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Frequent Contributor

Re: Tend to disagree, demand for corn sucks

Hey Buzz off! I said nothing about a drought! I may have said the yields will not be as good because the low lying heavier soils were satureted with rain and now the areas are affected even more so by the dry weather! I dom't think you want to get into a pissin match or better yet leave me out of your childish ways Thank You king kind sir!

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Veteran Contributor

Re: Tend to disagree, demand for corn sucks

The other side of that coin is that nobody will feel too sorry for the livestock guy this time.  There was an opportunity last winter to cover your feed needs in the mid to lower threes.  Its called risk management.  That is what got the livestock guys in trouble when corn ran the last time.  They were so used to having access to our corn for less than cost of production that they just couldn't fathom a period of sustained corn in the threes, fours, or even fives.  Ethanol production was ramping up, exports were increasing and the demand picture looked very bright.  Livestock sector gambled figuring prices would go back down under three bucks again.  I thought that the guys that survived that trainwreck would have been looking at covering needs when prices dropped back into the threes.  Corn will probably go back under three bucks someday but I have no idea when.  If your risk management consists of hoping day in day out that the corn market tanks I think you are in for a rough road.  No question about the livestock sector has had a very rough go of it.  Dairy especially.  That fact is that livestock producers are going to have to find a way to be profitable with three to four dollar corn.  I can only assume that will be accomplished by reduced numbers until the economy improves and people start eating more meat again.  I don't mean my comments to sound rude or inflammatory and I apologize if they do.  You just kind of touched on a sore subject with me.  Good luck to you.

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Veteran Advisor

Re: Tend to disagree, demand for corn sucks

67guy you don't sound rude just very honest and I am a big boy and I can take it.

yep your right no one should feel sorry for anyone right now. I will be bruttally honest here I didn't have the money to tie up more corn than I did last fall I got 10 months of coverage. SO I have some exposure right now.  I know of other folks who have had that exposure all summer and they are hurting.

My point of the comment ...."livestock won't run with you guys this time it will run away".... is that livestock all around has found alternatives to using corn as a base feed stuff.

Yea we got used to cheap corn but then again weren't we supposed too? And who was the greatest beneficiary? me or the consumer?

AS mark said in cattle talk a lot of SW feeders and dairies have found wheat to be an alternative.  That alternative Has now escaped us and corn may be cheaper.   THe thing is have any of the protiens been able to keep up with the costs run ups in production?  

THe answer is no. 

Therefore the conclusion is that we had an overproduction of meat milk and eggs because of artificcially cheap grains.  Our overproduction has taken us to the point of bankruptcy.  Therefore the numbers must be reduced to get supply in line with demand at these higher production costs. AS we reduce these herds and flocks than we also reduce demand for corn. 

I gaurauntee that in the next 2 growing seasons ,given normal growing patterns, as we go thru this contraction Our caryouts will start with a 2.  If we have weather hicups the contraction will be more severe. Numbers may not decrease but feed usage will definantly drop.

Again I appreciate the discussion I hope we can be honest and that it remains help[ful.  Gotta go time to go pull the T8tties. JR

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Veteran Contributor

Re: 67guy, MOST livestock is so far OUT

of the suppossed corn loop, comments trying to connect the 2 products are a rather "prehistoric jocular" supposed equation.

 

Corn is an Industrial use product, price based off said industrial use in today's times.

That simple.

 

Any other uses for corn come after the afore use.

 

Corn is NOT the "center of the plate" for most livestock diets.  Just another alternative source feed used sometimes, and sometimes not.

 

ddgs / coproducts are for many areas a more reliable feed than corn.

 

Interestingly the higher volumes ddgs produced cause in fact, exponentially LESS use of corn itself in the livestock sectors.  

 

Takes a couple of obvious things for high priced corn:

1. $140 to $150 per barrel oil. 

2. enough money in the whole system to supposedly pay for said oil.

 

Corn is NOT Wheat.   Wheat is Wheat.

Corn is NOT Soy.        Soy is Soy.

Corn is NOT Rice.      Rice is Rice.

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Veteran Contributor

Re: 67guy, MOST livestock is so far OUT

Rightone...you are drifting further and further away from reality....

 

Two thirds of corn production is used as feed. Of the remaining third a third of that is DDGS and is used as feed. The portion of corn for "industrial" use is minimal. It is still the feedstuff of choice.

 

Bone up on your facts.

