Are highest prices behind us?

[HappyFarmer]

WOW, how bad can it get, stock markets down hard last two day, see indian ruppee is up over 57 ruppees for us dollar today, european importers are paying as much as 6% more in the last month for imports just on there currency, probably 8 to 9 more seeeded acres in canada than the last 2 years, sounds russia, ukraine, eruope have good crop. Sounds like a overall ok crop so farm in canada. No doubt some problem areas in canada for some guys which isn't good but nice to see some areas who have had a rough free years get some nice crops.Prices could really start to turn for the worse soon i think. Seed what happens in the us in the next month!

[HappyFarmer]

Sorry meant 8 to 9 more million seeded acres from last 2 years.

[charliep]

Canola won't be up 8 to 9 million acres. Will be smarter Wednesday (or at least have a number to argue about) with the release of Statscan estimates. Likely to be in the 20 to 22 million acre range (story to be told) versus 18.9 last year and 16.8 in 2011/12. USDA will follow up with their seeded acreage estimates (spring seeded crops) June 29.

Questions that I would ask?

1) Where are prices relative to history? If they are at the high end of the scale, how long have they stayed there in the past?

2) Summer is always the weather silly season with the market reacting to almost every forecast and percieved impact on production. The world oilseed situation is particularly tight and will react. Grain not so much so (mostly winter in the N. Hemisphere so this story has been told).

3) The demand side for all crops. World financial side has been beat to death here but will impact consumption. $80/barrel oil is impacting ethanol consumption south of us. Reduced livestock numbers. Substitution between crops/crop products (oilseed complex).

I think there is more likelihood prices will go lower than higher but a still a long ways from harvest. Perhaps why I like to talk about managing risk/capturing opportunities versus forecasting price/believing I can pick the high price.

[wd9]

Charlie, do you know the correlation
between a country buying food and the
value we get? A country can't stop buying,
maybe delay, but if supply is short, they
gotta come knocking. Or do countries just
not buy?

[charliep]

On canola, I would pay very close attention to the inverse and basis levels. Anyone carrying canola unpriced should be prepared for a $1 to $1.50 drop in prices as the market switches from old crop to new crop pricing. If you want to carry old crop unpriced into the fall, I would look at selling cash and being long November futures or buy calls. Not recommending - I would sell at a disciplined spot, deposit the money and be happy.

Not suggesting there is a lot of canola left by the way. You can follow CGC numbers just like me.

[URL="http://www.grainscanada.gc.ca/statistics-statistiques/gsw-shg/2011-12/week-semaine-46/gsw-shg-01-eng.htm"]week 46[/URL]

[charliep]

wd9

Which country and which commodity? Some countries will slow purchases based on their ability to pay but not all. My concerns even for less price sensitive markets is the ability to switch. As an example, Japan (stable buyer of consistent supplies/less price sensitive) reduced corn imports this past year and replaced with feed wheat. I would also watch livestock feed use and from there industrial use (eg ethanol/biofuel). Maybe someone can give me insight into what has lead to $80/barrel oil versus $100 but this is a sign of something.

Errol has mentioned the CRB index over time. A sign that owning commodities was a license to print money. Easy money doesn't stay around for ever in my experience but I could be wrong.

[charliep]

[URL="http://www.farms.com/markets/?page=chart&sym=CIQ12&domain=farms&studies=Volume; &cancelstudy=&a=M"]monthly CRB index[/URL]

[HappyFarmer]

charlie
Good question, and of course didn't grow 8 to 9 million more canola than last year. I think on average ALL of our commodities (especially major's and most speciatities) are in for a correction. Completely agree, we are now in a weather market which as you said can make things "silly".

I think we also can forget that a lot of other conuntries are continuing to increase production of what we are grow, so the answer for certain crop is, yes they do have to eat, but no, don't necessary have to buy from us. We shall see.

[BTO_farmall]

Calm Down, Markets are Over Sold. Ukraine & Russia Are some what hurtin, NO Bumper Crop There. US ain't even got a Month, Days at Best, Lotta Damage already done. Rain now will not Improve Things. Remember Corn is a Determinate Crop, & Will not Chase Moisture. There is Pockets of Good, But fer The Most Part, She's F*cked!!!!! Canola Acres Might Be There, YES, Bushels, NO. Things definitely gonna get interesting from here on out, Buckle Up!!!!!!!

[errolanderson]

Charlie and Happy . . . have been
watching the decline of crude oil as a
barometer for grain markets.

Crude is the ultimate king of
commodities. Corn is the king of grains.
And ethanol margins are going to hell
right now.

Bullish corn analysts are forgetting
about the demand side of the equation.
The U.S. will simply require less corn
over the next year which sets the stage
for a huge jump in carryouts, drought or
no drought.

Crude oil above $80 per barrel was
purely driven by the war premium risk in
the middle east. Oil companies can whine
all they want, but their gouging at the
pumps is atrocious right now. U.S. banks
touting $130 oil are just sucking air
IMO and talking up this position for the
sake of their business.

The break in the CRB index was quite
significant and a stark warning to the
grain world. Once markets get through
the summer weather, down she goes.

I'm being blunt, but why beat around the
bush.

Errol

[HappyFarmer]

I completly agree with you errol. We
seeing the economies of these large,
important countries like china, europe,
us, really starting to slow down or in
the case of us not recover as fast as
hope. The price of oil is just not going
to be able to be sustained if these
counties are slowing down. Hence as you
said, lower corn, the bean, wheat
canola, etc.

[cottonpicken]

Ahhh... i don't think many are fooled.

Errol has been here 6 months?-and crb has been
watched continuously by some for years and years.

How much was oil 8 years ago?

Is it going back?

Why not?

Who is the next Lee M to get the boot from here for
being wrong.....

Corrections in bull markets..happen.