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Mizzou_Tiger
Senior Advisor

IF demand is dead.......

why am I seeing and hearing basis levels firm up almost everyday...........and in areas that were supposed to have a surplus...........just asking, because we hear about demand destruction, yet I hear new crop margins are still ok in the export market.........a post down the page talks about a livestock guys still making some change................ethanol in this area is still fine.........

 

China's imports are likely to keep growing for corn and soya based on several reports.................what gives?????????

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11 Replies
rayjenkins
Veteran Advisor

Re: IF demand is dead.......

Who is saying demand is dead??

 

 

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jrsiajdranch
Veteran Advisor

Re: IF demand is dead.......

Actually Mizzou what we are saying is there is to much demand for supply!

 

SO the question is What gets cut?

 

A weak dollar is gonna keep exports alive.

 

A subsidized ethol industry isn't gonna have to face the piper either.

 

So demand destruction comes in the form of your neighbor livestock guy going female body parts up.

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Mizzou_Tiger
Senior Advisor

So there in lies the question.........

most agree the supply side is in danger.............and some agree demand is still alive, some don't.............either way at these levels things are still chugging along..............so there in lies the problem...........we know its coming...........however the trade doesn't understand its coming, yet maybe its intent is to keep demand alive until its too late............thus our inability to blast higher, that or its that kick the can attitude and wait and see what happens.........

 

then its kind of like a "too big to fail" situation...............so now we have two questions...........what to do now and do we do it.........second is if it comes to head with a too big to fail mentality, what happens then...........

 

as a sidenote.........I do understand what the independent livestock producer is facing...........it may seem like I don't, but lets just say I remember what the late 90's brought to the independents in pork industry.............poulty came first, then pork..........this is again why I think beef prices should be higher, and the big boys in the P and P industry can still make the margins work.........

 

EDIT:  yes spraying is done for today........need a few days to dry to get going on some more.........hope we don't get blasted tonight.........

 

EDIT2:  one of reasons why I really think we need to see things go higher, maybe to the point of some major rationing (yes I know its a tight rope between rationing and destruction).......at least for a short time is to set some tone........we need to change the habits of cheap grain cheap food for the world.........

 

so when we do slack things off, the bottom doesn't fall out and production goes back the other way and we are in the same situation with supply a year or two later, followed by the same situation with slacking demand off to make supply work..........that is counter productive too...........in hindsight, while I still think 2008 was all air, it was probably a precusor to whats going on now and if prices would have sustained at higher levels after that, then we would not be in such a supply mess we are in now.........

 

 

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jrsiajdranch
Veteran Advisor

Re: So there in lies the question.........

Mizzou good thoughts all around.

 

Actually as the demand destruction of the next 3-6 months takes place most of the livestock sector will be on fire sale.

 

When you are out of feed or the capital to buy feed you have to sell when all your neighbors in the drought affected area or the flooded area are also in a shortage they also sell out. Big time domino effect. all that liquidation will drive down prices. as it does those who wer fairly finacially healthy also lose as the normal sales they were gonna make are also at reduced prices.

 

SO all that said we could actually see the physical price fall apart while the futures mkt. starts to lead higher!

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BA Deere
Honored Advisor

Re: So there in lies the question.........

Jerry Gulkie (one of the smart ones)  said on the Big Show `traders are yet to believe that this yrs crop will be short.."You farmers complain and then in a couple dry days and everything gets planted!!".  The market has been spoiled, hence the axiom "Never bet against the American farmer".  However 500 yr floods are becoming the new norm. 

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tree fmr
Advisor

Re: So there in lies the question.........

My Dad has been a farmer all 84 years of his life and says one more year of this wet weather patern (Iowa) then we turn dry..Time will tell if he is right but he did raise 8 children on a small farm so he has been a little successful. 

 

Treefmr

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animalfeeder
Contributor

Re: So there in lies the question.........

I love how you guys all try to defend ethanol. The reason we are in this sittuation is because just about half the crop is going to make that junk. With that said, One thing the gov't could do is to put a stop to exporting ethanol and just use it here in the states for a year. That would cut it by 25-30%.

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p-oed Farmer
Senior Contributor

Re: So there in lies the question.........

animalfeeder..... You might as well get use to the fact that there is going to be an energy component to anything that has starch in it from now on...... Yes the blenders credit is going to go away most likely sooner than later..... but it will not change the fact that feed grains will have an energy value...... I am not "trying to defend ethanol" but it is not going away.... It will have to stand on its own two feet here real soon..... 

 

As far as exports are concerned......Last time that I looked this was a free country and people were able to sell there products to whom every they wanted to...... I do not know as to what type of livestock production that you are engaged in but last time that I looked most all of the meats had exports...... Should we stop exporting those also?...... I understand the frustration that people in the livestock industry are going through but one must realize that things will not be going back to the way they were anytime soon......FWIW..... p-oed

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Mizzou_Tiger
Senior Advisor

If China.........

is planting more corn and still having to import it................and is importing soya like crazy...........it appears a rob Peter to pay Paul deal..........no fluff..........

 

http://www.agrimoney.com/news/chinas-soy-crop-to-fall-twice-as-far-as-expected--3208.html

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