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Advisor

"Dangerous levels" of corn production?

This morning, the Agriculture.com newswire reported that corn futures were expected to open higher "on global supply concerns." 

 

One of the issues is the "persistent dry, hot weather in Argentina, the world's second-largest corn producer," according to the report.

 

It continues: "Traders also say there is ongoing concern about whether U.S. farmers will plant enough acres in 2011 to keep supplies from dipping to dangerous levels. Ensuring enough acres will require relatively high prices to entice farmers."

 

There's the usual corn vs. beans "battle," and cotton is said to be bidding for acres. But, do you see an "acreage battle" being a legitimate concern for the market at this point? Anybody thinking of switching things up?

 

John

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Senior Contributor

Re: "Dangerous levels" of corn production?

I see it as more of a problem for the end user than the producers........ The market will get enough of what it needs..... OR...... It will make it so there is enough by slowing (or killing) demand....... The market place will rule....... It is how we use this tool that effects our own operations....FWIW...... p-oed

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Senior Contributor

Re: "Dangerous levels" of corn production?

If you can believe any of the seedcorn companies, there won't be any problem getting enough corn acres for next year.  With inverted markets, I highly doubt traders are concerned about ensuring enough acres.  What the market is telling us right now is that we're going to run out of grain this year, but we'll be fine for next year. 

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Frequent Contributor

Re: "Dangerous levels" of corn production?

 I’m going to cut my alfalfa acreage pretty severely, increase in wheat, and lease out more to row crops.  I’m on the Or. Ca. border, but I see a common theme over much of the west.

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Senior Advisor

Doesn't matter

We are short acres when you look at corn, soya, wheat, and cotton.........if S.A. trips up, which it looks like anything above average is shot to hell now, we will run carryout to levels that basically equal zero.........only way out of this is if N.A. grows one hellava crop, and I mean crazy good like 168 corn and 47 soya......

 

 

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Veteran Contributor

Re: "Dangerous levels" of corn production?

The government wasn't concerned when it paid much higher prices for all those CRP acres it accepted this year.

 

At these prices it is almost like playing monopoly, gosh there is a lot of money going in and out.  But honestly, we can raise a monster crop....but the current weather cycles do not favor those odds.  I am raising my targets on corn prices....and it starts with a eight...that should be good enough for my first sale of 2010 production.  Beans should start with a 15....not a good thing for the economy...but it is the cards we are dealt...and I will play my hand to win.  Many of the endusers are still in the money, hear Ray Jenkins say the average price they were paying for corn coming in in the last few weeks was still under four dollars...that has to hurt the guy selling...

 

Some where in here the economy can not take the price levels we are heading toward....but if we can keep fuel prices from going to 2008 levels, the game can be played longer than most think possible.  It is not food prices that will stop the economy cold, it is always energy.   Should invest in coal and electric utilities:  electric cars, geothermal, etc....all increasing the demand on the electric grid.

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Senior Contributor

Re: "Dangerous levels" of corn production?

The gov't hasn't been very concerned since they started mandating ethanol use, subsidizing ethanol, and then protecting it via tariffs from foreign competition.  If my math is correct, taking five billion bushels of corn and dividing it by 160 bushels per acre yields over 31 million acres of farm ground.  If we had those 31 millions available for other crops, the game would definitely be different.  We're continuing to hit all time high prices for beef, and it will continue as there will be once again less cows in 2011 than there were in 2010.  With feed prices where they are at, it has all but guaranteed no expansion for at least two to three years. 

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Veteran Contributor

Re: "Dangerous levels" of corn production?

Gored, the ethanol tariff arguement doesn't hold water.  Grassley was on CNBC the other morning.  When asked about the tariff, he explained it very well, even the interviewers were stopped cold.  The tariff is in place so the taxpayer doesn't have to pay blenders credit on imported ethanol.  BUT, the law allows for seven percent of ethanol usage to come into the country tariff free.  The MOST that has even been imported is one percent...which means another six percent could come in if there was a demand or price advantage with no tariff charged.  Currently, US ethanol is being bought from middle eastern countries over Brazil's ethanol.

Actually,, ethanol is a great 'reserve' program.  If there really was a food storage, grain could be diverted to food away from biofuels.  Problem arises that high energy prices are much more burdensome to the economy that higher food prices. 

 

I am as guilty as Gored, believing sound bites instead of finding the facts.  Hopefully, those with more knowledge than I will correct me when I do.

This is really an off the wall question, but with cotton prices so high, is the demand for wool also higher?

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Veteran Contributor

Re: Maybe 5.5m acres of corn in AR, don't amount to much

on exports because their use level is likely 75% of that.

 

Just don't see why this is news, because nothing there is non expected this year, regardless of corn weather.

 

Kind of a huge tax stigma there that favors beans.

 

If there was any REAL dough in AR corn, outfits like Los Grobo there ( perhaps the largest diviersified farm crop network on the planet ) would grow more corn, not beans and that is NOT the case.

 

 

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Frequent Contributor

Re: "Dangerous levels" of corn production?

Jec & Gored,  It's also not a tariff, per say, but a countervailing duty. What that means is it's meant to offset the blenders credit which all ethanol blended for motorfuel in the US eligible for.  It's my understanding it had to be done in this manner to maintain WTO compliance.  Would have been too logical to just exempt foreign ethanol from the blenders credit.  It's in place to protect US taxpayers from subsidising foreign ethanol.  The dispairity of the 2 came about when the blenders credit was lowered with out a corresponding lowering of the duty by congress.

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