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nwobcw
Advisor

Re: Alright bears, lets hear it.........

   I don't pretend to know everything and surely can't predict 6 months out, let alone a year.  I'm old enough to remember the market tanking when Carter slapped an embargo on Russia when they invaded Afghanistan.  So many things can happen you don't even dream of.  These days I value a "take it easy" lifestyle.  Therefore I have most of my beans fwd. sold at 13 and 14 something.  Even some 2012 at 13.18.  Will I hit the top?  No.  But my landlords were all happy this week when I told them next years rent will stay the same as I have it covered with fwd. contracting.  And when a bill comes in there is no problem paying it.  I only have 1 concern.  Why did beans drop a buck after I bought a new tractor?  Great timing I guess!   Ha.

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Nebrfarmr
Veteran Advisor

Re: Alright bears, lets hear it.........

Here's my opinion, of what I see locally.  Again, I'm not looking out to anyplace else, as I'm not that studied on it, but I think what happens locally may very well be fairly widespread.

 

 We have a lot of farmers here with inadequate grain storage.  They MUST haul at least some of their corn to market.

 

knowing this, they contracted some corn for what they thought was a good price, right off the combine. 

 

local grain elevators are offering some pretty deep discounts for drying costs right now.

 

The farmers are now delivering their first harvested corn to the elevators, as they aren't charging hardly any more for drying the corn, than it would cost the farmer to dry it at home, and the farmer doesn't have to handle it twice.  The lines are short right now, and he can save his drying/storage capacity for when the lines are long.

 

With this incoming new corn, that is already contracted, many end users are just not buying as of right now, because they don't need to.

 

I talked to a grain guy I know, and he said there is more corn contracted for Sep/Oct delivery at under $4 than for over $6. 
He also comments that probably 75% of it or more is under $5.

 

So, to get to my point, right now, there are endusers who are getting a hold of corn @ $4 or so, and quite a few for under $6.  This cuts the demand for $7 by quite a bit.  I think it snowballed a bit, with endusers starting to get a little corn, which dropped the price, which caused more endusers who were getting corn in to put off buying more corn, waiting for a bottom, which caused less demand, which caused the price to drop more, and by now the speculators who still have $1 profits on the board are eyeng taking their money, and running, as well.


I think once the harvest that goes to elevators and commercials gets chewed through, and they have to start buying the corn left in farmer's bins, things could get interesting.

On the other hand, the world economy could collapse, and things could go the other way, too.

 

 

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kraft-t
Senior Advisor

Re: So.........

It doesn't matter what I think about price direction. I would only be right or wrong and wouldn't want anyone to buy or sell based on my opinion, Nor do I want to imply I am a market guru.. I'm a nobody. And nobody is perfect . Therefore I am perfect.  NOT

 

What I will say is that we have had some remarkable opportunities to make sales and most of us should take a slice of the pie when it is offered rather than gambling on some pie in the sky figure. The irrational exuberance over crop prices is not good business. If this was the speculation forum I might think differently. AS far as I know its the marketing forum.

 

I don't know why my font is large. I'm not yelling at you . Some magical things happen when I am posting. I know even less about computers.

 

 

 

 

 

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Mizzou_Tiger
Senior Advisor

kraft........

I am simply pointing out the fact that this thing is far from over.........even with blood in the streets last week............

 

see marketeyes post with link to interview..........jist of it was..........we may not import much more but we will import the same as last year...........think about what the USDA has done with demand on paper the last few reports........cut it down big time.........

 

a break in prices will only allow for pent up demand.........if China's internal supply of grain is sooooo much cheaper and they figured demand was going to drop..........they would use it up and back fill at cheaper prices..........they are treading water just like everyone else that uses grains........

 

as for corn, they have chopped corn demand down with a huge axe..........we test 5 and you can bet your arse that demand will show up with massive shovels.........ethanol is alive and well and with Brazils appetite and ours, its not going away for awhile........

 

I may talk the bullish side hard..........that doesn't mean that the BOT hasn't been rewarded.........fact is most producers are ubber raging perma BEARS.........thats because ALL OF HISTORY tells us that grains are a step child to cheap food policy and any little run up is met with oversupply and crashing prices...........I HAVE SAID IT BEFORE AND WILL SAY IT AGAIN...........we have swung to a position of power in grains.........demand has finally caught supply.......sure ethanol has helped that tremendously, and we probably have some more flex in the world system going forward..........the key in all of this is a new era in AG..........as corn based ethanol is replaced with something else, that production will be shifted to feed the world.....

 

think abou this as a test of the world food system for 30 years down the road..........because at some point corn based ethanol will not exist yet we will chew thru as much or more feed grains and oil seeds........

 

$5 or $8 its a whole new ballgame..........thats all I am trying to say........don't sell your product short like history has taught us......its worth more now.........

 

yes I understand macros and policy can change this, but the silence has been broken and it will charge back..........think about this as I have posted many times

 

30's to 70's to 95 to 08 to 10 to 11 to 12????..........we have halved our historic runs in grain over nearly a decade.........40 years, then 20 years, then 10 years then less and less and less...........

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vrbuck
Advisor

Re: kraft........

MT Brazil lowered their mandated percentage Ethanol to gas the past month or two.  That new fundemntal was part of the break.  It so happened the percentage they lowered was what they imported from the US.

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kraft-t
Senior Advisor

Re: kraft........

I would say that cautious optimism is a better philosophy than irrational exuberance. I will take more to the bank for 2010 crop and 2011 crop than ever in my history with no sales at the top. 200 bushels of 6.50 corn is $1300 per acre gross and that is not $

$7.50 or $8.

 

The moral of my story is take advantage of exceptional offers when they are presented to you. If the market improves look for better opportunities. There may well be another crop next year to harvest those even better prices. BTW I have had more than a little experience with selling on the down side and some of it was pretty costly. Plus uneasy financial markets are not encouraging.

 

 

 

 

 

 

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Mizzou_Tiger
Senior Advisor

vr.........

yes I read about the reduction in Brazil...........until we see its real impact its hard to know its effect..........if it pays to blend they will blend even if they don't have too...........

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jec22
Veteran Advisor

Re: kraft........

Kraft, how did you get 6.50?   Did you buy back your november sales on the board?

 

http://community.agriculture.com/t5/Marketing/Sold-a-whole-gob-and-a-bunch/td-p/20917

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vrbuck
Advisor

Re: vr.........

A mandate is a mandate and a cut mandate is a loss of ethanol usage.  Only a perma bull would ignore the result of a lower manday, no disrespect.

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Mizzou_Tiger
Senior Advisor

Re: vr.........

no disrespect, but a mandate does not put a ceiling in place.........only a floor...........yes the floor was lowered, doesn't necessarily mean it falls to the floor.......

 

http://www.agmrc.org/renewable_energy/biofuelsbiorefining_general/proposed_biofuel_mandates_for_2012...

 

see link about half way down the page in a big and bold border is the phrase.......

 

"The mandates should be viewed as a floor, not a ceiling on the amount of ethanol used in the U.S."

 

 

same would apply for Brazil................

 

Only a perma bear would ignore the true definition of a lower mandate, no disrespect..........LOL

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