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  1. #1
    Banned IA CORN FARMER is on a distinguished road
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    Demand Driven Market vs. Supply Cut Market

    We are in obviously in Supply-Cut Driven Market today vs a Demand Driven Market. Any thoughts on how these 2 very different types of markets will affect the corn market for new crop?

  2. #2
    Senior Member Beaner is on a distinguished road
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    Prices have to be higher than they would otherwise because demand has to be limited earlier in the year to assure adequate supply later in the year.

  3. #3
    Banned IA CORN FARMER is on a distinguished road
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    Quote Originally Posted by Beaner View Post
    Prices have to be higher than they would otherwise because demand has to be limited earlier in the year to assure adequate supply later in the year.
    Very true. What has me most concerned is the timing of the corn-rationing event. Will it occur in 2011 or 2012? With a Supply-Cut Driven Market, the timing of corn-rationing event could be vastly different than the timing of a corn-rationing event for a Demand Driven Market. This could have a very large effect on when to time our new crop corn sales I believe. I guess some insight could be derived by looking at past Supply-Reduction corn markets and compare them to past Demand-Driven Corn Markets.

  4. #4
    Senior Member roger7 is on a distinguished road
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    I think a 'demand driven' market is more of a speculative market with all participants grabbing for a share of a quickly rising commodity like we have seen in the last ten months, it is highly volatile. In a supply cut market, increases will be slower and grudgingly given up by buyers as it will be based more on fundamentals, speculators won't be as willing a participants because they will sense this may be the top and don't want to be caught in a quick back slide. True users will keep bidding as long as they see a profit to be made from the product the commodity is being used for. That is MHO, I doubt if anybody will agree with it, but that's OK. R7

  5. #5
    Senior Member 48 is on a distinguished road
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    Quote Originally Posted by IA CORN FARMER View Post
    We are in obviously in Supply-Cut Driven Market today vs a Demand Driven Market. Any thoughts on how these 2 very different types of markets will affect the corn market for new crop?
    ICF: First...your premises are wrong. I assume you are looking at USDA dropping Feed Use and Exports. This is absolute BS. Feedlots are packed with calves from Texas due to the drought. TX is the No. 1 cattle state, and a lot of cows have gone to slaughter, so you could correctly say next year there will be less calves and less feed demand. BUT, with record low number of calves, the price of meat will be high, and weights could easily be pushed to 1400#. Ironically, feed lots usually push weights to 1400# when the price of corn is high, and they are losing money. It is this elasticity of 1200-1400 that you need to take into account. Ethanol demand is fixed unless they modify the Mandate. Exports are diminished somewhat by world feed wheat, but China is importing corn. The bottom line is USDA is massaging demand numbers to keep Ending Stocks artificially high. They are also massaging 2010/11 numbers to keep 2011/12 Beginning Stocks=940mb artificially high to keep 2011/12 Ending Stocks artificially high. $7 corn did not ration beef cattle and pork demand cuz beef and pork prices are high, AND beef and pork exports are high. Price does not ration ethanol demand cuz of the Mandate UNLESS crude oil crashes.

    Look...if 2010/11 Ending Stocks are really 940mb, why have we had high corn prices since USDA was finally forced to tell the truth on the June 30, 2010 Stocks&Acres report? Don't look at USDA. Look at the CASH market.

  6. #6
    Senior Member ECI is on a distinguished road ECI's Avatar
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    Quote Originally Posted by IA CORN FARMER View Post
    Very true. What has me most concerned is the timing of the corn-rationing event. Will it occur in 2011 or 2012? With a Supply-Cut Driven Market, the timing of corn-rationing event could be vastly different than the timing of a corn-rationing event for a Demand Driven Market. This could have a very large effect on when to time our new crop corn sales I believe. I guess some insight could be derived by looking at past Supply-Reduction corn markets and compare them to past Demand-Driven Corn Markets.
    Well he's my two cent's worth ICF , But I think the rationing is aready start'd for next year . The USDA did raise carry out up to what , 944 ??? From what 7 something . The big thing is not how high the price of corn we go But How much money we the banks keep throwing out to place's loseing there azz now , like chicken producers , boilers , turkeys ( the animals ) and some high end ethanol plants ! This will be done with in short order . Oil keeps dropping it will really start puting the hurt on ethanol , all this will cut useage , other country's will be looking everywhere but here for cheaper grain , wheat feeding is up and will keep going up while under corn .
    One other thing is the economy here and aboard , if things were like they were a few years ago , what would corn be now 10 12 or 15 bucks a bu. ?
    One other thing is , IF the crop really comes in short , the Nighty News will have a hey day with the food to fuel deal !! that will be all we here Every F-ing night on the news .
    Anyway probably about as wrong as you can get here as I proved the other day at my guess at the report , LOl Have a good all , Ken

  7. #7
    Banned IA CORN FARMER is on a distinguished road
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    Good points Rodger7. Guess our only job here is to try and figure out the difference between these 2 different types of markets in regard to the best time period to market our new crop corn.One way to start would be to look at historical data.

  8. #8
    Senior Member r3020 is on a distinguished road r3020's Avatar
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    With ethanol exports running around 700 million gallons corn demand could be cut by 250 million bushels and still not be effected by the mandate.

  9. #9
    Senior Member roger7 is on a distinguished road
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    48, you are missing one point on ethanol demand. We are exporting ethanol. Brazil's currency is strong,sugar prices are high so more of their cain is going to sugar rather than ethanol. World sugar production is expected to be down another 4.6% next year so don't look for those prices to be going down. Because of ethanol shortages Brazil has cut ethanol mandates from 25% to 23%, but shortages persist. I don't think demand is going to crash as fast as USDA thinks. R7

  10. #10
    Senior Member 48 is on a distinguished road
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    ECI: FORD=Functionally Obsolete Recognitive Dissonance. lol. JHF ole buddy.

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