grain prices and supply

[bucket]

A few weeks ago everyone was talking about how little grain was going to be left at the end of the year.

These traders that are selling everything to make their BMW payments seem to have lost sight of the supply demand fundamentals.

Pretty soon the Chinese will come in and pick up the remaining crop for a song and 20 years from now we will talking about the second great grain robbery - similar to that of the masterful Russian one in the mid seventies.

It really goes to prove that history does repeat itself when no one pays attention.

Watch the cwb give the remainder of our crop away and then say "no one could have predicted what happened because the markets were so volatile, we had to sell in a lowering market because we decided NOT to watch supply /demand and how dry it was in the southern Prairies".

And even though I phone the cwb and make my point about this (farmer controlled - you bet I put my 2cents in) they ignore me so in 6 months I can ask them to review the recording of my phone call and explain to me why they did not take my advice.

In the end it all costs my farm money for no good reason. In the states it doesn't matter if the market drops - the farmers are protected with a farm bill. In Canada we are left to eat up our equity.

Lots of complaining on this thread and I do apologize.

It makes no sense to be dropping grain prices when a bumper crop (which can't happen) won't rebuild stocks.

[Zaphod]

The old saying that it takes fresh news to feed the bull certainly applies here. All the bad stuff is already known and that's what caused the rally. Now, you'll notice the new news has turned bearish (cancelled sales, lower winterkill, etc). That's what's driving the market down.

From a historical view, prices are still very high and still reflect the tight situation. Nearby canola futures at $560 are probably still too high for a million tonne carryout.

It won't need a bumper wheat crop to rebuild stocks, only a normal one. The only place the wheat crop looks dicey is here in western Canada.

[SASKFARMER3]

Zappy your one of those guys that the glass is always half empty aren't you.
Normal crop will build reserves what the hell supply charts are you looking at.
China Pakistan and INDIA need food and its BS that they are growing whats needed etc. Australia Europe and USA and Russia are going to produce a bumper crop. Yea ever time I said that mother nature has put that fire out. Predicting a huge crop before its seeded to people other than farmers maybe makes sense but any farmer knows its not a wise decision.
Simply High prices are close to historical highs. BULL Ship, historically low and the only ones that are suppose to get paid for their product are the suppliers and elevators and we are suppose to work for nothing.
Let the world starve is my new saying and guess what ZAPPY its going to happen with just one wreck some where in the world.

[SASKFARMER3]

One more thing ZAPPY, Bucket is right latest news out of the US is that Canada got a HRS wheat sale because it was way lower than the US. Some $2.00 lower. Haven't I said those genius at the CWB are their for only one reason liquidate our product at any price. Look at the DPC their always $2.00 behind the Similar US point.
And the Big winners will be Warbiton the Canadian Millers and CHINA ETC.
CWB should have been called the
BGO
B L O W G R A I N O U T!

Slogan should be "Working for the other guys"

[Zaphod]

No comment on the CWB sales. I've been expecting that for quite a while. I would suggest you look at price charts that go back a little more than a year for some real perspective on where values are historically. $550 canola futures are low? $13 MGE wheat is low? $5 barley is low? Give your head a shake.

One thought on the wheat crop. About 80% of the world wheat crop is winter wheat. It's already planted. In fact, it's already starting to joint. USDA, IGC and Ag Canada are all calling for the wheat crop to increase 40-50 million tonnes. Those aren't stupid people. Like I said, the Cdn crop isn't made by any stretch, but other ones are getting close.

Last thought. The actual size of the pile of wheat isn't all that important to the markets, only the fact that it's going to get bigger.

You're right that a crop wreck could take markets higher again. No argument. But the best odds are usually on normal weather, not on a disaster.

