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Senior Contributor

What is the right strategy?

If we do produce a huge crop and prices collapse what is the right strategy? Locking the bin doors and rejecting low bids will accomplish what? Is it better to resist low bids or is it better to loosen up to encourage higher usage? If we need to work through the excess, then I wonder if resistance is the right plan.

 

Will low prices correct the supply problem? They tell me the cure for high prices is high price. Can the same be said for low prices?

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7 Replies
Honored Advisor

Re: What is the right strategy?

Low bids are a result of plentiful supplies, or at least the perception of overabundance.

Whether you sell or not is purely up to you. 

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Honored Advisor

Re: What is the right strategy?

Well, the "fear" may turn to the hopelessness part of the Udderback cycle if cash corn has a "2" in front of it this Oct/Nov.  Some farmers will just be dumping at any price,just to be done and collect on their RA insurance.  If that occurs, I don`t think you`ll want to be a seller.   If we are in a flat market, hold and sell rallies, but be cautious every day that you hold into May next year, because if they divine a big crop in 2015 coming....Uff-Da!

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Veteran Advisor

Re: What is the right strategy?

the best strategy is to be holding when everyone else is selling, and then to be selling when everyone else is out. If everyone did that, of course, it doesn't work, so if you want to be a winner in the down markets you should encourage everyone else to sell early and stimulate demand at low prices.

 

Probably will be a good number of bushels of $3.40 corn, the bid right now, sold at $2.50 though as this thing may go lower than anyone envisions. Better dump what you have right now before it goes lower and have a couple of whiskeys to celebrate.

 

Myself, I am going to wait to drink the whiskey until after the cops are gone.

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Advisor

Re: What is the right strategy?

4.50 would make me dump everything. I think I have a real big crop. If I do 4 isn't so bad. Keep in mind currency is keeping me at 4
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Senior Contributor

Re: What is the right strategy?

My objective is to convert to cash sooner rather than later for a better price rather than a mediocre price. If we are looking toward a long period of substandard prices then I don't want to pay the waiting game. If and when prices improve, I will have another crop coming on. If you can stratergize a basis improvment by storing that might be worth the effort but holding just to wait them out looks like a fruitless exercise.

 

Or maybe the yield and acre predictions are overly positive and that might produce a positive correction but i really don't anticipate that. I suspect the predictions will be closer to right than wrong and there will indeed be "enough".

 

Of course this is just idle speculation and I have a great deal of experience of being long and wrong. I'm in the business of raising corn and soybeans and then converting them to cash. I have no interest in being in the grain storage business unless i am paid well for it. Without that guarantee, one just might take a couple bucks loss on a well intended experiment.

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Honored Advisor

Re: What is the right strategy?

Well, if you don`t like risk then dump it off the combine..as hobbyfarmBR549 would tell you `the crop insurance will bail you out`, just hope for a dry harvest and strong basis in October, because after Oct the crop insurance is done protecting you.

 

All this fed money printing has to spark inflation fears and our wonderful friends those hedge funds that bailed us out the last time, China might be lying how good their crop is, Brazil might have troubles.  There`s a few stories for corn, but God it`s tough waiting for water to boil.

 

What can happen, it money will be tight...I`m already running on fumes this year.  Alot of farmers are probably in the same shape, so they`ll have to sell soon for cash.  Then the "John Deere low" comes in February, then 1st half of rent March 1, then try and prepay as much inputs as possible to impress the banker before you go crawling in his office next spring.  What i`m saying is, without a "story", there is going to be plenty of sellers...sad to say.

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Senior Advisor

Re: What is the right strategy?

Talking to my insurance agent yesterday, unless prices turn around this month and I'm able to harvest what I'm seeing, I might have above average yields and still collect an insurance check. Revenue insurance pays sometimes. I know there are a couple ifs in the above statement and I also know I'm probably not the only one in the boat.

Area late planted milo is just starting to push heads, just might beat the frost deadline with the latest rain received, all mine is either setting grain or adding color.
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