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hardnox
Advisor

could end with a whimper

Or not. I'm not trying to raise anyone's anxiety level just thinking out loud. I imagine that if anything people who are inclined to be bullish will run to find something bullish to confirm their opinions anyway.

 

The tragic outcome whereby we raise a pretty good crop and had some pretty good marketing opportunities might actually come to pass.

 

Some of the more bullish assertions, particularly about beans, are being challenged mildly. Believe it or not that usually happens and tends to mess with your mind because you want to believe it and probably tend to want to believe that the real facts are even more so. The market's reaction to that messes with you further because it induces regret over previous sales, and market action drives commentary- opinions trend to be more bullish as the markets seems to prove the point.

 

That's why a plan and discipline generally outperform over time.

 

We're now in the weather model roullette phase, to be followed by the real weather phase. Anybody's guess from here although models are less than fully cooperative this morning.

 

Although my best guess is that there will be more weather concerns to come, maybe sooner than later. The question is when and from what price.

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15 Replies
hardnox
Advisor

Re: could end with a whimper

Saw the statement that yesterday soymeal volume on the Dalian Exchange exceeded annual US production.

 

I suppose that can be construed as bullish of bearish depending on your view.

 

But I tend to be a little suspicious of everything we think about China ever since The Big Whiff* on China in '95-6, probably the biggest analytical fail in modern history.

 

Granted, it is no doubt a lot more transparent now than then but still don't think we understand it all.

 

* the Clinton Adminstration and a bipartisan congressional majority covered that booboo by backing away from F2F and doubling up farm payments in '98.

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Jim Meade / Iowa City
Senior Advisor

Re: could end with a whimper

The spin I'm hearing (from two analysts) is that this year is analogous (whatever that means) to 2009 when beans dropped a couple of dollars in a couple of weeks.  Or so.  That's how it's being remembered - I haven't bother to check the fact.s, that would be too much work and not near as much fun.  🙂

 

 

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hardnox
Advisor

Re: could end with a whimper

Could certainly happen.

 

But my best bet is that we'll see a period that isn't particularly satisfying for either bulls or bears.

 

I doubt that funds will give up unless the reality of a good crop beats them soundly about the head and shoulders. But barring anything outright bullish, their capacity to move the market higher is limited by being very long.

 

A move from net short to net long can create a pretty good move but it gets tougher from there.

 

Funds giveth and they taketh away in equal measure. It just feels bad when they're heavily short and the bullish shock hasn't arrived yet.

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BA Deere
Honored Advisor

Re: could end with a whimper

I still say that blue funk we were in last winter/early spring "there was no reason for prices to be that low" just a reverse to what the bears are saying now to CYA about "no reason for rallies that are happening".  There was no weather premium and there needed to be, this is a "garden spot" and after yesterday, some water standing in low areas, some rolling fields have "John Deere corn" and many of those are farmers that do everything right, like having a eye-wash named outfit testing their soil and tissue sampling.  Whatever the weather was so great to begin with has taken some tings off the cream around here.

 

I think the demand was stronger than many predicted and buyers being a little greedy magnified that a little and a few too many farmers shook loose too soon and were happy selling new crop beans at $8.75.  It may be a big crop coming, but it won`t be homeless.

 

Then the macro mess, interest rates, the Dollar, Breixt, China ect.   The answer will have to be a return to QE or a depression.  the trouble is Yellan a member of a certain party doesn`t want to confirm the depths of the mess to aid in the election of a certain presumptive nominee of a certain other political party.   And that could equate to another commodity boom.

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hardnox
Advisor

Re: could end with a whimper

Major commodity booms come every 30 years or so.

 

There are little echo booms in between and bulls in various markets periodically.

 

If I was going to worry about something on the macro side it would be the opposite- enormous amounts of ammo spent and no victory against deflation yet.

 

At any rate, for now this is a fundamental market with weather at the fore. If some form of inflationary policy is to be applied it is only after going close enough to the cliff to scare the dickens out of everybody, which means in the timeframe we're dealing with the macro risk is bearish.

 

Best bet- China and the EU (the place a problem is most likely to come from) and the US kick the can a few months further down the road.

 

But anyway, that's not my primary focus.

 

BTW, the best cure for John Deere corn is hot and dry for a while. While the crop condition reporting system is far from perfect I'm comfortable believing that the current high ratings indicate no imminent large scale problems.

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Hobbyfarmer
Honored Advisor

Re: could end with a whimper

John Deere corn makes more than prevent plant every time. This year PP is insignificant, unlike the last few years.

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swohio
Contributor

Re: could end with a whimper

Farmed for over 30 years and never had an elevator call me looking for corn. Not surprised, my operation is a one part time person affair. Cargill called this morning looking especially for old crop and wanted me to book some new crop sales. Spot price &4.56. Mar 2017 $4.50
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elcheapo
Veteran Advisor

Re: could end with a whimper

swohio the Inca would have considered that a sign.

Local bid....corn 3.66. New crop 3.90
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BA Deere
Honored Advisor

Re: could end with a whimper

Swohio, yeah them guys are your best friend   Smiley Very Happy

 

But with the QE deal Nox, the banks sat on the last QE money $80billion/month...$ Trillion/yr.  Now, what woulda happened if that money made it to mainstreet?   That money ended up in the stock market, that`s why all the bad news the last 8 yrs has been shugged off, if you`ve been hooked up with Wallstreet, there`s been a "wealth effect" but nary a crumb falls off the master`s plate for us mutts.  But if you`re on the fed board and job numbers come in low, those giving up rising, pulling every rabbit out to keep out of a recession, congress not doing anything monetay policy-wise...what do you do?  sit and watch it go into a depression or fire up the QE machinery and maybe put simulation "strings" on this money?

 

Hobby, there isn`t talk of over 2 billion bu carryover and 168 nat yield like back when the seed boxes were being delivered in March.  We could get there, who knows but not the level of certainty sitting in the Market-to-Market chair before it was planted.

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