Why didn't crop prices go even higher in 2012?

[boarderbloke]

This is such a kick in the bag it makes me feel like calling up the Chinese and selling my land directly to them. Letting them work it, harvest it, and ship every kernel back to China. I know they won't be worried about feeding the world! F*ck the U.N. and all the rest of the gov'ts who are so damn worried about taking the spikes out of grain markets. Once again, they are pleased with themselves about smoothing out the upward spikes in grain markets. I believe they were hard at work tamping down wheat prices during that 8-9 month period, where the futures market went sideways, even though there was bullish news. Here's a section from the story,

Winners and LOSERS

Governments deserve applause for, by and large, keeping their heads this time.
Sure, it is a little grating to hand out plaudits to authorities for acting as decency dictates, in avoiding the knee-jerk reaction to meet crop squeeze with stockpiling.
But it would also be churlish not to praise, say, Russian officials for keeping their exports open, despite a wheat crop even worse than in 2010, when a poor harvest sparked an 11-month ban on shipments.
The decision has brought benefits to consumers worldwide, through avoiding an upward price spiral, besides ultimately in Russian agriculture itself, through improving its appeal to agriculture.
The losers are crop bulls who lost out on that extra crop price premium, which may continue to elude them if authorities keep putting the broader good before short-term selfish impulses.

Ironically, a year marked by crop disasters has given huge hope to the cause of feeding the world, affordably.


<a href="http://www.agrimoney.com/feature/why-didnt-cop-prices-go-even-higher-in-2012--186.html"target=blank>Why didn't crop prices go even higher</a>

We need the up spikes to survive the dips, drops and spikes down. You can be damn sure they won't be concerned when prices spike to the downside, more likely, they'll be happier still.


This relates back to a post I made now dated Nov 16th titled <a href="https://www.agriville.com/cgi-bin/forums/viewThread.cgi?1352872733"target=blank>Distorting Havest Data #2</a>
There's a hot link in that post about the story from the U.N., for those that haven't read it.

[bucket]

And then consider the winter wheat crop conditions, it really makes you wonder WTF is going on.

"""Some South Dakota farmers are concerned about the lack of snow cover protection for winter wheat.

The U.S. Department of Agriculture says in its weekly crop weather report that snow cover for winter wheat is rated at 61 percent poor with the remaining 39 percent adequate.

Winter wheat condition is rated at 21 percent very poor, 49 percent poor, 27 percent fair and 3 percent good."""

[errolanderson]

The U.S. has clearly lost their ability
to control global wheat prices. The
Black Sea and Asia is gaining control. A
drought in the U.S. is serious, but it's
not enough to keep these prices from
falling back. Also, market knows spring
rains are what count in the U.S.

Also, U.S. exports have taken a hit. The
market is dropping to levels to attract
fresh demand. Once those levels are
found, grains are likely to rebound. But
there is also a bin-busting South
American crop on the horizon. Brazil is
now in early stages of harvesting its
corn. About 10% of their corn is now
mature.

Supply concerns have to match demand and
if it doesn't, prices will correct to
rebalance this equilibrium. This is what
is happening right now.

Errol

[hobbyfrmr]

Ok, so what to do about new crop? Pricing is 25-
30% less than I had expected. These prices still
show modest profit on my farm, just not as much
profit,which is insulting and discouraging.
I think I will sign up half the grain I normally would
for new crop contracts for cash flow at harvest
time.
The us is still in drought, but my experience is
market rhetoric always wins over the real situation
in the fields. Unstable US economy, higher
Canadian dollar will be another wonderful
excuse to push prices down.
I am going sour on the bear movements so I will
sign up some modest profit before my emotions
take over and lose my ass in spite of world
markets. I recall in 2008/2009 it took 2 years of
much lower prices and sometimes "no bid" before
the market returned to profitable prices.
The only reason I will sell half as much is because
to the large area of the US in drought and some
US farmers are talking about how much snow/rain
it will take just to replenish subsoil moisture.
Maybe, this will eventually show up and improve
the prices later in growing season. I just keep in
my head, "Maybe" does not pay all the expenses
on this farm.

[errolanderson]

hobbyfrmr . . . USDA is next Friday, Jan
11th. Those fresh global / U.S. carryout
numbers might provide a bullish boost.
Suspect that these markets are now getting
oversold, but traders may be cautious
ahead of report.

[rockpile]

Anyone who hasn't priced or sold their 2012
production will now be selling in the bottom 50%
price range. And options can be a damn good
investment. Expect 2013 prices to be 30% lower. As
one who farmed 35 years before leaping from the
squirrel cage I can tell you this exact scenario plays
out every 10 to 15 years. It takes forever to build up
the price, one sneeze and they collapse. My advice -
don't dwell on trying to nail the highest price of the
year. Set a target you can live with, pull the trigger
if you see it, and don't look back. And run your
operation based on the lowest, not highest
expectation. I had an old neighbour who used to
say 'farm for the bad years, the good ones take care
of themselves'. All the best in 2013 my friends.

[malleefarmer]

two days ago the market wheat market was
i think 32 cents about a hour from the
close yet it closed down was it 22 or
something, funds can move markets in
whatever way they like.
higher highs lower lows thats the fact of
markets today

[hedgehog]

if i could find my diary from 1996, droughted wheat went crazy on cbot in april, till rain hit sometime in may, then it just shot down the gurgler.
stayed there ten yrs

[charliep]

My favorite expression on Agriville in the last few years is "grain prices take the esculator up and the elevator down".

[errolanderson]

Bernanke stated yesterday that QE3 is
coming off the table in 2013.

Finally, some logic is entering the U.S.
Fed. QE3 (IMO) may be known in history
as somewhat of a disaster. The U.S. Fed
money printing belly is almost as big as
the U.S. GDP . . . good grief.

This may make gold buffs sweat as
government induced inflation push won't
be there to prob up prices artificially.

[burnt]

While the prices might have been suppressed to some extent, we seem to have overlooked how much grain values were boosted by misguided government policy in the form of biofuels subsidies.

I would venture a guess that those subsidies did more to inflate prices than any subsequent meddling might have hurt them. Because those subsidies created the voracious appetite for grains that resulted in the run-up in commodity prices across the board for the past two years.

So, what is the "true" value?

And how high would prices have to go before some are satisfied? We have had lots of excellent opportunities to price crops at record high values. If you didn't take advantage of them, then who is to blame?

[hobbyfrmr]

Thank you Errol, while occupying myself going
sour, I had already lost track of where I could
gather information to help me make a rational
marketing decision.

[TOM4CWB]

errol;

You bought the Bernanke line?

If US spends at home... work WILL get done...

Oil is already up... EU needs it high as anyone.

LOW interest rates are the most likely outcome of all
this... QE3 infinity is now hohum... so much money
printed anyway... can't raise interest... JUST like Bk of
JPN.

US cash is still king.... anywhere on the planet.

I am Very happy that the prices were as high as they
were...

Cheers!

[Burbert]

F'n grain prices is still good. Sell the
f'n shit as fast as ya can! Do not wait
fer more, it ain't gonna happen.......
Get the cheque and run, race, ta the bank
and casher, grab some brews on the way
home and enjoy........ Heil Harper