Boy that's a shocker.......

[Mizzou_Tiger]

Thanks for the vote of confidence Ray.......maybe I should turn bearish for awhile........

100 million acres of corn next year.........85 million acres of soya next year.......both at trend line..........sell it all now........

[jrsiajdranch]

You still avoid the tough question don't you?

What does demand destruction look like to you?

How many less cattle, hogs, poultry and dairy cows do we need to get you to a comfortable level?

In fact what is a comfortable level? 

Do we need ending stocks of a billion or is it 2 billion? 

All I am trying to figure out is where in the heck are you thinking equalibrium is? 

[muddymiller]

With the burdensome number of breeding age dairy hfs.. you need strong feed prices to keep milk production in check. Otherwise your milk market will be flooded fast and you won't make money with cheap feed. Grain farmers are price takers. You are mad at grain farmers because everybody wants grain(demand).

[Blacksandfarmer]

WOW 157 for Iowa! If Iowa has a 157 bu average then we are in trouble. I do somewhat agree with you Jr. Demand destruction will come from those paying $8+ for corn no matter what business they are in. China on the other hand is paying much less for our corn due to the much weaker dollar.

[Nebrfarmr]

I can see plenty of demand 'reduction' around here, but whether it turns into demand 'destruction' remains to be seen.

For example, I can point out several places where people are weaning calves later, running yearlings on grass longer, or whatever, to reduce the amount of corn fed.  You can do this for a year, or maybe two on some pastures, if we get good rains, and it was on pasture that had ample grass to start with.  Beyond that, there just won't be enough grass to do this without less cattle.  Nebraska is one of, if not the top cattle feeding state, and there are still a lot of small family feedlots around, and those that need to buy much corn are doing this sort of thing to minimize the corn they need to buy.  The ethanol plant seems to be going right along, but small hog operations are all but non-existant anymore.  The big commercial units continue to run as always, for now.

My take, from what I can see locally:  If we have a decent harvest, and prices don't get much higher, or drop to the $5-$6 range at harvest, so users can get corn prices locked in, they'll squeeze by as long as meat prices hold.

If corn hangs above $7 for any length of time, I think some amount of demand will be lost.  If it rises above $8 for any length of time, I don't see how it can not cause notable loss of demand.

However, there are wild cards out there, for example China could import more & make up for local usage loss.

[Palouser]

Either there is no equilibrium or it's a moving target, take your pick. As long as production trends seem to be lowering then there will be competition for supply.

Interestingly the number of cattle on feed is now above last year. Those animals will be finished regardless, even if it is at a loss. Meanwhile other markets are ramping up meat supplies. You will milk at a loss if need be. Grain farmers have produced at a loss in the past. I still remember the ridiculous position by the NGFA that American farmers could gain market share if they over produced - which they said was good - even if it was fairly obvious that was not a way to gain market share or retain it, as any desperate farmer from a developing country was back in the game with a handfull of seed.

Rising prices don't have the same demand destruction pattern as does the industrial model producing widgets.

[kraft-t]

JR. When you sell your milk or your beef do you care if it is processed for human consumption or would you be just as content if it went into dog food/ The fact is we are producing raw commodities and we have little to nop control on how it is used.

I don't sell corn to feeders or to ethanol plants. I sell to the local coops or to a commercial via the coop. I have no control on what it is used for nor do I care much. Therefore if grain prices are destroying demand it is not my fault. It's that grain elevator or commercial middle man. If they are concerned about keeping feeders in business, perhaps they ought to cut their margins to the bone to keep you in business.

Me? I sympathize with you but I recall sub $2 corn without much compassion out of cattle or hog feeders. None of them tossed me an extra buck to keep me in business.

[KsGC]

Amen on the $2 corn Kraft-t. When I sell corn to my local feedlot it's always on his terms not mine. He has told me more than once that he is not the farmers friend, he's in it to make money for the the feedlot. I held 20k of 2010 corn all spring and summer and called them a few times, they said they were not interested. Now our local coop offers me 50 over the sept. and it's going to the feedlot!!! Go figure. I just wonder how much more over the 50 that the feedlot is paying the coop.

[jrsiajdranch]

Thats a load of hog manure you were raising hogs during those two dollar corn days.   I do not know when you quit raising hogs but you sure did get the benfit from both sides of this coin.

And to every body who thinks that I think you should care about me you are wrong. The point of my posts here isn't that you should lay aside profit so I can have some, the point is that where is the demand destruction gonna come from? E plants have a mandated usage. they are here and we can't do anything about them. CHina like Black sand  said has the advantage of the currency to make corn cheaper. Plus an added insentive to get rid of dollars in exchange for marketable items. So that leaves livestock. Thats all I am saying so it is the reality that some of us are going away. Just seems to be a lot of cheering on here that we are. 

ANd KSGC you shouldn't care about the feedlot nor should he care about you. It cuts both ways.

[jrsiajdranch]

Muddy miller actually heifers are right in line with replacement needs not burdensome at all.