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Veteran Advisor

a trip down memory lane

I keep reading on all the sites about that" horrible USDA they stole from us" They were right back on June 30 but now they are wrong!  

I gotta laugh guess what this here internet thingy has a memory and anyone who wants to can go back and look at what were saying then. I did!  Laughed so hard I cried in my Pepsi.Smiley Very Happy

So in all fairness to me I will put up my wrong thoughts from that day.


Well I was going to but I think Mike's words set the stage.


Beans are up 5, corn and wheat are lower.What do you say, are the seasonal lows in??






At the close:

The Dec corn futures closed 29 3/4 cents higher at $3.73 3/4. The Nov. soybean contract ended 9 1/2 cents lower at $9.02 1/2. The Sep. wheat futures settled 26 cents higher at $4.83. Dec. soybean meal futures finished $5.50 lower at $260.30 per short ton. The Dec. soyoil futures closed 15 points higher at $36.96.


In the outside markets, the NYMEX crude oil is $0.27 lower per barrel, the dollar is lower, and the Dow Jones Industrials are up 10 points.


One analyst says that soybeans started off trading sharply higher off the emotions of the crop report, as quarterly stocks came in 21 m.b. under even the lowest national pre-report trade quess suggesting the trade has terribly underestimated demand and usage. But, as mid-session set in they traded exactly what the report said. Bullish stocks numbers off demand has old crop front futures contracts higher and 576 thousand acres more to be planted than pre report estimates have the selling new crop contracts of September and November. Corn was just plain bullish with all contracts higher as traders now wonder just how big of a cut will the july 9 U.S.D.A. monthly crop report show on ending stocks for the 2010-11 marketing year. The june report came in at 1.573 b.b. The july report could be 1.200 b.b.


Here is the excerpt from the minutes following the report release:


At 7:50am:
VERY BULLISH REPORT FOR CORN. Here is one trader's reaction:
"For Corn, the most bullish development you could have ever dreamed for corn. 20-30 higher.
Less acres than the lowest trade estimate and nearly 300 million less stocks than expected.
Beans were friendly on the stocks side, about 700,000 acres higher than the trade estimate, but will be viewed as friendly because of the corn strength.
Wheat, nothing friendly here with all wheat acreage up 500,000 from estimates and up 33 million above on the stocks.
I am amazed at this corn, it is a double whammy for bullishness. Not only did you take stocks DOWN dramatically, you cut the acreage too, so if you make an assumption on yield of let’s say 167 bushels/acre you have 1 million less acres so that’s immediately 167 million bushels off carryout, and then with the stocks coming in less than expected by 288 million bushels this is a estimated 455 million bushels off carryout, which last month was 1.573 billion bushels.
To put that in perspective, the carryout next year with a yield of 167 bushels/acre is
1.400 billion bushels. WOW!"






At the end of the first page Mike ask's a very good question:


I'm told corn is headed for $3.80-$3.87. What we saw Wednesday is a false ceiling. So,do you have any corn to sell?


Let me hear from you. Oh by the way, do you believe that corn is the next gold? This is not a poll.I could care less about the number of responses, well not really, but I'm more concerned about learning from you guys/gals about the potential of these markets.




Well this thread has all us loud mouths on here SWAG'in like the pro's.


Here's two of mine from that day


First Which I typed in a hurry cause I needed to get cows fed.

I said back in the middle of the month htat coen would work higher.  I do noit have a reason only a feeling.  Is it the new gold nah but you probably outa own some to stay diversified outa the financials.


We locked in the next two months of corn needs for the dairy farm today.  Still it was cheaper than just the end of may. 


