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Post by looter on Jul 27, 2011 21:44:42 GMT -5
Had an odd phone call today. A large trucking firm whom is reputable and I know personally called me today to ask if I knew any farmers in western SD with old crop corn. They have a dairy in Utah bidding $2 ABOVE the board picked up in the Rapid area. The guy said there is literally no old crop to be had???
Good lord! What must corn be costing the Mormans these days? (By the time its trucked all the way from Rapid) Can Utah milk prices offset it? Wouldn't HRW in Rapid City be cheaper???
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Post by looter on Jul 27, 2011 21:48:25 GMT -5
Is the scenario above an anomaly? Or does bull-spreading Sept vs Dec corn make sense?
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dman
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Post by dman on Jul 27, 2011 21:53:06 GMT -5
In simple terms OBG(sorry old habits die hard).....looter.......NO!!! Utah milk prices do not cover board +$2 corn. But many of those out there are "to big to fail", the banks/investors will just keep pouring money down a rat hole. WHY? Because you can NOT find a good energy replacement for corn. This dairy stuff is going to get interesting......
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Post by Hobbyfarmer on Jul 27, 2011 22:01:48 GMT -5
looks like they could find it in Neb.
for a buck and a half I'll load them out of my bins.
For a dollar over they can take beans with them too you pick any of the first 5 contracts.
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Post by looter on Jul 28, 2011 6:41:39 GMT -5
In simple terms OBG(sorry old habits die hard).....looter.......NO!!! Utah milk prices do not cover board +$2 corn. But many of those out there are "to big to fail", the banks/investors will just keep pouring money down a rat hole. WHY? Because you can NOT find a good energy replacement for corn. This dairy stuff is going to get interesting...... Are dairy economics presently working? Is another asz-rape in the dairy industry on its way? Will the dairy BTO's say uncle at some point? Thanks! |
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Post by looter on Jul 28, 2011 7:15:43 GMT -5
Does anybody here do spreads? With Sep and Dec even money do you enter a Spread Ticket? Or do you leg it in yourself, starting with the deferred?
What is cash corn in other areas?
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Post by ses on Jul 28, 2011 7:18:29 GMT -5
The basis on corn is +4 here. Don't remember that happening before. It's still July, the early corn down south is a short crop. Probably going to be a pretty good crop other places but pulling all of the new crop forward that can be bought will probably make the 2012 crop even tougher to maintain ending stocks in future years.
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Post by looter on Jul 28, 2011 7:28:51 GMT -5
Perhaps the guys who said the June USDA report would create a physical shortage will look Damn smart?
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Post by ses on Jul 28, 2011 7:35:12 GMT -5
That crossed my mind too, Bryan. LMAO How do the explain actual bids coming in that high? I don't think they have printing presses for corn. Kinda doubt if adding another 300 mil bushels to the paper bottom line will fix any thing.
