I posted part of Jerry Gulke's column last week... he got big push back from it in the US. Just as with Fabulous Fabas here... few want to admit the crop is/can be as good as it is... Just as in the US row crop country. Our technology and stable producers allow for near miraculous production from scant moisture.
Have a read... judge for yourself where US prices are likely to end up.
Jerry on DTN in part:
"This column mentioned both 1993 and 2010 as similar in underlying theme of extreme moisture and unknown effect of yield on even the good crops and that it took until after harvest to determine actual yields. Both those years were different from each other and different from 2015, but the underlying theme of going from certain excellent crops to a reversal in concern for tightness of stocks and back to more than sufficient total production, have created similar price volatility seen in 1993 and 2010. The key word here is total production. My last year's acreage reduction was nearly dead ten months before finals were in, but it mattered not as yield offset fewer acres. My estimates on acres are still less corn and more soybeans initially planned than most, but my fear is that the USDA may be closer to being right on yields than I'd like to believe. The crops in the northern areas are such that producers in those areas are nervous to hear themselves speak out loud of what they think their yields would be, for fear of jinxing the results. I will admit that from what I saw traveling northwest, including Iowa, northern Illinois, Minnesota, Wisconsin, and the Dakotas, it is tough to recall a time when it "looked" better. Weekend travels makes me wonder if the media hype dwelled too much on the negatives in central Illinois eastward to Indiana and Ohio. If market action since mid-July is any indication, the question of whether the west and northwest crops are making up for the poorer eastern areas, is being won by the bears.
Last week's column dealt with the collapsing markets and the difficulty in trying to catch a falling knife and that I would stay largely re-hedged from early July. I tried to catch part of that falling knife by taking profits on 10% of hedges, thinking prices had once again fallen too far too fast and profits don't come that easily. However, it appears that a collapsing market in July is much different than June, even with August weather and still the low threat that an early frost will bail out what appears to be a bad omen of crop size ahead of us. What has not been taken into consideration perhaps is the change in genetics since 1993 and even 2010. In 2008, many thought those "holes" in the growing fields would not amount to much, but the October report that year proved that wrong, leading to a couple of hard down days and a down market into the first week of December 2008.
My limited travels have caused me some nervousness and I do not like it, and may personally have been caught up in hearing negative reports somewhat. Marketing in a relatively low priced environment that is underpriced from three years ago but is overpriced from ten years ago is not easy and requires flexibility in thinking. As I mentioned last week, I'll stay largely hedged while waiting to be convinced by the market that we are once again too cheap. From a technical standpoint we had two consecutive weekly gaps lower in corn last month. Another one this week, let alone a monthly gap lower would suggest the risk of producing another crop similar in yield magnitude to last year. If so, our woes in the Ag economy may have been only forestalled by the brief price action in July. I hope not.
Jerry Gulke, President Gulke Group, Inc. For more info, go to www.gulkegroup.com, or click info@gulkegroup.com or phone 707-365-0601; 480-285-4745
(BAS)
© Copyright 2015 DTN/The Progressive Farmer. All rights reserved.
Have a read... judge for yourself where US prices are likely to end up.
Jerry on DTN in part:
"This column mentioned both 1993 and 2010 as similar in underlying theme of extreme moisture and unknown effect of yield on even the good crops and that it took until after harvest to determine actual yields. Both those years were different from each other and different from 2015, but the underlying theme of going from certain excellent crops to a reversal in concern for tightness of stocks and back to more than sufficient total production, have created similar price volatility seen in 1993 and 2010. The key word here is total production. My last year's acreage reduction was nearly dead ten months before finals were in, but it mattered not as yield offset fewer acres. My estimates on acres are still less corn and more soybeans initially planned than most, but my fear is that the USDA may be closer to being right on yields than I'd like to believe. The crops in the northern areas are such that producers in those areas are nervous to hear themselves speak out loud of what they think their yields would be, for fear of jinxing the results. I will admit that from what I saw traveling northwest, including Iowa, northern Illinois, Minnesota, Wisconsin, and the Dakotas, it is tough to recall a time when it "looked" better. Weekend travels makes me wonder if the media hype dwelled too much on the negatives in central Illinois eastward to Indiana and Ohio. If market action since mid-July is any indication, the question of whether the west and northwest crops are making up for the poorer eastern areas, is being won by the bears.
Last week's column dealt with the collapsing markets and the difficulty in trying to catch a falling knife and that I would stay largely re-hedged from early July. I tried to catch part of that falling knife by taking profits on 10% of hedges, thinking prices had once again fallen too far too fast and profits don't come that easily. However, it appears that a collapsing market in July is much different than June, even with August weather and still the low threat that an early frost will bail out what appears to be a bad omen of crop size ahead of us. What has not been taken into consideration perhaps is the change in genetics since 1993 and even 2010. In 2008, many thought those "holes" in the growing fields would not amount to much, but the October report that year proved that wrong, leading to a couple of hard down days and a down market into the first week of December 2008.
My limited travels have caused me some nervousness and I do not like it, and may personally have been caught up in hearing negative reports somewhat. Marketing in a relatively low priced environment that is underpriced from three years ago but is overpriced from ten years ago is not easy and requires flexibility in thinking. As I mentioned last week, I'll stay largely hedged while waiting to be convinced by the market that we are once again too cheap. From a technical standpoint we had two consecutive weekly gaps lower in corn last month. Another one this week, let alone a monthly gap lower would suggest the risk of producing another crop similar in yield magnitude to last year. If so, our woes in the Ag economy may have been only forestalled by the brief price action in July. I hope not.
Jerry Gulke, President Gulke Group, Inc. For more info, go to www.gulkegroup.com, or click info@gulkegroup.com or phone 707-365-0601; 480-285-4745
(BAS)
© Copyright 2015 DTN/The Progressive Farmer. All rights reserved.
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