02-01-2013 09:26 AM
1. Plains States drought
2. China demand for soybeans - insatiable
3. South American weather not perfect
4. Feed Stocks are dangerously low
5. Farmers will need to be coaxed out of remaining stocks
02-01-2013 11:05 AM
Dan Basse at AgResource probably put it best: new crop corn will either be $4.00 or $9.00 come harvest. It's difficult to argue with his logic. If we get rains and a good crop, we're probably staring down the barrel at $4.00 corn. If the weather pattern we're currently in continues, we're probably looking at $9.00 corn. I don't see much in between here.
Five reasons to remain bullish: 1. drought 2. lack of 100 million acres 3. less feed wheat in the World due to drought 4. falling dollar value 5. record gasoline prices
We've already covered the drought, and it's self explained. I don't believe we see corn acres anywhere close to 100 million. In fact, I think it will be difficult to get as many acres as we planted in 2012. There's already starting to be problems in major wheat growing countries. The dollar really only has one way to go unless more and more countries start to devalue their currency. Last but not least, we're nearly at all time gas prices for this time of year. I believe I read somewhere that if gasoline climbs another 10 cents we'll take out the all time high price for this time of year. Plus, Brazil is going back to 25% blends which should curtail some of their exports of ethanol into the U.S.
02-01-2013 11:05 AM
Hey. I'm sorry about that. You know, I couldn't figure out what you guys were talking about, until I just noticed my wording in that "At the open" post. Whooops. Sorry. Yes, this is a rally not a pullback day.
02-01-2013 11:14 AM
I was at both your AgConnect market updates, and I was one of the producers with unpriced old crop corn (<12% of my production so not much). I really enjoyed your presentations and the other ones at the show. I actually walked away more bullish corn and soybeans and more bearish wheat than when I arrived, regardless of how you think you sounded. The message I took away from all the presentations was that as until stocks to use are replenished in the corn and beans, the market will remain volatile and provide some good pricing opportunities. With high worldwide stocks to use in the wheat, the opportunities are much more limited for volatility to provide the same types of pricing opportunities.
In listening to the Brazilian market consultant, the big question I have is how soybean harvest delays might impact second crop corn. That could have a big impact on the corn estimate for Brazil going forward.
02-01-2013 12:24 PM
Thanks for your kind words. You should have said something at the show, I would have liked to meet you. I just got off Skype with another Brazilian source. You won't believe what he just told me. I will post the whole interview later. But, in a nutshell, he is saying the soybean shipments are being blocked at the port of Paranuaga. And here is why. You might think it's just because of the current harvested soybeans. Oh no! A record sugarcane crop, being trucked to the port is the biggest reason for the logjam. Sugarcane, mind you. On top of that, a huge increase in corn exports is right behind the sugarcane log-jam. And right behind that is this wall of soybeans that are coming on. Brazil has only harvested 2% of this record-high crop that is around the corner. Wow! I get the sense the soybean market is building quite the bullish story, if world buyers (namely China) have to keep turning to the U.S. to secure soybean supplies.
And I agree with you about the global wheat stocks that are building.
Thanks again for your kind words.