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dman
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Post by dman on Jul 28, 2011 22:15:40 GMT -5
In simple terms OBG(sorry old habits die hard).....looter.......NO!!! Utah milk prices do not cover board +$2 corn. But many of those out there are "to big to fail", the banks/investors will just keep pouring money down a rat hole. WHY? Because you can NOT find a good energy replacement for corn. This dairy stuff is going to get interesting...... Are dairy economics presently working? Is another asz-rape in the dairy industry on its way? Will the dairy BTO's say uncle at some point? Thanks! They don't work if you have to buy all your feed. Those of us who can grow all our feed, are much better off. When you are looking at $60-70/T to BUY corn silage, then throw harvesting on top of that, add in $2-300/T alfalfa hay, $380 SBM and oh yeah need to feed some corn grain too.....even with $20/cwt milk, it does not pencil out to buy all your feed. The will of BTO's to NOT say uncle continues to amaze me. |
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Post by looter on Jul 28, 2011 22:23:57 GMT -5
Are dairy economics presently working? Is another asz-rape in the dairy industry on its way? Will the dairy BTO's say uncle at some point? Thanks! They don't work if you have to buy all your feed. Those of us who can grow all our feed, are much better off. When you are looking at $60-70/T to BUY corn silage, then throw harvesting on top of that, add in $2-300/T alfalfa hay, $380 SBM and oh yeah need to feed some corn grain too.....even with $20/cwt milk, it does not pencil out to buy all your feed. The will of BTO's to NOT say uncle continues to amaze me. Would you say that a guy who raises his own feed and sells it to his own dairy instead of whoever else is paying full market price is subsidizing his dairy? Hard to say for me. The basis on forage etc is astronomical so its not as simple as the "opportunity cost economists" tell us?? Anyway thanks for the info! |
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dman
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Post by dman on Jul 30, 2011 22:26:47 GMT -5
They don't work if you have to buy all your feed. Those of us who can grow all our feed, are much better off. When you are looking at $60-70/T to BUY corn silage, then throw harvesting on top of that, add in $2-300/T alfalfa hay, $380 SBM and oh yeah need to feed some corn grain too.....even with $20/cwt milk, it does not pencil out to buy all your feed. The will of BTO's to NOT say uncle continues to amaze me. Would you say that a guy who raises his own feed and sells it to his own dairy instead of whoever else is paying full market price is subsidizing his dairy? Hard to say for me. The basis on forage etc is astronomical so its not as simple as the "opportunity cost economists" tell us?? Anyway thanks for the info! I always laugh at the "oppurtunity cost" stuff when it comes to dairy. Dairy is unique situation, you can't just walk away from it and get started again. So in short, no it is not as simple as just looking at "oppurtunity cost". I don't believe that growing your own feed is subsidizing the dairy, if that is true, then did/does the dairy not subsidize the crop enterprise when grain prices were/are low? |
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Post by looter on Jul 31, 2011 0:28:17 GMT -5
Would you say that a guy who raises his own feed and sells it to his own dairy instead of whoever else is paying full market price is subsidizing his dairy? Hard to say for me. The basis on forage etc is astronomical so its not as simple as the "opportunity cost economists" tell us?? Anyway thanks for the info! I always laugh at the "oppurtunity cost" stuff when it comes to dairy. Dairy is unique situation, you can't just walk away from it and get started again. So in short, no it is not as simple as just looking at "oppurtunity cost". I don't believe that growing your own feed is subsidizing the dairy, if that is true, then did/does the dairy not subsidize the crop enterprise when grain prices were/are low? I have zero clue on dairy, so I'll take your word for it. Found out that dairy in Utah is paying $9.42/bu for corn FOB its doorstep. If we background our calves and we can buy corn for less than we can grow it, (which happens on dry years) then our own feedlot is definitely subsidizing our grain farm. The inflated grain cost from our poor yields get shoved down the calves throat. The calf feeding operation in that example is getting screen over by our high cost farming operation. My ag econ instructor told anybody who said their feed didn't cost market price to sell it to him on the cheap. If it has low value to a person, then it shouldn't bother them to sell it for a low value. I understand Dairy is a differant animal. Also its likely common for a diversified grain/hog outfit to alternate between which operation is subsidizing the other? |
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dman
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Post by dman on Aug 1, 2011 12:17:19 GMT -5
Ever notice how oppurtunity cost always tells you, that you did the wrong thing? Think about, when has OC ever said you would have made less money doing the "other" thing? At least in Ag anyway. But OC is not a "real world" number so to speak. If it were "real world" then there would not be any beans planted this year, as the OC was higher with corn. But if all corn was planted, price of beans would go up, and corn down and then OC would say you should have planted beans!!
I can't argue against what your Ag econ instructor said, the hard part is how do you put a value on that corn? I value it at what I could have sold it for off the combine in the fall. Goes into all the ration costs. I've made the investment in the dairy facilities, but many people when they look at OC, they do not take into account the ROI on those dollars spent there.
That said at $9.42/bu to buy corn it will take roughly 20% of that farms milk sales just to but that corn. Say nothing of the other feed, labor, ROI and such. I really don't know how those guys keep going. At some even if it is investor money in the dairy, don't they need to show a profit?
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