I do hope it moves higher cause that will really help the livestock guys in the future.  Near term lots of pain again. JR


Then PO-ED asked me a question:

JR..... based on what is now known...... Are you expecting the prices to get cheaper?...... IMHO..... These are the cheap prices when we look back a year from now...... FWIW......p-oed

This information is worth what you payed for it...... :~)
Here's my answer:
Po-ed Nope I think we have seen the lows for the year.  I think we work higher I just don't expect the stratospheric move of 08 there just isn't money left to keep the market moving that high. the funds are out of money. the livestock guys are out of money and the consumer will just go into shock.  I think 4.50 tops this market on the board probably sometime around thanksgiving.  At some time this market will lim it demand.  With the Butterfat tests being lower all across the nation (BF is directly related to energy in the rationie corn) We have proved that the national dairy herd is using less grain. A move higher will cause us to use less. I only tied up two months cause that was all the money I had.  JR
Well lots of other posts from that day but the point is USDA suprised us then and guess what no one was complaining ( well maybe me a little) So now they pull out that found 300 mb. and we think they lied!  Come on guys it is the USDA they are just goverment guessers the only reason they are more legit than the wight guessers at the circus is that they have a pension plan!  Really I think we will be OK so keep harvesting and go back and reread the old posts learn from some things OH BTW I like all  you guys on here and I am not picking on any one in particular with this post.  But we all get sidetracked in our opinions.
I can't resist I am gonna pick on a couple more of you! Smiley Wink

Grain stocks data looks bullish for corn and soybeans.  Bearish wheat.

Acreage bullish for corn.  Bearish for soybeans and wheat.

Looks like the USDA comes through for corn farmers again!  I have a hard time believing that with the great early planting weather that farmers in IA and NE didn't plant as much corn as last year.  But hey those are the numbers we get to play with!


Since corn has been beat down the most, it should perform the best today.  Grain stocks data should help old crop beans gain new crop.  Wheat is going to be the anchor today and either get pulled along or drag things down.


Long term trend is still down in corn and wheat.  Beans are sideways.  I look for higher yields in the next production report, at least for corn.  New crop soybean ending stocks will still about double from last year.  Wheat carryout could be over 1 billion.



Reckon I'd sell it.


Everyone's situation is different but if I didn't have anything sold or had old crop I'd probably let some go near up limit.


Not that this report isn't very bullish but my worldview leads me to focus to a very tenuous situation in the financials and I believe that very well may trump fundamental grain bullishness, at least for a while.


For me, I might experience some pain on the 370/430 fences that I have on if corn rises more than .70 or so but actually I'm ahead if it does- won't "lose" penny for penny on the fences.


With a good crop 80%+ assured might look at advancing cash sales beyond the 50% that I have and the possiblity of finishing sales at a profitable level (and that assumes "normal" yields, for now we look beter than average) this is a good thing.


I can live with this if I'm wrong but could be surprised- I'm learning about the new financial world every day.


Best, h


Palouser has the best handle on wheat hands down  here is a post from him on 6-25


I try and add to the over all perspective of the wheat market but specific advice as to how to proceed on a sale is more than I want to do, and judging by the historical results of advisers I should have good grounds for being cautious.


In general I'm guessing wheat prices aren't going to vary a lot in the medium to long run this marketing year. The important qualification to that is I'm assuming average results for harvest and protein. If spring wheat contines to get moisture and cool weather this summer then I think protein will be more of an opportunity - assuming you have some hi pro. I would still watch Australia if i was holding some wheat into the winter. It's early and they have mixed opportunities as they are just planted/planting. Their export area is still a question mark this early in their cycle.


I am not familiar with buyer tactics in the southern plains. The buyers in my area are highly 'co-ordinated' in their tactics and will apply pressure under different circumstances. I don't grow hi pro wheat, but if I had good test wt wheat with good protein I would be tempted to hold on to a portion while this years harvest shakes itself out on the quality issue. I'll guess lower quality soft wheats will be pretty unexciting to buyers and importers.


ZMAN, NOXIE, PALOUSER I am just pointing out I think you guys have the most reasoned well thought out answers most of the time on here,  you three always get read by me and I know thousands of others read you also. We all make our guesses based on the numbers at hand with an eye toward the prize and sometimes the unforseen happens like droughts in Russia or the 300 mb peek-a -boo. 

Like the Good book says this too shall pass.  JR

PS it's fair game anyone who wants to put up my blunders can certainly go forit but I am warning you it will be along list!

