jeffk3510
Posts: 4132
Joined: 12/3/2007
From: Kansas
Status: offline
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ORIGINAL: Chickenboy
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ORIGINAL: jeffk3510
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ORIGINAL: Chickenboy
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ORIGINAL: jeffk3510
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ORIGINAL: Chickenboy
Hey Jeff,
Why are July 2012 corn futures holding relatively steady whilest Soybean futures have gotten pummeled lately? For animal feed, they're in lockstep, so I can't rationalize this divergence with animal feed precursors to the Chicoms. Lots of questions about Argentina's crop this year in Soy-no guarantees there.
Is this ethanol production that's backstopping the corn futures? I know ~40% of the crop is going for primary ethanol production (and DDGs used in animal feed subsequently), but is that enough to explain the difference?
Seems like Belarus, Ukraine and Russia will have a decent wheat crop this year, neh? What's the skinny on the Canadians, eh? That'll probably deflate some of the wheat action further.
Ha. Maybe I shouldn't have mentioned I am a broker… so that I don't have to answer questions no one has the answers to...
Your questions about ysb vs corn this year is a mystery in everyone’s book. I've seen reports that the stocks to use ratio on ysb could be NEGATIVE this year... now how the hell that equates to the board being down $2 since September is beyond my knowledge.
The uncertainty in these outside markets has just crushed grain prices as of late. That mixed with harvest pressure. Yes the crop (corn/ysb) will be down substantially going into 2012, but S&D seem to be out of the picture for commodities now a day. They don't seem to have anything to do with it. We're starting to hear of better yields on corn as harvest moves itself north in addition to the outside markets, thus resulting in the funds selling their long positions, taking their profits, and running. However... I don't buy the traders following S&D... as noted above.
One this that is for damn sure is corn vs wheat. If corn is $6.50, wheat won’t be $7.50… one will have to move. Either corn down or wheat up… the market always seems to correct itself. Over what time frame… ehhh
You also are looking at just futures price… the cash price is a totally different animal. I am trading corn a $1 over the board for local cash prices, when historically it is -20c or so….THAT is how poor the crop is in this area and how short the fall crop is. For example.. there is a carry in the corn market futures.. but about a month ago cash corn was actually an inverse out to the Dec11....meaning sport corn was a HOT commodity
Argentina- Beans will be a known commodity come Mayish timeframe and then we will have an idea of direction possibly.
I would say until all of the outside markets and financials pull their head outa their rears, things will be extremely volatile. That mixed with harvest pressure will probably keep things in check. So... in Jan when we're at $10 corn and $15 beans, you can say, damn Jeff, you were wrong as all hell.
I do more commercial brokerage than actual market analysis (charts yadayada)...buy commodity x from coop, sell it to end-user x for x profit. We track local basis (difference between cash and futures price) and just trade that, thus lower our risk SUBSTANTIALLY……..10 to .20 margin depending on how long the hold the position for and how ahead of the game you are. You do that on 10m bushels... my company can make a nice little chunk. This year we won't even come close to those numbers on volume because of the poor crop in both the summer and currently this fall.
One this is for sure.. .we're buying all of the good quality corn and milo we can get our hands on... at any basis level... sitting on it and dumping into the feedlots and ethanol plants in Central Kansas....the margins we're making and are going to make would blow your mind....thats the kind of work I do. Take a position that will work in our favor and move it to x... for x margin.
I also trade local farmers accounts. Soo... Mr. Krehbiel.. what do you think corn will do today... Well, Frank, call me at 1:15 and I will tell you what it DID...
Pretty sure that $7.50-$7.75 will be the top price for corn here in the US. Beyond that, it just doesn't pay to put it through an animal. Thus, yellow dent #2-solely propogated for further feed processing for animal feed-won't be used for animal feed here as much. The poultry margins are negative now, dairy has sucked wind for years (only recently marginally profitable), pork margins held up by trade constraints applied by the chicoms to pork. Why 12% of our poultry exports oughta be tied up by Chinese retribution for Obama's tire tarriffs (and the chicom lash back at poultry) whilest pork products slide on by is beyond me.
Some poultry producers were losing 0.07-0.17/lb. on everything they produced. For mid-sized poultry companies, that translated to $2-4 million / week. Input costs are a major part of that lack of profitability. Feed is ~70% of input costs for poultry, so there you have it. There are more poultry producers in dire straits.
Corn over $7.50 for an extended time will kill corn's unsubsidized animal agricultural market. And if *we* can't afford pay $7.50 / bushel, I doubt that the chicoms can make it work for long either. Of course, market distortions and trade sanctions throw a spanner in that logic before long.
Alright. Nuff said. Jeff-I'll be back in January to tell you, "damn, Jeff-you were wrong as hell!"
Agreed. At the levels of corn and beans here a month or so ago rationing was talked about heavily.. and you're seeing the result... Ethanol plants would just SHUTDOWN if corn hit the levels some traders thought we would see... but hey, when we were at $4 corn, I thought the guys that said we would see $7 corn were nuts.
On poultry... we do business out of NE Oklahoma and SE Kansas into the Springdale area for poultry HUGE Tyson area... lots of poultry... the crop was so bad in that area this year... and the aflotoxin levels in corn were so high... 2 to 300 parts per million that that plants refused it because it kills poultry anything over 20 parts per million... and dairy cattle too. Crazy year it has been.. fun though!
Are you large or small animal vet? Or both..?
Poultry exclusive.
Ahh-- I am putting the name connection together now... at some point in the future when we move out of the city to the country when the kid(s) are older and my wife won't be so lonely by herself, I have always told myself I want chickens and such... in addition to our other hobbies. 15 quail at the farm last night, do you specialize in that?
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Life is tough. The sooner you realize that, the easier it will be.
Currently chasing three kids around the Midwest.
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