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Discussion Starter #1 (Edited)

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Need a title rework.
I agree but some will frown over the title "When will the USDA pull their head out of their ass".

Many of you that know me will realize this wasn't my first choice in wording but rather I opted for the PG ish version of what popped into my head.
 

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With 70%+ of the crop harvested, there are ample supplies for the next 4-5 months. If prices rally it will be when the supply starts to dry up. Nothing to say yet that this crop won't come off and add to the supply. I have crop left in the field that wont get harvested till next spring. At this point I am still hoping it winters well and will be worth something next spring. Until the market hears differently that unharvested grain is still in play.

Personally, I think that markets are showing higher futures numbers for each month you go further out, which I take as a positive sign.

Feed barley prices have be getting stronger as the corn crop is going to be slower getting to the feedlots than they thought.
 

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What you have there is called on farm storage Twix. It's factored into the USDA projections. And projections is a good word. When I looked at the reports and did a little digging I noticed all their data is "estimates" for September, October and I beleive that continues into their January reporting. Meaning that you don't look at a November report and expect to see the numbers posted in September as estimates now being revised with actual data. The estimates stand for some time. I could be wrong about all that so mention it here for others to look at. I am looking to see who in the grain industry decides to ignore the USDA reports and begin making their own decisions. It used to work that way, money was made and businesses operated by ignoring all government data and find opportunities but in the last 10 years or so it seemed the opposite occurred where everything has followed exactly what government data says. And why we see markets reacting the moment a USDA report is issued.

I am thinking with so much "on farm storage", a long cold winter, and people starting to think the USDA is not the best source for info on available resources that price may move up in the next few months. Johnson's Daily keeps talking about busy trucking to Alberta. Cheap feed could be the simple explanation but perhaps buyers are not betting their business on feed being as abundant late in spring as the ag reports have us beleive. Crop in field doesn't help come April. And alot of that stuff around here isn't going to hit the bin in spring either, probably get destroyed/burnt.
 

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They showed this year they are comfortable making revisions for this crop all the way into September of next year. But by then if were looking a decent or trend 2020 crop, it wont hardly matter. Its data smoothing to prevent extremes.

However, a surprise disaster 2020 in conjunction with overestimated 2019 would make for much larger fireworks than if theyd have estimated correctly the first time. But the likelihood of back to back poor years with our equipment and genetics nowadays is low.
 

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apparently one should be stocking up on frozen French fries...........



ASF such a huge question mark on feed grain use right now. no one could ever estimate world feed consumption right now. which does make the lack of volatility in markets odd.
 

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I thought feed grains would be right in the dumpster but have actually popped up a bit.

Might get a decent bump out of a signed agreement out of China. China’s dragging its feet and it sounds like Donald is getting a bit desperate to get something done.

Canola consumption is actually ahead of last years pace not due to exports but strong domestic use. A good crush margin has the crushers with the pedal to the floor. Don’t know if they can keep that pace up but thank god that market is strong.
 

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I am thinking feed will keep going up regardless of USDA and its estimates. 2018 was dry, by July 2019 it was very dry and a lot of cattle guys were getting worried. Now we have a bunch of grain in the field not accessible for some time and will be of unknown quantity. Not to mention the low quality stuff that already came off. So the question is whether all grain binned to date addresses those factors and will keep price from going any higher.

As I understand it, the USDA report revises their estimates monthly into January but don't know about after that. The question is what are they using to create revisions.

From page 8 of pdf. From what I read is there is methodology that is adhered to even during unusual situations. Kind of like ISO 9000 procedures where it doesn't matter whether what you are doing is correct or meets the needs of present situation. What is important is you keep doing it the same. There is a lot of areas to question methodology on adverse years like this one.



Identical procedures are used to forecast yields for both winter and spring wheat. Number of head
forecasts are based on different models depending upon crop maturity. These models have a
considerable forecast error until emerged heads are present to count. Historical average head weights are
used until fertile spikelets and actual filled grains are available to be counted.
Potential accuracy of each month’s forecast for these crops is dependent on the crop maturity at the time
of the forecast and future weather. When maturity lags normal patterns, number of pods, ears, etc., is
based on number of plants and fruiting positions rather than actual number of fruit. Thus, when maturity
lags, the forecasts become more variable because the expected number of fruit can differ from the final.
However, the primary source of forecast error occurs when final end of season fruit weights differ from
the historic average because fruit weight cannot be fully determined until crop maturity.
NASS will revise estimates of harvested acres if necessary during the forecast season. Again, the goal is
to make the production forecasts as accurate as possible. The production forecasts are based on
projecting the acres that will be harvested and the final yield per harvested acre. If acres are lost during
the forecast season because of weather or disease problems, those yields drop to zero, the acres are
classified as planted but abandoned, and acres for harvest reduced. For this reason, it is possible for the
production forecast to be reduced without a corresponding drop in forecast yield per acre. It is also
possible for the yield per acre to increase during adverse periods if acres for harvest are abandoned and
classified as not for harvest. Data on which to base changes in harvested acres come from the yield
forecast surveys when sample fields are taken out of production or the operator reports acres no longer
being considered for harvest.
 