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8 Replies
BA Deere
Senior Contributor

Re: a trip down memory lane

Hey Jr, the USDA`s sole propose is to keep food cheap. As our old friend Faust used to say they come out with "comic books" every so often and if you believe it "I have a shovel to sell you because you have drank too much sheep dip"  Smiley Very Happy The best market understander is Senior Citizen over on Agtalk, he advised having your family lock you in the hall closet and give you vitamin D shots so you aren`t tempted to sell during this current washout  Smiley Very Happy  If corn goes down another dime we may hear from "LDP`s this fall :  ))))))"  NIA farmer.

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Veteran Advisor

Re: a trip down memory lane

I don't know what is going to happen I just was pointing out that we all misssed this one to the upside.  I think we all knew the up was coming but weren't ready for the hieghts to which it cam eup.  I hope for all my cropper friends it does go higher.  I have nothing against you guys making some money. Just waiting for it to come my way. 

BUt I seriously disagree right now with SC I think we are sideways. 

What is the bulish news to come now?  Yields are pretty well dialed in while lower so is demand.  I talk to enough livestock guys who say they just won't do it again. 

This whole run up was in one quarter don't you find that odd?  

I say from here on out watch who is shorting if the shorts get in now the bottom is going to be well past your ankles.

I really don't think alot of folks have really grasped that livestock has run away from corn.

The mentalllity in feeding dairy cows used to be use forages to be the broom now we use forages as the foundation and fill in the holes with the grains.  What does it mean in the end?

LIvestock has left the building!

I also saw where SC says dairy is going to return  well I haven't had time to post but we had limit down in butter futures this week.  NZ is getting beneficial rains Brazil has really ramped up production and Argentina has gotten china to be a buyer.  All this while Mesico our Number 1 export for cheese has doubled the tarrif on cheese from US.  Guys we are about to get nailed again. and the hogs are next to get the mexico boot.  That says our demand for livestock products is out the window. 

On top of that what if the dems just simply don't have time to renew the ethol blenders credit?  They have to pass a budget when they get back from the election that will take up all the time no way is that going to get reinstated. Just my Sat. morning thoughts. JR

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BA Deere
Senior Contributor

Re: a trip down memory lane

When Senior said that he thought dairy would make a comeback, perhaps he means for the 10,000 cow opperation not the 100 cow family farm. I know a guy that was getting investors and plans together for a 6,000 cow unit in this county. Just in the rumour stages he had major icecream companies wondering about making a contract with him. To his good the idea fell apart when he couldn`t get a 160 acre site, dairy prices shortly tanked. With hogs less than 10% are bought on the open market. By right`s way the mega units should be rotting down after the crashes of `94 and `98...but NO some other A..hole outfit bought `em out and they never lost a turn of production. Hoghouse janitors had been complaining the past couple years, however in my area new buildings were popping up like mushrooms at that same time. What I`m saying is, if dairy goes like hogs open price is just a arbitrary number to set a contract by. As far as grain, China hadn`t been afraid to buy all the way up in this market. Another thing, all commodities just about have to go up with all the monetizing of debt that will have to occur. The alternative to debt monetizing would be the least attractive option.  

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Frequent Contributor

Re: a trip down memory lane

JR you said "On top of that what if the dems just simply don't have time to renew the ethol blenders credit?"

I'm in a great mood, so I'll ask the tough question...why do we need to reinstate the blenders credit?

Ethanol would be quite profitable without it. Subsidizing the wealthiest taxpayers from a bankrupt government? Plus, it is going to end soon enough, why not adjust now when times or so good and money is so cheap. Strategically, ethanol should go independent now while it can easily afford to do so. But, back to the question, if you a dem running for re-eleciton why do we need to reinstate it?


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ray h.
Senior Contributor

Re: a trip down memory lane

    All the USDA is,is a governor on the food supply engine.And guees where they get most of their info,YOU,and your neighbors that are willing to report! Farmers have been called their own worst enimie,guess thats true.But this time there is a falsity in there #s that even some traders are questioning with good reason.Maybe we can keep food prices from spiking until after we elect the next bunch of quacks!