[SASKFARMER3]

No Zappy give your head a shake what I am trying to say is all the experts thought OIL at 20 was historically High and where is it.
People need to eat and FOOD is and has been for way to long been dirt cheap. Yes 13 wheat is high now and 13 Canola etc. But really maybe its to cheap at 13.
PEOPLE NEED TO EAT and the Boat and BMW will leave if food becomes scarce.
THATS A FACT>
SEE HOW LONG YOU CAN GO WITHOUT YOUR BREAD AND BUTTER AND STEAK>

[SASKFARMER3]

Zap you must be the guy who told me that it never freezes in SA.
That was BS or do you forget what happened last year.
Frost all the way down to Texas and the so called experts said it cant happen.
Rain stops on a dime any real farmer will tell you and you.
Yea AG Canada and CWB are geniuses That's a good one.

[Zaphod]

You need to read a little more carefully. I didn't say the CWB was smart. In fact, at Grainworld, their estimate of world wheat production was lower than most others.

I also didn't say there couldn't be weather problems. I did say that betting the farm on a disaster is more risky than betting on normal weather.

Cottonpicken has been right about the rally and I'll give him credit for that. But ignoring bearish signals can end up costing a lot of money too. If you want to think that prices will go higher forever, good luck. If you only want to hear bullish news, then I'll just shut up.

[Hopperbin]

Back to the Chinese issue, how do we find out if it really is the Chinese pulling these markets down? Seems they do buy cheaper year after year only to leave others pay for more expensive crop. Perhaps they even bought cheaper earlier to bring prices up and are now reselling the extra at higher prices. My opinion is that Americans are angels compared to the Chinese when it comes to trade issues.

[SASKFARMER3]

No I don't think prices will go up forever. But I also dont believe that the boom in Grain prices is over in less than one month either. Hell we will rebuild stocks but not as fast as you think, but its a fact mother nature is cruel and she destroys more crops than makes.
That's a fact ask any farmer.
Loosing money Just ask the genius North of me that locked in his peas at 7 for next fall to help cover his $8,000 plus quarter rent. Yea keep helping them their really their for you.
Look if you believe China has huge stocks and India and Pakistan will be self sufficient hey that's fine ever one has their views.
I personally think this is been blown way out of proportion on this correction.
Have a good one.
Off to Check my 58 bushel Canola Crop and 75 Durum, plus the whopping 65 Bushel HRS wheat crop that's just starting to Get Cleaned at the Farm this morning.

[agstar77]

Have you noticed fertilizer and fuel prices come down?

[Zaphod]

I thought you said I was the glass half empty guy. Yikes! I'd hate to talk to you when you're depressed.

I'm not talking certainty, just odds. And yes, I've had my own crops destroyed by weather. In fact, my first year farming was 1988. How's that for a kick in the crotch?

As far as the Chinese go, I agree with you Hopper. In fact, the rumours are about cancelled boats of soybeans and soyoil. No doubt they're involved. I don't know if all the blame can be pinned on them too. Investors are needing cash and are pulling it out of all commodities. Some are just taking their profits and dumping it into cash and bonds.

[SASKFARMER3]

Its hard for an investor to go home at Easter and tell the family that they are going to loose their house come April 1 st.
China is always up to something they need lots of food and will do any thing to get it. That is a scary thought.

[bgmb]

I think we need to put things in perspective. Grain prices were horribly low for too long, and most of the world got used to taking food for granted.

Now biofuels and a couple crop failures have wiped out the cushion. Panic has set in for the first time in years. That coupled with Ho&ny commodity fund managers drove the markets through the roof.

A little while ago i was reading an article from a popular analyst who proclaimed that the new floor for canola was $600/t haha.... The guys that listen to him are the ones paying retarded cash rents.

My game plan for next year is to do pretty much the same thing I always do;

1) Forward price 30-50% of my crop before harvest to generate cash flow if the prices are profitable for my farm.

2) Grow the most grain for the lowest cost.

3) Try not to get screwed on my inputs.

4) stick to a fairly normal rotation that has been working for me.

[cottonpicken]

Dec 13-if we get a 67% increase we get 774,i still owe wedino a bottle but my point will be made.

67% is not a fibonacci number,i meant 61.8%,should have double checked before posting.

Canola high from latest rally 769.20,i think.

Corrections in bull markets are SUPPOSE to happen.Nothing in the fundementals has changed,its only gotten better.

Instead of a seller of commodities i am now a buyer.