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Honored Advisor
Posts: 2,810
Registered: ‎04-29-2011

Re: Danger In Corn Market

I just read that China's corn number was increased and put out after they reviewed their numbers going back to 2007.   10 years worth of numbers changing.     And the rest of the world is suppose to believe these new numbers?   This still smells like they are trying to lower the value of corn.   

Thank goodness the USDA only goes back 1 or 2 years to change theirs.    Smiley Wink

Senior Contributor
Posts: 425
Registered: ‎08-02-2012
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Re: Danger In Corn Market

Why is everyone always surprised by the USDA pulling s rabbit out of a hat? They literally do it about every 6 months. Not to be to political about this, but how would the tariffs be affected as well as the corn market, when a plethora of indictments and possible impeachment hit? Doesn’t anyone think that maybe China is just baiting the hook? Wouldn’t be the first time another country betting on turmoil in the US. I mean honestly has anyone confirmed these piles,?, and oh yes there would be piles of corn that somehow everyone missed.
Veteran Contributor
Posts: 485
Registered: ‎09-20-2018
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Re: Danger In Corn Market

Front Month Futures Contract bottomed on December 12, 2017 at $3.3525, and then rallied straight through to May 24, 2018, where it peaked at $4.1225.

 

In light of this information about China's alleged  purchases, my guess is that it was their buying that fueled that entire rally. There was no news on it, they hid what they were doing quite well, which is easy to do nowadays with the electronic trading platforms.

 

I am glad you find value in what I write here about the market.

Veteran Contributor
Posts: 485
Registered: ‎09-20-2018
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Re: Danger In Corn Market

As I wrote elsewhere, there was at least one well-known and respected corn market analyst at a big commodities firm that has been calling for this adjustment in Endstocks for some time now. Its not unusual for the government to revise prior reports going back quite some time. I think the benchmark revisions to the GDP reports go back five years or more, same with the Employment Report. This is due to all the probability factors that the government statistics office uses due to the fact that they are trying to extrapolate numbers for an entire huge country from a relatively small amount of data. As time passes, those probability functions change as the survey data changes, and so they revise many old reports to adjust to the new circumstances. 

 

Its an inexact method for sure, but its the only one markets have, and prices in markets are determined based on all known information at the time, whether its correct or not.

Veteran Advisor
Posts: 1,504
Registered: ‎06-30-2010
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Re: Danger In Corn Market

"Its an inexact method for sure, but its the only one markets have, and prices in markets are determined based on all known information at the time, whether its correct or not."

 

I'll agree with that statement.  The relatively limited corn market movement suggested to me that the "adjusted" info was discounted as to its pertinence. It's a change in numbers on paper, not a change to what is actually there, or not, which is not significantly different than last week.

Veteran Contributor
Posts: 485
Registered: ‎09-20-2018
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Re: Danger In Corn Market

But remember, the market now has a new piece of information that it did not have before, which may have an impact on the aggregate price decisions of the market participants.

 

What goes on in a trader's mind now is this : I don't know if its correct, but it may be correct, and that's a possibility that I did not factor into my thoughts on price before yesterday. So going forward, whether its true or not, I have to assume it may be true to some degree, and that will make me change my thoughts on price to the degree I think the information may be correct. 

 

Which is why I wrote yesterday that while this news may not sink the market, it will reduce its upside potential until and unless further news comes out to lessen the impact of what was reported yesterday. 

 

Interestingly, from a strictly technical standpoint, the market had a bullish close yesterday, as we had an outside day and close 25 cents higher than the previous day's close. My feeling is that someone was playing around with the closing price to make people think its safe to go back in the water. In corn, unlike many other markets, the close on an outside day often is not as important as the nature of outside days to change trend. Today's trading below $3.70 again supports that idea. 

 

Bottom line is regardless if the report was true or not or only partially accurate, the news being in the market will have an effect on the perception of where prices should go from here. But to me, news is not nearly as important as where the traders put their money. Which is why I watch price levels. And the levels remain the same, below $3.60 and then $3.54 you are triggered to act, and also between $3.85 and $3.95, and then possibly just slightly above $4 if that happens. Get a good book while you wait for the prices to trade, or stick around here and talk with us !

