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12-28-2016 09:51 AM
I know that it is hard to believe, but Brazil has started its new year harvest season already. I'm sharing a few market thoughts from my favorite Chicago insider. In his comments, (Warning: It's not friendly), he mentions that Brazil is picking soybeans, already. My question to him was where are we going with this market in 2017? The following is his response in his own words. How does this hit you? I'd be interested to see your response.
"Bearish, environment. Ethanol growth is topped out by design at 15 billion gallons that was long term target from 2007 legislation. above avg. crops around the world for two cycles.. starting with Indian monsoon.. then record US wheat and grain crops.. then return of Argentine to world market last year.. with large carry in stocks of soybeans.. and then record US soybean crop.. Brazil expands 3% in acres this fall.. and now off to good start.. infact first soybean harvest in Mato Grosso started last week... while Argentina is still working on planting...
India harvest 1st northern hemisphere wheat crop in February..
Chinese looking to change ag policy to de stock large corn grain reserve.. expecting to plant 3 million more acres of beans.. next season.. US poised to switch from corn to bean acres most expect 4 million.. acre out of corn and up 3 million in beans.. here.. large carry in stocks in corn means corn stuck in 30 cent range..
ARC -county subsidy 5 year olympic avg is throwing out the last of high corn prices so subsidy is expected to drop by 30 dollars an acre..
Iowa farm land down third year in a row -7%.... now interest rates rising and dollar rallying.. not good for ag business cycle..
The good news is we here fertilizer and seed prices are down 30 and 25%??...
I sold today's (Tuesday) rally.. in beans.. rains continue for southern Brazil and Argentina.. view as beneficial.. though drying out in NE... but this is year end squaring.. and is over bought..
Weather man can make a fool of us all.. we have 6 weeks to make a brazil crop and 8 before we exhale in Argentine.. but the large soybean harvest is not October anymore.. but last half Feb through first half April.. where we are looking for 170mt.. of new crop beans.. traded in the March and May contract... US was just north of 118mt last fall..
China is taking more from US as Brazil was short last year.. but that will end soon.. with Chinese now working on Feb shipments.. the World exports in general are flat year on year excluding Chinese.. who were light on imports late last summer but making up this fall.."
12-28-2016 10:22 AM
"then record US wheat and grain crops."
if you repeat it enough it will eventually become true....... how does this happen without oklahoma and Kansas?
Propanda drives the market in the new age...
12-28-2016 12:45 PM
Nothing really new here-all old news, except for the "future"
Turning hot and dry in NE Brazil, Argentina is getting rain, no rain-may have a repeat of last year. The weather Gurus are divided on this-they basically follow the recent trends and rely on "anomalies". As far as China, their corn acres are going to drop next year and are offering subsidies to ethanol plants along with transport subsidies to divest their large carryout of corn. Have heard reports of winterkill in parts of sw Kansas and nearby areas. Pretty sure there is going to be another "Siberian Express"(I like that term better than "Polar Vortex") coming down circa Jan 6-have to see how that affects things. Hog and cattle numbers are up-demand bull.
FWIW, China has half of the world's carryout of wheat and corn and don't seem to be aggressive about exporting. Maybe they know something we don't? I guess the USDA has to include it on WASDE, Until China starts inporting, it is dead weight on the market but they can run the world short in a matter of months. However, I do not believe their inventory rotation is good enough to avert spoilage. Yes, the world had a record harvest of wheat-a record harvest of poor quality wheat. I've often wondered how much if it would make contract specs.
The bottom line is that everyone knows the current supply, the bankers and finances are going to dictate higher bean acres and less corn, SA has the "potential" for a good crop and China will be turning to SA soon. It looks like a battle between demand bulls and supply bears-the bears may win out on soy. As far as corn/wheat, one analyst said it best-the only reason to be long wheat or corn is the low prices. Tells me we are close to a bottom.
12-28-2016 02:57 PM
I'm not quite sure how ANYONE knows for sure how much grain China has in storage and what kind of condition any of it is in. The term "Fake news" is somewhat new here in the U.S. I believe we have been getting "fake news" from China for a long, long time already. We only know what they want us to know.
12-28-2016 03:10 PM
I never have understood the difference between the old saying "to make money in the markets is simply buy low and sell high" and when the price is low the same folks will say the grain isn't worth owning..........
Propaganda,,,, is the former term........ Fake News is the term we say when we get caught believing something, because we are too lazy to apply any critical thinking. Blame Fake News...
The conspiracy of Fake News.
12-29-2016 05:37 PM - edited 12-29-2016 05:43 PM
At least it seems to me that most "news"(published or internet documented) is pretty much unconfirmed secondhand speculation..... For instance the "news" concerning China's inventory and grain issues, we can be pretty sure that no one "producing" those stories is counting in a warehouse or seeing it firsthand. It is all words of "he said or they said" or a "political" release of "information" by some press handler in China or Washington or Chicago..
We have lowered our standards of what is news from verified truth to "if you can get it printed in three web locations it is near fact".
So Jim, I think that boils down to "believe what you like" because we don't know the difference. And if those in the information publishing business will not discern fact from fiction, or even content from the headline, all we are left with is "that sounds good to me" or doesn't. If it is unreliable or unverified it is just gossip and a waiste of our reading time. Should we be basing our marketing and business management decisions on it?
I would just hope that the person who publishes the story asks the same question. I find it scarry how the press runs around lapping up political commentary all around the world like a puppy trying to earn a treat. We have historically held political sources(all sources for that matter) in a questionable status knowing there is usually an alterior motive, or at least "the rest of the story" we don't know. Somewhere we lost the wisdom to apply scepticism to unverified information. Maybe the public just doesn't care what the truth is anymore.
I think there are simple reasons..... the public knowledge becomes more and more focused on specific areas and has lost its broad based knowledge......... the public spends very little time watching or reading factual information as opposed to its time viewing entertainment. More and more we are believing the entertainment and doubt the verified facts, especially if entertainment doubts them.
If Stephen Colbert is on TV and says that new discoveries show peanut butter and 30 weight synthetic motor oil will mix to cure cancer and a cancer specialist from MD Anderson has an equal time ad that says it will not work. A segment of the public will believe there was some truth to Colbert's claim, will publish it on the internet, share it with many "friends", and it must be disproven because there is now a cult following that believes it to be true.
The guy from MD Anderson will probably not get any viewers because most viewers of TV won't know who he is and won't watch his boring statement. Those who do watch and believe already knew it and will not get excited.
Internet publishers will call it fake news(or not) and publish it as many times as possible because Colbert's name attracts viewers and get lots of "HITS". Treatment centers will open up in Mexico and fundraisers for the girl down the street will be held. And she will die with a feel good autographed picture of Stephen Colbert, and two parents who think they tried everything.
So label Fake news what we don't like. But I think in many ways Fake news won the battle a long time ago when we decided "If we believe it, it is true". And since most of us just read sources we like, we can't tell the difference and the term makes us uncomfortable to consider how much Fake News we believe.
This is an interesting subject for me....... I have a personal friend with a russian cold war education. He has spent much of his adult life verifying what he believes to be true............. It is not an easy process to relearn a misconception and not easy to change it. Our information gathering is something we take too lightly and turn over to others too foolishly.