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01-30-2014 06:38 AM
That's what I got from John's chat last week at the Land Investment Expo. He talked a lot about selling in these 'oscillations' in the market, and that in general, we'll trend higher in prices from now through at least early summer, then probably hit a harvest low, which will be the bottom of a "new plateau" in prices. He did issue one sort of warning: We need more soybean acres this year, he said, but when we're selling into a "1-country" market (aka China), we may not have a clear signal for bean prices based on China's propensity toward fudging the facts at times when it comes to grain stocks, etc.
So, do you buy it? Here's more from John's talk last Friday.
01-30-2014 08:32 AM
Roach seems to be thinking typical seasonal will be back in style this year. It would seem to me that would depend on a typical carryout scenario. Many other marketers are focused on the likeilihood that we'll have more produciton in '14, maybe even another record.
Why will we have more production? Dr. Chad Hart of ISU pointed out some reasons in a Crop Advantage lecture yesterday in Iowa City. He showed that the southeastern and southern portions of the country had record corn crops in 2013 and good marketers would have had the chance to sell for good profits. His contention is that farmers who grow a rrecord cropare not quick to switch to something else, so he is watching the March report to see what it shows. The corn belt is going to grow corn and soybeans because that is what we grow. The corn belt will not be the place to see a significant drop in corn and soybean acres.
If thta scenario plays out, about the only play will be weather. That might support some regularly scheduled sales such as Roach predicts but it might be that waiting for an up trend could be risky. If a person subscribes to Dr. Usset's suggestion from Minnesota and does not sell below the cost of production and waits for an uptick that may not come, one might miss the few opportunities to break eave.
Roach would probably contend some opportunities are historically likely to come. The question I have is how does one know,other than hindsight, when and at what price to pull the trigger? This could be a year of "woulda, coulda, shoulda" for all grain marketers.
01-30-2014 08:47 AM
Yeh boy! That's what I'm waiting on..........the chance to break even........and just a few opportunities to do that........geez.....
"and somewhere in the darkness, the gambler, he broke even. And in his final words I found an ace that I could keep."
The glass is half full folks.
01-30-2014 12:00 PM
Just as we are globally a residual supplier to some because of our location for some grains, shipping insoy has a cost, especially if domestic feeders and processors must keep the price up to encourage the final domestic supplies to be sold.
At these lower prices I do see the China gov restocking reserves.
Meanwhile it seems likely that if soy starts surging in N America not only will it support or raise global prices but it may encourage domestic farmers to plant more beans instead of some corn on corn if fertilizer stays high.
01-30-2014 12:46 PM
It is possible that South American infrastructure is part of the current soybean price. There has been talk of bringing Brazilian beans into the south and east coast this summer, just as the ethanol demands could be met by Brazilian cane ethanol.
China reserve stocking would seem to be a function of price and policy.
My guess is that corn belt farmers who have been thorugh some corn challenges the last couple of years may thinking about balancing their rotation, though I doubt if this will b e very significant. It is what used to be called the fringe states that will determine corn and soybean prices this coming year. What is fringe now? Is that changing?