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corn disappearance

First quarter corn usage was surely the biggest surprise of the report.

 

It is a good default position to assume that USDA is just doing their job and whatever they may or may not have gotten wrong along the way was honest error. anyway, its now the guiding fact of the market, so no use fighting city hall.

 

But if you'd like to speculate, among the possible explanations of the numbers are that they continue to struggle with earlier harvest in the south and those bushels get double counted in the earlier reports. Fair enough, it is possible.

 

The other that occurs to me is that the pipeline was surely the emptiest it has been since '96 and some bushels just disappeared into it. I'm skeptical as to whether there is a reliable way to track that.

 

If you'd like to proceed with a cui bono line of reasoning as to where the institutional incentive for interpretation of the numbers lies, I'd submit that it was probably weighted toward producing bullish numbers.

 

Farm supports are now like everything else in our economy- it has been turned over to privatized crony capitalism via the crop insurance "industry". 

 

If corn farmers had been facing a sub-$4 spring set price and subsequent decline of prices under growing production prospects, the marvelous system that was envisioned by perfessors and lobbyists would possibly had some 'splainin' to do come fall.

 

Dunno. But I am unrepentant in maintaining that sometimes USDA has taken some liberties in interpretation of data dn that like in 2000 and 2004, sometimes it is to the benefit of price and a gift horse if you don't look it in the mouth.

 

Back to hard reality. It is unlikely that the new crop price is going to rally above the levels where previous sales were made. Best now to just let it play, see a set price and then look for a spring rally, or clear technical failure, to add.

 

 

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8 Replies
Honored Advisor

Re: corn disappearance

Well, they took the 1.8B carry down to 1.6B, farmers have 2 billion bushel of "on-farm" bin storage available, full pockets, spoiled and stubborn.  So, I think buyers will have to bid a little bit.  USDA got their carryout "cushion" built, so they have less incentive to fudge numbers to the negative side from here on out. 

 

Any trouble in the 2014 growing season and that cushsion can go away as easily as it was concocted, put $2 on the price of corn so fast it`d make your head swim...That is "$2"  NOT $3 or $4. JMHO

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Senior Advisor

Re: corn disappearance

BA  I think input expenses will unlock the bins. I'm getting writers cramp making out checks. Must have 90% of 2014 exp paid except crop insurance and custom hire.

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Senior Advisor

Re: corn disappearance

Farmers would rather cut their own throat than tell the truth about on-farm storage, but eventually the grain goes where the govenrment can count it.  It's hardly a surprise that some gets counted later than it used to when the storage situation was more subject to audit.  We know planted acre reports are misleading.

I guess you'll burn in hell for your continued belief that USDA is misleading purposely on reports.  I say again there is no evidence in all these years that such is the case.  But, I'm happy that a few conspiracy theory adherents exist - they give a little spice to the market for the rest to skim the cream off.

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Honored Advisor

Re: corn disappearance

FWIW, I don`t have anything to sell as far as grain, that`s why I can almost guarantee that it will go up because I`m always wrong Smiley Wink      I do think that USDA twerks the reports, kind of like a music conductor will motion to those in the back to "play louder" to make the music enjoyable for the audience. 

 

But me, I sell when I need the money and sometimes that forces you to make a sale when you don`t have the luxury of thinking that you`ll outsmart them.  "Ain`t never been a horse that`s never been rode or a cowboy that`s never been throwed"   "I`d rather be Lucky than smart"   "They can stay irrational longer than you can remain solvent"  If you live by those 3 sayings, you`ll survive. 

 

Right now, I`m just trying to talk the market up for next fall  Smiley Happy   `13 is in my rearview mirror. 

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Senior Contributor

Re: corn disappearance

Kraft, us farmers have had a good run here the last few years. I can't speak for others, but I've made some money and paid for my new combine in short order. There's a little cushion in the bank and the bins are locked till after planting from here on out. The only corn coming out the chute is what I grind to bump up the silage for calves in the lot. I don't see a long haul farmer selling anytime soon on account of bills to pay.
I know you think it's wrong, but all expenses on seed, chemical, and fertilizer were paid from my dirt before the new year. I might have a slow week and get a hair up my butt to pull the bins down, but it won't be to pay a current bill.
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Senior Advisor

Re: corn disappearance

What happens when corn is at or near $4 and the calendar reads August 1st. If the bins are still full, will the 2014 crop be sacrificed to win the battle on the 2013 crop or will the war already be over by then?
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Senior Contributor

Re: corn disappearance

Historically, corn is highest priced around the 1st of July. Usually have an idea of whether it's going up or down by then. 90% of my crop will be sold by then either way. As a disclaimer, Whatever I do, do the opposite and you'll probably be better off!
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Honored Advisor

Re: corn disappearance

Doesn't the corn first have to appear.............before it disappears?     Just asking........ Smiley Happy

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