Some elements of both although a lot of stuff at play.
Tight carryover from the 2011/12 crop year (old
crop).
Basis levels across the US midwest that are pretty
wanky to reflect non traditional movement/freight
spreads and other issues.
Importers that are buying Ukraine, Russian, European
and yes, Canadian feed wheat plus corn from where it
can be found. The Canadian feed wheat part includes
at least 1 or 2 (maybe more) unit trains of winter
wheat into Texas. Flow of feed grains around is
becoming interesting as buyers adapt.
Hurricane Isaac at the Gulf and drought issues on the
river system that impact transortation in the US.
A livestock industry that is adapting to a new reality.
The reality has been there for a while. Livestock
numbers will adjust - have to.
An early harvest with at least some element of early
delivery to pay bills and fill early stuff farmers have
contracted last spring (assuming they got the
production).
Prices have to reduce US corn consumption and
exports combined by 20 to 25 %. The question is
whether $8/bu corn can do it. Indications that it is
working to date. You have all the other world
economic and financial events being discussed
including potential for a "Black Swan" event no one is
even imagining.
If you think the market is undervalued, store grain
and get long futures.
Tight carryover from the 2011/12 crop year (old
crop).
Basis levels across the US midwest that are pretty
wanky to reflect non traditional movement/freight
spreads and other issues.
Importers that are buying Ukraine, Russian, European
and yes, Canadian feed wheat plus corn from where it
can be found. The Canadian feed wheat part includes
at least 1 or 2 (maybe more) unit trains of winter
wheat into Texas. Flow of feed grains around is
becoming interesting as buyers adapt.
Hurricane Isaac at the Gulf and drought issues on the
river system that impact transortation in the US.
A livestock industry that is adapting to a new reality.
The reality has been there for a while. Livestock
numbers will adjust - have to.
An early harvest with at least some element of early
delivery to pay bills and fill early stuff farmers have
contracted last spring (assuming they got the
production).
Prices have to reduce US corn consumption and
exports combined by 20 to 25 %. The question is
whether $8/bu corn can do it. Indications that it is
working to date. You have all the other world
economic and financial events being discussed
including potential for a "Black Swan" event no one is
even imagining.
If you think the market is undervalued, store grain
and get long futures.
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