Are grain markets headed south?

[TOM4CWB]

Charlie, Lee and Brenda;

Are we not in denial if we do not realise a fundemental shift has just occurred?

Cattle limit down yesterday!

Should we now go to 100% priced for this crop?

What about 2002?

[charliep]

I stand by what I have said to date on the marketing side. The only other comment is to encourage every farm manager to review both their business and market plans as we go into a period of high uncertainty/risk. I don't farm but I look at the profit formula (price times yield minus expenses) and I see risk in each component we go ahead as we go ahead in each one. We mention price risk but yield (no subsoil moisture) and costs (increased fuel costs in the face of a war situation) are just as much a factor.

A question in my mind is how farm managers will change their decision making/plans in the face of this uncertainty. How are participants dealing with these issues?

[melvill]

What worries me is that I'm getting calls from producers that have little or no canola or barley priced. They need cash this fall but they're asking me if canola futures will get up to the $370 to $380 range. When I asked them if they priced any when Nov futures were in the $350 to $360 range, they said their goal at that time was still price when futures were above $370!

On the barley side, callers are tell me that feedlots in southern Alberta were bidding $155 to $160 picked up in the yard (that's 162 or 162 to $167 or so delivered) but they still haven't sold any. They're asking me if they should wait for $165 or $170 in the yard! These are guys that need cash.

When I ask them what kind of market info, analysis and outlook they get, the answer is quite often "none".

Managing market risk and being aware of (pricing) opportunities means being informed. A lot of our managers aren't getting enough info to make an informed decision.

What are forum readers getting for good info, analysis and outlook?

[bbrindle]

I will leave strategy for others to comment on. Lee is asking what you are reading. In other words, who are you listening too and are they credible? I don't consider myself a market advisor anymore because I no longer am able to devote the time to market analysis that I once did. I find too often everyone and anyone is willing to throw out comments on markets and too many farmers take in all those comments as valid. I've also seen a great tendancy for farmers to be far more willing to focus on the bullish voice than the bearish one. I've been at canola meetings where a professor who specializes in plant breeding makes a statement on the market and because it is bullish farmers will grab onto that but totally ignore the experienced market analyst with a proven track record who was bearish at the time.

So, my 2 cents worth? When I was reading bullish commentary over the last few months my gut feeling was -- be careful.
(stage in sales) with an eye to proft and trends.

[melvill]

I agree with your "stage in sales" philosophy, Brenda. However, many farm managers have been watching too many major league baseball games where the home run hitter gets the biggest cheers and, more importantly, earns the biggest salary. Farm managers are trying for the market "home runs" too so that they can earn the best farm income salary. Trouble is, on farms no one know where the home run fence is.

[bbrindle]

sorry - sports examples go completely over my head
what are you saying?

[melvill]

Sorry, Brenda, we'll have to explain major league baseball over a single malt. "Scale up selling" by definition means that all the product hasn't been priced at the market peak. Maybe none of it has. Pricing everything at the peak would be the "home run" with the highest possible farm "salary". Get it?

Lee

[bbrindle]

Make it a g&t and you're on.

Step one is get rid of any thought of picking the peak. That's for gamblers and egotists. That's no way to run a business. (Am I being too blunt?) I recall farmers who had bragging rights on $10 canola and reaching the peak -- then they froze up and messed up their marketing for the next five years. I've seen that happen over and over again with speculating in futures accounts too.

But back to the question about going to 100% priced or looking into 2002 crop. Any thoughts from anyone? Anyone considering 2002 - why or why not?

[rain]

Down side for wheat and barley looks limited right now. Even with a million tonne of corn barley and wheat carryout look very low. Around Calgary I think banker and rain will make marketing decisions. Cash barley is $1.00/bushel higher than the same time last year and wheat is $1.25 higher than last year as well. Canola is almost $2.00 a bushel. At least if we have to sell we don't have to sell as much.

[ianben]

Hi All
We finished harvest over here on 4th Sept, all 2002 planting decisions had been made by then.
Half canola was already seeded and the rest by 8th.We have seeded 3/4 wheat area but have been kept out of fields for last week due to rain. 20th Sept is suposed to be the ideal date for seeding both w.wheat and w.barley in our area so I hope it stops raining soon.
Still some crops left to harvest locally they look pretty miserable now.

Our prices are better than last year too,feed wheat from £60/00 to £75 today,canola from £110/00 to £145 today.
Not enough to make 01 better for us than 00 as we are 500tonnes down on yield.
02 thoughts??
Even more unpredictable than ever!!
If G W Bush thinks he can beat terrorism with force I see many problems for our world which will have implications for us all

Regards Ian

[cowman]

I'd say if a feedlot offered you 160/tonne at the bin you should go for it. U.S. corn works out to about the same dollars per tonne and it is a way better feed value than barley. Once the shift is made to corn it's pretty hard to go back to barley. No way can it compete with corn in the feedlot!