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Honored Advisor
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Registered: ‎07-18-2011
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Keep in mind the corn market

Unknown.jpeg

 

Keep in mind that ever increasing corn production is being met by ever increasing demand.  As Illustrated here.

And I still think that negative basis is being created by the need to sell the crop much faster than it is being used increasing storage and ownership by end users for future usage needs.  negative basis forces the producer to sholder storage costs.

With better corn prices and profits, the producers are able and willing to hold ownership and store production until it is needed.

 

This data does not show increasing world supply, but a relatively equal increase in demand increase as production claims increase.

 

 

Senior Contributor
Posts: 184
Registered: ‎08-02-2012
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Re: Keep in mind the corn market

And yet the market continues to trade lower.? I like the part about profits 3.5 is far from profitable. Any farmer holding old corn which isn't many should just hold it until next year at this point. All the hype everyone switching to soybean acres just increased again corn just doesn't pay anymore. Up here around 700$ an acre for production do the math avg. yields 170 on good years
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Posts: 240
Registered: ‎01-16-2013
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Do the Math

Okay.    Let's get real here fellas.    If you live in a county that can consistently bang out 200bpa you would still be lucky to break even at $ 3.50 when you calculate all your costs, and just leave the cash rent out even.   The market does not want our corn.  Period.   The market is expecting us to go to the field and lose money to provide fodder for paper markets. As for farmers with corn still in bin.   I am sitting on my entire 2016 crop.  A 69 bu bean average and $ 10.50/bu made it possible to raise enough money to keep it all in the bin and have enough cash to plant my 2017 crop to beans without borrowing any money.   I have moved all of my 2016 bean crop.

 

I love growing corn....but I'm not loving it enough to go broke growing it.    I will be planting my entire farm to soybeans in 2017.   1,100 acres...which isn't much.    If i grow corn hoping for a 170 avg like last year (Co avg is ( 140)   then more than likely the real corn belt will deliver a huge crop and corn will have a definite $ 2 in front of it.    The only way I see profit in corn is for a 2012 drought.....and have it occur somewhere besides my farm while I grow a good crop.  Odds of that happening is probably ZERO.

 

You are not going to grow your way out of this dilemma by bigger yields.     Only a fool would go down that road.    It's survival time.   

 

Best luck to all.

 

 

 

 

Veteran Advisor
Posts: 2,058
Registered: ‎02-11-2013
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Re: Keep in mind the corn market

Sw...how do you account for only a. Couple day increase in supply with such a big crop last year ?

Can the moonshine and chicken feed be using
THAT much ??
Advisor
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Registered: ‎05-13-2010
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Re: Keep in mind the corn market

SW  -  Investing  in  corn  acres  on  the  fringe  corn  belt  seems  puzzling  to  me  -  guess  I  need  new  math  lessons  or  sumthun ? ?

 

 

 

 

Honored Advisor
Posts: 6,869
Registered: ‎07-18-2011
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Re: Keep in mind the corn market

[ Edited ]

elcheapo,

 

I am just reading the reports and the consumption figures go up at nearly the same rate as the production......

for example a record corn crop in 2010 would be way short of demand in 2016.

The folks who buy the product( and the press that lives off their advertising)  just do a much better job of spinning the data than producers do. Storing grain on the ground has been common since the 1950's  when it was at the end of the field instead of at the elevators in the region of the ethanol plants.  My dad used to truck with a friend in the winter, milo from ground piles to poultry markets east during the winter.  From the same area where some market spinner reports ground piles of "crushing" volumes.... it's silly.... forgivable though because many in the industry of reporting on the industry don't know much about the industry or its history.

Humans are lazy.... especially mentally... we allow the narrator to define the picture painted and fail to see other issues involved.  For instance---- The delapidated condition of grain storage.  Most of the grain storage in kansas was built in the WW2 time frame and is now unusable.... that is 70 years of aging and some private rebuilding, but nothing to the size needed considering the increases in production since 1950.  We have a storage problem.... One would think that the basis would fix that but your not going to here that question from the market spinners.

 

Consider the big expansion in global trade of all products....  40 years ago we would not have considered international trade of feed or feed ingredients like corn gluten in the volumes we see today.  Isn't that just corn exports that are not reported in the usda monthly data?

Along with US ethanol which is in the data... the production and demand continues to grow...

 

world-corn-use-and-stocks_october-25-20123.jpgCGM Export Report.jpg

 

Looking for other ways that grain leaves the US.

 

USMeatExports.GIFCOTW 2.jpg

 

And lets look at the real meat increase world wide....

This is not corn being unloaded from the US it is corn gluten meal for feed ingredients.

Even occasionally advertised as non GMO after it leaves the US...

In the slight of hand that is the reporting and spinning of USDA reports does anyone at SF or anywhere else growth of the demand side of the report??

 

 

 images.jpeg4-10-14blog2chart1.png

 

Cheapo answer these

Is the futures market a tool for price discovery or a tool for price fixing?

Do those who are in the position of Oversight and Reporting provide a public service?   

Or a price control service?

Or is their public service to the US or the World trade?

 

Honored Advisor
Posts: 6,869
Registered: ‎07-18-2011
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Re: Keep in mind the corn market

K 289

 

The answer might be in choice of options in planting.and in production investment.... Folks tend to plant for the market they have and right now corn has buyers and wheat does not.  Milo is cheaper yet.  Cattle is a very expensive answer and another monopolized market.

