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Veteran Advisor

Market Mover?

So, the idea of a Tropical Storm hitting the already high water levels of  the lower Mississippi was talked about a few weeks ago in this story,  The Caboose of Corn Belt Storms Arrives

Well, guess what's coming this weekend? A Tropical Storm is brewing with an 80% chance of landing. The graphic below tells it all. The highest crest since 1927 could happen this Saturday.

Not only could you see flooding in the Delta, the rains could push up into the Midwest. Now, the crop damage in the Delta and the suffocation of grain movement out of the Gulf could be considered market-moving to the upside. However, Midwest rains, after this nearterm heatwave could be taken as market bearish. What say you?

 

Mississippi River.png

 

Pretty interesting to watch.

 

Mike

 

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12 Replies
Honored Advisor

Re: Market Mover?

Last I heard was that it has a 100% chance  of hitting mainland, with a turn up the Mississippi River, then northeast to the Ohio valley.

As the old saying goes, a drought will scare you. A flood will kill you.   

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Senior Contributor

Re: Market Mover?

I think most of the bin doors on corn are closed currently until the market offers $5 plus, well, except for grain that is already contracted at lower prices. At least, I hope so. You can fool some of the farmers all of the time, and all of the farmers some of the time, but you can't fool us all, all of the time.

I am old enough to have lived thru, and marketed, during the mid 90's short crop years, and was able to buy a late model combine to replace my 20 year old one by being patient. Also bought a new machine in 2013 by recognizing that $8 corn was a once in a lifetime opportunity. Not going to sell any corn during this rodeo until the clowns pay up again.

$5 a bushel corn in 1995 is like what....$12 or $15 today? Endusers….better get covered.

 

 

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Contributor

Re: Market Mover?

Actually $5.00 corn in 1995 adjusted for inflation would only be $8.40 today.  But, still I would much rather have $8.40 than the 4 something at the Coop.

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Senior Contributor

Re: Market Mover?

the $8.40 sounds too low....if dollar devaluation is only $3.40 since 1995, I would be very surprised. What was the cost of a new pickup truck in 1995 vs today...an acre of ground ...an ounce of gold.....any other hard asset then vs now? Barrel of oil?

I know that our government does a consumer price index that they use to calculate raises, etc. but like most of what the government does, do you trust it?

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Honored Advisor

Re: Market Mover?

Suppressing the cost of food at the raw material level.  And then giving the raw material producers a few crumbs along the way to keep them in business.   While this keeps the non-producers in an uproar after raw material producers receive a government check, they have no idea that the government is actually doing them a favor, keeping the cost of food in check.   Sounds like a plan.  I hardly think that this recipe will change any time soon. 

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Contributor

Re: Market Mover?

I see farmers tweet about their families.

I see farmers tweet about their livestock.

I see farmers tweet about the weather.

I see farmers tweet about the growth of their crops.

But what I rarely EVER see is farmers tweeting about what it actually costs to operate their farms:  crop insurance, seed costs,  fuel costs, vet bills, livestock losses, crop losses, pesticides, equipment, etc. 

...until a farmer suicides, then there's finally a small mention of the "costs of farming."

If the endusers only ever see the media reports spouting off "OMG, there are MORE large-dollar taxpayer checks being sent to farmers," how does anyone in the general public ever get to know what it actually costs to feed this nation?

So what does it cost you in crop insurance?

What does cost you in fuel to run your farm for a year?

What does the seed cost?

What does the livestock and their losses cost?

What are the hard dollar figures?

LET THE PEOPLE KNOW!!

Veteran Advisor

Re: Market Mover?

UPDATE ON HURRICANE BERRY

 

Mike Steenhoek, Executive Director Soy Transportation Coalition, offered up this update on the hurricane-building situation in the Gulf and its impacts on grain shipments.

