Farmers added as much as 2.5 billion bushels in grain storage capacity in the last five years, thanks to strong earnings. The way corn prices are trending, they might fill every square inch of them, says Jerry Gulke, president of the Gulke Group.
He compares current market conditions to a giant cat-and-mouse game. Many grain end users, presumably the cats, bought short.
"They are as greedy as we are in farming," says Gulke. "We want to get the highest price, and they want to get the cheapest."
But the new wrinkle in the game is that U.S. farmers, the mice, have added a huge amount of storage capacity.
The market, speculator and end user all believe that farmers will cave in, just like they always have, and sell grain for a low price, Gulke says. "But we have not been in this situation before; we have some money left over, and we’ve got insurance that might pay us," he says.
Sharply Lower Dollar, Exports Support Grains
The Federal Reserve’s announcement of continued bond buying sent the dollar index lower. The flight from relatively safe assets into relatively more risky assets supported the commodity complex. China signed papers for a huge soybean purchase, and more soybeans were sold to an unknown destination (9/18/13).