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Post by kenmb on Jan 31, 2022 13:29:26 GMT -6
I am thinking the same way as you two. Right or wrong, who knows. What's important is to have a valid basis for expectations and then adjust as information comes in.
There are lots of variables going forward. But I also had some suspicions a year ago when I was contracting heated feed barley in June for August pickup and trucks were in the yard 3 days after I sent the contract. No one talked of grain shortage at the time other than a few areas experiencing dry pasture at the time, but no real drought talk.
So I don't know if things get turned around in one growing season.
Our local elevator hosted its usual yearly gathering for farmers to discuss what is happening in the grain business. A couple interesting things to note for me:
1) Canada as always remains a major grain exporter. But other countries that also exported a little grain no longer have much to export as their domestic demands are consuming that extra. So there are fewer exporting countries. St happens in Canada may be a bigger factor worldwide than we are used to. 2) Wheat is about the only grain produced in average quantities around the world. Canada was down a bit and others up. So about average. And wheat is something I haven't sold much of, maybe a bad idea to be undersold. 3) Around here a lot of feed barley went in last year. Expectations are farmers will switch back those acres to another crop. I would agree. 4) Our elevator says amount of grain on farms is at a historically above average level. They showed charts on % of grain shipped and they are below average as of Dec 31. That one I am sceptical of. I figure farmers contracted record amounts of grain last season and I sure saw a lot of trucks hauling in fall. I wonder how much grain is actually on farms. I for one am about average considering what is contracted to go in March April.
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Post by totaledmygn on Feb 24, 2022 3:42:11 GMT -6
Any new thoughts on grain prices?
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Post by garyfunk on Feb 24, 2022 6:34:07 GMT -6
Yesterday I was almost ready to lock in some new crop canola just over the $19 mark. Well, just 12hrs into this Russian invasion and the markets are already in panic mode. I'm not sure how high these commodities can go, but things are about to get pretty interesting 🤔.
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Post by cptusa on Feb 24, 2022 6:41:53 GMT -6
Any new thoughts on grain prices? Wow. I thought it would take weather to get us here. Going to sell some old crop today if these gains hold. 7.25 cash corn, 16.70 cash beans. Hard to say what shakes out with Putin on the move. Not selling new crop, yet. Beans did back off their high, up 57 now, was up 75 at 03:00.
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Post by kevlar on Feb 24, 2022 7:52:51 GMT -6
I imagine everything else will follow right along.
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Post by kenmb on Feb 24, 2022 10:18:06 GMT -6
I am holding for at least a week. The more fuked up things are the more I want bushels in the bin vs digits on a computer screen. If crops go to $50 a bu the question always remains "ya, so what. What if I can't do anything with those digits on my computer anyway"
If you promise me we are going to level out and everything will function normally then I think I will sell some. So let me know.
Here is where you really pay attention to how the world works. Presently known as financialization.
Does the stock market drop 50% yet or collapse before this ends, or does it recover shortly?
Why does this matter?
Well, it's no different than your debt to equity ratio of your farm. All these businesses that function on financialization are in the same boat. For a decade or more you have heard of companies taking on more debt to buy back stock. Wow, isn't that a genius move? Think about that idea, no more is company price based on profitability but rather based on how much debt they take on. Talk about a world of inversion.
Ok, so you sell your grain tomorrow and it is picked up next week. When are you getting payment? Might be a good idea to get payment before the grain leaves the bin. Why? Debt to equity is why. Are you actually certain that you will get paid if payment is made in 30 days? Is it possible for a company to become insolvent in a few weeks. Maybe. If their equity is based on share price as they keep buying back shares, yet that share price craters, how exactly do they have the funds to pay you?
It's an interesting scenario. Financialization has been the accepted thing since things always go up. The question is, do you know how well things will work if things go down heavily?
I will again remind people of your debt to equity ratio in the farm. If the stock market collapses, or interest rates sky rocket (risk on), how does land prices trend and your banking look.
