INKERMAN - Times have boomed as never before for crop producers over the last few years, a fact established by a market analyst who quickly surveyed the 100 farmers attending Hendrick Seeds' annual soybean grower meeting last month. Just be prepared for the inevitable levelling-off of crop prices that history suggests is coming, John DePutter, president of DePutter Publishing Ltd., advised the group.

Most hands sprang up in the affirmative when the keynote speaker began by asking: "How many people in the room would say that out of the last three years, or maybe the past four years, you've had one or even two of the best, most profitable years of your farming career?"

"A lot of people are saying the same thing," remarked DePutter, who has made the same query of farmers in Alberta, Manitoba and Saskatchewan. "This has been a fabulous upswing for agriculture. From a financial standpoint, this has been a veritable boom for a lot of family farming operations throughout this country. We've had some exceptional times."

Then he asked how many in the audience were taking a "short" position on any commodity or crop - indicating a bet that prices will drop. Very few hands were raised. "Interesting," DePutter cryptically observed, before laying out three cautionary points to ponder:

â-¢The grain and commodity markets have been "extremely high";

â-¢The various commodity indexes and markets now show a downward trend;

â-¢The grain and livestock tables are turning, which historically happens when a grain spike levels off and meat producers move into the ascendant position;

"As I travel across Canada, I get this feeling some people think these high prices are going to continue, and that may well be the case," he said.

But he cautioned his listeners to put the situation in historical perspective, noting that grain price "bubbles" or "explosions" occurred in 1918-21, again at the end of the 1940s, as well as the early 1970s.

"After the Second World War, a lot of commodities spiked upward and rallied up to new all-time highs, and that initial explosion - brought a lot of land prices up, it brought a lot of great prices, it brought expansion - It was a boom time, and after that boom time, prices levelled off for 25 years."

This lengthy levelling-off period saw prices drop below the heady highs of the bubble while remaining better than those prior to the boom, he said, a phenomenon that also occurred after similar spikes in the early 1920s and 1970s. His charts illustrated how such spikes last three to seven years and are "double pronged," with two price peaks separated by a couple of years, followed by a more dramatic drop-off that persists for the next two to three decades.

DePutter made the case that this fall's weakening of grain prices may portend more than just the end of a 2011 price peak. Ominously, the 2011 prices represent the second peak in the latest "macro economic upshift" in grain markets that began in 2007-2008.

"If we follow history here, we're probably going to level off for awhile-. Now, that's just based on history, and I don't know if we're going to follow history this time around, but we can make some conjectures, some general assumptions."

Even if it's true that agriculture finds itself in a new global paradigm of higher demand for food from a growing world population, "we're still closer to the high end of the trading range for a lot of commodities than the low end," he said.

He acknowledged a number of factors that appear to be contributing to current weaker prices, including U.S. monetary policy that may have helped inflate the 2011 price peak, and a relatively strong U.S. dollar that works against higher prices for the many commodities that are priced in that currency.

The U.S. dollar has only "chopped sideways" against other currencies over the past three years, not dropped, he said, despite bad press for the greenback.

"Higher prices are an incentive to produce more and to use less," he also said of the basic economics that will eventually conclude the boom, noting that wheat prices still haven't recovered from the record highs demanded by that crop in 2010.

However, oil remains a "maverick" in the mix, especially with tensions rising in the Middle East. Surging oil prices were "the granddaddy" of the recent boom, he said, and another oil rise would drag all prices back up again. "If the oil market starts to move up, I'm going to get more bullish about corn than I'm otherwise going to be," said DePutter, referring in particular to that crop's linkage with ethanol and energy prices.

Better prices for beef and pork may also signal the end of the grain boom, he said, suggesting the change of cycle was "as natural as breathing in and out, as natural as growth and decay."

It takes about five years for high feed prices to translate into fewer cattle going to slaughter, and resulting higher meat prices, according to DePutter. For grain and oilseed producers, "this is like writing on the wall," he added.

But he couldn't say if the "day in the sun" for meat producers would come at the from really strong livestock markets, or "really low grain [feed] prices." Either way, "the feeding margins will be there" for a livestock industry he deemed "the next frontier in agriculture, to provide the world with needed protein."

Reflecting on the troubled and indebted economies around the world, he suggested taking your pick on deflation or inflation or stagflation as potential outcomes.

But the "bearish" markets are foreshadowing deflation, he told the audience. "The markets think these problems are deflationary, in other words, lower prices for basic assets like commodities - every chart shows that except oil."

One thing farmers can do amid all the uncertainty is to lock down their business debt into fixed rates for the long term. "Ten-, 20- and 30-year money is still available at a fairly modest premium over variable rate, and now is the time to consider fixing rates on borrowed money."

At this point in time, the risk of a spike in interest rates "can be managed without paying a whole heck of a lot of money," he advised.