Consider These Facts Before Selling In A Panic
Jun 17, 2011
The corn market has been under pressure as of late and could continue under pressure as the big-boys try and sort out the "outside" markets and decide just how much money they want to allocate towards the commodity sector. In the end however, I think corn still has a few unanswered questions that might ultimately provide the market with some renewed life. To begin with, it is my contention that no one really knows how many acres of corn actually went in the ground. How many acres were sent to preventive planting? How many acres were switched to beans? How many acres were flooded and how many more will be flooded in the coming weeks? On top of that, no one is even close to having enough information at this juncture to make an educated guess at this years yield. With this being said we still have to then assume all of these "cards" are still in the deck. Certainly they could be dealt and turned over as "bearish" cards, but they could also be revealed as being extremely "bullish." In any event, these variables are still unknown and look to remain unknown for several weeks. Some additional cards that I believe are still in the deck pertain to last years crop, and just how much of it we actually have left? If you are of the belief that most US farmers have already sold their 2010 crop, and what bushels they do have remaining in the bin they are in no hurry to get rid of or as far as that goes they don't really need to get rid of, then we are on the same page. I believe many producers had a great year and are content with sitting on their remaining bushels and letting this one play out. Stocks are just too tight for producers to be forced into selling. That means with very few new supplies coming in the door, the elevators are left to make due with what they have on hand. To make matters worse the ethanol plants are bidding bushels higher. You have to believe if the farmer is considering a sale, then most of the bushels are heading to the ethanol plants, and being used for production. That leaves fewer and fewer bushels available for the elevators, feed lots or other end users. If the USDA wasn't 100% correct in their assessment of last years crop, then we could all of a sudden have a serious issue on our hands. Say for example the USDA's yield estimate was off by just a touch, and we were actually lower than last year like many have suggested. What happens then? What happens if feed-usage was actually a little more than they have estimated? The numbers that the USDA provide us with can not be considered an exact science. Certainly those folks are trying to do their best and provide us with the most accurate data, but be realistic. You guys have filled out the surveys, you guys have taken the calls on occasion, how accurate were you in regards to the information you provide them? Did you count it down to the last bushel? They can only report as accurately as the information they have been provided. I think I am willing to take a chance this time around that these numbers might be off just enough that we finally have the opportunity to take a really accurate account of inventory. My assumption is, taking inventory might just become a whole lot easier when there isn't any thing left to count....
If you are not getting my free report make sure you get signed up by simply following the link below. You can also click the button below to follow my Team and I on Twitter and get daily updates on what is happening in the grain and livestock markets.
Send My Free Report