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Honored Advisor

Darin Newsom says 955m bu baloney,

More like 560m bu bean surplus...still too much.

 

 

 

at about 20 min.

 

http://www.iptv.org/mtom/story/32810/market-market-january-11-2019

 

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Veteran Advisor

Re: Darin Newsom says 955m bu baloney,

Yeah, I saw that.  Not sure what to make of it.

 

He made a statement that the USDA is typically 40% high at the end of the year on soybeans, if I recall correctly.  I'd like to see some corroboration of that.  Talk is cheap.

 

 

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Honored Advisor

Re: Darin Newsom says 955m bu baloney,

Newsom`s anecdotal evidence is that "the market knows better" and prices would be much cheaper if there really was a 1 billion bu carryover.  I will say, locally farmers needed the cash and the infusion of "Trump money" took the stang off selling $7.25 beans off the combine.  But that probably means the carryover is more in the buyer`s hands...and "locally" probably doesn`t mean a lot "here" 40 was a good yield where the cockydoodles in Illinois and South Dakota were claiming "best crop ever!!!".  So I don`t know.

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Honored Advisor

Re: Darin Newsom says 955m bu baloney,

USDA never “corroborates”. Why should Newsome?

Touching on reality— the market only responds to “available” supply. Traders, end users , and usda assume all supply is available. Even when green in the field. This creates market surprises and deviations. Not because the market is wrong, but because the assumptions are. And we all make poor biased assumptions.
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Veteran Advisor

Re: Darin Newsom says 955m bu baloney,

It would seem to me that a commodity one can store only for a short time or where the producer needs the money soon is always available - the question is price.

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Honored Advisor

Re: Darin Newsom says 955m bu baloney,

It`s hard for me to talk specific "price" because when I say $4 corn $10 beans, most of you have a better basis and to you it would be $4.25 corn $10.50 beans.  But it seemed when it was $13-$15 beans there was the thought of not wanting to sell at $15 for fear they`d go to $20 (I know now that seems really silly) but at the time farmers had the deep pockets to hold on and that kept the beans in the $14-$15 range for a while.

 

Now we see kind of the reverse where if beans old or new get $10, the coops` phones will ring off the hook with sellers, thus putting a very solid ceiling on price...we`re talking double 2x12s at 12" spacing joists ceiling.  And for those in my neighborhood $10 beans = $9.75 beans.  And not many with deep pockets to be stubborn and hold until "they`re right" anymore.  

 

The $10 mark will shake supply loose, if not by the river, certainly 150 miles inland it will.

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Honored Advisor

Re: Darin Newsom says 955m bu baloney,

Jim we are talking carry overs of less than 10% of the crop. That is the bushels that change the market. Few farmers are in a pinch to sell the last 10% of the crop. Or cannot use that last 10% for income adjustments. And those are the bushels that are seldom offered to the market. Inventories might say that 10% is always unsold. But of course some of that is older than one year. The idea that everybody “else” has to sell is held by way too many. May have been true when small farms raised most of the bushels, but that isn’t even true in Iowa any more.
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Honored Advisor

Re: Darin Newsom says 955m bu baloney,

Carry is very misrepresented especially by usda, but by many...

 

First it is called rotational storage.  You always keep the newest bushels in storage.  Last years bushels that came with a "Jim" storage ticket left as soon as there were new crop bushels to become "Jim" storage bushels. No one keeps the exact bushels--- nor are they required to.  And every crop does not have carry....... if so we would never have bin space the next year.  That happened once ...... 1930 or 31 in wheat country when Russia dumped Ukraine's and their wheat on the market to build an army..... and starve out Ukrainians.

 

If 2009 had a 430 M bushel carry and 2010 had a 450m bu carry, then the 2010 crop only had a 20m bu surplus....   To listen to marketing advisors talk they think that a 400mb carry every year means that after 10 years we have accumulated 4b bushels.

Truth is if we start with 400mb carry and end with a 400mb carry we did not raise one bushel above what we sold for that ten year period..... yet that carry figure weighs on the market like excess grain by "experts" we depend on who know very little about the process..... It might take 400mb to make a crop available at 50% of the locations where it is traded.  That excess may actually be 20 years ago or just a series of optimistic assumptions when you consider how many bushels were total over a 20 year period that carry is almost meaningless.  It appears to me that the idea of "carry" is just a function of volatility control.  And usda is the only one using it.  I havent heard one major grain buyer say "we won't take grain this year"  They will still put it on the ground and lower the price.  (for example in 2012 or 13 when corn harvest started in Texas, basis got very good and corn had to be barged north because of short supplies yet usda never showed a limited carry ---- that figure is not based on inventory, it is based on theory.)

A usda report is generated for budgeting purposes as noted in the statutes....not intended as a marketing tool.

It is like saying your Cash flow statement is the same as the Profit & Loss Statement.   One is a projected plan for the year.  The other is reality or a marketing report.  One is a production roadmap, the other is marketing analysis..... 

I want to know what basis moves are happening now and what grain inventories are now...... what acre plans are locally.   2020 projections and the coffee shop discussion are not relevant or real.

 

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