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06-20-2011 08:45 AM
BA big difference between US and zimmi. we are the reserve currency of the sorld. That means that the world has a big stake in our solvency. We also are the worlds reserve storehouse for food. Hyperinflation here will lead to world wide riots. That will make the Arab spring look like a rock concert!
06-20-2011 09:55 AM
If corn goes to $4 or $5 what do you predict ending stocks will be in that scenario? That is a pointed and serious question. Not a starting point for what I know you believe.
On the other hand, down below you argue hyper-inflationn which presumes the price goes up for necessities.
06-20-2011 11:18 AM - edited 06-20-2011 11:19 AM
To get down to $4 congress will have to follow through with ending the ethanol subsidies. That will not stop the consumption of corn for ethanol but is should slow it down as some of the marginally profitable plants struggle. That should create enough carryover to make the $4 possible. At the same time oil prices will have to moderate otherwise ethanol production will increase on its own. Lots of ifs but we are just guessing hypotheticals.
06-20-2011 11:35 AM
based on the mandate we have to generate 13.2B gallons from corn in 2012...........thats around 4.7B bushel.............
a lot of uncertainty, and nothing is absolute, however IMO several things have to happen before that 4.7B demand base goes away.........
again its all a crap shoot........
06-20-2011 02:44 PM
Hey Palouser, I just can`t see any out come other than inflation, maybe not $50 billion/bu corn but $5, $6, $7 chopping higher. Trying darned hard not to get political, but the current administration doesn`t have the luxury that Paul Volker had of 18% interest rates to whip inflation. Houses are 3 yrs stacked up now with free interest, unemployment +9%. At least moderate inflation looks certain, however just when you have it figured out a left-hook comes out of no where. To paraphrase a T Boone Pickens quote `If inflation is inevitable, you might as well lay back and enjoy it`.
06-20-2011 04:40 PM
..... but I react to fundamentals. Goldman Sachs forecast price targests of $8 wheat and corn in the next three months with corn trending slightly lower and wheat trending slightly higher on production potential.
On the other hand they were predicting slightly higher oil prices.
I'd give it two weeks to a month for the general trend to make itself clear. But I wouldn't be surprised by a strong surge in grains as the corn crop is more easily quantified.
Potential future inflation or not - I don't think will have much bearing on the prices this summer if ending stocks are going to be tight. Too much competition for feed.
06-21-2011 09:45 PM
Mr. Palouse “until the trend make itself clear”> You may not get prices data, SRW Chicago traded 655 today, 260 off its peak and far closer to its contract low vs high- that is called a BEAR Market. That is fundamentals it is process, finding demand where supply is TOO high.
06-22-2011 08:20 PM
Plan for what "event as such"? A easy to see major decline in wheat, or the inflation eveyrone is so sure will happen (everyone is never right :-) ) Just curious and I'll take a honest shot at an answer.
Just ignore Arti as he always bearish regardless of price or TIME.