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When Will Demand Return for the Grains?

With the basis at the "Gulf" starting to slip even further on poor export interest, there is some fear that "demand" rather than "yield" may soon start to be more of the focus.  Certainly there is no debating the fact that the current USDA yield number will be reduced in the weeks ahead.  The question though is starting to linger as to if and when "demand" will start to pick back up.  As end-users come to the realization and fear that US corn bushels simply may not be available in the months ahead, many may be tempted to start booking less expensive alternatives such as "feed wheat" now, before supplies become more limited later in the marketing year.  This is certainly cause for concern and poses the question as to how US exports will fair in the days and weeks ahead, as cheaper global alternatives seem to be the the only real solution.  

 

I am certainly not expecting a major market set-back solely caused by a reduction in "demand," especially with the USDA crop report slated just four full trading session away (next Monday). I do however believe the "Big Boy's" may be looking to reduce their overall "risk" in several of the commodity markets as more fear and concern over the European Debt situation comes back to the foreground. As I have been saying for weeks, this situation is far from over, and may continue to be a thorn in our side as we try and move to higher ground in the grain and soy markets.  What do you think? Will we get past the risk-off feel in the markets, or are we doomed to see weak prices as the Outside Markets weigh on the grains?

 

 

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Contributor

Re: When Will Demand Return for the Grains?

I am going to stick my neck out on this one. I agree with Kevin. Not only is wheat cheeper to export but there is a tremendous amount getting fed here in the states. Here in Michigan I can't believe the amount of wheat that is being fed. I would not be surprised if the ending stock number does not surprise alot of people. I know a farmer here that has about 60,000  bushell of corn that he would like to get rid of but nobody wants it at this time. I hope for the livestock/poultry guys like myself prices cool off a little bit. We can't feed at these prices alot longer.

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Senior Contributor

Re: When Will Demand Return for the Grains?

40% overbearance correlation of corn price as directly related to crude oil price ( whole corn price deal is basically a usa determinate deal).

 

Western econ scenario has problems, and the crude oil market thus has continued problems too.

 

Crude is still 12 to $15 over what works for reasonable econ conversions ( might even be $30 over as thermal econ mass in the W continues to fold ).

 

Cash corn back to $5.50 to $6.50 ( crop size is likely irrelevant ), and cash beans up to $15 to $18?

 

Could happen, keep in mind beans are food, corn is basically fuel.

 

Folks globally are tired to the sameo sameo sick econ spin so they'll eat well, before they even think bout wasting dough on driving.

 

 

 

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Veteran Contributor

Re: When Will Demand Return for the Grains?

Thanks kevin,I am excited to see you on this forum. I check multiple times a day.
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Veteran Advisor

Re: When Will Demand Return for the Grains?

Animal feeder where are you located? I know last years corn crop in Michigan was pretty good for the most part. This years corn crop throughout Michigan looks pretty good as well except for the far southern areas.

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Veteran Advisor

so, animal feeder

since I don't know what part of Michigan the guy with 60,000 corn is located......what was this guy doing when eastern Indiana and western Ohio was bidding +100U????

 

Let me guess....waiting for $10--fob the farm??

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Veteran Advisor

Re: When Will Demand Return for the Grains?

Demand will return when there is a greater profit in feeding it than selling it!  Until then it's one step forward two steps back. Oh but with the reduction in the cow herd we have seen that will take awhile.

Also with folks driving less they will eventually need less E.

 

So the answer is when the profit returns to the enduser the demand will increase. Till then not so much.

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Senior Advisor

Re: When Will Demand Return for the Grains?

I guess I can't rationalize the idea that fear of lower prices should be a big factor at this point. And I haven't seen any solid evidence for demand destruction throughout the year - at least enough to cancel out the likely lower national yields.

 

As compared to corn feed wheat is limited. And whweat will respond eventually to this demand. I hear that feed wheat in the rationas out in the PNW are maxxed out at this point. I assume this would be for cattle primarily. Perhaps poultry too.

 

Ukraine has a lot of feed quality wheat this year so lucky for them I guess.

 

We still don't know the fate of hi pro wheat in the north. Or at least I don't. How much is making protein. HRS in the PNW is a bust this year for protein.

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Senior Contributor

Re: When Will Demand Return for the Grains?

at 4 $ corn ?

 

demand never left- dail;y wporld use is about the same day in day out.

COF are up 5% or more.

 

its econ 101, high prices gradually quell demnd and attract supply.

 

SRW and WWW are in excess supply. CHI wheat peaked in Jan & is in a secular bear mkt,

as producers respond to price.

 

Likley go down for 2-3 yrs. 

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Veteran Contributor

Re: When Will Demand Return for the Grains?

See US Drought MonitorSmiley Surprised

 

It's a little early to be worried about the wheat drought in the southern plains, unless of course you have a cattle heard in the HR wheat grazing areas and hope to get some wheat pasture to stop the ongoing feed bill. 

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