Corn

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silverbleve
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Corn

Hey Art, if you are out there many of us have been watching corn with great interest, including the Turd, from what I have seen it looks even more volatile than Silver! With inflation however it seems that taking out a December futures contract on Corn is a pretty safe bet, food prices are going up right?

I'm talking about holding for the long run of course.

Edited by admin on 11/08/2014 - 05:18
silverbleve
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Can't figure out the edit function yet,

But I wanted to add it is interesting to draw parallels between things like corn and crude to silver, why do these things seem married even more than gold and silver?

Iowegian
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Here's a Bull!

Check out Larry Edelson's forecasts:

http://www.uncommonwisdomdaily.com/15-loaf-of-bread-and-more-12123

Read this a few days ago.  I really doubt if $36 corn can happen without a currency collapse.  Not sure who the buyer(s) would be.

IO

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tmosley
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Why does a reply need a subject field?

Iowegian wrote:

Check out Larry Edelson's forecasts:

http://www.uncommonwisdomdaily.com/15-loaf-of-bread-and-more-12123

Read this a few days ago.  I really doubt if $36 corn can happen without a currency collapse.  Not sure who the buyer(s) would be.

IO

Speculators, panicked government officials, national granaries seem like likely buyers.

Iowegian
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Good point on both accounts!

Both the subject matter & likely buyers.

Not likely going to be ethanol producers if Oil is projected to be only $180 or so, nor many meat producers will be around at that point.

Beans for everybody.

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Sterling
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Beans for everybody?

Stock up on the air freshener :)

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Art Lomax
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CORN

SilverBleve,

Yes, I believe food inflation  just getting started, but not sure corn is the way to play this, and not a safe bet. Like you said,

its just as volatile as silver, especially now during the growing season. No one knows how many acres got planted or what the summer weather has in store.   Corn is also tied to the energy complex so crude prices will also affect the corn.

Action  in Congress today scared the market today with threat of repeal of ethanol subsidy. So December corn may very well have put in the highs for awhile, and probably takes a weather scare later this summer to take it higher. Good growing conditions and this market trends lower. Chinese demand is also key to this market. These higher prices are rationing the corn supply, and wheat will be substituted as well, stretching supplies until harvest.

If July corn doesn't make new highs soon, I will be stepping aside from this market for awhile.

silverbleve
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Art I have been watching your

Art I have been watching your commentary very closely and want to thank you for your insight and shining light on grains. I understand how corn is tied to the price of oil, most fertilizers are based on petrol and it costs fuel to ship the finished product /etc. I still do not feel knowledgeable enough about grains to trade them but still am fascinated by the correlation between food and real inflation. If inflation is the main market mover food prices will continue to go up, and if I could leverage some function of that inflation as we do with the PM's here. Maybe just thinking out loud but thats one reason I'm glad we have a grain section of Turd's site here, because it all works together.

Art Lomax
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Corn

Silver,

Don't get me wrong, I am bullish grains long term for same reasons as I am PM's.

I just think corn is a market to trade right now, not  buy and hold. Too may unknowns.

Sometime later this summer, traders will get a better handle on acres and yields, and can determine the crop size better. Once supply is known, then we can better trade the demand fundamentals.

BlackHawk
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Art, You're the Corn Go-To Guy

Hello Art

I've been buying CORN like I used to buy AGQ, in small lots as it dips lower. I have to quit buying and sell some soon since I am a little over allocated in freaking CORN now.

Hey IOWEGIAN, that's the name of the local paper in Centerville. I used to loaf on "the largest square in the country" as a one day per week escape from the "the biggest bison herd" in the country, located in Promise City. I worked there for about a year. How fun and dangerous. Bison are as unpredictable as silver price movements.

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Wheat

Art do you think Wheat is getting ready for an upswing?

D E
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CORN

Tough day in the pits now, as we're just a few strands of corn silk above limit down. Have a bid in for 1 at limit down; highly confident I'll get hit.  Any bounces I'll use to lighten up as day trades and put some house money back in the jar.  Who knows, I might need more steers.

Sometimes it makes sense to just sit back and watch the corn grow; could be one of those times, especially for December--we'll have plenty of data coming in over the summer to consider.  Patience is a virtue, and a learned virtue at that. 

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rice?

I think all commodities will be selling off for awhile and then a big bounce once stimulus is reached again. I am kicking myself for getting rid of my wheat put when wheat was at 7.50, should of held but drought conditions had me scared. Jim Rogers thinks rice in the long term will rise because it hasn't had that rise like wheat and corn etc. I like wheat thought just because it isn't so volatile as as corn like Art says.

Art what are your long term thoughts on wheat? I heard on the farm report that global wheat production is up 3% but alot of drought conditions are yet to be resolved?

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YFCGUY
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I agree,  $36 seem too wild

I agree,  $36 seem too wild to even consider.  But for years I remember farmers feeling good about selling corn over $3.5/bu.  Just hauled corn into a turkey producer yesterday for $8.40/bu.    Sold some to a local Poet ethanol plant for about the same today.  We still have corn in the bins to sell.   Much of this years crop was planted late in our nw ohio area and I expect to see $8-10 by fall.  Would be surprised if it were not.

