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...[:D]
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...[:D]
Life is tough. The sooner you realize that, the easier it will be.