Too many unknowns for me. I think I will sit on grain in the bin vs future promise of digits on a computer screen for a little while. Unless someone promises things will go smoothly between the time I ship my grain and the time I can put those dollars to use that I received. Hard assets vs unknowns. Each decides what is best for them.
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Post by SWMan on Feb 24, 2022 10:36:49 GMT -6
Yeah not even into a weather market yet. There is still many months left to go for marketing old crop and we definitely have a trend going on.
There has been a large inverse in the market for some time now, generally that tells you that they want your grain now. As this persists though one must wonder how much coverage buyers have further out? Question is how much grain is left un-priced, with all the data mining out there the big buyers probably have a good handle on this. At some point they will back off and wait for new crop supplies, but that's probably a ways off yet. Demand destruction will be inevitable at higher prices, question is how much demand is inelastic and how does that relate to production especially if we have weather issues going forward?
Important to have some sort of game plan to remove emotion from the equation. Remember that some grain buyer throwing a huge new crop price never seen before at you should be evaluated from the framework of what does this coming crop need to produce? Well, it needs to produce a return to grow another crop(most farmers generally want to do this..ha ha), support your family and perhaps pay off some debt or make some savings. In the inflationary environment we live in (that is not "transitory" IMO) should mean we will need bigger prices to keep us going in the future.
Beyond my basic principle of Grow-Bin-Sell I'm kinda just taking the approach of selling as a function of time throughout the crop year. Should give an average price. Cashflow needs play into this as well, but as prices climb it has become much easier to meet cashflow needs. The big open-ended question is how bad is the summer fertilizer prices are gonna be...
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Post by Oatking on Feb 24, 2022 10:47:53 GMT -6
If grains, feed or meat prices explode in prices, I think a lot of urban people will go on strike because they will not be able to feed themselves or support there current life styles. If that fails to get higher wages it could Actually get scary, maybe this is how a great reset is planned. Bankrupt everybody and than the elites step in and dictate how you live.
I agree ken, land is only worth what someone can afford. Twenty years ago , sw sask land rented for the taxes. could happen with sky rocketing interest rates. lets hope calmer heads prevail.
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Post by kenmb on Feb 24, 2022 12:23:25 GMT -6
I suspect the big companies are hoarding grain. At our recent elevator meeting one of the guys says Richardson has a terminal in Thunder Bay stuffed full of grain. That has been my speculation for a long time and why I am holding also. We don't actually know if the price structure is actually based on being short grain to meet consumption or is it short because of hoarding. Yes, there is lots of data about supply/consumption, stocks to use inventory, etc. And I give that stuff about as much value as the same governments putting out covid statistics.
On a positive note, the stock market just rebounded some. Yes, while Russia is invading and that is bad for the world economy and so sell stocks, apparently a bunch of people just realized the world going into war mode is also good for stocks and started buying.
Well, since I can't quite figure out the stock market and how it prices in the future like this I think I will sit on the sidelines as grain futures contracts also do their thing of pricing in the future.
I do wonder if flax will surge up. For the last umpteen years I have been hearing nothing but bearish news for brown flax prices because of expanding supply in the Russia area. I suppose war there would disrupt flax supply. But in this world of "markets" I wonder if flax will go down now.
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Post by carlos on Feb 25, 2022 13:18:02 GMT -6
Just had a canola target trigger for 24 bucks yesterday. For June delivery.
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Post by kenmb on Feb 25, 2022 19:22:52 GMT -6
Well, that was awesome! What a day in the "markets". I really didn't think the central planners were going to go full retard, but they sure did over the last 24 hours. In a world where the worse the news, the higher the stock market I actually thought possible ww3 starting off would finally break the trend. And for about 12 hours it was happening. But then the planners decided once again to buy everything everywhere and shoot stocks up and crush commodities. Because wars do that it seems. Yes, for a brief time there was indication that wars are bad, but soon enough the central planners corrected that.
