Shaking Off Bearish Mountain: At This Age Its Hard To Do
Sometimes we have our moments. A few years ago I showed up at a local department store and bought a hockey table for my family. I was pretty pleased with my purchase; I was never able to have a hockey table as a kid. So as I went up to purchase, the 20 something women behind the counter asked if I had my card? Somewhat confused, I asked what card? However, even as dense as I can be at times, I clued in. She was asking me for my senior identification card.
That little ditty I’ve never lived down. I know farming can make you look haggard, but at the time I was forty something. Since I turned “fitty” in January, maybe I’ll start to earn that status honestly.
It’s insidious. You think you’ll be young forever but then someday you wake up and everybody’s older than you. I had a bit of that feeling last Thursday when I spoke as part of a panel discussion at the Western Fair Farm Show in London Ontario. Other members of the panel were Moe Agostino, a Senior Risk Management Consultant with Farms.com and Bob McNaughton, the President and Chief Operating Officer of Sylvite Agri-Services Ltd.
The question came from an audience member, Phil; do you think there will be a rally in grains? Another question had to do with what I thought the price of soybeans and wheat was going to be. Simply put, both people who posed those questions were younger than your loyal scribe. Also too, some of the words from my co-patriots on the panel, although solid as rock, were a bit more optimistic than what I was thinking.
So I answered the question by telling a story about former DTN analyst Elaine Kub who told in one of her columns about a farmer she had a met at a meeting she was speaking at. He told her basically that all “young people” are bullish. Elaine’s thoughts were that she first started to work at DTN at the beginning of the ethanol gold rush and everything since then had been bullish. The farmer went on to tell her that he’s been around the corner more than once and he doesn’t see it quite that way.
Sitting there in the panel discussion in London, that was me. You know, when we talk about commodities its like we’ve all been on some wild bender over the last couple of years and everybody is expecting that’s the way its going to continue. It’s almost like nobody believes that we’ve had a once in a 70 year financial meltdown and we are suppose to shake it off, like its some kind of bad hair day.
Of course nobody knows what the future holds, but let me paint a bearish picture for a moment. In Wednesday’s USDA’s WASDE report, world-ending stocks for corn went up. The US ending stocks actually decreased slightly from 1.79 billion bushels to 1.74 billion bushels. Corn usage for ethanol was actually increased a 100 million bushels to 3.7 billion bushels. However, unemployment in places like Ontario keeps rising, the IMF is warning Canada that it might get worse before it gets better and there is wheat seemingly everywhere in the world when last year they were looking under their bed for it. Some things are just not quite adding up to me.
It might be because I’ve sold corn for $2.11/bushel back in the day. I’ve sold a lot of corn for $2.50 to $2.75/bushel and lived to tell about it another day. It might have been a long time ago, but to this day, it sticks to me. In London I told the audience what really got me was the weekend when Lehman Brothers, a company in business for 158 years with only one quarterly loss over that time suddenly over one weekend vapourizes before our very eyes. That told me this time was different and when it comes to commodities, I felt the whole gamut changed and still in March 2009 I don’t think it has changed much. We can hope all we want, but its never going back to where it used to be.
Does that mean we’ll be able to contract corn for $5 or $6 a bushel in 2009/10? Or are we going back to $2.50 corn as one of my farmer colleagues told me this past week at the London Convention Centre. A few weeks ago I offered up that my opinion in this market environment wasn’t worth 50 cents. I’m sorry folks; I just can’t get off that bearish mountain. I’d like to say, I’ve been here before but even at this age, I don’t think I’ve ever seen market conditions like this.