|
| A long time ago it was ADM and similar companies that tended to set the bid for grains - bid up when supply is low, bid low when there is plenty. USDA has always been a thing, companies like ADM could just look out their back window and count how many bushels they had or had control over. You could argue that it was a more perfect market with the sellers/producers (us) setting the bottom by our cost of production (or somewhat lower than COP) and ADM deciding the top by how much grain they needed (once achieved, there is no reason to bid higher). Now funds have far more money in the grain market than actual grain buyers and therefore set the bid by their own activity. Since funds and similar traders don't own grain, it's the USDA reports that are the major fundamental influence (of course they do in the field research themselves also, but it may be no better than the USDA's).
I think the result is we have a somewhat higher price than warranted, but not enough to cover a previously inflated cost of production. However, we don't have the fundamental tools working as well - if we stop selling, it may mean absolutely nothing to the funds et al. | |
|
Ears Per Acre
