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Veteran Advisor

Re: NE corn stocks

rsw, this where I come inSmiley Wink------This is the "MILLION DOLLAR QUESTION" I feel

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Veteran Advisor

Re: NE corn stocks

50 cents per gallon in capital costs....so a 100 myn gallon plant has $50 myn capital cost....per year...??!!

 

what did it cost to build Golden Grain at MC??

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Senior Contributor

Re: NE corn stocks

Yes, C-X-1. This is more like a $1 BILLION Dollar question on pricing 2013 crop corn. As mentioned, I am currently at 0% priced on both 2013 crop corn and beans. I just do not see a reason to price 2013 crop yet this early in the ballgame. The Acreage report comes in at the end of March, maybe a few days before that big report comes out, maybe that would be the time to do a 10% sale depending on prices to take some risk off. I will probably do at least a 10% new crop sale for both corn and beans a few days before the report and then the same day buy some corn and bean CALL OPTIONS to protect my upside on this contracted 10% of my crops. Kinda of a Chicken way of doing it, but I would hate to sell $6 corn in the spring and see the drought continue and take corn to $9. A $3 a bushel hit in income!!!!!!!!!!!!!!!!!! Just $3 on 10% of my total 2013 corn production is only 20,000 bushels, so a $60,000 hit/loss of profits, not the end of the world, but $60,000 would pay for alot of my kids college tuition bills!!!!!

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Senior Contributor

Re: NE corn stocks

Ray- I can't remember how much it cost to build Golden Grain in Mason City back what????, 10-12 years ago. But they do have all there buildings, land, and equipment paid-off. Perhaps 50 cents per gallon in FIXED/CAPITAL Costs is a little high, probably more like 25 to 32 cents per ethanol gallon. I believe that Iowa State University uses 31 cents per gallon in there MODEL, notice I said Model, ethanol plant. Let me try and look up some numbers for you.

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Highlighted
Senior Contributor

Re: NE corn stocks

Ray- below is the website that tracks the profitability of the Ethanol Plants in Iowa. It currently is being updated so you can't get in to the website spreadsheet, but you can read about the Ethanol "MODEL" that they use. WEBSITE is below:

 

http://www.agmrc.org/renewable_energy/ethanol/ethanol-profitability/

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Veteran Advisor

Re: NE corn stocks

Just to clarify, I don't think we will run out of corn, but I think we WILL have spot shortages, and with less than normal grain in the farmer's bins, if you happen to be in one of those 'short' areas, watch for some very favorable basis.   While I didn't go West of North Platte, I can say for sure, from North Platte East, to most of the way to Kearney, and areas North, just about to the Dakota border, is short of corn, and is VERY short on hay.  I think there will be quite a few acres cut for silage, and some pivot ground planted to alfalfa.  I know I will be one of them, contributing to that trend.   Right now, I can lock in a sale for $5.50 or so new crop corn, or $200 a ton alfalfa (if I were to buy alfalfa today, it would cost me close to $300 a ton, I can live with a little less $6 corn to sell, if I don't have to buy any $300 a ton hay).

Our local co-op has had no corn on the ground since Christmas (a new record) and the local Cargill has a disappearing pile.   While the Cargill pile is about 'normal' sized, what I do NOT see, are the lines of trucks that are usually hauling there, the first part of January.   I don't think I ever saw more than 3 trucks there at once, and no waiting at all.   Highly unusual for this time of year, January is usually second only to harvest, for the number of trucks going in.

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Senior Advisor

Re: NE corn stocks

Corn stalks and CRP bales might be junk hay in a normal year, a year like this they could be worth a fortune.  Lay them next to a bunk full of snowballs and see what the cattle eat first.  Drastic times lead to drastic measures.

Veteran Advisor

Re: NE corn stocks

True, but they must be supplemented with SOMETHING.

Around here, the most popular thing to supplement them with would be distillers grains, and the E-plants have their expected production already sold months ahead.   If/when they slow down, that will have to be replaced with something else, like grain, which will bring usage for feed up some, as ethanol usage goes down.  I know it won't be a bushel for bushel trade in use, but if the E-plants suddenly shut down, grinding say a billion less bushels, that will not mean a billion bushels unused, but more like only 500-700k less use.

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Contributor

Re: NE corn stocks

The lower Elkhorn NRD last night inacted some limitations on how much water can be pumped in certain areas. I believe starting this growing season. The republican basin has been dealing with this, now it is in northeast Nebraska. No doubt in any of our minds that area will be expanded. I hear Senators warned a group in Lincoln on Tuesday night that this is just the beginning and that farmers better get used to raising crops with less water statewide! I think land values will get adjusted real fast. Corn stocks will be down next year for sure.  

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Advisor

Re: NE corn stocks

Everyon baled their corn stalks in my area.  The cattle guys hae been out picking up those bales and have started feeding them, their hay must be gone. We are having an open winter so they are still eating dead grass, those corn stalks may be enough to get them through the Winter, but if it does not rain, there will be no pastures  this Spring, and then they are going to have to come to grips with what may be a catastrophic event in the cattle country of Southern Iowa and North Missouri.   John

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