 

 

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Veteran Contributor

Re: Patriot, Bone up on your's

E requirement is 4 to 4.5 Billion bu annually.  ( say 33 to 40% of production ).

 

Did you forget exports? or are you assuming those at 0?

 

Livestock....hogs and chickies use some corn...I have no idea how much...just know that Both segemnts are down in numbers of hogs and chickies available ( and planned production ) to consume some corn.

 

Beef and dairy:

Fact is beef can run almost corn free as compared to the supposed good ole days.

Alot of folks are doing just that now ( more graze outs to say 1,050 lbs then some feedlot etc).

Also alot of beef deals have simply quit the business.

Catte numbers keep declining, and cowherd numbers are now in a STEEP long term down trend .

Hiefers in the Total FI Harvest mix here last week was 41%, 39% the week before, compared to 36% same time frame 09.

09 btw was considered a high hiefer mix too ( up 3 to 4% over sustainable ).

SOOO,   That's approx 2 million annually, now out,  which would have been future stock cows.

 

Dairy? ask jr...dairy folks have cut back on numbers too, and there's " a Million, Plus One ways" to tweek rations.

 

Patriot, seems to me like when your quoting 8 billion bu of supposed feed use demand ( and keeping in mind livestock is consuming the co products / ddgs, too )...Wow.

 

 

It's always interesting hearing a farmer's take on supply and demand.

Very few really realize TRUE demand is utmostly achieved by moving More product VOLUME for MORE Money.

Granted Same volume moved for MORE money also indicates Demand increase.

 

Same volume moved for LESS money means LESS demand.

And Less volume moved for Less money also means declined demand.

 

Basically take total corn volume sold from the Jan 1, 2009 thru Aug 1, 2009 time frame at whatever the average price was, and compare said to SAME time farme in 2010 at the 2010 average price.

 

 

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Veteran Contributor

Re: Patriot, Bone up on your's

Ah Markwright....exports are fed. We export 20% of our production and it is used as feed. I serve on the US Grains Council that focuses on exports of feedgrains and am acutely aware of exports. Did you know China is chewing through our DDGS like candy? I assumed all exports as feed.

 

E requirements are capped at a 10% blend of RFSII mandates. Your numbers are close.

 

Dairy? I am involved with a large dairy operation that consumes 30 to 40 percent of my corn. We have not changed rations one bit in terms of corn silage fed. BTW, the corn was hedged by the dairy operation in June for the coming feed year. The reat of the US livestock sectors are holding there own.

 

It is always interesting to hear a cattle traders take on supply and demand.

Your convoluted view on demand can be broken down to this....demand up price up. demand down price down. Given constant supply. Econ 101.

 

 

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Re: 67guy your talking a "paper" price

Rightone I agree with your basis comment. If things stay as they are ( and I'm sure it will change several times before the Jan. report) and we keep creeping up it would not surprise me to see a $1 basis. We are at -$.60 dec. That is the highest I've ever seen here on the corn belt fringe( scwi). I'm sure there are places that are worse.

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Senior Contributor

Re: Patriot, Bone up on your's

mark, for the sake of our wager, assume my collateral for this bet to be simular to a govt bond. its backed by the full faith and credit of  dapper7, currently paying 3.00 %. i am borrowed short to lend long. as long as interest rates stay low you will be fine in terms of our wager. if however if interest rates go up, i will have to default on our agreement. and that my friends is a sign of things to come!fence materials to arrive next week! d7

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Frequent Contributor

Re: Patriot, Bone up on your's

One can talk all day about More money more volume or More money same volume equals Demand market? As in summer of 2008? How much more Volume did we sell @$6.00 and then @$7.50?

Bottom line is the speculators can move the market and leave all the Fundamentals behind. The one factor that is worrisome to me is the 247,999  long contracts held by the funds. This is almost the same as the summer of 2008. Carryout projected at 1.4- 1.5 billion Bu. @ 163Bu. Acre. About the same carryout as last year. Take out the feed wheat and replace it with corn and increase the exports to China could we possible use up 400 million bu more. Yields go down by a couple Bu.? So my take is that the market may be vulnerable to the changes in supply and it looks as if Demand side will increase this year. Soybeans >$10.00 will be attractive to 2011 seedings and who knows how many acres of wheat may be bought. So how much more Fund money will or can come into this market? Maybe we'll have a wash out this Fall. If so the funds will be back in the market for the next year. 

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