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Rob SC NE
Contributor

Black Sea corn

Read headline here this morning that "Black Sea Corn Exports To Fill US Void." A source from FC Stone says that" corn exports from the Black Sea region, especially Ukraine, will step in to fill the void left by the US in the 2011-12 crop year." 

 

Ukraine is reporting a bumper crop that is supposed to help offset lower production from the US corn crop.

 

A couple things here. It's been a while since I've heard Ukraine talked about as a major competitor. And, what's the deal with this "void?"  Are our supplies perceived as being that short in the global market? Guess I've got a lot to learn about the international scene.

 

Rob

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6 Replies
sw363535
Honored Advisor

Re: Black Sea corn

mizzou might not be the only one that sees a problem with the usda data.  

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Palouser
Senior Advisor

Re: Black Sea corn

What the Ukraine can ship remains to be seen. They lost valuable shipping time with export taxes for the last 4 months. They don't have a very big pipeline out due to poor infrastructure. Much of the potential of Ukraine this year is speculation. The constraints are real.

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Mizzou_Tiger
Senior Advisor

Re: Black Sea corn

tight grain supplies and fear will keep extra bushels parked in the world.....shipping out grain at a high price only to bring it back in at higher prices and risk civil unrest to boot does not make sense........infrastructure will not only limit production but also movements in countries that are lacking..........

 

there in lies one of the geniuses of ethanol........while we produce way more than we consume in this country........if there were ever a hiccup we could flip a switch and be good to go.........the downside risk to that is what we are juggling now.......the possibility of the switch being played with.........

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timetippingpt
Honored Advisor

Re: Black Sea corn

One of the first things I learned about grain marketing from one of my ole mentors was simple.

 

1. Supply shortfalls are ALWAYS followed by supply surpluses. Price declines BEFORE the supply shortfall SEEMS to be resolved. This just happened btw.

 

Point being that deciding to take price risk as a farmer SHOULD NOT be the same as being bullish. There many times when it is far wiser to NOT take price risk even though things are bullish. The entire year since 2/14/11 this has been true for beans and wheat.

 

I certainly think we have some weeks higher at this point, but this is not mid 2010 and corn is not $4.20.

 

Lots of easy ways to see sub $4 corn again by next fall. China bubble bursts. Ethanol mandate waved. Just lots of ways it could happen. But like I said, the TIME isn't right just yet.

 

Of course the spec money game is over. Plan accordingly. I would suggest folks look at monthly chart and ask themselves just why they don't have any 2012 and 2013 corn/soy sold yet.

 

Pal and Mizzou....your focus may be right...but you probably will get a much lower price than the rest of us.

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Mizzou_Tiger
Senior Advisor

Re: Black Sea corn

TIME........you should probably do a little chart surfing...........February highs in soya were met or exceeded on the BOT or basis in August........

 

as for focus and price.........unless you have an $8 printed on a corn slip..........well you get the idea.........you can sell a lot of mid $6 corn current year, and couple it with a lot of $7 and $8 corn from a previous year............and still be ahead if you have to sell $5 corn the next year...........compared to most that is..........

 

play ball.........

 

EDIT:  Time you forget I have been doing this dance for a year..........everything including the kitchen sink has been thrown at this market and it bounces back...........China will not only have to implode, but burn to the ground.........the EU will have to bankrupt the world.........oil will have to go to $50 before ethanol dies (ethanol can handle another $1 on corn which means it can handle a $20 drop in oil at current corn levels)............supply only happens with more production per acre, could happen for sure, but dont count on acres to help............a lot of what "if's" have to come forward for this to go boom.......

 

how confident are you that China burns to the ground..........EU bankrupts the world...........oil goes to $50.......and we raise 165 nat average crop next year (coming off a hot dry summer and fall now).............shuffle the deck and draw a card, thats the best odds you will see for awhile............

 

 

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Palouser
Senior Advisor

Re: Black Sea corn

I am not bullish  at this particular point. I'll be sure and tell you what I receive for the rest of my wheat. I anticipate doing a lot of watching for a bit.I'm guessing December and January will be when the market trends will be solidified.

 

 I think there's more equilibrium in the market than some of the current psychology suggests, but I'm not used to some of the relationships, i.e. corn being worth more than wheat. As much as I think the rest of the economy is stagnanting due to political deadlock I'd guess the chances of it affecting the grain markets much being low. There's the black swan but I think it's unwise to base marketing on that kind of event.

 

I am not worried about China at all.  Because of their authoritarian central control they can ward off instability as most look to what the government says and does first, not after a shake up. They have been consistently demanding controls on rampant speculation. In any case their food chain is sacrosanct. They are going to produce more and buy more. They have a remarkably flexible yet controlled system based on adequate inventories for any immediate concerns and yet keep internal prices high enough that production will continue regardless of what happens economic events elsewhere.