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02-20-2011 12:07 PM
I'm getting back into the swing of things after being in the SW and Mexico hiking and relaxing, and when I check back in I sense increasing tension in markets and no possibility of mitigating factors at this time. It extends to virtually every grain commodity simply because every grain and feed is interrelated to some degree.
Everything hinges on two things: North America's prospects of getting another record or near record crop across the board, and China's. This also assumes the rest of the world gets good crops too. Due to what I call 'Normal Production Variability', the possibility that every region will get a great crop is not high, and neither is extensive crop failure. BUT, the probability of less than ideal crops is significant though there is no way to quantify that. But experience informs us that this is so. Remember the world being awash in wheat? That didn't last long.
The way I see this unfolding in regards to marketing is one MUST follow events and see how each crop and region resolves the issues. Like counting cards in Vegas, one will need to keep a tally of where we are at. My assumption is that trends continue until something changes it significantly, therefore droughts aren't ended by a single rain. This provides a way to project into the future as far as the situation allows. Globally there are multiple trends combined that will need to develop one factor at a time.
So, how to market? My marketing plan will be completely flexible and changing as events change. It doesn't matter if I'm dividing my crop sales up by month and creating creating a sales average, or any other way. If events cue me I will proceed or decide to slow down the plan. If it's dramatic enough I will suspend sales. This grain situation also tells me to keep an ace in the hole no matter what I do with the majority of the crop. Frankly I don't see the likelihood that all the S/D tension in the market will be resolved in one year. It could be, but I'm not expecting it.
The first important issue that will be resolved will be wheat - specifically how the Southern Plains and China wheat crop potential is determined by spring events. Then we roll on to corn and soybeans.
I know I've said this before, but it doesn't get any better than this.
02-20-2011 05:14 PM
Good comment on the "AWASH IN WHEAT"-----with the world population pressure on resources and the information that is available one can find out first hand ---with the fundamental might be we are really short of food resources---with the next being a strain on crop nutrients ?
02-21-2011 04:25 AM
I am in the Toledo area. Last I heard there was lots of wheat. Our local elevator has 40% of it's storage filled with wheat. We had the longest lines at the elevators last fall I can remember because they filled up so fast. The river elevators were full too so we were waiting on boats coming in the Maumee river to take our corn and beans as fast as trucks could haul it there from the local elevators. Most our locally grown corn goes to ethanol plants. Some beans go to a crusher. At a meeting last month the head marketing guy for the co op said they were making $.18 a bushel a month on the wheat. That didn't make any of us too happy that waited in the lines last fall. During the heat of harvest they were only open 2 hours a day. So if you were lucky you could get 2 loads thru. Then go combine till 3 or 4 pm and quit cause you had everything full again. We were very lucky the weather was great. Otherwise some real problems would have developed. Note: There is very little on farm storage in this area.
02-21-2011 07:57 AM
Looks like the first contingent will be unrest in the mideast and ultimately if Iran follows. I would wonder if we see any disruption in supply that ethanol would only be strengthened as a stabilizer. It could get real hairy this spring. I know on cnbc this morning they were saying commodities in general will be a safe haven, including fertilzer companies. other than that I would agree with the eyes wide open approach, some day the monster crop everyone keeps predicting will show up.
02-21-2011 08:02 AM
As I sit here this morning it would appear to me that most farmers have or are moving the bulk of there grain..... If the market goes up 10 to 25 cents more I think it will buy most all of it....... locally it is tough to get bids not because of high prices but because they are full and can not handle any more at this time....... It appears to me that the market is on a collision corse as it relates to the physical grain supply...... I do not think that next summer there is going to be any grain around at any price..... It will all be gone for the most part......Farmers have sold there grain as these prices have been going up there will not be any left over..... p-oed
02-21-2011 08:20 AM
Why the fixation on selling and moving the grain now??......most big end user markets are offering substantial cash carries into spring and summer months.......if the farmer insists on moving next 30-50 days, basis will continue to weaken on front end ---and will show even better carries to those willing to wait 90-120 days.....
02-21-2011 09:04 AM
Ray..... Here in SC MI we had an above ave crop..... The local end user has been able to buy corn 10 to 25 cents better than ave because of that..... The summer basis bids are not much better than today..... A lot if not most of the corn moving is not cash grain but forward sales...... The bottom line is.....There seems that the farmers that I talk with will be willing sellers at 7 to 7.50 corn for the bu that they are not going to keep for the fireworks next spring/summer...... FWIW..... Guys don,t seem to be to concerned about 5 or 10 cents at these levels as they know that the market can and most likely will move more than that in one day...... p-oed
02-21-2011 12:39 PM
nw..... Yes in a nut shell...... I would keep back as many wild cat bu as one could feel comfortable with.....I am not sure that I look at as 'bragging rights'...... .. For me I just think that there is an above ave chance that something spectacular might happen this year......But it could be that you sell for 5.00 or less too....I will keep some back ..... That is going to be between 10 and 15 %....... The rest will be long gone before that....Good luck.......p-oed