Iowegian
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BlackHawk

BlackHawk wrote:

Hey IOWEGIAN, that's the name of the local paper in Centerville. I used to loaf on "the largest square in the country" as a one day per week escape from the "the biggest bison herd" in the country, located in Promise City. I worked there for about a year. How fun and dangerous. Bison are as unpredictable as silver price movements.

Yes - I am from the Sioux City area in the NW corner of Iowa.  I starting using the name following a ski trip with fellow Iowans to Summit, CO, when I dubbed our group as Iowegians.  I was not aware of the Centerville newspaper at the time, but someone alerted me to it a couple of years ago.  Sounds like you are from a County in the greatest State in the Union that would include Waterloo?  I have been to that area on a number of occasions.  Used to be a bank examiner and one of my fellow workers was from Waterloo.  We spent quite a bit of time in nearby Clear Lake.  Anyways - greetings from a fellow Iowegian!

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Iowegian
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RE: $36 is too wild

YFCGUY wrote:

I agree,  $36 seem too wild to even consider.  But for years I remember farmers feeling good about selling corn over $3.5/bu.  Just hauled corn into a turkey producer yesterday for $8.40/bu.    Sold some to a local Poet ethanol plant for about the same today.  We still have corn in the bins to sell.   Much of this years crop was planted late in our nw ohio area and I expect to see $8-10 by fall.  Would be surprised if it were not.

I work in a smaller community bank as well as own land that is custom farmed with a corn/bean rotation.  In the past I have attended numerous marketing meetings where grain farmers were basically trained to forward sell their corn.  Moreover, the government crop insurance plan is designed for forward selling of grain.  For years the price of corn floundered in the $2.50 area.   Whenever the price spiked trained farmers would indeed sell their crop forward for two years or so.

As a banker, I cannot adequately describe the angst that some of my agriculture loan customers are experiencing right now as I have advanced huge amounts of money to cover margin calls for corn sold in the $3 to $4 range.  Very painful to wait that out, pay interest for all the days the loan is outstanding, and then receive your paltry approximate $3.50/BU for corn while many others are receiving amounts in the $6 range.  I anticipate that this is a game-changer.  If the price spiked for one year and went back down as it did following 2008, I would not have this sentiment.  But, the price in not going back to the former levels IMO.  As an active farmer I can tell you that I am "UNHEDGED" in 2011.  I expect to remain that way going forward.  I also expect a lot of other farmers will be doing the same.  Many of my agricultural customers are doing just that.  I wonder if the market fully realizes that there are A LOT of us corn/bean producers with the capability to store grain rather than deliver it and will to do just that?  Frankly, I would rather have corn/beans than dollars in this economy and I suspect there are lot of others who feel the same way.

I agree.  $36/BU sounds like an upward chart number that was just subjectively targeted for some reason.  I also agree that corn that high will make the overall farm economy non-functional.  However, I do not feel that the long term upward trend is over by any means.

IO

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Art Lomax
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Vypeuro, Agree wheat in a

Vypeuro,

Agree wheat in a trading range and close to a buying opportunity, March lows should hold. It is harvest

so I would expect a lot of selling on 30-40c rallies. Not sure I want to get real bullish wheat here.

D E,

this is good ... "sit back and watch the corn grow".  Agree lots of data to process during the growing season.

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I'm also an Iowa grain

I'm also an Iowa grain farmer.  Many producers (including myself) have short memories and remember the massive rally in corn prices last fall.  My impression of hedging 2011 grains is that a lot of farmers were forward priced out of that 2010 rally, and do not want to miss something like that again.  It sucks to sell $4.50 corn (for a good profit I might add) while you see cash corn selling for significantly higher prices.  That would be extra cash going straight to the bottom line.

My intention with the 2011 crop is to have a good portion of it priced if we get a weather rally this summer.  Today's price action not withstanding, we still need a crop and there still is tightness in ending stocks.  IF there is a perception of a serious production problem in the corn market, and we get a strong weather rally this summer, I'll be booking some of my production for this year.  After last year, I don't know anyone confident enough to book any significant production out more than one season.  Besides lost opportunity for profit, the cost of production is also rising rapidly.

As an aside, the enormous amounts of cash being generated in agriculture today are the same metrics in the metals shares.  Farmers know the wealth being created, the metals share prices aren't currently reflecting the commiserate bullish fundamentals for their business.  I'm happy to have the opportunity to diversify some equity into the mining sector.

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What's your thought on

What's your thought on beans?

We also haul bulk soybean oil for Cargill and Bunge to food producers in the midwest and out east. Whats been going lately with oil shortages and plants running very low on beans to crush supports the idea that farmers are going to sit and wait on pricing.   I feel, at least in our area, that the situation is going to be very tight with both corn and beans this fall especially if we have a dry Aug.  How did planting go in your area?  

Doc Scurlock
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Producers seem to be

Producers seem to be marketing soybeans in a similar fashion to corn.  Crops in central Iowa look really good (JINX).   I do know that the local grain elevators are going to be fairly low on inventory come September.  The midwest needs a crop.

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The End of Ethanol Subsidies?

MSNBC is reporting that the Senate has voted 73 to 27 to end ethanol subsidies.

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