Marketing
102 www.WallacesFarmer.com ● December 2008
Coming out of economic malaise
Exiting the house of mirrors allows We should see a strong recovery rally
Key Points
Market ■ Economic woes limit the trade’s ability to
you to quickly see reality once again, to buy corn acres for 2009 this winter
but it still takes time to get your feet if we’re able to exit the malaise soon.
Outlook focus on fundamentals. under you and walk a straight path. The Otherwise, the 2009 corn crop will likely
length of time that it takes is generally fall far short of levels needed to meet
■ Soybeans have the strongest near-term
By ARLAN SUDERMAN proportional to the length of time spent demand, requiring a much stronger
fundamentals.
inside the house of mirrors. rally to ration demand sometime late in
■ Corn has the strongest long-term
Likewise, we will eventually exit 2009 or in 2010.
fundamental support to lead.
M
ANY amusement parks have this period of distortion to refocus on Midwest farmers are currently very
an attraction called the house supply and demand rather than on the apprehensive about committing the
of mirrors, where one walks vided a distorted view of reality. Similar daily flow of news from Wall Street. The large capital requirements needed to
through rooms containing mirrors that floods severely curtailed the national length of time it takes for the markets to grow corn next year. As such, they
distort reality. Eventually you lose your corn crop in 1993, although later in the get back on their feet will hinge on the favor an increase in bean acres for 2009.
sense of the outside world, leaving you growing season. Areas that were directly length of time spent in the Wall Street Failure to exit this malaise in time to
woozy and unable to walk a straight affected experienced similar losses this malaise. get the needed corn acres would be
path. year, but nearly ideal growing condi- Global corn fundamentals in par- bearish for soybean fundamentals once
Producers experienced similar condi- tions in July allowed fields outside the ticular are very supportive long-term. we get past the current tight stocks situ-
tions in 2008 when devastating Midwest immediate flood areas to recover much They should be strong enough to even- ation. Of course, all of this assumes that
floods and frozen credit markets pro- of their yield potential. tually lead soybeans back to respect- growing conditions are normal for 2009,
able prices, relative to current input which is always a risky assumption to
Getting back to reality cost levels. However, we first must see make.
The economic collapse of 2008 reached investor confidence
POSTMASTER a crescendo as harvest was gaining restored on Wall
180
Global corn stocks to drop again in 2009-10
Wallaces Farmer (ISSN0043-0129) momentum in the Corn Belt. Like the Street. Otherwise,
is published November for $23.95 160
Midwest floods, the flood of red ink rallies in Chicago
per year in state. A Rural Press USA 140
on Wall Street provided a distorted will remain vulner-
Days of supply
Publication. Periodical postage paid 120
view of the fundamentals of supply able to collapse on
at St. Charles, IL and additional and demand. June rains impacted the the next unexpected
100
mailing offices. 80
supply of this year’s crops, just as the bearish financial 60
Known office of publication economic downturn impacted demand news, either here or 40
and Postmaster: for the crops. Yet, the initial price reac- overseas. That will 20
Send address changes to Wallaces tion overstated the actual impact. Even keep both end users 0
Farmer, 255 38th Ave., so, it’s difficult to wrap one’s hands and speculative fund
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around the degree of distortion when managers wary of
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60174-5410.
one is still inside the house of mirrors. building ownership. SOURCE: USDA & FARM PROGRESS
Advertising Directory
AGCO Corporation................................. 12 Martin Industries LLC ........................... 11
Agri-Cover............................................. 46 Midwest Seed Genetics ......................... 69
Alliance Product Group ......................... 67 Monsanto .........................................18-19
Alliant Energy ...................................... 100 Monsanto .............................................. 21
Apex Genetics Inc ............................... 102 Monsanto .............................................. 30
Archer Daniels Midland ......................MX5 Monsanto .........................................62-63
Asoyia ................................................... 26 Monsanto .............................................. 65
Bayer Cropscience ................................ 37 Monsanto .........................................72-73
Bayer Cropscience ................................ 39 Monsanto .............................................. 98
Bestway ................................................ 60 Montag Manufacturing Inc .................MX4
Blue Diamond Parts .............................. 22 Mycogen ................................................. 1
Buhler ................................................... 61 Mycogen Grain Corn ............................. 33
Can-Am ................................................. 32 Na-Churs Alpine Solutions .................... 78
Case IH ..............................................MX2 NC+ Hybrids.......................................... 53
Case IH ..............................................MX7 Nutech Seed.......................................... 25
Case IH Dealer Co-Op ......................48-49 Orthman ................................................ 98
Claas of America ................................... 16 Pioneer.................................................2-3
Crow’s Hybrids...................................... 13 Pioneer.................................................4-5
Curry Seed ............................................ 28 Pioneer.................................................. 10
Deere Company................................42-43 Pioneer.............................................56-57
Dow Agrosciences ................................ 23 Pioneer.................................................. 77
Dow Agrosciences .............................MX1 Polaris................................................MX3
Exactrix Global Systems........................ 64 Rain and Hail LLC ................................. 99
Farm Credit Services of America ......54-55 Raven Industries ................................... 17
Farm Credit Services of America ........... 66 Specialty Fertilizer Products LLC........... 31
Firestone Agricultural Tire ................34-35 State Farm Insurance ............................ 46
Ford Motor Company ...........................8-9 Stine Seed Company ............................. 52
General Motors ................................... 104 Syngenta ............................................... 27
Great Plaines Mfg.................................. 29 Syngenta ............................................... 47
Growmark Inc ....................................... 45 Syngenta ............................................... 51
Iowa Toyota Dealers .........................40-41 Syngenta ............................................... 79
Iowa Toyota Dealers .........................70-71 Syngenta ............................................. 103
Krause Corporation ............................... 50 Trisler Seeds- Inc .................................. 80
Kruger Seed .......................................... 36 United States Soybean Export Council .. 44
L.G. Seeds............................................. 59 Unverferth Mfg Co ................................ 20
Landoll Corporation .............................. 24 USDA Risk Management Agency ........ 101
Latham Seeds ....................................... 38 Yamaha Motor Corporation ..............14-15
Lexion ................................................... 58