Durum and canola contracting.

[sumdumguy]

I thought you Tom would be in a position where you don’t have to pre-sell anything? Geez, we learned our lesson long ago from the special crops market (our friends thought the lentils were “good as in the bin” but not so). History repeats. Marketing is kinda like surfing. Get ready for the big wave.

[errolanderson]

Errol, you tend to sell fear in most of your posts, is there another side to you?

I sell ‘risk management’ in my posts.

Today’s economics follow no rules given immense market manipulation that is now losing-its-grip. And now the mad scramble by central bankers to hold this financial deck-of-cards together with little options left.

Stock markets are hitting daily record highs on central banks fueling investor greed, not true valuations.

Global commodity prices are already starting to come down. Yes, we are see inflation, but there is now incoming deflation creeping into cracks of market demand.

The foundation of inflation is; supply chain disruptions. The foundation of deflation is; weakening buyer demand.

If calling a spade-a-spade is considered fear mongling by some, then so be it. It’s up to every producer to make that management decision.

[TOM4CWB]

It is ignorant and frightening how crazy looking after a futures account on an only 10% hedge risk management program. And in 2021, it only cost money.

Few farms can cash flow the minimum $400/ac/yr needed to pay to grow a crop... depending on how productive your land is [more cost for better land- less for poorer land].

What will that number be in 2022? $500-600?

Our risks are increasing exponentially... just as the money supply increases... like the Tesla Central Bank money supply charts showed.

How far can this deflate and not cause massive societal breakdown and chaos?

Japan has been on track for close to 20 years on this 'inflate yourself out of your problem' solution... which printing money by central banks globally have chosen to follow.

$20 Canola, $10 wheat, when the money supply has increased by 100%... land has increased by 100% [good corn/bean land in Iowa is $24,000/ac!!]... we had better adjust our mentality... this economy will not survive going back to 2016 prices... the new 'green revolution' assures that.

Better to understand the risks we now face, not just look in the rear view mirror!!!

Cheers

[TOM4CWB]

I thought you Tom would be in a position where you don’t have to pre-sell anything? Geez, we learned our lesson long ago from the special crops market (our friends thought the lentils were “good as in the bin” but not so). History repeats. Marketing is kinda like surfing. Get ready for the big wave.

SUMDUMGUY,

Good analogy... 'the big wave'...

Stormy weather, must be out surfing to catch that big wave... few of us have the cash flow to cash sell in the spring of the year, our grain production. 15-20% of grain sales minimum are at minimum expected to pay bills and living expenses. This year 20% is now 70% sold [short production] for many grain farmers livestock folks have had many costs go up exponentially as well...livestock income flat.

Good for you if you have no loans, not many here are in that position [certainly not my family]!

I think I noted some 'tongue in cheek' attitude, so sorry if I took the bait with a Rant! Grin

Cheers

[jazz]

errol, Biden just signed a couple more trillion of stimulus. Are you sure you think this is the end of the line?

I think some farmers want to make the market pay up for all the times we got screwed. Fair enough, but if you are sitting on a lotto ticket its getting close to cashing in your chips here. I wouldnt be be playing it too pretty these days. Take the win, move on, shore up your balance sheet because you may need that edge if crop prices come down and inputs stay sticky for a year or two.

Was chatting about inputs with the neighbor this am. Out of the blue he mentioned summerfallow for some reason. Had a great crop but sees the squeeze already happening and risk increasing exponentially. We have all pre bought inputs but what will the crop be and prices for it in 10 months. Huge unknown.

[TechAnalyst]

An inverted market is a SELL signal to the grower. The demand is on the front end of the crop year.

I completely disagree with how you are presenting this Errol.

Yes, the goal of an inverted market is to have you sell right away rather than incur the cost of storage then receive a lower price later on.

But it is in no way a sell signal suggesting the price will in fact be lower in the future. This past 14 months have been a perfect example with inverted markets throughout. Unless the supply/demand imbalance is resolved, the inverse simply moves forward into the spot month as delivery months pass.

In fact, one of the most important and easiest to track BUY signals of a producers career is the moment a market first goes inverted. It is the first sign that demand is outstripping supply by a significant amount. Some of the strongest rallies follow.

At this point, a warning sign to watch for would be a narrowing of the inverse suggesting the S/D imbalance is slowly resolving.

One last point, it should be watched within crop years more than old vs new. All the old vs new inverse suggests is that the trade is optimistic the new crop will be sufficient to look after the situation. And to make sure you don't carry old crop into new. I don't believe for a second it is a sell signal for new crop pricing.

I hope this helps anyone trying to make the difficult decisions regarding marketing.

[errolanderson]

I completely disagree with how you are presenting this Errol.

Yes, the goal of an inverted market is to have you sell right away rather than incur the cost of storage then receive a lower price later on.

But it is in no way a sell signal suggesting the price will in fact be lower in the future. This past 14 months have been a perfect example with inverted markets throughout. Unless the supply/demand imbalance is resolved, the inverse simply moves forward into the spot month as delivery months pass.

In fact, one of the most important and easiest to track BUY signals of a producers career is the moment a market first goes inverted. It is the first sign that demand is outstripping supply by a significant amount. Some of the strongest rallies follow.

At this point, a warning sign to watch for would be a narrowing of the inverse suggesting the S/D imbalance is slowly resolving.

One last point, it should be watched within crop years more than old vs new. All the old vs new inverse suggests is that the trade is optimistic the new crop will be sufficient to look after the situation. And to make sure you don't carry old crop into new. I don't believe for a second it is a sell signal for new crop pricing.

I hope this helps anyone trying to make the difficult decisions regarding marketing.

Tech, there was no mention of new crop. Sell sign for old crop (IMO). Agree, there is no sell signal for new.

[furrowtickler]

Errol and Tech , thanks for your respectful posts , you both bring insight that’s appreciated 👍