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02-27-2018 09:42 AM
Well the "Unfortunately we have too" rally continues another month...in the kcwheat market.
January move was a reminder of July and with some heavy snow in places that raise winter wheat .... probably the same scenario. But feb 18 in the face of fundamental supply facts that are not going away (low acres, bad crop condition, dry winter, etc) ...... february seemed to stall....... which looks to me like a better trend upward than july.
This is not just a weather market for wheat...... it is a survival market for the commodity in its fight to stay above the unchartable gutter/cover crop status.
Crop condition ..... much worse that reported...... 9 lives is a statement based on the crop after it sprouts..... much of this crop has not reached that lofty level and It is hard to find an area this time that is "normal" in the states of ks and okla.
Acres ........ very low..... the swing away from wheat continues.. increases of continuous crop milo acres along with limited irrigation cotton continue to take wheat acres. Driving the states I personally think useda is a year behind in lowering wheat acres...if not more.. usda shows 46m planted and 37m harvested......and a 46 bpa to hold carry numbers....... of those acres are very questionable and probably closer to 38 planted but the real looser there is yield.... probably going to be hard to see much above 33 bushel for an average with irrigated acres reduced and going to cattle grazing as I type.
Economics......continue to push wheat acres for grain out of the picture even with a little better basis
Basis ............ improving .... but far too late to help this crop.
Cattle............ numbers are going up
There are far more producers world wide than buyers..... Control of speculative information is not held by the producers.
Beyond that loud voice of the international buyers.......... in the US...... the economics that increase wheat acres and production in KC wht are not there. But that loud voice controls speculative trade and the eternal optimism of usda will continue to limit actual production. Land prices may be a better indication of wheat production in the future than futures markets.
In short ....futures trade internationally may need to see a 20% reduction in acres to reach prices profitable in the US high cost market. That would be enough to wipe out US wheat production in HRWW.
Futures trade has lost its local function.... now serves the world wide market....
That is going to be hard to adjust to in our economic structure.... and much easier to adjust to in producing areas where private land ownership is restricted and costs can be controled on a national scale.
02-27-2018 11:42 AM
Is now top wheat producer...and I was told years
Ago, if Russia would get serious, they could really
Go to town...maybe they have now got serious.
And remember years ago how the Russian had
His shoe off, banging it on the desk that they would
Beat us,.......well maybe they have, without firing
I'm told the military college teaches ways to fight
And win without shooting....
Maybe the Russians read the memos
But SW what are we to raise in the high plains?
Dryland corn is a risk....and I don't see a profit,
Soybeans so so
Milo maybe...but soon where will we get rid of
Oats.... elevator will not take them
Sunflowers...maybe but have to haul to be
Corner of state.
And numbers don't look good
Dry beans, nobody has raised around here.
Alfalfa...maybe, but shipping, and no rain ?
I'm looking into mushrooms....no not the good ones"
And hydroponics...but how many acres under glass
And can an old man in key overalls compete with
South America ?
And the most spooky idea
Tesla has a battery powered semi....cost about
$225,000 or maybe a hair more...300 to 400
Mile range....and level "5" automation is about
I have been rubbing my bald head about the
Hub bud in the techie forums about level 5,
But read article on it last night...as HAL said
Business plans already reviewed by trans company's
That show payoff in 18 to 24 months...and even
Faster no $45,000 a year for driver !!
02-27-2018 01:20 PM
I watched a tractor fertilizing dry land corn stubble to go back to row crop yesterday in this area. That is an extreme change from the wheat rotation.... the benefits if the notil rotation is all based on wheat stubble and its snow capturing benefit...and the year of fallow that precedes the wheat year.... So that is two crops in 3 years and one of those is wheat that is a guaranteed profit loss.
Now it is 1 row crop (corn or milo) every three years....... it can't make enough return to the land asset. So it's grass, weeds, or abandonment. eventually. But first it will go back to a continuous row crop of 3 crops in three years with low yield and crop insurance claims. Then the eventual outcome.. described as grass and weeds etc. .......without profitable wheat and living in an ever increasing tech driven high cost society..........I don't see any other options for US.
Now elcheapo explain to me why you hate the only guy who has stepped up and said we need to protect our economy by working for trade deals that favor our economic future????. We cannot survive being a high cost producer on the low priced world wheat trade. Someone who is honest enough to point that out may have some flaws but that isn't one of them....... he is absolutely right. We have legislated a very expensive economy and traded against our profitability. Our gluten wheat will go the same way as coal...... even though the demise of coal is a lie because the replacement energy has not been created yet...wheat is probably on the way out.
