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South Central Iowa | I hope we get some index buying. I heard on Market Rally that they were talking about inflation buying. I don't know whether I believe that or not. Sometimes you hear things on MRR that you don't hear other places; which usually doesn't mean it is insightful, but rather useless. But I would welcome some index and inflation buying for sure if it will come!
I don't know about our weather thing yet. As long as a person can make a path to shortage on the balance sheet with a disruption, then we will get a weather premium because people want to be on the ground floor of a multi-dollar swing higher. In 2011 we had a 92% of trend line yield; a modest disruption. If we plant 92 million acres of corn and harvest 84.6 with a yield of 169, that is 14,300 mb. Usage this year is projected at 14,620 mb, so that would lower our carryout from the current 2,320 to 2,000 mb. Now if we have a 92% disruption like 2011, that reduces our production to 13,150 and with the same usage, our carryout would be lowered to 850 mb for 17/18. But we won't have the same usage everyone will say. That is correct. We won't have the same usage because price-rationing will come into play, which means that we will have a higher price.
So long as a reasonable disruption can cause price-rationing, we will go to a median ground on price. That median ground the last two years has been $4.50 and occurred in the summer. Why would it be $4.00 and occur in February this year? The answer is it won't. | |
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first 2017 sale
