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Advisor
Posts: 771
Registered: ‎10-18-2016
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Re: Strong open

I've been selling too soon and I'm still selling because I don't believe these prices will hold.I expect to make money on every sale, but will make more on some than others.  

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Honored Advisor
Posts: 14,690
Registered: ‎05-13-2010

Re: Strong open

The weekly local paper runs the cash corn bean prices from last Tuesday and compares from 1 year ago, I know it`s simplistic with all the gee-whiz info at our fingertips these days but     2016            2017 

 

                                         Corn            $3.37         $3.07   

 

 

                                     Soybeans       $10.48        $8.46   

 

 

So corn is 30¢ cheaper    and beans 2 bucks cheaper as of last Tuesday.  My 4th of July test of "is the corn head high and you get muddy shoes walking through it?"    Not this year, it`s really dry, spots of pineappling on high spots, beans are very short compared to normal and blank spots or recently germinated, small plants.   They promised rain on my 4th of July parade, which is getting pushed back and taken out of the forecast.  

 

I know it`s a 2 billion bu carryover and this is "backyarditis", but these prices compared to last yr are too cheap.  I know they can go cheaper but you also have to have bushels to deliver if you contract and at these prices it`s not too hard to just roll the dice and let RA insurance do it`s thing if it comes to that. 

Advisor
Posts: 1,336
Registered: ‎08-04-2010
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Re: Strong open

BA, I don't think its "backyarditis." Our corn looks good for the time being, but water is starting to become an issue. The "flash" drought we experienced in June took some bushels off the top. If we can get a few more timely rains we could have a decent crop "here", but the forecast is getting dryer.

Senior Advisor
Posts: 2,642
Registered: ‎11-02-2010
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Re: Strong open

BA nailed it

We haven't even warmed up the appetizers yet

It's feeling more and more like people are going to sell to early and it may happen pretty fast. Which should put this thing on a tear after that.
Honored Advisor
Posts: 7,427
Registered: ‎07-18-2011
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Re: Strong open

I get hammered for it but I am a realist.......

This country can expect steady production somewhere in the 9 to 12 billion bushel production ranges......historically an high average crop because our production areas are spread out and subject to damage and problems nearly every year.

 

This mass production .... "record crop" expectations every year is not even logical......

And expecting record production at prices below cost of production will not happen for very long.

 

Too many of us can remember when $2 corn could be produced at a profit if belts were tightened and land was $1500 an acre....

Now land is 7-10,ooo an acre and we think we can still do it.  We have lost our ability to think for ourselves.

 

We cannot expect record crops at prices that are below costs for extended periods of time.

Weather is the only answer we understand.

So we ignore that we are seeing producers go out of business around us and saying it is their fault when we have to acknowledge it.

 

So why sell on the expectations of lower prices......... when we know what will happen to fringe acres if wheat prices go back into profitable levels.  Especially when you consider costs and basis in high risk areas.

This thought is what leads to the feeling in me that all commodities are undervalued compared to profitability.

This year, corn had problematic delays in planting and prices along with basis gave fringe producers no hope of hedging a profit in corn.  Why didn't beans buy acres???  Because after basis $ 8.50 beans are not any better.  Profitability drives the supply eventually... Wheat is the case in point.

 

What on earth makes us think prices will go  back to $2 corn.  Below $3.20 renters are going to be hard to find.

Maybe Iowa has never seen that, but the fringe has.  And the other half of that 14B crop is raised on the fringe.

Honored Advisor
Posts: 14,690
Registered: ‎05-13-2010
0

Re: Strong open

In a way I look forward to testing my mettle during this era of "attitude adjustment" but it seems I just "cost shift"...long term profit is profit, to quit buying aids cash flow, but doesn`t increase profit.   I figure we are in for a year more before we realize that our wound is "down to the bone".   I hate to sell and find out in the fall or shortly before that the bushels aren`t there, prices go up to a cost of production level and I come to realize I had prematurely pulled the trigger. 

 

We had a 80% chance of 6/10ths and that now backed off to .15", I`m here to say if that is what happens there is going to be some ugliness by the weekend on gravel farms, a week later for upland forest soils.   This is in my backyard and I`m one that usually hates the rain, in 2012 it was dry to start with, this year wet and turning very dry.    I could see some of these recent germinated beans that had laid in dry soil a month, just die running out of gas.   If Mother Nature does bails us out with just in time rains, it`ll have dings come harvest.

Honored Advisor
Posts: 7,427
Registered: ‎07-18-2011

Re: Strong open

Wheat is a good example.  2010 was a good production crop in HRW.    It has taken 5 years of decreasing planted acres to finally reach a point where there is a desire in Futures markets to buy American wheat at a price close to profitable.  We finally hit a point where wheat is planted at 1919 acres levels and are told our wheat is not worth planting because the world supply in China is equal in quality and accessibility to ours.  

 

Our technology is used against us in many ways but the real issue still lies in the fact that so few entities handle commodities that it is easy for them to control the information and spin of those in the media and their interviewers.   

It never seems to down on us that every segment of the economy works with an inventory and gains from being able to deliver needed supplies. 

Only in agriculture are we asked to stop producing if there is a supply....... that is what happens when the buyer controls market place.