Where elcheapo's wonderful politicians deserve burning at the stake is in their allowance of genetics to become monopolized...(brought on by their love for globalization and the concentration of wealth in the hands of a few large political cash doners to the foundations of power.   ........ there that ought to irk some of the "government worshipers".

Milo seed has absolutely no research or trait technology yet the price and supply are controled by the same monopoly that controls corn.  The price has gone up 300%..... so it becomes harder to used as an alternative to corn in large scale.  

Probably the biggest abandonment of local agriculture by Washington is seen in wheat.... Where the "world vision" usda continues to use the world supply against the regional disaster that is midwest wheat.... The acres, production, and price continue to decline without alarm because there is plenty in the world according to folks who won't even go outside to get coffee.

 

We are well on our way to something very different thanks to our public servants and those technical rich visionaries...

Honored Advisor
Posts: 6,869
Registered: ‎07-18-2011
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Re: Keep in mind the corn market

Please reconsider the Corn chart presented earlier in this thread.... We had 120 days use of corn on hand in 1998-9.  

We have much less now and are producing more.......much more.... The graphic above looked like this.... and says demand was going up 50% faster than production...in years when prices were high.

Article_2_Figure_3_56559014F8E5F.png

 

How many times in that time period have you been lectured on loosing demand .... (always consider the source)

Most of the population repeats what they are told to say.... without testing it or thinking it through.

 

I know ,,,,, if you think too much it may lead to that "conspiracy label" disease.  But what happens to farmers who do not question and adapt........?

 

Same goes for the rest of the public ?  The populations of the world that work and think will adapt?

 

Because what happens to governments( the voters) who do adapt to new circumstances?  Or question what they are told?

Highlighted
Veteran Advisor
Posts: 1,047
Registered: ‎06-30-2010

Re: Keep in mind the corn market

We might not always find the right or best answer, yet we must never cease in "questioning" what we are told -- from the accuracy and meaning of the details, to the economic, political and philosophical persuasions and limitations.

Veteran Advisor
Posts: 2,058
Registered: ‎02-11-2013
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Re: Keep in mind the corn market

the following three links should, in my opinion, should be good news for corn, sorry

not smart enough to put them in chart form, maybe one of these days.

 

www.agmanager.info/grain-marketing/grain-supply-and-demand-wasde/us-com-usage

 

www.agmanager.info/grain-marketing/grain-supply-and-demand-wasde/us-food-alchol-com.usuage

 

www.agmanager.info/grain-marketing/grain-supply-and-demand-wasde/us-corn-ending-stocks-total-usage

 

if you look at these charts, things look good for corn ahead....IF we have an average crop for

the coming year  IF  we continue the grind rate for ethanol  IF  we have the continued export

and usage.

 

i'm reminded tho of a saying....if if's and but's were candy and nuts, we would all have a good

Christmas.

 

getting to some of sw questions.....we have been told, and beaten over the head that

the markets are "price discovery".....I guess I have to say I have some issues with that.

It seems that the "discovery" is done more by computer programs, day traders,

commericals, etc.....than perhaps the true buyers and sellers.  I was told years ago

ago, that a trade included a buyer and seller.......but it implied it might be a producer

and user....today, the same bushel might be traded 10 times over.

kind of like other things, the seller says what he wants......in the commodity markets,

no such thing, the thing we get to as close, is if we "accept or reject" the daily bid.

Much is relative.....yes you have the "price discovery price" at Chicagoland, but then

you get out here, you can easy see almost $1.00 less (a little bit better for corn).

 

I read the otherday on another website, how the peanut business works...admitted, I dont

know that much about it.....other than I like the grandulated peanuts on my sundae,

and my honey glazed ones. 

As the story goes, "the grass is always greener on the other side of the fence"...well I thought

it was...knowing the cost of peanuts at the store, I thought it might be a good business, after

all, Jimmy Carter did good....well to find out, there is only about 3 major buyers, the buyers

sell the seed....then need to maybe spray several times with fungicides.

I think i'm told peanuts were up to 600 a ton, to the farmers....but that was a high price,

but also some talk about 400 a ton, and production is about 2 tons/acre.  seed I was

told similar to corn.

 

it sounds they are pretty close to "vertical integration"  funny thing about that tho, the ones

on the top have figured it out they need the farmers on the bottom, so it is wise to at least

let them make a modest income, so we have a constant supply of low cost raw material.

 

in the corn, wheat, soybean and cattle market....we don't have that, and they don't care,

there are enough people out there, that we are going to only pay so much, and if you

don't want to sell, I know there are at least 3 others that will sell....they will "take" the price.

what their c.o.p. looks like who knows......maybe they need to sell for cash flow, maybe

for any number of reasons.

 

this will be the worst year we have had for a number of years....the years of low prices are

taking it's toll, along with crop conditions...I look at this years numbers, and it just doesn't

look good at all...you know it's getting bad when the fert and chem plant admit it's hard

to make much at the prices. locally everyone in the community knows, agriculture is

down.  I just wonder if people in Chicagoland have the same attitude, I doubt it.

 

where do we go from here.....I really don't know.  I hear a lot of talk, I read (in an un-named

publication), saying how agriculture is so optimistic...is that the auctioneers and the bankrupt

lawyers they are talking to ??

 

I know there are some that think that property values need to be lower, to make room for

others to farm....or we have to weed out the less good farmers........oh really.....who just

made you god ?  who says we must be more efficient ?  are these people crazy enough

to think they need to chase the market, spend their assets, and all the work they do for

lower and lower income ?  the question is, are the ones that say that's good...are they

as smart as they think they are ?

 

I don't think so........and I think there are a number in agreement with me.