Floor Talk July 30

[Sillinoisfarmer]

giolucas, we are in agreement it seems!

jennys-mn

As a farmer I too am angry how fast the basis fell when it fell.  Think it caught many of us by surprise; not that it would fall- just the when and how fast.  Trying to prove collusion in this market clustermess would be like trying to find out which fox in the den ate your chicken!  I used to think that many of the people blaming the government with spying capabilites and etal had their tin foil hats wrapped a little too tight; then the revolations come out they were right!  Problem is why is nothing being done?  Mr. Corzine and etal are still free on the street and if you or I would have done that we would be behind bars.  They called Ronald Reagan the "teflon" president because nothing would stick to him, then the present executive branch and Congress should be called the "teflon gang".  Mortage scandal, bank scandal, SEC scandal, insider trading the list is too tedious to go on.  The rule of law has to apply to everyone and when their is obvious  favortism shown to the privilidged few then there is no rule of law.  I guess the potent think we are all "muppets" now but they had better realize that the rule of law protects them from the law of the jungle.  The Chicago boys will figure out that when enough get tired of the charades that other alternatives can and will be found.  What would happen if a farmer would contract directly with thier enduser?  Not saying it would work for everyone but with as many e-plants as there are now, only transportation costs would be the limiting factor on whom you would sell to.  In point of fact is that not what basis has been doing lately?

[sw363535]

One point to consider,

IMO----------------------------When the basis no longer reflects freight rates above or below cbot.  When the basis goes up and down to entice purchase, then the "market" no longer establishes price discovery.  And is close to being irrelativant.

Is there a historic time when price was "marketed" down with such a strong basis?  And what would the market in the last three years have been if cash weren't being printed with reckless abandon?  Or even the last three months if cheap spec cash were not there to play with?

I disagree that the market is lagging in response to what producers are seeing.  IMO------- the market is anticipating conditions it expects.  A flood of grain at harvest time.  A temporary condition for at least a short time.  But that condition continues to get smaller year after year as more and more of the crop goes into storage owned and controled by end users and producers.  I think it is possible the end users and producers ------ as the numbers of both dwindle--------- will have to consider eliminating the middle men who want to make 60 cents a bushel three times a season on grain they don't grow or process.  It is just too expensive a process.

I wonder if the market is moving contrary to supply because there is so little actual pricing of crop going on.  Old crop committment has been over since April, for the most part, and new crop sales are well below historic levels.   Am I way off?

[jennys_mn]

What a country we have become. It's too hard to prove so we'll just let them go on stealing. What a concept.

Jen

[jennys_mn]

SW - I agree. Why should farmers sell with what they've been presented with the last 3 - 4 years. We're all skeptical of the market - we've been lied to over the years more times than its possible to count. And I do think that this is a lot of what this particular market is about. The fact that enough farmers haven't sold, maybe the trade simply doesn't know how to react to the new paradym of farmers storing their own grain. But I rather doubt that is the case.

How much more of the recklessness of a few can America withstand. We may all find out sooner than we want. If we can't police something like what you've described, then what are we as a nation doing trying to police the world.

Jen

[Shaggy98]

IMO, the one's who are going to "Pay the Piper" the most with this price dip are the ones who are the most leveraged.  $7 & $8 corn made it easy to purchase that new tractor, combine, planter, etc...  Well when the smoke settles, some of these producers probably setup payment schedules to match their harvest schedule, if they were smart borrowers.  If we remain at low levels when/if their crop comes in, they will need to sell off the combine to keep their loans out of default.  If they are the ones who are suffering from a poor crop, that becomes a double whammy.  It will take twice as many 2013 bushels as it did 2012 to cover the same payment.  Couple that with reduced yields and there will be little left for living and capitol improvements, some possibly barely hanging onto enough for the next crops input $.

High priced commodities have bankrupt just as many producers as low priced commodities.  It boils down to discipline and planning.  Just because we profited $700 to $1000 per acre in past years doesn't give us a bottomless bank account, it is only a mirage.  Just my nickels worth.