I'll lay my cards on the table here...

Ag has been in a FUNK since the 2012 peak as prices have been sliding lower.. aka Sat's argument who is evidently looking for "more of the same."

We've raised Four Big Crops in a row now.. and the Dec 1st Stocks reports are the FIRST report of where the rubber meets the road.. all last falls talk of 175 bu corn.. 53 bu beans.. et all  meets the road of "so where is it?"

No doubt we raised big crops..

probably not as big of Sorghum.. SCA's not withstanding.. but out west they still had moisture to bust big dryland sorghum as well as corn crops.. does it continue?

As we run out of cheap sorghum.. they are going easy on the exports.. so that is slowing it down.. but we also have a smaller crop.. so.. closer to the end also.. As we run out of Cheap Sorghum.. getting the piles picked up and switch over to Corn.. then the Cornbelt analyst see it.. cause they don't care about Sorghum.. nor do they understand it..

We GRIND ALOT of Sorghum in ethanol.. then we switch over to Corn.

The expectations are that we're sitting on a huge Corn stocks situation.. and probably that will bear out.  However in our local market we were hit hard with cob rot.. which cut irrigated yields by about 30'ish some bushels and are adding quality concerns on top of everything else..  "always something."

The farmers REMEMBER LAST YEAR's markets where the bears STOLE their beans.. as South America came up short..

"Why are markets rallying?  I thunked S America had beau coup crops coming on WHAT HAPPENED?"

They lost the Safrina crop.. reality set in around March.. right before planting here in the US as Brazil came up 18 mmt's..  69 mmt's vs 14/15's 87mmt's.. 700 myn bushels went "poof."

Combine the lower expectations the Costs vs Prices squeeze.. it takes $$$ to grow corn.. ALOT OF IT.. with Breakevens north of $4.00 for ALOT of producers..

So right now.. producers SAY they are gonna plant beans..

I think the bears think they can squeeze the bean market LOWER and we'll switch.. however, I don't see much of that occuring..

you can't raise a larger corn crop by tanking the bean price.. in that scenerio.. farmers will CUT INPUTS.. and it takes INPUTS.. Seed, FERTILITY, WATER.. etc to bust out bushels..

So the markets are going to have to BUY Corn acres.. if not.. you'll end up with the Wheat market..  HERE there are WHOLE FARMS.. 5,000+ acre operations for the first time in probably a century that have NOT PLANTED A SINGLE ACRE of wheat.

edit add: so where is it going?  well weather has been good.. try some beans.. try some dryland corn.. buy crop insurance.. what happens in a drought.. do they raise 35 bu corn vs last year's 65 bu wheat?  lol.. poetic don't ya think?  probably something like that.. would be my guess.. golly last year's dryland beans did 50.. this year.. 15..  ???

That's my best guess...

Yes we have stocks.. but we also will GET LOWER acres.. unless this rally continues and buys SPRING WHEAT acres.. "stay tuned."

Furthermore, the US is due for a 700 myn bu + "whoops" of our own.. the AMO/PDO cycle.. et all.. "EVEN in the 1980's.."  along came 1988...  where we had STOCKS TWICE the Level that we do today.. and WE USED them.

So we are NOT READY for a 1988 type of drought more or less another 2011 or 2012.. which.. 3 meterologist which I track say "It's coming.."  2016..17..18.. or 19 you can PLAN ON IT.

....

Personally I had 1/3 of my wheat contracted before harvest.. stored the rest.. pulled my hedges off last fall.. took the LDP's.. and priced about 60% most of which has occured on this rally..  I now have room to store my 2017 crop on the farm.

Corn.. similar story.. delivered on contracts.. stored the rest.. I have a crop year priced right now.. 66% old crop 33% new.. If things do not improve.. as I've said.. I'm not selling anything more this year below $4.00..  If I don't get it.. I'll just deliver the rest of my 2016 crop on 2017 $4+ contracts...  We will be planting LESS corn acres this spring.

However, I plan to go into the next drought with my bins full.. Todd knows what i mean.. 

Beans.. Mostly gone.. I got 33% contracted over $10.. Got 25% of 2017 contracted over $10.. was going to plant more acres.. but considering options.. cotton.. sorghum.. etc..  I got about 4 loads left.. who cares what it does now.. under loan.. they will be my summer weather card bushels.. so see what July brings..  If things don't improve just cut acres..  I'm not gonna plant beans for under $10.. as it doesn't pay..

Soybeans are the double crop for us.. our "Safrina" if you will.. in 2013 we turned 1700 acres around.. next year.. could be zero.  In 2016.. we did about a thousand.. the tail end were pretty poor.. about 25 bu to the acre.. which SUCKS!!  We ran out of moisture.. and 2016 was better than the odds say going forward.. "done with that.."

It doesn't pay to grow double crop at these prices..  I wonder what the Brazilians are finding...??  They got a longer growing season.. but I'm sure they are licking their wounds also...  as the Brazilian REAL has GAINED even on the US $$$..

We had wonderful wheat crops last year.. 40 to 50 bu dryland and 80 to 95 bu irrigated.. it's been awhile since we've had a late freeze.. the last time our beautiful irrigated wheaties did 26 bu on a late spring freeze.. OUCH!!  So nothing is guaranteed.. and the bears are getting a little to sassy in their grind and expectations towards lower prices

"in my humble opinion."

However, I expect Large stocks.. Large Corn Stocks.. Large Bean Stocks.. Large Wheat Stocks.. tomorrow.. those no doubt will be bearish.

Acreage.. probably a bullish wheat acre number.. It's not reported tomorrow but we're on track to plant too many beans..  vs NOT ENOUGH corn acres.. for the coming drought..

po pooh it all ya want but like the business cycle it's coming.. we just do not know when...

We are starting to see some Wall Street $$$ coming into Ag.. the stock market is frothy.. and inflation concerns are on the rise.. this will be supportive.. a stronger dollar will hinder.. et all..

In the past decade there are irrigation wells in SW Kansas which have declined over 100 feet.. that will not continue.. as irrigated acreage shrinks in this area going forward.

The next drought is gonna be a doosy.. It may not occur in 2017.. but it will come.

later.