I am all out of popcorn now after that schit show. Going to sit on my grain for a while yet. Because I really have no clue what will happen. About the only thing that seems evident is an intent to make fertilizer in short supply. Because I am pretty sure the world didn't suddenly run out of natural gas in Nov December like the markets are showing. And Russia sanctions will no doubt be used as a reason to limit fertilizer supply. So lower grain output will be my guess for the narrative in fall.
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Post by SWMan on Feb 25, 2022 23:01:48 GMT -6
Well, that was awesome! What a day in the "markets". I really didn't think the central planners were going to go full retard, but they sure did over the last 24 hours. In a world where the worse the news, the higher the stock market I actually thought possible ww3 starting off would finally break the trend. And for about 12 hours it was happening. But then the planners decided once again to buy everything everywhere and shoot stocks up and crush commodities. Because wars do that it seems. Yes, for a brief time there was indication that wars are bad, but soon enough the central planners corrected that. I am all out of popcorn now after that schit show. Going to sit on my grain for a while yet. Because I really have no clue what will happen. About the only thing that seems evident is an intent to make fertilizer in short supply. Because I am pretty sure the world didn't suddenly run out of natural gas in Nov December like the markets are showing. And Russia sanctions will no doubt be used as a reason to limit fertilizer supply. So lower grain output will be my guess for the narrative in fall. Today was wild but there is many things in play. End of week/month activity, low volume, etc. I wonder how much panic selling happened today? The market has been following a distinct pattern of upswing and then a sharp dip, but each time going higher. It would be interesting to know the psychology of those selling the grain and where the sales happen in the pattern. You can bet the buyers know this. So if there was to be manipulation of the market it probably wouldn't be hard to know how to play the farmers. Sad that everything has to be questioned, but I have felt for awhile that the markets job is basically to separate you from your grain for as little as possible. The real risk is a banking failure or reset, that would throw global trade into a tailspin. Probably not good for exporters but less good for hungry people in import nations. Hard to plan for that scenario!
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Post by shmiffy on Feb 26, 2022 8:26:52 GMT -6
I’ve been noticing that same pattern, rise then a sharp drop only to rise back up.
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Post by kenmb on Mar 1, 2022 8:24:13 GMT -6
Wheat and corn marching higher again. So we have this battle between the smart money who buys grains on a war threat/scenario and the other smart money who sells it. Right now the buyers are active. So how long before the sellers take over.
Naturally it will be those mysterious hedge funds involved. Those same people who manage $billions/$trillions with one to six people calling the shots but the SEC will go after Robinhood traders because 5000 people on an internet chat forum all deciding to buy a certain stock using their own funds is considered "market manipulation". And some hedge funds are now being investigated for getting inside tip-offs from banks on what banks will be doing.
All the news is shaping up for low fertilizer supply. So higher grain prices looking forward should be the trend. But then those hedge funds will be active so who knows. I haven't bought any fertilizer, don't care to think more than 2 weeks ahead on any of this stuff, because 2 weeks can be an eternity sometimes with these markets.
But to swmans point, yes I would say some kind of catastrophe is in the works. Related to sanctions and blocking Russia from the financial world. Nothing just happens.
Remember the finer details. The Central Bank of Russia is a member of the Bank of International Settlements, the same as about 63 other banks if we can beleive anything on the internet. So the central banks of Europe and America are asking the BIS to sanction its own entity. Kind of like a local Esso station asking Esso corp to block transactions at another Esso station.
How it will all play out remains to be seen. I won't even attempt to guess. Sitting on real commodities vs digits on a computer screen remains the best idea I can come up with.
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Post by cptusa on Mar 1, 2022 12:11:46 GMT -6
Talked with a guy yesterday, he asked wonder what prices so if nukes start flying.
My response... really doesn't matter at that point, does it.
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