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01-02-2012 10:22 AM - edited 01-02-2012 01:45 PM
heard reports from NW IA that there is zero water 5 foot down...........this is a profile problem............
and its probably not going to get fixed this winter........and we all know what April-June rains can do to a crop.........thus we could have a situation.........as it relates to the plains states, they have gotten some relief, but I wouldnt get too excited yet, a good stand of tillered wheat can be a bigger disaster if it doesn't rain anymore.........
guys there are better ways to be bearish than thinking this thing in SA is a rumor..........its real and IMO worse than last year and getting worse.......take a look at the rainfall table, almost all are 50% under for a few months now.......and it appears its will be Jan 10th or later before any chance of rain, and that model is fading the last few days........also if you read my reply to another post yesterday you saw the WASDE numbers have some lofty SA goals.......remember last year they had some much lower numbers so cuts were not as dramatic because of this........
this fertilizer thing could get interesting..........two big companies are playing dice and will likely win.........also heard a third party comment a few weeks ago about fertilizer prices for P and K could move much higher by this summer because inventories are low and retailers are holding out all at once which will backfire when the all show up to buy.........the flip side to that is less bought and applied which will inevitably lead to lower production, remember most of the soils in the world are very old and need nutrients.........here in the NA we are very lucky to have young productive soils, but we are quickly squeezing them too.....
no links on demand this AM, just want to hit on it because it is very important.........all of the above have referenced major supply concerns in the world..........and many balance sheets are being kept in check by lowering demand before it has been realized, Mark to market if you will (LOL that kind of accounting worked good for ENRON, must be why the USDA uses it)..........you guys know I don't believe that.........but hey, if you are going to hang onto a bearish hat, this is probably a good one, because the rest of the world is going to try and use it to keep a lid on prices, all the while most of us probably overate the last month or so......
kind of a neat report, not sure I agree with some of the numbers, but at any rate it shows there is $0.50/gallon margin for variable and capital cost........those are tight margins no doubt, but for a plant with little or any capital cost, they are likely still making money.........not to mention they probably have corn bought at a lower price thus lower unit cost.........I am not sure why that spot ethanol price is so low, nat average is close to $2.50...........at any rate its Jan 2nd and ethanol is still being made.......like Ray J has said before, you build these things to run em........and most of the seasoned plants have been around long enough to have capital cost down to nothing and know the game well, and remember the mandate is still out there and so is Brazil's appetite..........
EDIT: and this stinking wind, anyone else getting tired of it.........been 36 hours plus, had gust yesterday approaching 60........steady 20-30..........
EDIT2: a lot of chatter going on the last 24 hours about SA weather getting worse, remember this is essentially our 4th of July weekend for them, and remember what happened in the weeks following for us this past year........they are talking same or worse on a dry profile and probably weaker soils...........the markets could get explosive here, short covering and the like..........and do not forget the dollar is at some lofty levels, it likely now has more downside than upside which will cycle well with a spring rally........as mentioned over the last 4 weeks or so, it might be time for the bears to hibernate as the fuse has been lit........
01-02-2012 10:48 AM
u bet ya,
We had it saturday and passed it on.
We are used to it more than most, but I never like it.
I thought it was a fitting final day for 2011 in the panhandle region.---------glad it's over.
Hope we learned enough from that "historic education"----don't want to repeat that course for a while-----------------will not forget 2011.
01-02-2012 11:06 AM
Hope everything is well with you MT. Just a supportive note to your comments regarding soil moisture status. We are currently installing a county main tile system in north-central Iowa. This is a 24 inch main at depths from 6 to 12 feet. This is prairie pot hole heavy soil with very little slope. Last week on my farm it was 12 feet deep in an area that has been wet my entire lifetime. There was no sign of water at that depth and all field tile are also dry. This dryness in the heart of the cornbelt will need to command some risk premium in the market if it persists into spring. This area was 200 bu (continuous corn) in 2011 with almost no rain after Aug1.
Thanks for your insight.
01-02-2012 11:15 AM
You are correct that there is no subsoil moisture here. Finished tiling and one county tile around 7 feet deep had no moisture at all. We have picked up some moisture the month of December but not enough to replenish subsoil moisture. We will need March and April rainfall or we will start out with no reserves.
01-02-2012 06:37 PM
I am digesting your stuff slowly.
2012 markets are primed to be wild if the economics can support it .
But supply & D are going to be wild for the fall crops. Especially if the next 3 wks in SA mirror our July.