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Honored Advisor

Re: Silver Drags Corn down...Again

jr wrote: "I just think this is a good time to stand on the sidelines and watch."

 

As a producer of generic corn/soy/wheat commodities, it is never good to stand on the sidelines in late April/early May when offered 100% net profit margins ($6.50 corn which cost 3.25 to grow).  Find a way to protect the downside should be the only focus, develop your pricing triggers, implement them, and live with the results. After the fact, if you don't like the results, you can change the plan for next year. Every year should be different anyway based upon the condition of the market in January.

 

As I said to some friends last week, it is just a TERRIBLE time to be taking price risks. Corn probably has one more spike higher left in it, but a bullish move for corn will be bearish for beans, which made their high many weeks ago now.

 

I feel the emotional pain of having nothing planted, but you just cannot let that impact your pricing plan. The way it looks right now, 100% of the high yielding areas of the belt might get planted in the ideal window before May 20. Only us fringe eastern belt areas will be late and our late May planted yields can be very good depending upon hurricane moisture in August. (The last 3 times we have planted some corn May 31 have all yielded 180 or avg fwiw)   Rained again this morning. Silly weather.

 

Good Luck to you JR and I appreciate your posts and humor when I have time to drop in here.

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Honored Advisor

Re: Silver Drags Corn down...Again

Forgot...you wrote:  "what is corn over-valued against".

 

I would argue everything, but that is just how I read the numbers. Besides it is being over-valued by 2 non-economic users. Inflation hedgers and gov mandated fuel usage. Neither of which can be economically sustained in this global economic environment.

 

Palouser is correct though that food demand is good now and food users like Saudi Arabia, or China, or India, can pay any price to get food. This is why the new low price for corn over the coming decade will likely average $3.00, and not $1.80 like it did in the last decade. Wheat will be $4.40 and not $2.20. But with corn at $6.50 that is a long way from $3.

 

Just thoughts but corn approaching $8 is overvalued against everything right now (except maybe cotton and silver).

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Veteran Advisor

Re: Silver Drags Corn down...Again

Time for me I am a corn buyer. so my reference was more inline with the fact that cornis coming down solet it. Yea youare right we prolly (85% chance) have another leg up. Will it take out the highs of April? I think so. BUt we got to get the throat cleared here and then we can make that move.
And don't go talking about gov't mandated fuel usage like it is evil!  The midwest ethol mafia will track you down and rplace your milk with Ethol so you will be crying in your beer instead of over spilled milk! HE HE.
 

I just keep hoping that livestock can take part in the rally sooon.

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Honored Advisor

Re: Silver Drags Corn down...Again

Ah yes, as a buyer, wait and watch.

 

If you haven't read "Rich Dad Poor Dad" it would be worth it. One of the chapters is on the massive effects of a change in governmental policy. Livestock producers, including us,  underestimated the extent the ethanol policy would be pushed and funded and its impact on input costs. Kind of like everyone else that uses feedstuffs.

 

Hope everyone stays safe as the pressure gets turned up.

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Veteran Advisor

Re: Silver Drags Corn down...Again

Time good post as usual.  I do not even get into the ethol thingy anymore. I just say that the increase in the price of corn has caused my cost to go up and so therefore that increases the cost of the end product thereby driving up the price of food. I do not care the casue of increase in corn I only care that it is higher therefore the price of corn has increased the cost of food! Period.

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Advisor

Re: Silver Drags Corn down...Again

    The answer is simple.  The traders have large profits in corn and sell corn to cover their positions in sliver.

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Honored Advisor

Re: Silver Drags Corn down...Again

jr...another good book to read is "The Omnivore's Delemma."    Not that a corn farmer will enjoy all the facts, but I believe it is well researched and helps folks understand how the price of corn underpins the whole industrial food complex.

 

I hear everyone is done planting in Iowa. Congrats. If you are planted, taking price risk is impossible to justify. And even more impossible if you are not planted since IA/NE/MN make up such a huge percent of production.

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