It appears that the wheat market sell off was a little over done...........

[ag678]

If an endures buys all their corn needs for two years out what should they do with their outputs?  Should they be locking them in also?  If they do a lot of the forward margins are negative, if they don't history has told us it is the easiest way blow up your business.  I could maybe see locking in further out  in a production system like hogs where it is hard to stop and start the flow of production, but if you are a feedlot feeder cattle adjust everyday with the price of corn so betting the corn market is adding more risk not less, and if your an ethanol plant do your margins change everyday.  If things get bad enough you can turn the dial down or turn the key off and on fairly quickly.  For both of these production systems locking in corn two years out would be dangerous. 

[rayjenkins]

Mizzou----I see you like to talk in the extremes.....$2 corn???....come on.....we're talking about finding a way--if we need to--of cutting corn for  annualized ethanol usage from 5 byn to 4.5 to 4.75 byn bushels for a limited period of time......and that spells the end of the corn market???

did you ever stop to think the ethanol business may be forced to cut usage anyway because of unprofitability.....despite what you may be hearing, it's not all so great in the ethanol biz right now.....offer 40 cents a gallon to go dark for 90 days starting July 1 and you would be shocked at how much capacity would sign up for that...it wouldn't even take that high of a price per gallon...

shall I put you down in the "I've got mine......."  so let's not mess with it group??

[jrsiajdranch]

MT I am 39 . not sure how you are and really it doesn't matter casue you sound kinda ignorant about the last time we said screw the export market. Remember Carters grain embargo?  It took years to get back the faith of the world to see us as a steady supplier who wouldn't pull the rug out from under the foriegn gov.

You have said before that you don't know much about livestock and that is quite apparent from your statemnets. I will admit my knowledge of the ethol world particulars are somewhat limited, however You can bet that an ethol plant that is dark can start back up in a matter of days to maybe two weeks. Not so with a dark livestock operation.

Take for example a dairy farm.  If I sell all my cows tomorrow. and so does a very large percentage of others and they are slaughtered How long before enough replacements are available to get my farm operating in the light?  Years  man Years!  Now you tell me who has an easier time of getting back online? 

This sin't about a good corn price or the consuming public having to finally pay their fair share. No this is about maintaining the capasity to feed a nation.

Very interesting discussion on here today. I have been busy since 2:30 am trying to get cows milked and then we went right to chopping at 5:30 while we  had a little dew and no wind. Had to stop by 9 then I went and sprayed off a load of corn herbicide while dad raked up 10 acres to bale this afternoon. Just got done eating and now time to get to baling some small squares and some rounds. I thought this was supposed to be a day of rest! HE HE

Check into tomorrow of some pics of the hay baling. Man this is some nice stuff!

[Mizzou_Tiger]

well Ray, I guess thinking in extremes is my thing........most usually don't agree with me at first, but I tend to get pretty close to the target when its all said and done.........

as for margins in ethanol, I am sure some are better off than others.........will you guys be forced to blank out for a month or two????  what drives a decision to stay open.........will you guys operate in the red limping back to black........or once it goes red for a week, do you just shut down???  just asking, don't know.........

also, I forgot to ask this question in previous post, but how aggressive and for how long would this flex last??????  I kind of get a feel for the aggressiveness with your reduction of about 250-500M bushels..........who sets the reduction, and if the reduction doesn't overshoot by a little bit then we are right back to were we are now...........only this time the trade won't care because they know plants will just get paid to shut down.........

IMO we are not talking about 250-500M.........when you consider soya and wheat and the price damage that will be done.........we would likely need to cut 1.0-1.5B in corn consumption to give things time to even out............heck we may need to cut demand by 700-800M this coming year and ending stocks could still shrink to pipeline levels..........and then we need to add in about 700-800M in the carryout to get a cushion again..........so using 1B of grain.........thats what 2.8B gallons @ 40 cents a gallon.......thats 1.12B dollars in additional subsidizes to the ethanol industry..............you can do the math on 1.5B of grain..........how will the public percieve this.........

and yes.........I firmly believe that if we show the market that the ethanol industry will be used as a flex valve under government control...........all pricing power is gone until that valve is taken away forever, or other food/table demands catch up to what ethanol was using..........once you cross that line you can not come back..........its sort of its own form of demand destruction..........why would anyone buy corn based on market supply/demand fundamentals when they now know that the demand side can be toyed with to make up for any short falls in supply............and again, you have to overflex the system to achieve what you are after, or it was a worthless attempt that cost money.............thus prices will fall very hard very fast..........

