing good about entering this geopolitical cycle for fertilizer prices. There's nothing good at all. It just means that prices are going to have significant risks to the upside going forward. And so the fertilizer side is going to be another reason that agriculture yields become challenging or that agriculture prices would need to go higher in order to compensate the farmer for that critical input being so high and going higher. You know what I'm saying? And obviously, if you looked at natural gas prices in Europe, they almost doubled in one day when Qatar said that they were shutting down their key LNG production facility for an unidentified period of time. Just think that through. It's just not good for fertilizer prices and for the world, for the region, and it's going to embolden both Russia and Ukraine to dig their heels in. And I could easily see a contagion. Usually these geopolitical cycles, there's a contagion that spreads from one region to another, and I could easily see this Iran-Middle East not only being a contagion for other Middle Eastern countries, but being a contagion for a resurgence of Russia-Ukraine unrest as we go into 2027. And there's nothing good about that in terms of fertilizer and wheat supplies. And that's what makes the weather in China and the weather in India during an El Niño so very, very important to follow, because if they have poor crops this coming cycle during El Niño and their supplies come up short at a time of geopolitical acceleration to the upside and high fertilizer prices, I mean, that's what happens, Casey. We always talk about synchronicity of cycles, right?
A couple of reports ago, I showed all the different cycles of inflation that have led to large increases in hard assets over a thousand years. We had the solar cycle. We had the monetary cycle. We had the interest rate cycle. We had the geopolitical cycle. There's times when they're on opposite sides where, you know, one cancels each other out. There's times when a few cycles are in synchronicity. The more cycles that are in sync, the greater the inflationary impact. Prior to this cycle, the most synchronous period for hard asset inflation was the mid-1600s. We had all cycles but one in an inflationary upswing. Anyone that follows the Little Ice Age and what happened to food prices and commodity prices during that time in the 1600s knows it was one of the most inflationary periods for hard assets and resources that we have seen. In this particular cycle, every single cycle is now in synchronicity for the first time in a thousand years. So it just means that everything seems to be in alignment monetarily, geopolitically, weather volatility-wise, and interest-rate-wise to lead to this war on resources, to why this phase is the war on resources, right? Like there's a reason that this is a war on resources. It's interesting because the world figures this out, like they figure out what the problem is and then they do something about it. And it's just very interesting that this is going to be termed the war on resources, and we have alignment of every single inflationary cycle pointing in the up direction heading into the 2030s. It's just very interesting that that's what the war is, that what this geopolitical instability cycle is all about. And it makes sense that it would be about resources.
Yeah, very much so. Well, we're also at a point in time in history where you have, very similar to, you know, go back in history and look at all the stuff, where you have one dominant world power, the United States, and an up-and-coming world power in China, that if you look at it historically, how those two systems or styles have clashed with each other along the way, there's always been a lot of volatility and a lot of geopolitical stuff through proxy wars.
Well, I think the historians call it a monetary regime change.
Change the rules of how the economy operates. When the British lost their role and we gained it, it was a major, major monetary regime change of how the world operated economically. And it looks to me we are going through a monetary regime change. I don't know. No one can say exactly what that will look like, but it won't be what it has been. It won't be what it is today. It'll be something different. And anytime you change the monetary regime to something different, hard assets, commodity assets, food assets, energy assets tend to reprice during that part of, as you correctly point out, throughout history have tended to reprice into that new monetary system. Historically, what has led to these monetary regime changes is excessive indebtedness on a country-by-country basis. We had a sovereign debt crisis in the 1930s. We had a sovereign debt crisis in the 1970s. We clearly are in a sovereign debt crisis now. And so excessive debt leads to these monetary regime changes just by force. The system cannot continue to operate in that kind of excessive, ever-growing indebtedness, and something has to change. When you change an indebted system, it means ultimately the new system has to reflate your way out of it, which means the hard assets maintain their purchasing power. And that's why hard assets, commodities, energy, food, precious metals have tended to fare well during these periods of time. And I don't think there's any question that we're in some part of this phase. And now is the geopolitical instability part of that phase.
No, for sure. All right, Sean. Good stuff as usual. I'm sure you've got some speaking engagements coming up this time of the year. So, where can people come check you out and the upcoming speeches you got?
I was speaking in South Dakota. I could send you some of the dates and where it's going to be. But I'll be in South Dakota. I'll be in Iowa. I think I believe I'll be in Maryland. So some different places here over the next few months.
Right on. Well, Sean, appreciate you being on the podcast. If folks want to reach out to you, get more information about what you're doing at Hackett Financial, what's the best place to do that?
Our website is hackettadvisors.com. We have a Twitter page, @hackettadvisors. We have a LinkedIn page as well, and from time to time we do put out some information on some of these cycles about what we're thinking, what we're looking at. People can go there to keep tabs of what we're thinking if they see value in using statistics, cycles, and correlations of the past to predict the future.
Right on. Well, Sean, it's always fun to have you on, man. We'll catch you again next time.
Thanks, Casey. Always a blast.
All right, stay tuned for more Moving Iron podcast after these messages.
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