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Senior Contributor

Re: Please

I just talked to my broker, who thinks the credit will not be extended and that is already in the market.  In other words, don't short it.  What do you think?  Is the expiration already on the board?

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Senior Advisor

Re: Please

its already factored in because the USDA projections for corn demand going towards ethanol production is a number that is going to be used to blend the mandate.  We have shifted from an industry were lets make it now and find uses later (ie ways to prop up corn prices) to an industry that makes it knowing there is a demand (mandate).  Worst short term blip we see will be less than $0.20 net day to day......

 

As for your thoughts on soybeans, I have said this among peers for a few weeks now, we could actually run very low or out of soya and see a spike to $20 soya.  Is it a given, NO, but it is more than a 1% chance IMO.......We don't have enough acres to cover wheat, cotton, soya, and corn.  Get ready for some major physical short covering....late winter and then early summer....

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Frequent Contributor

Re:Hi! Do you post on AgTalkl

On AgTalk I was posting with the login No-Till. I have been kicked off the site because of apposing SC's credability. Everyone at AgTalk should realize that the  reason posters are not coming back is that they are locked off the site. This may be the reason for SC's no show also. Very discriminate site as I see it. The posters there should realize that there are ones that are getting locked out. Thank You.

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Senior Advisor

Re: Please

The question is are you going to speculate with cash beans or futures options?

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Senior Advisor

You got booted ehhh

I didn't know, but assumed.  Yes I frequent that site, have for a few years now.  However, I have followed and posted on this site clear back to 2000-2001 (can't remember been so long).  It was a happening site for many many years, still has great insight but traffic has slowed.  The machinery and crop talk sections were really hot and the marketing section was pretty happening several years ago.  Anyone remember John SWMN (or something like that, can't remember now).  I personally like this site (check it everyday), but since I am looking for agronomic/market perspective, social opinion and interaction you have to :branch" out.  You are only as smart as what you do not know........

 

As for SC, never really followed those post too much, a lot of filler, with a little fact....told a great story with little direction....haven't seen him since.....

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Veteran Advisor

Re: Please

I talked with a guy from out west the other day who was sure if they got the ethol crdit dropped it would drop the price of corn.  I told him it is already priced in and that outside of a fast drop on the news the bukks had this market and were going to run with it.  He said that Cli. dairy can't take this much longer and that something has got to change. 

 

I told him being from the midwest makes me keenly aware of two things.

1. there are no more corn acres.

 

2. there is a lot of demand.

 

I told him to we will probalby never see 2.50 corn again and 8 dollar soys are going to be a rarity.

 

He said that he thought that it would be the end of dairy in Cali. as we know it.  I said it is already here you guys are the walking dead. 

 

Jim keep your bin doors locked you will find better price opportunities ahead.

 

And if you think the Cali. dairy debacle will impact grain consumption think again. It won't even be realized in total feed use. 

 

I feel that with a weak dollar and high oil grain is in the drivers seat. JR

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Senior Advisor

Thats a great question

and goes to a general "kicking" it around thought.  Will this spike come in the form of paper or basis.  We have lived for years with just in time inventory and for all intensive purposes have never went to grab another bag and the shelf be empty.  This spike will likely be a true price discovery situation, which means you may have to have physical to cash in.  $20 soya are not sustainable on the board, just can't happen this quick, however it will take the board making a move to all time highs and maybe then some, so really its back to whether or not you are going to use cash or paper from this point forward.  IMO you wait till $14.50 plus and start liquidating inventory, but hold some back.  At the same time use paper if you will to get to all time high levels and cash those out.  At this point you decide if you liquidate final inventory or wait for spike......make sense....

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Senior Advisor

Re: Thats a great question

That is why IO say it isn't for the faint hearted.

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Senior Contributor

Re: Thats a great question

I can't imagine reowning on paper to go to the highs - at least not as a hedge. As an entertaining spec game with a limited amount of contracts maybe. Then you could find out what your nerves are made of and feel more 'alive' walking down the street, calculating where the next cell signal is so you can check in every 15 min (your friends will tire of this quickly). Options would be too expensive and the margin exposure on contracts would be enormous beyond a few to stay in the game and not make  your banker start calling your spouse.

 

In '08 physical spring wheat prices sometimes exceeded the insanely high futures. The game ground to a halt when end users and elevators crowded (or exceeded) their credit limits. Ethanol operations made a major mistake when they 'hedged' against higher prices and then couldn't get out when the market reversed. They won't do that again.

 

My inclination is to play the physical. My game IS to look for the top in a market like this (yeah I know it's taboo) but I don't have a problem selling on the way up or the backside when markets spike. It's still better than playing too conservatively if cash flow and obligations aren't big items. When the markets get to higher levels then cash flow and obligations shouldn't be as big of a burden, assuming some has been sold. There can be big drops, but if ending inventories are going to be slim to none (keep calculating that) then the bottom isn't likely to be prohibitively low. The later in the year the big action starts, the shorter the spike might last. Unless there is reason to fear planting progress after it's been determined that pipelines are ready to collapse. That would be a historic event.

 

IMO, this market year has some great opportunities to play.

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Frequent Contributor

Re: Thats a great question

Wow....not a bear on the planet.....probably should give everyone pause. This rally in grains SO FAR (could change so monitor it) is on declining open interest and volume. Better check the history of what that means.

 

The year after a short corn crop is usually pretty easy, just not often for the bulls. It is important to remember that demand changes are never known until after the market tops. 2008 being the latest example.

 

Surely, no one thinks the global economy can handle food and fuel inflation and continue to recover? That just isn't the way the world works, 2008 being the latest example.

 

 Good luck to all.

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