Senior Contributor
Posts: 331
Registered: ‎04-28-2018
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Re: Danger In Corn Market

Market manipulation ! Plain and simple.
Veteran Contributor
Posts: 485
Registered: ‎09-20-2018
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Re: Danger In Corn Market

By whom and for what purpose. I find it interesting that the only time I hear that phrase in the farming community is when its applied to data that causes prices tro fall rather than causes them to rise. Who would have a vested interest to manipulate prices only in the down direction ? It surely is not the government, since they wind up better off when prices are rising. They collect more income tax and pay less in price guarantee insurance. Sure, the food processors and livestock industry prefers lower prices for the grains they buy, but why would the government favor them over the people growing the crops ? If speculators were manipulating the market, they would do it in both directions...and besides, they cannot influence the crop yield data. 

 

So when you really get under the hood and look at the wires, its not at all a plain and simple situation. And as I wrote before, this increase in Chinese Endstocks was not entirely a surprise, there was at least one major analyst who was banging the table for some time making this case long before the data was released. 

 

If you want to see a market that's manipulated, look at the Treasury security market and the foreign exchange market, where governments actually gamble taxpayer money to try and force the price of securities and currencies to the levels that benefit the government.

Senior Contributor
Posts: 331
Registered: ‎04-28-2018

Re: Danger In Corn Market

The government would not give monthly estimates nor would there even be a usda service center for farmers if not for their need to manipulate, that's the whole point of usda. They must manipulate to keep a price range bound cheap food source. When citizens go hungry governments collapse. When the price of food gets unaffordable, governments collapse! Example: Egypt 2008. Wheat prices go up to profitable levels and egypts government is overthrown. Wow! Think about it! do you get what I'm saying? The goal of usda is to keep farmers planting and giving them just enough to survive so they have hope. You see farms go out of business when usda miscalculates. Prior to 2008 the gov was practically out of farming according to subsidies. What happened? $8.00 corn and $17.00??? Soybeans? According to my calculations with the gov subsidy corn will have to get to $5 and peanuts get to $550 per ton before I will make the same money without subsidy. I won't make more money at those prices,I will make the same because what I gain in price I will loose in subsidy! Think about that! Who makes the money then from these deals? Not the farmer he just survives. Example give u a hint, when corn dropped from 8 to 3.60 did corn flakes go back down in the store? No! 2012 peanuts hit $1100 a ton, the price of peanut butter doubled in the store. Did it go back down when they hit a low of $ 375? No! What did usda do with the plc and arc county programs? Ensure that they had cheap raw ag products for years to come! Who made out with peanuts? The shellers! Who paid lobby money to ensure it happened? Shellers! Who has to pay an assessment of 6 dollars per ton by Florida law which goes to promote peanuts? The farmer! Why should I have to pay for advertising to a peanut board ran by shellers? I'm selling raw product! I don't give a damn what they do with it as long as they pay me. They should advertise their product they want to sell. They are the marketer not me! Same thing with beef! I have to pay money by state law for every head of cattle I sell to go to a board for beef promotion. In the end promotion isn't going to change my prices. Prices go up more acres will be planted prices go down less acres should be planted but they don't go down because you have manipulation by the usda! Manipulation plain and simple! These grower associations are a damn joke! Look at the members and who's doing the talking! I've spoke about creating a real corn real corn growers association before. Not one that promotes corn but one that controls supply!
Senior Contributor
Posts: 331
Registered: ‎04-28-2018
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Re: Danger In Corn Market

Called this week about prices for 28, and 32% n for grazing rye, anyone else? Cheapest found 28% $245 32% $253 hmm! It's winter folks! More corn next year ? Chemicals ? heard of a price increase by as much as 20% due to tariffs! Fuel costs going up, insurance going up, parts going up, and I'd hate to own new equipment, I know farmers who do, and after talking with them glad I don't!
The usda miscalculated and with the last farm bill put a bandaid on a mortal wound. Without the last farmbill many farmers would have been out of business and with that same farm bill many more will be out of business very shortly!

Not necessarily complaining, just wondering how anyone could think that the farmer in the us will keep planting under these conditions! Mathematically impossible long term!

Watch the market! Watch usda! Watch bullish and bearish data and when it happens! Look at the corrections through out the year!

Farmers look at the products you and I buy! Want to watch a good movie about your industry? Watch food inc.! See who really has the ears of your senators and representatives, and who sits on the FDA panels! When you actually do a little digging it's to damn obvious!

We as farmers just think we know our industry, but in reality we are the hired labor that takes the risk and works on a production based salary for the gov, seed, chemical, machinery and processing companies!

We as the grain farmers are the foolish masses of our industry!