Re: figured I would stir the pot since its Friday......and a good read.......
Time, don't tell me your memory is failing. '07-'08 had nothing to do with corn. Corn was in good supply.. Wheat badsically carried the whole market. As soon as people understood corn peeled off. Wheat was in a downward supply trend and fewer acres and the market ingnored it. Believe me, I tried to sound the alarm for several years to absolutely no avail. And YET, wheat didn't shoot up until December when the facts were in quite early. Yes, the market is a lafgging indicator! THIS YEAR WILL PROVE IT BEYOND A SHADOW OF A DOUBT IN MY OPINION. (Didn't mean to have caps,but, so be it)
Now, thingk of global tightness in wheat, corn AND soy all at the same time! Hmmmm ???
MT you are on. Only not just any steak dinner, Capital Grill in Downtown Chicago and with a $300 bottle of wine. (Pretty confident I'll win this one.) It does seem your football team plays alot like your basketball team. Never quite finishes the job :-)...
Am I short? Really depends on if you count production as being long corn. That is how we do it. So, before we sell anything, we would be long many 100,000's of bushels. So, being 50% the 2013 corn crop, I am still long 250,000 corn the way we look at it. It will all be sold before the end of this week, if the market pulls our triggers. ($6.50 x 200 bu = 50% ROE only 3x our goal). (Yes, I know about production risk. It requires that we carefully choose which tools to use so that margin is not a worry.) Many others would think that having sold 100% of the 2012 crop would make us short indeed. (Basis is not fixed so don't think I'm an idiot. Never store a short crop UNHEDGED....always fix the basis later at delivery in a short crop.)
170 or higher is the way the math works. The odds are in my favor is all and the math is irrefuteable, we are overdue for a big corn crop. The technology is much better and the weather is variable, not worse, just variable.
Palouse... I'll just submit to your views of the wheat market. I understand its timing pretty well, but don't care about the S&D of it. Like you, myself, and many others saw these new price levels coming back in 2005. 2008 in corn was all about a FUTURE shortage. And, now we have one despite the market getting us to plant 15,000,000 more acres than a decade ago. So, the market did lead not LAG, at least in corn and soy that I understand. Wheat you might be right.
We both agree that market mechanism through the CME is terribly alligned to screw the producer. But, even in their monopoly there are ways to take advanage of what I call "Idiot Momentum Investers". We just love to harvest speculators. Their supreme arrogance is their weakness. Farmers have better knowledge and can beat them at their game. But only if we have the discipline to use our advantage. (Meaning you have to get bearish when THEY are all bullish!)
In our view, farmers should just know that specs own 2 Bil bu of beans and at some point they well sell them. The inverse will vanish. Basis will get better.
I can find better ways to literally piss away $300...........how about a Makers 46 on the 96th in the Hancock.........
Capital Grill is alright, but have had better...........Mortons, one of the originals, gorgonzola bone in ribeye, wow.............
Time, you are usually humble..........why do you think we are owed a record crop...........yes we have great technology these days...........that said when all the low fruit is plucked.........it then becomes a question of ROI..........weather, weather, weather can make a good plan look bad, and can make good technology equal zero ROI...........
not sure if you saw this from earlier this year.........
170 is doable in a "perfect year" on less acres..........but that likely lowers overall production because of lowered acres..........IE, peak corn..........going to be hard to crawl over 13B and 14B..........and I bet the USDA thinks we knock 15B like its no big deal next year.........when was the last time everyone had a "perfect year"...........
I agree that the market did FINALLY get the corn acres though under a steady drumbeat of the obvious. However, getting there was a matter of nail biting for a few years as we could see the plants going up steadily, we knew the mandates but, we still had a scare ramping up.
I can't fathom not caring about the S&D of any crop that is part of the modern grain complex. It's within those trends that I can find the opportunity. I have to ignore the market's lack of reaction in most of those cases. Right now wheat is out of historical balance w/ corn and soy. Returning to '07-'08 conditions and adding wheat and soy to the precariousness it may very well be that wheat returns to it's historical relationship. If so, the market has no frikken idea right now - none.
I don't always understand your analysis but, I respect it. My experience indicates there's definitely other approaches to capitalizing on the apparent disconnect between 'the market' and the outcomes that will be dictated by the physical market.
I can't fathom not caring about the S&D of any crop that is part of the modern grain complex. It's within those trends that I can find the opportunity."
Thank you for clearly stating why I ALWAYS read the words you write and respect them. Yes, you can find value there. I can only find value in how the market reacts to new S&D data. Meaning it is about psychology and not the actual S&D. But again, you are about the best at it in the business, so thanks for sharing. (Which of course means that I might use your viewpoint as a selling trigger on a failure, which is a compliment, not a criticism.)
Is the price for new crop wheat really out of line? I don't think so. Most surveys show wheat acreage up 3 to 6% because it is far more profitable than soybeans. So, isn't the market already fixing the wheat supply concerns? You can see how I can just get confused.
the acreage prediction is just a little early. With moisture in the upper plains this next three weeks it may come true.
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