I appreciate the fact you have ideas to try and fix a problem........however its basically price controls.........and we know those never work.............we need to find a way to let the domestic market survive and protect our supplies and let the export numbers do the flexing...........did you not like my comment about subsidizing the livestock guys, again I think that would be more popular to the general publich and probably have a larger impact at the grocery isle........

[Mizzou_Tiger]

its clear you guys want to see $4 and $5 corn..............question for the livestock guys.........in the late 90's corn was freaking dirt cheap ($1.60-$2.30/bushel, look it up) and how many independent guys went under raising hogs...............was it because the price of grain.........NO..........get my drift..........cheap grain doesn't mean successful livestock............

I know a little bit more about livestock than you might think.........if you have the equipment still in place you can be turning lots of feeder pigs pretty dang quick.........cycling 2 plus cycles of fat hogs per year real quick as well............poultry even less time..........

Beef and dairy are different, and I have said that already...........you also posted a few days ago you were in good shape.........maybe I miss read the post but I took it as milk prices were good and your feed side was under control............other post by what appear to be cattle guys speak a similar tone............

I can tell you right now...........at the first mention of the ethanol industry shutting down, and getting paid to do so by the government..........two things will happen............first is ethanol will be in serious jeopardy of going away forever.......the public outlash would be nuts......you really think the consumer will see any benefit at the food isle........NO they will not........thus all they see is more money going to ethanol with no breaks for them.............and second no matter what happens with the first...........grain prices will fall like a rock..........remember this is just as much about public and trader perception as it is keeping demand alive...........and what normally wins out and doesn't care about AG..........the public and traders..........

It will be worse than an embargo..............and I never said anything with that word in it..............if you glean anything from my post its for a free market.............40% of our production goes to ethanol, if you can't justify its use thats a lot of acres freed up.........

[RayN]

Mandated useage of anything aside, what price do you want corn at, and how much yearly variation in that price do you want?  Serious question.

[sonoma72]

mizzou,

just a little more insite into the beef end of things.  I recently talked to a cow/calf beef feeder a week ago.  They had an interesting opinion.  First they were pro ethanol, odd.  Secondly, they have utter contempt for Tyson and all their giant CAFO minions and finally and most importantly they grow all their own feed, ahhhh.  While the government is busy ####### things up, they might want to go back into time and look at all the consolidation in the packing industry.  It wasn't that many years ago that "A LOT" of people fed cattle, grew their own feed and the like, where ever did they go?    In summary, we shouldn't lump all animal guys into one lot, maybe the smaller self sufficient operation model, is in fact, the better business model.

[jec22]

Given the overweight population of the US, and given the added burden that causes the health care system and health care costs; food in the US is way too cheap. 

We subsidized big oil for close to a century now,  by the looks of the comments from the average Joe, it should be the only game in town and we want to be beholden too it forever.  Sometimes you can't help stupid.  

Biggest drain on the economy is fuel and health care costs. 

[Mizzou_Tiger]

you nailed it..........fed a lot of hogs in the 90's and made good money at it.......also farm had way more than enough production to cover needs........last commercial hogs (kept small show string) left the farm in 98..........I loved raising hogs, but that was one of the smartest things I ever did.........cattle left a few years later..........

and yes, I have no sympathy for the big boys...........most of their margins are padded as they are vertically integrated.........I do understand what the independent producer is facing.........and their only saving grace is if they do produce some or all their feed needs..............

[rayjenkins]

OK----rubber meets the road time...

current USDA grid published on May 11, shows a 13.505 production number and ending stocks on Sept 1, 2012 of 900 myn bushels.......so let's say we grow a 12.5 crop and we need to cut usage by 800 myn to get to a 700 myn ending stocks number on Sept 1, 2012...

tell me who quits using and the ramifications of the reduction on that segment and ag in general....