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Veteran Advisor

Re: a trip down memory lane

Time we do not need to reinstate the blenders welfare.  I was just saying what will the psychological impact be to the market if it is not?

I think the convetional wisdom is that it will have anegative effect.

Personally I think this will be the excuse for why we use less E but in the end it will be because we are using less Gas.  and 10% of less is still less. 

So again why do we need 90mil. +/- acres next year?

And with a good bean crop we can probably stand to give up those bean acres to cotton and rice so soys don't need corn acres and corn don't need soy acres.  Hence no acerage battle.

Therefore no need to run up the price of grains in the spring. 

Hows harvest in your neck of the woods.?

One other thing Obama needs something to run against in 12.  He will need a repub congress to fight,  So if the dems don't renew this the new congress needs to make a new law to put together a ethol policy.  THis will require a reaching across party lines and also reachinmg across regional differences this will require so much pork that it will never pass.  All the while we will desimate the economy of the first in the nation caucus State givng the pres a big stump to preach from.  And it will all be the repubs fault.  Win Win for dems in 2012. JR

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Veteran Advisor

Re: a trip down memory lane

Hi JR,




This stuff never remains static. Once those numbers were in the market, a lot of other things came into play- russian losses were recognized, US weather conditions became less perfect and the hardest one to deal with- Wall Street decided that the "ag space" was the place to play again. That dates to the BHP/Potash play back in August.


We're fortunate that our yields keep previous sales profitable.


In the "strategy trumps opinion" vein, here is what I think I have reason to regret:


In markets that are this volatile, when I had hedges that were very profitable and a lot of the game yet to be played, should have taken some action to take some money off the table.  Probably buying some cheap calls before key potential turning points is as far as it needs to go- 80% of the time, or more, there isn't going to be anything dramatic to change the trend.


As to current strategy, yep, it caught me flat footed and I wasn't able to take advantage of the USDA gift of $5 corn. My question now is do I take off hedges if prices drop to my sales levels in the 4.30/10.25 level?


For myself the answer is no. Had a plan, it will be pretty profitable owing to production in excess of sold APH and I just don't have any insight as to how to play this anyway.


I'll turn sights on '11 although have nothing in the way of strategy there yet.


I'm going to book it and walk away.


Best, h


PS. Second year running when good early sales became what everybody else got by the time it was all done (except for the many who didn't take it and had to dump into the lows). Congrats to all who did well here, I'm not unhappy with here I am and have enough to taking care of myself as to worrying what anybody else got.



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Frequent Contributor

Re: a trip down memory lane

Nox...being a little too tough on yourself in my view. Very few farmers sold much above $4.75 is what I hear from the local merchants. Many put it on storage! So, you are pretty close to being ahead despite being too conservative for the 20-20 hindsight what happened.  btw...Have you looked at the PAcer Ultra's from the big C? Great tool for 2011 and 2012 stuff, if you can swallow the fees and grading and policy abuse rendered by the big C. We did 4.90 floors to average thru 12/15 for 30 cents back when cz11 was around 4.80. j fwiw 


JR, harvest here is moving very fast of course, as it is very dry. Everyone's beans are done and corn in the area is probably 55% done. We are under-equipped vs. some of the operations around here, so we have a bit further to go than that. Beans yields are a record by just a whisper, many fields in the 70's, but many in the low 50's where the flooding got em, whole farm average around 61. Corn is extremely variable for the same reason but we are hoping we can end up with average (178)  just as we expected after the floods came in late June. Highest field is 212, lowest is 154. Hard to believe the same guy planted both! We have about 2800 acres of cover crops planted with excellent emergence. Quite a stark contrast to the one neighbor who has disked, and then ripped, and will field cultivate next spring, his corn stalks going to beans. Some day cost of production will matter again, just not today!


What are you gents doing on fert? We were offerred 82-0-0 for $725. Told them with the price of Nat Gas to keep it till next May. I'd rther pay $1000 then versus $725 now. Keep the crop rotation open I guess.


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