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SC Iowa | Mikado------the beauty of your current situation is that you don't HAVE to do anything in the short-run .....and I'm a guy who thinks that Jan/Feb may be like the pre-ethanol boom days when we had soft futures markets in years with adequate corn supply.....just not a lot of fun for anything really needing cash flow in next 60 days....and I think March will be a month where basis can get real sloppy with the amount of corn needing to move for quality reasons pre-planting....so if we start getting a futures rally in March, and more corn than normal needs to move---well, that is my recipe for a corn basis train wreck.....
Ya know, I've been wondering for months how we're going to get those 90 myn acres planted...same concerns as other folks-----wet fall, limited fieldwork, lots of winter moisture to melt and move.....but for me, it all comes back to the price of fall 2010 soybeans.....when the $10 bean opportunity was in play, I saw NO WAY we were going to get 90 myn corn acres unless CZ10 pushed into the 4.55-4.75 area, which was one reason I was not eager to push new crop sales past 25% in the 4.40-4.50 area of CZ10.... I know folks should focus on "margins" regardless of price, but there are a lot of folks in the upper half of the demographic farmer age profile who think that $10 beans are a heck of a price, and given the fact we finally had a lot more 60+ yields this year, that $600 bean gross revenue is (was) attractive...
So now we are on to a different scenario, and starting to wonder about China bean demand and whether a monster SA bean crop can drop new crop beans to 8.50 on the board......that's a game changer
And here is another X factor: the corn market has consisently offered the opportunity to earn substantial futures and cash carries post harvest for several years, something the bean market has not done....so when making the "standard comparisons" of SX/CZ to look at price ratios between the two crops, that does not always tell the whole story, especially for the farmer with significant on farm storage capacity that can hedge those 30-35 cent Dec/July futures carries that appear with regularity....
Sooooo.......there is plenty to worry about on both bull and bear side.....regulatory issues in size of fund positions keeps popping up and can temper bull side enthusiasm....I expect the corn export number to slide over time, and these feed wheat import stories are worrisome for both corn and wheat domestic usage patterns....on the bull side, we know there is still uncertainty about crop size, test weights, etc. etc....fact is, we aren't going to know for a long, long time what the real numbers might be.....it just the way the system works, and it's frustrating when we live in an instant gratification/want to know with 100% accuracy now kind of society....
My question to you is this----are you willing to sell more corn at 4.50 Dec 2010 futures?? If so, why not consider selling the Dec 10 4.00 call option for 50 cents....it's an interesting proposition for another 25% of your corn production......
Lastly, without a signifcant change in market structure, the ACRE program is going to get attention again this year.....for those who signed up last year, they may be looking at how to lock in the opportunity and for those who didn't they may be looking at signing up in 2010 since the gross revenue calculation can only slide 10% per year.....no shortage of things to be looking at....
good luck
Ray J
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corn- panic or hold
