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07-12-2012 08:21 AM - edited 07-12-2012 03:10 PM
Alright, Blacksand & SW...you asked for it! Ha! Hit play for the prices & stick around for the rain dance!
The gains are sharpening. Now, corn's 28 higher, soybeans are 17 1/2 higher and wheat's 29 higher. For the latter, we got news of an export tender to Iraq, giving a little more strength to that pit. Otherwise, it's all weather, weather, weather! Man, I'm running out of different ways to tell that story! Any suggestions?
So, what do you think? Pretty even voting here in this poll so far, with the lowest category just in the lead. What in the world would happen if we do come in with a sub-120-bushel corn yield?
Good video from our pal Scott "OptionEye" Shellady on the heels of yesterday's reports and how the markets are going to behave moving forward.
Just saw the latest Drought Monitor map. Wow. The "extreme" drought conditions are really blowing up in the mid-South and southern Corn Belt. Look at this:
Some interesting thoughts from John Roach this morning:
Marketing in this uncertain environment is not for the faint of heart. Many producers in dry areas are not worried about getting more sales on the books. Instead their worry is that they have sold too much already. What do you do if you have sold too much?
The first thing is to take a deep breath and practice some relaxing exercises. Keeping a cool head during this craziness will help keep you from doing something rash you may be sorry about later. An exercise that you should consider to keep your farm business in proper perspective is to calculate your total net worth today (using bad yields and your cheap sales) compared to last year and 2 years ago.
Before you think Roach has gone completely off his rocker (or perhaps it is too late for that) let me explain. In the final analysis your farm business is a financial entity with a very strong emotional component. When the emotional aspect is running full tilt, take the time to analyze your financial situation to get an appropriate balance.
If the crops are as bad on your farm as you fear, how bad will it hurt your net worth this year? My bet is most farmers’ net worth will not be dented much if at all compared to last year. Farm values in most areas are up enough that they will offset all the losses from this bad crop year. Most farmers purchased crop insurance and the indemnities will further help to maintain your net worth.
I know this is no substitute for the solid profits we hoped for this year, but God decided that was not to be. Seeing your net worth in print will act to balance out the emotions for the marketing decisions you need to make.
Now let’s get to what you do in the markets. When grain markets are 15 days into a Sell Signal and already dollars into an uptrend, it is not the time to buy if you are a grain marketer. Sell Signals can certainly last longer (we had a 30 day Sell Signal in beans earlier in the year) but you can bet a Buy Signal will follow eventually. Our grain markets have already made a major adjustment for supply losses. A Buy Signal when traders are worried about demand destruction will be a better time to deal with grain sales that scare you today.
So if a farmer shouldn’t buy the market, what else can be done? You are not going to like my answer because it flies in the face of your emotions, but you should be selling beginning percentages of your 2013 crops.
Well, it didn't last long for Mother Nature to take back over! After yesterday's lower close based on lower demand pegged in Wednesday's WASDE report (as well as some profit-taking after a sharply higher start Wednesday), we're back to the weather market, with corn, soybeans and wheat all trading higher. Corn's leading the way, with the nearby contract 17 3/4 cents higher at $7.21 3/4. Nearby beans are 9 1/4 higher at $15.31 3/4 and nearby wheat's 10 1/4 higher at $8.36 1/2.
So, is it going to be all-weather-all-the-time now? Or, if we see some signs of further slides in demand, will we go back to looking at that to feed the bears?
07-12-2012 09:17 AM
I would not sell anything until this drought breaks and weather reverses. Just last year the drought was smaller and in the south. Where will it be next year? Maybe gone or moving north and east.
07-12-2012 10:53 AM
Good Point in that our coop is offering $12.20 off the combine for 2013 beans. To not take such an offer must mean we think the drought is going to persist for the rest of this year, through the next South America crop and through the next north American crop. So nothing is going to satisfy demand in the next year and a half.
Or do we think there will be better opportunites so we will not lock in anything until they come up with a better offer and what level might that be before we are persuaded?
I'm not advocating anything but would like your thoughts.
07-12-2012 11:48 AM
I am tired of living in the "red".
Good post and you are right, if I knew what regulated water usage was going to do in the future I could project production. Then I could sell better. But for Beans you are right on------------it is a place where we better consider starting. A lot happens in the bean market before 13.
Regulation of water usage continues to favor larger, well backed producers over smaller ones. The ones that can stand the risk.
07-12-2012 11:59 AM
SW, did you catch any rain last weekend? My family out in NWKS had about 2 1/2 to 3 inches all in one quick hit. Did that get down to you too? It's hard to believe we aren't yet in the red -- or close to it -- in central Iowa. It's sort of amazing how there are still fields that don't look horrible here yet. Most all fields are pineappling, for sure, but there are still some that are just starting to tassel that don't look quite as DOA.
I'll do a rain dance for everybody!
07-12-2012 12:36 PM
Jeff to prove to all of us here that you really have done a rain dance I think you ought to video and post your rain dance LOL! (clothing must be worn PLEASE) Hopefully we get rain very soon to aid our soybeans before they die off. In 1988 most corn in this area yielded around 30 bu unirrigated. This year a lot of the corn in this area will make 0 bu. Depending on whether or not you got an isolated storm last week or not. Central Iowa was lucky enough to get rain in mid to late May that we wished we had. Its tough to tell what this crop will yield on a US level without traveling across the cornbelt first. I take vacation in mid August and I can usually come close to figuring out a yield average that is within a few bushels of the January report.
07-12-2012 02:35 PM
Yes we caught about 1.5 inches of nice gentle rain over two days. The 4 days of cool helped a lot also. Nights are still in the 60's.
My son was through Iowa last week on 35, said it looked decent so far. But he is used to hot & dry. .
Hard telling what Jeff can or will do. Those NWKs wrestlers ---------- well------a challenge-------lets just say the "clothes on" comment is a good idea.
07-12-2012 02:54 PM
Hey, I was a basketball player, dang it! I do know the type, though! Hey, today's market video is uploading...stay tuned! Ha!
Yep, at least we're getting down into the lower 70s and upper 60s here overnight. So, there's some relief there, I guess. Amazing how your point of view changes when you're so short on rain like this!
07-12-2012 03:31 PM
It was such a depressing condition last year-----------totally out of our control. Got where we were just encouraging each other to show up. ----------------And we live in good water area, but it didnt matter.
Jeff I gotta say---------my reading and contributing here helped survive it. The tough year developed our leadership on this farm. The young guys even look older.
Sorry if the contributions have been excessive!---- you guys do a good job. Keep pluggin away. I have been a reader of SF for many many years. I appreciate your work.