In his own words:

Many are monitoring the current and future impact of Tropical Storm Barry in the Mississippi Gulf region.  Wanted to pass along a handful of bullet points that may be of interest.

  • The 256 mile stretch of the lower Mississippi River from Baton Rouge, Louisiana, to the Gulf of Mexico accounts for 60% of U.S. soybean exports and 59% of U.S. corn exports – by far the leading export region for both commodities.  The region is also the leading port area by volume in the United States.  In addition to soybeans and grain, many petroleum, chemicals, and other freight are accommodated by ports and terminals located along this area of the river.    
  • The historically high water levels throughout the inland waterway system, including in the lower Mississippi River near the Gulf of Mexico, have been a consistent struggle for barge transportation feeding into the lower Mississippi River and have impeded the ability to load ocean vessels to their normal capacity.  Given these high water levels, many have been concerned that a tropical storm or, even worse, a major hurricane could significantly inundate this critical area of the country with significant flooding. 
  • Yesterday afternoon, the bar pilots – those responsible for navigating ocean vessels into and out of the lower Mississippi River – suspended all ships entering and exiting the lower river due to Tropical Storm Barry.  As a result, soybean and grain exporters in the region will not be receiving or launching any vessels until the suspension has been lifted.  The suspension was made due to the safety of the vessels and crew and others working in this area, but also they want to avoid having vessels operate and therefore create additional wake that can contribute to levees being overtopped. 
  • I am aware of soybean and grain exporters along the lower Mississippi River declaring “force majeure” – a provision in a contract that relieves a party (the soybean and grain exporter, in this case) from fulfilling the contract obligation due to events, like weather, that are outside their control. 

 

This year weather has presented farmers with unique challenges in planting a crop.  Our disruption in trade has impeded farmers’ ability to market their crop.  Flooding this year has complicated farmers’ ability to transport that crop.  We were finally starting to see some relief along the inland waterway system and southern Louisiana.  According to the U.S. Department of Agriculture, for the week ending June 29, 373 soybean and grain barges were unloaded in the New Orleans area – a 41% increase from the previous week.  Barge service was finally being restored.  Unfortunately, Tropical Storm Barry is imposing itself on this critical area of the agricultural logistics chain, which will only further encumber our ability to meet customer demand. 

 

Thanks, Mike, for the update

 

Mike

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Highlighted
Senior Advisor

Re: Market Mover?

Freedom, I feel your pain, but this really becomes a segment or geography problem. All of my friends from Iowa who operate pretty good sized farms spent their vacations in Europe last winter. They of course could tell you their Return on Assets % in a heartbeat, despite having a lot of owned land in the family (point being they are extremely lean for being large land owners...not living off Grandpa in any way) and  (btw, 2 of them started with nothing 30 years ago, no family farming) Just saying, it becomes a very regionally specific, and business specific issue. And, unfortunately, if you want to produce a commodity with no added value (like corn, wheat, beans), over 35% of the firms will be losing money almost every year. Gov money only makes it worse by elevating the cost structure for everyone.

The business is tough and yet it is easy all at the same time. Buy dirt, make the payments (doing anything that is required, like watching the kids while the high income earning wife teaches school plus gets insurance, etc.), retire wealthy. Pretty simple business in the end, just a long-term commitment. 

Not trying to be cold, the gov manipulations in the last 3 years have been incredible, just saying even without government, most would struggle. Nature of the business of producing something that even a poor Chinese farmer with no fertilizer can grow. Everyone can make your product, thus no one will make tons of money doing so.

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Honored Advisor

Re: Market Mover?

I been doing ag accounting for 5 decades. — nobody wants to hear that stuff.  Even farmers if prices are good, hire the accountant to limit the tax burden and “spare the details, tell me what I owe”.

Where I see your point applied, in sw Ks. Nearly every large farm has an accountant on board and keeps amazing records.  The big ag service companies are fighting hard to get access to those records..... through my deere, FieldView, granular, etc etc. 

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