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I think we are definitely seeing markets that respond less rapidly to North American production fluctuations than they used to.(Yes I know I'm stating the obvious) Eastern Europe is slowly getting their considerable production potential in gear and we all know what has happened in South American in the last 20 years . Feed grain usage in China is way down due to the rapid reduction in hog numbers. I am actually surprised that markets have held on as well as they have. And I'm not surprised they have fallen below COP in the higher land rent areas of the US and Canada. So I guess my idea is that they won't respond any further to our problems until ours are compounded with some problems elsewhere, Europe and South America to be exact. The days of Australian and Western Canadian drought moving the world wheat markets are long over. Even more surprising is that trouble in the I states and the newer Northern row crop areas don't seem to affect the markets like they used to. And yes the USDA does have their heads up their @^& but that is only part of the story.There will be some sentiment that the crop will still come off in spring and end up in the feed market. You should be able to see that reflected in the spreads. I haven't checked to see if that's the case.
 

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An election year is coming up. That normally means prices go up a bit?? There doesn't seem to be a normal anymore. This civil war we have going on is costing all of North America. South America seems to be doing great from it. I keep wondering who wants to deal with South America for the long term? Things have to work out eventually? Lots of questions, few answers.
 

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With 70%+ of the crop harvested, there are ample supplies for the next 4-5 months. If prices rally it will be when the supply starts to dry up. Nothing to say yet that this crop won't come off and add to the supply. I have crop left in the field that wont get harvested till next spring. At this point I am still hoping it winters well and will be worth something next spring. Until the market hears differently that unharvested grain is still in play.

Personally, I think that markets are showing higher futures numbers for each month you go further out, which I take as a positive sign.

Feed barley prices have be getting stronger as the corn crop is going to be slower getting to the feedlots than they thought.
"higher futures numbers for each month you go further out" actually is reflective of a mkt that has too much supply and is not really positive sign for future mkt strength - even though that is the popular farmer deception. IE - you would be better off selling current forward mkts and carrying grain to deliver against them unless you think there will be something that materially changes the supply or perception of supply by next Spring. This is something that could be turned into a very solid mktg strategy for the people in the crowd who seem to have to grow canola each year.

I actually think mkts acting very well considering all of the trade headwinds that likely the most talked about threat to Cdn/Aussie mkts. Heck - I am still selling into spot mkts just to accommodate grain drying and space - carrying costs become very real when you have to handle the stuff multiple times.
 

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Anyone seeing anything better than $6 delivered for dry #2 CWRS 14.5 pro with 330-360 falling number? This is bs - we are giving it away at these prices.
 

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Cost of production is high. $100/acre rent and other huge fixed costs there is no margin for error or bad weather. The Cartel here rented an entire farmers acres here for the first $100/acre I have seen within 30 miles of me. The farmer didn't have to think long about that offer lol. Most money he has made /acre in his life with no headaches lol. If prices remain in the crapper there is going to be some worried lenders. Seems the only ones gobbling up every piece of land available around here are the Mennonites (Cartel)with bottomless bank accounts. Money laundering and farming go hand in hand. What easier way could anyone launder money lol.
 

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Door killer the Mennonites have the same tax laws as we do. They as whole work hard and spend their money wisely. Everyone that services the farmer from the equipment side to the input side is taking too much of the pie and leaving the crumbs for the farmer to live on. Farmers to their demise have always been willing to take big risk for a low rate of return. It is better to walk away from renting high price land that has almost no chance of making money than to risk financial ruin.
 

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I am wondering why cash price is around $1.80 higher on HRS than futures when looking at futures charts. I have been using barcharts to watch the futures. MWY00 is $6.74 and MWZ19 is $4.94. Look at portland trading price for DNS and they show $6.38-6.74 for December. https://www.ams.usda.gov/mnreports/jo_gr110.txt

What is going on with Hard Red Spring futures?
 

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I am wondering why cash price is around $1.80 higher on HRS than futures when looking at futures charts. I have been using barcharts to watch the futures. MWY00 is $6.74 and MWZ19 is $4.94. Look at portland trading price for DNS and they show $6.38-6.74 for December. https://www.ams.usda.gov/mnreports/jo_gr110.txt

What is going on with Hard Red Spring futures?
Think there a few things going on there. First, I believe Mpls futures reflect interior delivery so a few of those things that make up increased farmers cost in the basis that gets it out to Portland port position - IE rr cost keep going up and they still strike. Also, believe Mpls futures are a 13% prot and think sales values you have above are 14% - spreads/discounts have certainly widened in Canada this yr with harvest mess. In Canada if you down in even #2,13.5 type protein values being paid pretty much comparable to feed.
 
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