cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
Veteran Advisor

What Do You Think Gang

We are getting things figured out on this new site. I have a few thought-starters on all things agriculture. Here are just a few of them:

 

--IGC upped its monthly estimate of world corn production Friday. Now, the agency sees 2016/17 world corn output at 993 million tonnes, up from a year ago's 972 million, but below a record 1.02 billion harvested in the 2014/15 season. World wheat production has been lowered to 713 million tonnes from 734 million in 2015/16.

 

--China will let the market forces determine its corn price? Will they? No more stockpiling. Less imports in the near-term, but don't we need the Asian giant to chew through what they have, so we can sell them more later?

 

--Farmers are tired of fighting weeds that won't die, so more corn is being planted. That's what I hear. Do you believe it?

 

--There's so much late applied fertilizer that a lot of farmers still have the chance to switch to soybeans, if they wanted to. Is that what you hear?

 

--Elwynn Taylor sees El Nino producing a 171 corn yield average. What? With 93.6 million acres, what a whopping crop that would be.

 

--Close the bins and wait for July corn futures to hit the $3.80-$3.90 range? Is that what you have in mind?

 

--Funds could be headed for a total of 280,000 corn short position. Wow! But, what a rally it would be when they reverse their position. Are you prepared?

 

Now your turn. Where have I gone wrong here?

 

Mike

0 Kudos
7 Replies
Highlighted
Senior Advisor

Re: What Do You Think Gang

More years than not, the market goes down from some spring high into the harvest low.  With the kind of prospective planting numers we're seeing, what will drive the market higher?  Slight planting delays won't bother it.  Some change from corn to soybeans won't be a big mover.  Where is the potential for more exports?  

 

The 800 pound gorilla is the El Nino transition.  If it comes late we may have a higher than trend yield.  Even a trend yield will make us wish we'd sold before the report.  If it comes early, the numbers suggest somewhere around a 4 bpa yield reduction may be likely.  

 

What is the price difference between trend or above yield and a 4 bushel reduciton from trend?  How do we position ourselves to maximize our return?  I'm gong to plan on selling at some number I thiink is high and I'm going to be very atuned to the possibilty of buying calls if I see a chance of a large reduction in yield.  I don't have any crop insurance.

 

Will El Nino affect next year's South American crop?  Should we figure on putting ours in the bin and wait them out?  Or should we sell it out of the field for the best price we can protect now?  

 

NH3 is going on.

 

Are the funds leaders or followers?  If they are followers, who cares what they do?  If they are leaders, what is the basis for their decisions?  Is it basically fundamentals supported by technicals?  If so, maybe we'd better watch them.

 

I'm not a charts or cycles guy so can't speak to them but will say nothing drives me to their camp this marketing year.

0 Kudos
Highlighted
Honored Advisor

Re: What Do You Think Gang

Dunknow Mike.  Can we realistically raise 171bu on each and every 93.6 million acres?   Alot of fringe acres in that mix.  Can we raise a unprecedented 4th above trend crop in a row?

 

There isn`t any hope to "talk the market up" it will be what it will be.  But if this trajectory continues, the philosophy of "plant beans, you`ll lose less" will be even more evident.  Every year someone has weather problems, yes even in a ElNino, I guess who and how widespread will be the question.  Also all the foo-foo dust that makes above trend yields will probably have to be cut, so for some it might be just a matter of "dragging the planter across the field for insurance" for some. 

 

Stay tuned.

0 Kudos
Highlighted
Senior Contributor

Re: What Do You Think Gang

Dad and I were talking this morning about planting more beans.  We have no nitrogen on yet and with local new crop at $3.27 and $8.59, we are thinking beans might be better than corn on corn.  Have to push the pencil this weekend. 

0 Kudos
Highlighted
Senior Contributor

Re: What Do You Think Gang

I'm in the same boat. I just put a call in on bean seed prices. I've been 100% COC for several years because it always penciled out better. I'm not opposed to growing them no matter how much I hate doing it.

0 Kudos
Veteran Advisor

Re: What Do You Think Gang

I just talked to a central Iowa farmer that has decided to go heavy on beans this year. He is just dialing back and playing it safe.

 

Mike

 

0 Kudos
Highlighted
Honored Advisor

Re: What Do You Think Gang

The corn acreage number will only go down from here.  There are weather sites out there still projecting a very hot summer.  The yield number may also be at the high mark for the year also.  And, of course, not much of this monster corn crop is even planted yet.   

 

Many market advisors are telling producers to "hope for the best and plan for the worst" in their marketing decisions.   I for one as usual,  will be planning for the best and hoping for the worst on my farm. 

 

Success happens when preparation meets opportunity.  

0 Kudos
Highlighted
Frequent Contributor

Re: What Do You Think Gang

- Beans on beans look really enticing on certain fields after rerunning the numbers with the new prices this weekend.  Preplant herbicides and a rotation that usually includes small grains and Liberty Link corn have kept the weeds well in check so I can afford a couple years of beans.

 

- I think the guys with unhedged corn still in the bin are in for a world of hurt this year even if we are a couple bushels below trend line yields.  Funds could slowly unwind a lot of the short position over 3 or 4 weeks without moving the market much.  Significantly changing corn price direction requires a bad safrina crop in Brazil and widespread dryness in the US to eat up corn and feed wheat stocks world wide.

 

- Personally, I'm looking for opportunities to hedge Sep 2017 Minneapolis Spring Wheat in the $6.20 area.  That has some potential vs. corn for next year if we do hit a trend or better corn yield this year.

 

- On another subject, an improvement for the new site would be to put author's names back under the titles of their articles, especially in the Markets section.  I like to be able to scan the articles and pick out Roy Smith or Louise Gartner, etc, and then click on their name to see all their recent articles, instead of having to guess which articles they have written.

0 Kudos