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06-17-2013 03:58 PM
Jeff Coleman, The Trean Group analyst and CME Group floor trader, describes the market this way:
"After better-than-expected export inspections today, July corn futures rallied 13.5 cents to close at $668.5 per bushel. The export number of 14.144 million bushels was more than twice the numbers from last week. The bull spreaders were out in full force today, as the basis remains strong for old crop corn. December corn futures closed at $538.5 per bushel up 5.5 cents on the day, bouncing off of a key support level of $525 overnight. July soybean futures gave back 4 cents today to end the session at $1512.5 per bushel and November soybean futures lost 12.75 cents to close at $1285.5 per bushel. An improved weather forecast had new crop (November) soybean futures lower than July futures, as farmers are now able to work the fields nonstop."
06-17-2013 04:19 PM
Mike, To answer your question on whether you can make money storing beans........During the 2011 harvest, soybeans were priced locally at from $10.50 to $11.25 per bushel. I filled a small bin with soybeans (because the bin was there, it was empty, and it helped speed up harvest)......I literally thought I had lost my mind to pass up those prices. As luck would have it, (and pure luck is what it was) I hauled and sold those beans during the last week of August 2012.......for $17.92 per bushel.
That will probably never happen again........
Please don't ask if I refilled that same bin last fall..........
06-17-2013 05:11 PM
We stored a lot of beans in 2008 and sold them when the market went to $13 in '09. Stored a few along the way. 75% last year went to the elevator. Why store beans to market them when SA is flooding the market? Have to hold them to summer to gain anything if any at all.
Commercials have had control of a lot of these last few crops. You will see guys that don't need the money use the "hammer marketing" theory and lock the bins....others will have to sell some to pay bills...yet others will give up or take what they get. I get the feeling that more will be in farmer control the way we are going.
06-17-2013 06:10 PM
No exact numbers will be given (as I still like my job!), but the "directionally correct" statement is that there are a lot of similarities to how 1996/1997 played out regarding the sale of the n/c '96 production.....the flat price oriented seller just could not come to grips with the $2 inverse and kept saying "but prices will have to come together, and they will do it at closer to $5".....I don't recall the name of the guy, but a local cattlemen's group brought in a speaker in the fall of '96 who said "corn will never be less than $3 again".....don't think anyone remembers his name, nor has he been asked to come back for a return engagement....
with so little new crop sold, the spreads narrowed post harvest and by early January, cash was strong and the board was inverting......the commercial elevators were blowing their stocks since market was not paying them to hold inventory.....mid to late summer of '97 was chaotic....between the developing Asian situation and the overhang of farmer bushels, it got very ugly.....not saying at all to expect a repeat, but you may want to entertain some alternative strategies other than "put it in the bin and wait for $8"....
we've identified a lot of farmer owned corn, and it appears they may be willing to let a $2 cash inverse vaporize over time and start over from option price the Dec futures around November 1....you can sell +189 Z in our market today...and it's being treated as "no big deal", yet I've had people haggle for 5 minutes on 2 cents for a 10 lot under different circumstances....my, how things have changed!
06-18-2013 02:37 PM
SW....we really did run the country out of corn in 1996,,,,,,and the reason we did it was because nobody expected it to happen, and it really came as a big surprise......the HTA debacle was also a factor...
corn was trading around option price in April to small single digit overs....nothing like we've seen early this year.....and we ended up at +150-175U in August......the Chinese had bought a lot of corn, and they loaded it out early, so nothing to be bought back....a lot of Mississippi River elevators closed up mid-summer...
and like this year may be, it was a late start to harvest.....
carryout was about 450 myn on Sept 1....
06-18-2013 03:42 PM
Thanks for the memory lesson Ray,
I was locked in a career making decision that year and I knew the market, along with another thing or two, turned and helped me out but was not up on the full why at the time.
This year --------- well lets just say we could not expected a back to normal year after the last two. I am glad you are there----------------------and on here. I Appreciate.