Buy the rumor, sell the fact. A neutral to bullish number followed by a puke fest?
This suggests a head slap is coming for unpriced 2012 grain.
Today a friend sent me an article saying that about 45 percent of producers have nothing sold for 2012. It could get ugly for a farmer if they don’t have a good risk/management plan.
How ugly? How about ugly enough for Willie Nelson to have a chance to do a whole new round of fund raising for failed farmers. How could that happen, with near record high prices historically?
Very easily. If we return prices to below the cost of production and if a farmer has not either cash forward sold or hedged himself properly with put options, he could be delivering 3.40 cent corn when his break even was 4.60. In effect delivering and losing on every bushel he produces….
Today is April 10th 2012. I hope I am wrong, but I think 6 months from now in October or November, we could have corn with a 3 in front of it instead of a 5 or a 6. Currently we have CZ12 corn at 543 a bushel. If a farmer’s break even is 4.60, then he is sitting with 75 cents a bushel profit. If he does not protect that profit, he is just gambling. And gambling is not marketing, nor is it risk management. You might as well just close your eyes and walk across the interstate and hope for the best. Hope is not a marketing plan.
CER