Some Good News For Corn

[rayfcom]

Its a common refrain that markets are wrong when they happen to go against the interests of the whiner.

I have given you numerous reasons why the greatest risk is lower rather than higher prices. Not assumptions, but proven methods to analyze market forces and predict future price movement.

There is no better proof of the over-supply in the corn market than to go to the grain elevators and the storage silos. You have had two consecutive years of tremendously good harvests and from all reports - government and private - another fantastic harvest awaiting you. Market indicators are reflecting those actual conditions. Deny them at your own risk, if you're a producer you have a lot to lose if those indicators are right and you are wrong.

And yes, paper sales and hedge funds trying to move markets away from equilibrium for short term gain can occur on a short term basis. But corn prices have been in perpetual decline since 2012. Every try to rally prices fails at progressively lower prices, and the market has stayed below $4 for many more days in the last year or so than it has traded above $4. No one can manipulate a market for that long a time. The supply/demand equation is clear, the world's corn farmers are doing a great job, but maybe too great. If you are going to oversupply the world, you are going to have to pay for the storage to store that oversupply, And that's the embedded cost that continues to suppress corn prices.

[wrightcattle]

And most of the globes wheat crops have failed.

so corn usage will go up more now.

ray, all the bad news crap you spin is history....not the near future.

[rayfcom]

The futures contracts are called that for a reason, because they deliver in the future. If what you say is true, the 2019 contracts would be rising more than the December 2018, and that's not been happening. The March 2019 contract has risen only 50 cents more than the December since the price bounce started last Thursday, and the July 2019 contract has moved 2 and a half cents less.

So that thesis of yours is wrong.

You are also wrong about wheat. Wheat prices have mirrored corn prices this year, huge downturn followed by a small bounce back lately. If "most of the globes wheat crops have failed" as you claim, wheat would not be trading with a 5 handle but probably twice that. 

Is there an adult there who I can talk with ?

[Hobbyfarmer]

They are outside standing in line for a chance at using the outhouse, with these prices could only afford a one holer.

[illinifarmer]

Right, markets heave been proven wrong way to often to assume their accurate ever. Last we heard corn traders are short 100,000 plus. Makes perfect sense

[deasmatt90]

In regards to wheat prices, funny how drought didn't move market. Unless it was a commodity that didn't trade on cbot. I'm not going to mention what it is but further evidence to me of market manipulation by news media and others.

[deasmatt90]

Anyone priced grazing rye for cattle yet? I guess I will mention it

[deasmatt90]

Here's what's different about cbot than the real world.
On cbot there is an endless supply of corn. in theory the supply can be infinite because at any time anyone can sell 5000 bushels they don't have as many times as they want. All they need is margin in their account not corn. So in theory the possibility of corn purchases are infinite as well as sales. So does this reflect the true supply and demand and a valid method of price discovery of the corn market, when what it actually takes to glut the market is not corn but the number of contracts someone is willing to throw onto the market. The corn supply is finite while the contracts that can be bought in theory can be infinite.

[rayfcom]

Markets are always right because at the end of the day they dictate what your assets are worth. What you probably mean is that the market today does not necessarily dictate where it will be tomorrow, and that's why there is an entire sub-science devoted to interpreting signals the market gives to determine future price moves.

Hard to argue against it considering how many hedge funds make so much money each year. There are some people who are very good at reading those market signals and profiting from the price moves they are predicting. Its those advisers that you should partner with to help your business.

[rayfcom]

The price charts I cited in wheat were from the CBOT. I am surprised as well that prices did not move higher if there are drought conditions in the wheat fields. 

Reminds me of a guy who used to track the snowfall in various places in the Midwest, and he had a long enough data history that he could predict next summer's agricultural prices based on how much snow fell in the winter. His thesis was that a big snow year would leave water deep down in the soil when Spring came, and that would provide the water to keep crops growing in the hot days of July and August. 

Seems to have made sense. Did you have a lot of snowfall in the wheat farming areas last winter ? If so, perhaps there is enough water in the soil to negate any drought effects this summer.