Grand Rapids, MI | djmcountryboy - 10/6/2009 01:01
Are farmers already holding grain is my question to everyone or is it the harvest being so late? Basis levels are astronomical around St. Louis for December and January delivery. Corn is plus 12 and beans are plus 32.
My thesis is many farmers put up quite a few bins with the big incomes some of them made in the previous years. Am I wrong? I just don't know. It appears farmers are helping prices by having so much more storage on the farm.
My second thesis is either we didn't have as big of a corn crop in 2008 or we didn't plant as many acres as was reported for 2009. We should have the mother of all carryovers when this harvest ends yet prices continue to try and press higher. If the bottom is already in on corn, will prices head a great deal higher? Any opinions would be very helpful.
It appears if folks are holding the commodity based on what I see in front of me instead of holding the "Dixie."
IMHO the basis levels are mainly that harvest is late. Being late by a couple weeks is a lot of extra usage in the old crop year. I think this is coupled with some areas not knowing what the quality of the new crop will be with potential for frost on immature crops, leading to some users snatching up good quality old crop corn.
As for guessing what prices are going to do....not from this economist....I consider that a fools errand. I can tell you, however, that based on the implied volitility, there is a significant risk that this market could go substantially lower (or higher) One would be wise to consider this when managing price risk for their farm. |
The Demise of the Dollar
