View the Recommendation summary below, but for the full report click here.
“If we continue to call our elevators pleading the case we need to move everything left in our bins in the next 2 months, those agents will continue to tell their merchants that any Basis level will by as much grain as they need. It is time to stop trying to ram grain into the system.”
We are days away from what has been a critical USDA report the last 4 years. It will most likely set the tone for the markets into and possibly right thru seeding. Last year’s crop size may change some but this report tends to capture the Demand side of things and in the end that’s the key number as Demand is the most challenging component in the S&D to predict and yet is the most stable when it gives it’s hints. Supply is so weatherdependant that a big crop does not always have repercussions longer than the year it was grown but an increase to Demand can be felt for Decades. See China and Soybeans in 2005.
As for our Supply and Congestion problem here at home, it is simply time to start shaving off the amount of bushels that you are going to want to sell this year. If 35% more grain needs exported than our current infrastructure has ever shipped before then somewhere between 25 and 35% is probably not going to get shipped this year and that means around 20% is probably going to be stored on the farm. We need to come to that realization and it may not be a bad thing given today’s Canadian price verse world prices. It’s not long ago that 40% of our cereals got stored most years and that amounted to 15-25% of our total grain.
If we continue to call our elevators pleading the case we need to move everything left in our bins in the next 2 months, those agents will continue to tell their merchants that any Basis level will by as much grain as they need. Start making calls that say you want to move half of your remainder over the next 6 months and are willing to sit on the other half (which should be about 20% of your total crop – or less for the savvy this year) and then start to prepare for that storage as it’s likely happening whether you try to ram it into the system or not.
If the Canadian farmer takes the 20% of his grain off the market now that the market is going to force him to do anyhow – the logistical issue begins to correct and the Grain Handlers actually have to start vying for your business once again. There is 30-50c/bu of upside in doing so for this year’s crop and that held grain could find another $1.00/bu in an uncongested market in early 2015.
It is time to get strategic with our remaining bushels however the USDA turns out on Friday.
The 1st J-MAS Marketing Meeting of ’13/14 winter will be a week or two after crop show in January with ATP presenting on the Agronomy side.