Swelling Feedgrain Stocks Next Year

[errolanderson]

Feedgrain prices may come under
considerable price pressure over the
next few months. A number of factors
appear merging together to trigger
possible price pressure.

1. Spring is late and Cdn wheat quality
may be threatened.

2. Crude oil heading to $80 per barrel
or lower . . . ethanol margins will be
hit which represent 35% of U.S. corn
usuage.

3. The American Midwest is now getting
too much rain which means a huge corn
crop this year is possible.

4. Cattle feeding losses are intolerable
and will impact feedlot purchasing power
ahead.

Suspect in huge recovery in U.S. corn
ending stocks over the next 12 months.
Cash corn prices to $4.50/bu or lower?

an opinion for what it is worth . . . .

[kato]

Suites me just fine.

[rkaiser]

Wonderful - positive message for anyone involved in Agriculture. Even the corn and grain guys if they think about it from a whole agricultural industry level.

[errolanderson]

rkaiser . . . you are so right. You can't
continue to bite the hand that feeds you.

This would be a healthy correction.

[blackjack]

errol...what is your guess on the August grass cattle price wise?

[errolanderson]

blackjack . . . totally unqualified to
answer your question, but old enough to
remember past history.

This past late winter sell-off is
similar to 1996. If memory is right,
there was a late winter cattle wreck and
by summer, the grass and fed markets
were boomin. This current market has
similarities.

This current weakness is beef demand-
driven, but moisture conditions are
improving stateside and this should be
supportive toward the U.S. feeder
market.

The Cdn dollar is also in a downtrend
which should help out basis levels and
U.S. corn prices (IMO) will ultimately
be lower in the long-term. U.S. buyer
demand for Cdn cattle may heat up within
a few weeks.

Personally feel grass market should be
supported into the mid/late summer
market. But grain markets are vulnerable
to further losses.

an opinion to throw out with the wash .
. . .

[blackjack]

Thanks errol...that's my gut feelings as well...I hope the gut doesn't cause me to have ulcers...lol