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Veteran Advisor

Downward Pressure For Corn?

VIDEO: Brazil has more corn in storage and more on the way in February.

 

The question here is whether the building world corn stocks will keep a lid on gains for the U.S. corn market?

 

What do you think?

 

Mike

 

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Honored Advisor

Re: Downward Pressure For Corn?

So???

 

Much of it is $2.25 to $3.50 a bushel in freight away from an export terminal. 

 

Their options are even fewer than North Dakota's farmers choices.

 

They can "sell" it to their govt at about $2.00 then what ?

 

Much of it could be "given" to you and it would be a money losing deal if the stipulation was you had to export it as grain.

 

Ask the lama and ostrich/emu farmers how growing something with out a viable market works out.

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Veteran Advisor

Re: Downward Pressure For Corn?

Somebody will love to buy cheap corn, at some point in January and February. They will have to move it, at some price, to make room for the new (most likely record) soybean crop. Hobby, are you saying their corn will not compete with the U.S. corn that will be looking for a home, at the same time?

 

Mike

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Honored Advisor

Re: Downward Pressure For Corn?

Good post Hobby.   Nothing like having a good supply that you can't get your hands on........

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Honored Advisor

Re: Downward Pressure For Corn?

Mike I'm afraid my post went right over your head.

 

Do the arithmetic. 

 

Let's start out with $4  corn at the port. Subtract off $3+ for shipping to get it just to the boat. That leaves less than a dollar for all growing expenses. Bet they can't do it for that and stay viable.

 

Much of that "huge supply" you are worried about is $3.50 freight charges away from port ....that is why it is still there and will continue to be there for some time or it composts in place.   They, like some of our high fliers thought $6+ corn was here to stay, wrong answer..

 

I wonder how well it is keeping in their heat and humid conditions. Sample grade anyone?

 

 

Edit: last fall at the Farm Progress Show, was the first time in the last 15 or so years that I did Not see at least one jumbo jet full of Brazilian farmers at the show. Not many more than a mini bus full of them. Sign of farm prosperity there?

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Advisor

Re: Downward Pressure For Corn?

I'm guessing this crop may not keep well, although maybe not as bad as 1992 or 2008.

 

May be a dump in basis and futures sometime late winter as some of it starts to smell

 

BTW, don't forget that grain in deaths tend to cluster in years following a big wet crop. Virtually all of them are easily avoidable by paying attention to reasonable safety rules.

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Veteran Advisor

Re: Downward Pressure For Corn?

Hobby,

 

Oh, I got your point. It's well taken. But, I don't believe it will sit there and rot. I think that it will find its way to the ports, eventually getting exported and replacing some U.S. export business. How and when, don't know. More questions than answers, right now. But, I can't imagine all of this corn not being sold at some point. Eventually, it's going to be cost prohibitive to hold onto it.

 

Mike

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Honored Advisor

Re: Downward Pressure For Corn?

The price of corn will need to get closer to five dollars in my opinion. 

 

Grain rots in India all the time. Mostly wheat though. Same type of climate in Brazil. 

 

Might be a good place for a few more corn based E plants, I understand they ONLY have one there.

 

In the mean time maybe Buffett has his grain bin sales force on a plane headed down there? (He owns Brock/Butler)

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Frequent Contributor

Re: Downward Pressure For Corn?

Thanks hobby, when are we an get alittle tired of this crap. With all due respect someday you will regret being a mouthpiece mr market eye. Of coarse you and your analyst buddies always no better than actual farmers. I smell a rat.
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Senior Contributor

Re: Downward Pressure For Corn?

My guess is Hobby is correct about shipping that Brazilian corn not being viable option at these prices. But there are a lot of cows in Brazil and I am guessing there is an all out attempt by farmers there to market as much corn as grain fed beef as possible. No idea what their infastructure will support, but would seem that their beef processors would be aggressively selling into the export market. 

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