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07-05-2012 10:53 AM
Price the crop before the 4th of July....
Today has proven this old adage wrong....the question now is by how much and when the screw turns.
How high will corn and soybeans go? $8 for corn....$20 for soybeans? WHat are the guesses if the dry spell continues? When does buying stop and short selling take over?
Guys that are having to buy back oversold crops are probably really feeling pressured right now as this upward march has been relentless....Anyone hedged at the lower $5 's on corn must be wondering now whether to bail out and cut their losses or keep borrowing to finance the margins.
I know that in the past I have been there waiting for a break in the markets to just get out....when is that coming this time?
Just wondering what others think the highs are going to be and what it takes to stop this freight train.
07-05-2012 11:47 AM
If we can salvage 2012 at say no worse than 140 bu nat avg, the EPA could use their discretion to take the ethanol mandate from say 10% down to 5% and higher prices should slow exports and $8 should cap it. I`m very reluctant to type futher, so anyone that doesn`t have a cast-iron stomach, look away. Let`s say that there`s a "perfect storm" the rain always comes just before it`s too late, but what if it doesn`t? And a good yield on 95 CSR soil is 80 bu/acre and we raise a 7 billion bushel crop, all the ethanol and export cutting in the world wouldn`t make up for it. Then add a "QE-3" money printing fiasco in late August. Sorry to say but things could get desperate, where there would be no buying your way out on paper they would demand physical. In that senario, the $11.36 maximum insurance guarantee would only be a speed bump. Let`s hope to God that we will never see anything like that, even if you`d be one of the lucky ones. My question is, how will 2012 affect grain contracting next year? Many are going on getting burnt for the 3rd year now. Is anyone really going to jump on a sub $5 new crop corn bid ever again? If beans end with a below pipeline supply, what will the 2013 acre "bidding war" look like this winter?
07-05-2012 11:54 AM
THe cap on crop insurance is one reason why I am now reluctant to forward contract until I see a crop being made. Too much that can go wrong to make a forward bet when I no longer know how much is at risk. I guess I would rather make 50 cents a bushel on a bin buster, if the market goes south hard, than to risk the farm on forward contracts. I know this is extreme pessimism but who would think that we would have a pre-WW II Germany type government that sees inflation as the way out of all the problems they create. Dollars do not mean much anymore. And bad weather trumps bad economic policies.
I hope you are wrong about $12 corn, BA. THat would be about the worst outcome.
Let the rains begin!
07-05-2012 12:54 PM - edited 07-05-2012 12:55 PM
Be advised that this is personal opinion for the most part and worth only what you paid for it.
Right now in Washington DC the powers that be are making the rounds and the oxygenate "mandate" is being seriously considered to be reduced to 5% (all it really takes to make it work anyway)
If I still had old crop I needed to sell to pay bills etc today or tomorrow before the weekend might be worth a serious look. Corn in the mid seven's and beens fifteen+ really nice territory. Might be time to only gamble with the ones that you could compost and afford it.