I got a hunch

[Shaggy98]

I agree, but $10 long?  I don't think the USDA would ever let it happen.  Just my nickels worth.

[BA Deere]

Here's the problem $10 corn would give ethanol, the oil industry is hostile and would slam gas prices down to $2.50. With $10 corn that would cook ethanol's goose right there. And don't think it wouldn't happen there's alot of unjustified hatred of ethanol out there.

[RWflier]

All of it will be gone before $10.  with a bunch going between 8. and 9.  There won't be much left but bat wings at 9.95.  I sold a load last week for 7.30 and the bin is almost empty.  I have 8.00 dec calls bought for .09 and I expect them to expire worthless. 

[c-x-1]

What would the USDA do to not let it happen IYO?

[RWflier]

I remember something happened around 1972 or 3 when beans went to 13.$   The feds did something and beans went down for the next several years.  I wasn't farming then but I remember watching the grain traders stand in the back of 111 first st. at merril Lynch in Dayton and cry big tears. 

[Shaggy98]

CX1, I can't truthfully answer as to what they would do, but I honestly believe they would step in and disrupt something.  If grain prices (not just corn but all commodities) roar out of control, we are introducing ourselves to a whole new set of problems & issues that would go way beyond the agriculture sector.

[c-x-1]

True, would effect commodities that feed/fuel. beef, pork, fowl, turkeys, deer, etc.

like the poster above alluded to, prices were allowed to increase over 100% in price in C/B - early 70's

[sw363535]

Ray,

Thanks for the input

 bkadds,

Not far from you in the okla panhandle, the last couple of days, I listened to talk by elevator men that said we do and will have wheat basis aproaching even with the board.

In 50 years of experience I don't remember it anywhere near that high.  That would be 50 cents better than a good basis for this area.  

Feeding is not an option this year.  It is reality for whatever wheat there is in the area.

[sw363535]

I have been burned by this senerio a couple of times on a local basis and I cannot see why it does not burn us on the national scale.

Market price is dependable as long as there is free product to market.  But when supply is short ( air in the pipeling)---like pressure in a liquid line---- the price is not dependable.  We could see prices back off on corn when corn is not available, no matter who owns it.  

I have had corn unpriced in June waiting and found that the buyers in the area using either had supply contracted to the end of august or had alternative rations contracted into the new crop supply.

The buyer as well as the seller sees what's coming and prepares.

IMO, a calls to a "grower" sourcing is just inventory research.  Does not mean the buyer intends to buy---------------- he may just be lining up his options.

We could see fertilizer prices jump before grain prices rise much.--------- if the barges coming up the river have grain instead of fertilizer.

I am reading now to understand the RIN issue ----------- The area ethanol rep was here on friday discussing it.  One of those inevitable after affects of government run programs.

[rayjenkins]

Back to farmerjoe 79's comment on $9.15 corn

The difficulty is that you don't know what kind of risk management was put in place prior to actually buying that cash corn from farmerjoe for $9.15..........if the buyer had purchased corn futures for $6.00 much earlier, then the net cost was much less than $9.15

And it's no different for the farmer who hedged some of his new crop corn at $5.90 Dec 13 futures......if we end with a big crop and Dec futures are trading $4.50 with a -50 basis, there will be lots of groans....but not everyone's net price will be that low....

and that is why "spot price comparisons" in the ethanol biz are quite hazardous as well.....almost everyone has done something in the form of risk management along the way and that is why some make good money and some don't...

Now--on the wheat.....yes, HRWW will likely be in short supply.....but that is not the case for SRW and white wheat out west....SRW wheat had a 40%+ stocks to use ratio based on current ending stocks....and good crop prospects on the way.....but with corn basis likely to be up in the "rare air", expect local wheat basis levels to be supported through late spring and summer in most areas as the demand for wheat for feed will be strong...