Mizzou I was thinking the same thing when you said "So they set there and tell you to your face you will be rewarded if you can get the lake infested corn fields planted, and in the same breath say the top is near".
The first part is about the most bullish statement I've ever heard from Cargill and the second was to cover their ***. I immediately recognized the was a signal to not be too quick to contract new crop and to be happy I have not contracted any new crop yet.
and by the way it is still drizzling here in Ohio this morning.
If this crop is going to be as short as we all think it will be do you not think there will be some type of govt intervention. They could cut ethanol mandate in half with a stroke of a pen or how about a grain embargo. If all livestock/poultry starts bleeding badly they will be screeming to the govt to do something. You think they (the govt) is going to let food prices explode?
Re: Corn still potentially explosive
One thing to keep in mind is the difference between a 'prediction' and 'potential'. They are different terms. I tend to focus on trends that are likely to continue or create a situation where normal changes in production (like poor planting conditions) could create tension in the market due to a complex of trends. We could have a super crop of corn, but I think one has to think about the real possibility we don't.
It seems that significant rationing hasn't occurred in corn at these prices. If the harvest is later, then users such as Cargill do become anxious due to that time when old crop and new crop doesn't transition easily, therefore the encouragment to think about the 'reward' of planting. The paradox is that agribiz (like Cargill) DOES make more money when commodities are high priced, and yet it is also an ironclad rule that one will make more than the competition (all else being equal) if you can buy the commodity somewhat lower than they. But none of this matters if there isn't a smooth flow into the priocessing capacity invested in. The greatest profit will be made by a processor when the volume is in the sweet spot where efficiency of a given operation is greatest. Volume becomes the name of the game. If you have it then your competition is denied it and they have to pay more or put together less efficient sources. By the way, Bryan Edwards of Cargill was the one educated me on the fact that high prices do tend to mean higher profits in discussions we had some years ago on this forum (those were the days!).
In any case, my method of marketing tends to be based on watching trends that might reward changing my timing, though I'm more an opportunist then a 'TIMER'. The reason is that having covered cash flow and obligations there isn't a constant relationship between price and quantity. When there is a demand or supply crunch the price seems to always increase faster than the demand/supply trends on a graph. For instance, the prices of commodities are much higher this year even though mathematically there was no question there was 'enough'. The insecurity by buyers is focused on the next phase of supply. The "what if" scenarios. When inventories are likely to be tight the tension seems to increase geometrically or logrithmically.
Re: Corn still potentially explosive
well i gotta tell ya, im a grain merchant, i too am traditionally bearish, i know alot of the Cargill guys, this year i am not bearish. It will be a classic short crop year, highs should come closer to harvest time. IMHO the highs are not in. I am close to the ETOH biz as well. these guys are making money w $8 corn. we will go higher in order to shut off demand.