It'll be a bottle-rocket rally without demand
May 03, 2013
From The Editor
May 3, 2013
Hello Pro Farmer Members!
"Anxious" doesn't really describe how your feeling now, does it? Most of you made the right decision and your seed is sitting safely in the shed and out of the miserable weather. Those of you with seed in the ground that's nestled beneith a blanket of snow will probably have a little more work to do in that field before you get a crop up and growing.
But, there are some areas that saw good planting progress this week. When it was snowing in Iowa and Minnesota, planters were rolling hard in South Dakota. There was also some progress made on the southern and eastern edges of the Corn Belt... but growers there had to pick-and-choose their way to the lightest, most-fit ground.
So, needless to say... we're off to a slow start to the 2013 growing season. With the tight old-crop supply (which translates into the new-crop supply-side cushion), you'd think we'd see a stronger response in new-crop futures than we did this week. But there's a missing ingredient -- demand.
Without a demand surprise... or even just consistent minimal growth in demand... supply-side scares trigger bottle-rocket rallies (quick rally and a small "pop"). A supply-side scare that comes with a demand surprise or consistent strong demand growth is the combination that turns a bear into a bull. That hasn't happened... yet.
On News page 2 of this week's newsletter, I made the point that traditional buyers are coming back to the corn market. Export sales to traditional importers like Mexico and Japan were featured in the old-crop market. If they keep buying, 2012-13 corn exports just might be able to get to 800 million bushels. And just as importantly, China is buying new-crop corn for import in the 2013-14 marketing year. If these buyers continue to show up, that could be the "consistent demand growth" that's needed to turn some bears into bulls.
At this point in the season, it's really hard to say yields are being threatened. Conditions could, after all, turn perfect. Soils could dry out and warm up and planters could be rolling in the heart of the Corn Belt within 10 days. Unfortunately... that's not in the forecast. But if the forecast is right, don't expect a runaway bull market in new-crop corn futures... unless consistent demand comes to the market.
If you're not on Twitter yet, get your account open now. You've got to sort through some tweeters out there to separate the wheat from the chaff, but there is good growing-season information to glean from this social media service. Trust me, it's easy to get started. Just go to www.twitter.com and follow the instructions. Once you're there, search for @ChipFlory. Go to the "Following" button on my twitter page and check out some of the people I'm following to start to build a list. You can do the same by going to @BGrete, @JuliJohnston, @MeghanPedersen, @walstenm and @DavisMichaelsen. Those are your Pro Farmer, LandOwner and Inputs Monitor editors and reporters. It's a good place to start to build your twitter feed. You'll be amazed at some of the tidbits of information you can get in just 140 characters!
If you haven't checked out My Grain Trades on your homepage yet, please do that this weekend. This is an exceptionally valuable tool that will help simplify your marketing efforts in the year ahead. Click here to go to the introductory page. It's a free service for Pro Farmer Members that helps you keep track of your grain sales and figures your profit potential on the fly. Just check it out...
Pro Farmer's Marketing Education Series is also now available. It is what the title suggests... a series of workbooks designed to help you make better marketing decisions. Click on the link to learn more about this new project we're putting together.
That's it for now...
Follow me on Twitter at @ChipFlory
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