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| Like John said, the one thing we can all be sure of is that we don't know. The scary thing this year is how extreme the extremes could be.
Bull side - it's dry, and the likelyhood of making up the moisture deficit is low. Plus, from studies I have done on Iowa tree rings, this past year should be the first of about six where Iowa should have poorer growing conditions. This is a cycle that really jumps out of the data, and when I did the study, I used statistical software from the Foundation for the Study of Cycles. The thought that we never have two dry years in a row is simply due, IMHO, to not having much data to look at. As I remember, we only have rainfall data in Iowa back to the 1870s or so. We should expect to see years like the 70s, 50s, and 1890s, and hopefully not like the 30s. As for prices, if we look at charts of the last (what I call the thirty year bull) cycle high, we can see that it ended in a blow-off top. I looked at the meal in particular, and when I plotted it on a log scale, it was a straight line until the blow-off in 73. A linear trend in logs is an exponential function, and that is exactly what it looks like now. Will we get the blow-off, or will it end with a wimper this time? No one knows, but if we get the blow-off, it will be the worst thing that can happen for all of us. Not that CPI adjusted prices mean all that much, but corn adjusted today is about $20 and beans (last I saw) would be $68. I certainly don't expect these prices, but they do give reason to pause and think about how badly we could get hurt in a blow-off, since crop insurance would not cover anything near that price. And, we would really see demand destruction.
The bear side - everyone knows what is going to happen when we raise a normal crop, I think. We will be buried in corn and crying to the government for help again. Keep in mind that whenever the thirty year bull in corn has topped (1917-20, 1946-48, 1973-74), it has taken twelve years just to see the price of corn stop going down.
Other factors - we all know the government is destroying the value of the currency, but if I'm right, it is a fairly controlled thing, and we won't see a sudden impact in one year. But - who knows?
So, I'll be curious to hear opinions - is there any predictability for the price of corn? | |
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Simple poll... 2013 grains. Bullish or bearish
