07-06-2011 10:10 PM
IMO nothing has been decided in this market. At all. Corn production is still uncertain.
The turmoil after the market has reflected the usual turmoill of a report reaction where there is a lot of tension in the market. The past has shown any direction might be taken and then followed by a reaction to the reaction based on a return to a reality or a reason to doubt initial conclusions made from the report reaction. The reaction to a report is often not long lasting.
There are numerous situations and conditions in the market that don't seem to square with the report reaction. Basis in certain areas for one. And not just in corn.
A consensus regarding the markets has not been arrived at IMO. Partly because it's too early I suspect. Partly because of conflicting signals.
07-06-2011 10:31 PM
..Consensus may be what you're looking for...but I once heard an old farmer say, "When all those guys in Chicago start saying the market has to go one way...you better be on the other side of it because it's just about to turn". I've never traded on his advice...but I sure wish I had a week or so ago....LOL
07-07-2011 07:59 AM
Palouser..... There has been a lot of things decided........ For one the Chinese can now import corn and it works very well...... End users can now buy corn cheeper than they were looking at a couple of weeks ago..... Demand has not been destroyed ...... I think that these are all good things...... I hope...... I sure hope that USDA really is right and all of that corn is there because the way that people;e are buying the stuff it doesn't look to me that it will take long to get rid of the excess....... p-oed
07-07-2011 08:36 AM
I don't think anything has been decided.
One conclusion we can make after 6 years post ethanol is that USDA rightfully fears the impact of extremely aggressive ethanol mandates and thus will give you a reason to plant in the spring (and BTW, please remember that planting intentions are a purely subjective number).
Then you wait to find out how it plays out.
My guess is that there are enough nicks out of global production already that we aren't going to see a significant stocks build so we get to play this game at least one more year, if not many.
We can also conclude from the recent reports that $8 corn does create some rationing.
If you don't have a fair slaes book on I wouldn't be terribly concerned. If you're Texas hedged long I would be because all of this may take a while to play out.
Further, we remain at risk to global financial turmoil although we are approaching an election year and it sure looks like everybody on both sides of the Atlantic and Pacific will do everything in their power to kick the cans down the road.
The fear is a real Black Swan (not the faux Black Swan of '08 that everybody knew was coming).
Can't handicap that, sorry.
07-07-2011 09:11 AM
It looks to me like the pull back in crude and gasoline prices gave the economy a bump up. Copper is heading back to the old highs. Just shows the most important thing in keeping the economy rolling is keeping fuel prices down. Hard to imagine any politician would vote to back off any on biofuels with that fact staring them in the face. Should be expanding them. The oil spill in Yellowstone River just adds to that fact.
07-07-2011 09:31 AM
According to stories this morning China may have bought 3 Million tns of corn on this drop. The sum total of purchases in the last 6months make it look like @ 10 million tns purchased? Perhaps the one sure thing is that China is buying corn as some predicted last year. This is an important development and will be an important factor in the future. Assuming any agreement on ethanol will be a gradual phase outof some subsidies, but not mandates, then the pressure is still going to be on corn production and current yield trends.
07-07-2011 09:35 AM
I'd say the jury was out on rationing. At least I didn't see any hard information for ethanol or feeding, though maybe some speculation about that.
As for 'everyone knew it was coming in '08'? It seems to me that there were a lot of good actors out there when it happened if that's the case.
07-07-2011 09:46 AM
As to the rationing, what happened to the markets was a blessing to many local feedlots. They had probably 2/3 to 3/4 of their corn needs already 'bought' and were hoping for some sort of price break before they ran out. With this price break, they bought a LOT of corn, maybe enough to last to harvest. Some contracted the physical, some bought on paper. Either way, while they weren't buying in the high prices, they weren't really rationing much in the sense that many bought enough corn cheap enough that they will still use most of what they would have anyway (although they were sure looking into alternatives).
One indicator of this is our local basis. It went from 30 to 36 cents under Chicago to 8 cents over in 2 days. Right now it is from even to 6 cents under, depending on when you call. Basis changes daily around here now.
07-07-2011 12:00 PM
Here is one discussion of how to use options to figure out the odss of various Dec corn prices. I don't know if the options line up with the other indications but it is one thing to look at.