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Senior Advisor

Commodity groups lagging again

So trump was at FB convention. Lots of *** grabbing and butt sniffing. But no substance.

Zero talk of more ethanol and biofuel. Zero.

It's time these commodity groups did something instead of sitting on their duffs.

I did something this week that I don't think I've ever done. I filled out the state form to get a refund on my corn checkoff dollars. I'm tired of sending money to groups that waste it.

Rant over.

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14 Replies
Senior Advisor

Re: Commodity groups lagging again

And if I could get my soybean checkoff back too I would.
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Esteemed Advisor

Re: Commodity groups lagging again

What exactly do you want them to do Mizzou...raise the government forced mandate to use your product? No way a Trumper will ever do that...

 

how about everyone just lower the cash rents back to a more normal level and everyone can be profitable on $3.50 corn again? Whose fault is it? Demand growth has been incredible over the last 10 years. Over-supply isn't the gov's problem is it? Planting 15 mil more acres corn/soy is the gov's problem? 

 

China will use a Bil bu of corn more than they produce in 2018, give or take, pretty soon that becomes a big deal, like I said, demand growth has been robust...perfect weather can suppress prices for a few years, but perfect weather always gives way to less than perfect weather, I am looking forward to our regression to the mean.

 

This is NOT 1986, we don't have stocks/use ratios of 50%, we are at 8 to 12%, we have to grow another above trend crop to keep prices below $4, someday it will not happen...

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Veteran Advisor

Re: Commodity groups lagging again

Whom  is  paying  those cash  rents  ?     

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Veteran Advisor

Re: Commodity groups lagging again

I agree that the evidence seems to be that good weather is more important than genetics or management in the recent string of good crop years. 

 

Regression to the mean is a useful concept.  It assumes one can use past history to project the future (which, of course, almost no on this board is willing to assume, but that is a different subject).

 

There have been a number of weather people who say weather is now more volatile, due to cycles, global warming, you name it.  No matter the cause, if you subscribe to this you accept the weather will be more all-over-the-board in the future.  So how can one use projections from the past if the future is expected to be more volatile than the past?  Even if one can make a good projection of a valid mean, each individual year data point can be farther from the mean so how much good is that in concluding what the weather will be for marketing purposes?

 

I'll admit I've always been a skeptic about chartists.  Driving by looking in the rear view mirror.  One can say a lot of the marketing world believes in charting and acts on it so I'd better, too, but that's like saying the USDA projects yields which analysts turn into price expectations and we all know that few on this board will accept that.

 

Having said all that, time's point that we can expect at some time to see less favorable weather seems very believable to me.  The question is when and how does one market for it?  I know from bitter experience that the market can be wrong for longer than I can be (or am willing to be) solvent.  

 

I heard a broker yesterday say the basis is not too bad right now, sell $25,000 bushels corn and buy an out-of-the-money call for a little under $3,000.  Save on storage, get rid of storage risk, bank the basis and see if we get better prices in the summer.  Maybe he's right.  Of course, if he's wrong you just wasted $3,000.  Maybe that is "insurance money" and a cost of doing business.  He'll be around next year to give some more advice, too.  Smiley Happy

 

We're a little short of subsoil moisture now but it will only take two decent spring rains to catch us up.  La Nina doesn't seem to know what it wants to do.  Will it be dry next year?  

 

Last year we had nothing but reports of awful weather and we raised a good crop.  Can you believe any weather reports from farmers if we do have chancy weather in 2018?  The traders will not, you can bet on that, they'll figure farmers are bad-mouthing the market trying to talk it up and they'll make us prove poor yields just as they do every year.

 

This is going to be an interesting marketing year.

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Senior Advisor

Re: Commodity groups lagging again

its not about rent or weather or mandates

 

its about accountability, its about not settling, its about moving the needle

 

one might argue that the demand base that has been built the last couple of decades was going to happen regardless of these groups, thus why do we even fund them

 

the only time we hear from them is when someone attacks, then we here some formal written defense for a few days then silence again

 

they should be building a brand, not randomly defending it in a reactive state when something comes up

 

I am tired of ag just settling.  dang it, ag built this country and too many have forgotten that

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Highlighted
Veteran Contributor

Re: Commodity groups lagging again

Hey Ken, if they decide to chuck NAFTA and the resulting 20-28% grain exports...and eliminate the blend rate mandate that is not helping your MEGA hog confinement operation with cheap Corn? Seems your Displaying a pretty biased ideology for a new state chair person of the FSA. You MAGA!! Lowering cash rents?? you first! Quit planting corn Beans and wheat? setting cropland aside? You first! Nope it is not 1986 again but it may be just as devastating. You better rethink you allegiance. Trumper could care less about you in fly over country!

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Esteemed Advisor

Re: Commodity groups lagging again

Well, as I expected, not one idea about what you want them to do.

 

Export growth has been huge and all the groups helped that happen. 

The Ethanol mandate has been huge and all the groups helped make that

happen and spend a lot of time/money defending it now to maintain it.

 

My only point was that Mizzou's critique gives me no idea what he

wants them to do. Push the needle? I see them pushing and maybe

more importantly holding the needle steady against economic headwinds.

 

Corn is still worth 200% of what it was when this cycle started in 2005.

Revenue per acre is about 250%. The revenue side really isn't the entire

problem, the cost side is so much tougher to manage.

 

State Chairman. Thanks I think...I didn't really get your intended point.

My job will be to make sure the FSA treats its customers fairly, and

insure the millions it manages are carefully handled. Not very glamorous

I can assure you...  :-)   Maybe I can even harass the NASS guys about

why the crop ratings were so low, and so wrong, this past year?  

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Advisor

Re: Commodity groups lagging again

I have to agree with ken her.  We as farmers work on margins.  Our costs need to co e back down. And it will.  Rent in my area pencils in around 220.  There is no land owner that will do it.  No farmer isn’t pushing rent anymore, it is landowners pushing scheme and device because they are used to the big checks.

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Senior Advisor

Re: Commodity groups lagging again

Export growth has been huge.....for everyone.......not just NA. So I would argue our commodity groups didn't really move that needle since NA is the last place the world goes for its food. They would rather buy from everyone else out of spite even though I would guess we have the highest quality and generally most reliable supply.

Ethanol was all Bush. Commodity groups have certainly defended it some but did not make that market.

I will again state this isn't about COP. I am not bringing this topic up because of inputs and net margins.

Not sure what the FSA has to do with it. The last farm bill was a fing joke and I wouldn't step foot in the FSA office if it wasn't for crop insurance.

As for what to do?

How about we start with what has been done or being done. I'm not sure I know what they do anymore but show up to a farmer meeting and preach to the choir.

In this USA first era, and the value of ethanol, and the environment friendly attributes, E30 should be the standard. Our corn groups should be on the phone and in person every day pushing this. Especially if we blow up NAFTA. Going to have even more corn to use up.

How about all these groups going together to fight this ignorance around ag production in the general public. And I'm not talking about a mailer. Im talking about a full blown national campaign. Might even need to include groups we don't even think of.

I'm sure there are other ideas out there.

If I'm the only one coming up with ideas maybe alll the checkoff dollars need to come to me.

Kinda thought that was the point of these groups. To do these things.

Which is why I'm bringing it up here. IMO it's time to clean house in these groups and hold people accountable.
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