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IL near StL | After the recent run up on corn and beans and a shower keeping us out of the fields for what looks to be a few days I spent some time really looking at things this morning. Given current prices there are pretty good margins laying on the table using average yields.
Question #1 is assuming an average growing season, what kind of prices are we realistically looking at? Yes, things are dry in areas, no things don't look too shiny for the SA Safrina corn crop right now and there are a crap load of unknowns but given current S&D and maybe using bigger acre numbers than USDA is using right now, what sort of price range "should" we be in?
Question #2, when the funds decide to start to even up their positions, how much gas does that take with it? Not thinking that it happens soon but it will happen at some point.
Question #3, I've read multiple comments lately referencing the 2008 run up and in some cases folks will mention adjusting those prices for inflation. Now it's clear to me that inflation is happening around us and it will definitely affect our costs moving forward but can inflation really cause our crop prices to rise? Seems to me that it is more a function of S&D. I figure that high crop prices can cause input prices to inflate, equipment prices to inflate and land costs to inflate but I've never felt like it worked the other way, at least to any great degree. I suppose if the speculators are buying as some sort of an inflation hedge then that could cause it and maybe that is part of what is happening now.
Bottom line, there is a lot of emotion in the grain markets right now and I guess I am trying to cancel the noise a little bit if for no other reason than to get a realistic picture of where we are really at and then be able to make some sound financial decisions moving forward. | |
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Realistically, where are we at?