I would like to see another possibility but so far the economics are not there....... We are reduced to looking for a crop failure in russia and australia or argentina. Fat chance. I don't think a crop failure in the US is going to help as much as we want it too.
02-28-2018 03:44 AM
Problem with most crop failures in the US is they are usually a west half first deal.
Second a short crop here is painful for many but not the devastating thing it is out your way.
Better crop insurance here and cost to put the crop in is not much different.
Biggest problem I see is lack of fences to contain cattle on those Fringe go back acres.
Also would be a shortage of cowboys.
02-28-2018 08:30 AM - edited 02-28-2018 08:34 AM
My discussion got too much into the economic trap the west has one foot in, and not enough on the markets...
Senior Sidetrack.......(in the voice of Sylvester the Cat)
It looks like a blowout market...... based on a drought in wheat........ although February was a little soft on the uptake compared to July. Weather markets tend to end like the one in July so I am avoiding the risk and according to the usedxperts with union job security,we are in lofty prices for wheat. We the rich tax dodgers who would like to pay a few taxes.
Besides this market for another day or two is headed the producers direction. Good time to have some in the ground and not in the market. Other commodities, like corn are going to recieve benefit and be less volatile. Im gonna look there or at feeder cattle for a little futures investment. Both will be affected by the wreck in wheat. Far less cattle on wheat this february in oklahoma than even in 2011. Cattle were observed last week in northern oklahoma on cotton stubble(there is still discussion on whether that was intended or not--unbelieveable). ..... but very few on wheat.
Those pounds not gained on wheat will be made up in the feedlot with corn.
The answer is close...... March will be the Lion or the Lamb in a week..... either a 15 inches of snow or arizona heat driven by high wind...if the snow or rain precede the guaranteed wind will set the wheat market $1 down.
Small crop is guaranteed west of the patomic. But production does not control the media.
Basis is already correcting at -45-60 instead of the -100 or more we had --- a good sign.
My guess is we are in the $2.00+ volatility range now in wheat
So questions arise....now
is $7 wheat a good hedging point for 2019?........ probably and that might keep acres at current levels.
2018? .................. yes if you have some that will make...price a little. But the window may slam shut quicky in a march wind.
I am looking at setting a 10K of 2019 kc wheat sell at $7.14 and leave it open for a while with a 20K risk if it goes to 9.14
A wonderful thought as a producer.
And offsetting that with a 10K buy of 2018 corn at $3.85 dec 18 figuring for a fill on volatility.
With my parachute on for a bail out as the market changes.
What do you think? Do we have the volatility to get that done and see a profit on both in time?
02-28-2018 08:46 AM
Maybe they have a secret - ''' Broad Band '' or '''' Infrastructure '''' or ''' Ice Free ''' shipping ports or aahh - all these things putin them in the lead ? ?
Humor is a good ''' Antidote ''' I've '' herd '' - Although I know it's far from humorous ---
02-28-2018 08:51 AM
elcheapo look at the land sales west of you in nw ks and eastern coloradolll
Farmland that sells has a wheat base and a corn base...... and most 30bu wheat and lots have 80+ bu corn yield.
The crop takes two years to make out there either way. Why not just plant corn/fallow/corn... with an equal price.
Or corn/corn when the probe has a 4 ft profile .
If central Kansas has gone to beans and cotton instead of wheat...and that looks like a big shift.driving through...... I went looking last fall.....because the bean basis in wichita changed from normal to "we don't need it that much".
There are options... and changes do happen..
I think usda runs is behind on their acre guessing....... those big corn acres come from somewhere. And far more from wheat acres than noted in the north and southern high plains.
Wheat has been in the tank a long time.
02-28-2018 10:21 AM
Not as I do....I see wheat is up almost 25 cents
I should have been in the market..
But as one source as said, the near term
Market is really day traders....so will
The market end in the red ????
02-28-2018 10:49 AM
But SW what are we to raise in the high plains? Elcheapo, what about raising Winter rye , rye grain?
That is the main work-horse for cover crops here in the mid-west and other places too. I would think it would grow just as good as wheat, maybe more Winter hardy than wheat. A few years back I paid $22 for a bag of rye grain, now around $13. Cover crops are increasing around here and someone has to grow the seed.