Just wondering if anyone else is concerned that the tables have just been turned on farmers regarding the bidding for the commodity you plant for new crop acres?
Just as there can be a bidding war between different commodities, to get you to plant a particular grain, by increasing the price somewhat each day, I think the inverse can also be played out.
With commodity prices in a descending trend, farmers are forced to lock in new crop prices before they trend even lower. So the bidding is reversed in that farmers will price a particular grain(the best return possible) before they drop any futher, the more farmers price the more new crop prices will drop as end users will see that their needed commodity is being commited to be planted.
The amount of new crop pricing done by farmers will be insignificant in lowering prices as farmers lock in such a small portion this far ahead of harvest, and many farmers never lock in new crop till it's swathed or harvested. But end users also know this and when seeded acres look high enough to staisfy relative to other years then new crop prices will really fall off the table. For those farmers waiting for the price to turn upward will now be in a panic to price at a level they can still profit from, hence driving new crop even lower.
My thoughts, mostly thinking of canloa;
1) New crop bidding war for seeded acres is over.
2) Farmers that haven't priced new crop soon will, while they can still get a double digit price and be profitable.
3) The more new crop farmers price the more it will drop.
4) If there is a drop in the equity markets, this time it will compound the drop in grains.
5) End users will purchase Old crop hand to mouth again, preventing much of a ralley. They will use stocks already bought and crushers will shut down for maintenance.
6) As farmers price their remaining old crop, old crop prices will continue to drop.
7) New crop will ralley again in Dec.
This is not marketing advice!!! Just some thoughts to spur marketing conversation.
Just as there can be a bidding war between different commodities, to get you to plant a particular grain, by increasing the price somewhat each day, I think the inverse can also be played out.
With commodity prices in a descending trend, farmers are forced to lock in new crop prices before they trend even lower. So the bidding is reversed in that farmers will price a particular grain(the best return possible) before they drop any futher, the more farmers price the more new crop prices will drop as end users will see that their needed commodity is being commited to be planted.
The amount of new crop pricing done by farmers will be insignificant in lowering prices as farmers lock in such a small portion this far ahead of harvest, and many farmers never lock in new crop till it's swathed or harvested. But end users also know this and when seeded acres look high enough to staisfy relative to other years then new crop prices will really fall off the table. For those farmers waiting for the price to turn upward will now be in a panic to price at a level they can still profit from, hence driving new crop even lower.
My thoughts, mostly thinking of canloa;
1) New crop bidding war for seeded acres is over.
2) Farmers that haven't priced new crop soon will, while they can still get a double digit price and be profitable.
3) The more new crop farmers price the more it will drop.
4) If there is a drop in the equity markets, this time it will compound the drop in grains.
5) End users will purchase Old crop hand to mouth again, preventing much of a ralley. They will use stocks already bought and crushers will shut down for maintenance.
6) As farmers price their remaining old crop, old crop prices will continue to drop.
7) New crop will ralley again in Dec.
This is not marketing advice!!! Just some thoughts to spur marketing conversation.
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