July 26, 2013
Hello Pro Farmer Members!
Have you ever heard the story about the old Texas cowhand that decided he'd like to harvest one of the deer that had been sneaking up to his stock tank for a drink at night? And then they got so bold that they started eating out of the creep feeder in the middle of the day? And then they got so used to seeing him around and taking feed to the feeder that they were right there waiting for him and eating out of the feeder while he filled it?
No? You've never heard it?
Well... he wanted some venison for the freezer, but not from the scrawny critters that were at his feeder. He thought it'd be a great idea to rope one, lock it in the barn and feed it until it was fat on corn. He had a plan... got the rope on it... and once the 100-lb. deer realized it had a rope around its neck it took on the strength of 20 men and drug that old cowhand through cactus and thorn bushes and busted up his bones and blackened an eye before he finally cut it lose.
At that point, he decided he really didn't like venison.
That's kind of what it was like for bulls in the grain markets this week... and many decided they really don't like being a bull in the grain markets any more.
That's good. And while they decided they don't want to be a bull any more, they sure don't want to be a bear with uncertain crop potential and prices low enough to rebuild demand from the domestic feed and ethanol industries and from foreign feed makers. So the one-time bulls became wannabe bulls this week. Now they're on the sidelines waiting for the downside momentum to exhaust itself.
But even when that happens, the busted-up bulls in the corn and soybean markets won't likely jump right back onto the long side of the markets. They'll let the markets build a nice base... maybe even as they just drift lower to rebuild demand lost during the run to all-time highs just last year.
On the front page of this week's newsletter in the eartag column, I made mention that this year's market reminds us of the 2010-crop corn market. That year followed a big, but low-quality corn crop. Crop problems really didn't develop until later in the 2010 growing season and by the time the market believed corn yields wouldn't be as good as earlier advertised, demand was rolling back into the market. Exporters front-loaded needs and ended up buying about 1.95 billion bu. of our 2010-crop corn when prices were near the lows.
By the time we got the crop problems confirmed by USDA (at that time, a crop problem was a 152.8 national average yield) the new-crop cash corn bid had fallen to about $2.85 in July of 2010. By April of 2011, the 2010-crop cash corn bid was over $7.00.
Things changed quickly... kind of like the old cowhand's attitude about venison.
That's it for now...
... I'll be in and out of the office next week. My son Tom will have his market heifer and steer at the Bremer Co. Fair and I can't resist but to hang around the fair for a while. He shows on Thursday and I'll leave next week's newsletter in the capable hands of your Pro Farmer editorial staff next week.
But before I take a couple of days off next week, I'm going to take an aerial view of the Iowa and Minnesota corn crops on Monday. I'll get a report ready for the newsletter.
I'll also have something really cool in the newsletter next week. I've got all the details of how USDA NASS enumerators go about sampling corn and soybeans for USDA Crop Production Reports. I'll have those details for you on page 4 of the newsletter next week.
Follow me on Twitter at @ChipFlory
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