Harrington's Sort & Cull
John Harrington DTN Livestock Analyst

Friday 08/10/12

When Your Sweet Tooth Aches

When it came to policing the candy traffic in my childhood home, my blessed mother could be a real Nazi.

That may sound a bit harsh, but few in our family fond of life and limb dared to sneak a bag of jawbreakers and gummy bears past her deceptively angelic demeanor.

"You'll make yourself sick," was her constant warning.

I often resented her low opinion of my self-control, even when stomach aches and disgusting pools of vomit surfaced as irrefutable evidence.

Yet over the years her wisdom has served me well, especially as I increasingly realized that candy was not the only dangerous thing that knew its way around shut-off values.

Bull markets can become as addictive as candy stores with each successive rally pushing blood sugar levels higher and higher. And just as an excess of sweets will sooner or later trigger a diabetic coma, skyrocketing market prices eventually work to cool the hottest demand.

Given the way today's corn market turned nauseous (i.e., nearby Sep and Dec futures closed nearly 15 cents lower) in the face of still more bullish news (i.e., the August 1 crop production report estimated the new harvest to be no larger than 10.7 billion bushels, almost 200 million smaller than the bullish-minded trade was expecting), I wonder if the self-feeding grain trade has not finally made itself sick.

The unexpected sell-off in corn futures had nothing to do with the credibility of the government's dour assessment of yield potential. Indeed, I suspect many late-week sellers would concur with the suggestion that the actual harvest could be even smaller.

No, the market's post report reaction was less a function of supply bulls running scared than demand bears digging in. While one day's action in a huge market like this means little, the timing could eventually underscore its significance.

From coast to coast, livestock producers seem to be turning in their candy store credit cards. As tempting as the sugar-rush remains, they just can't afford any more cavities.



Posted at 3:05PM CDT 08/10/12 by John Harrington
Comments (2)
That's okay...your National Corn Grower's Association leader has asked us to "just all get along". That'll make it all better. What I'm curious about is if Charley Grassley believes the numbers. After all, 2 weeks ago we were told not to panic because we hadn't harvested the crop yet, and the USDA was estimating 146 bushels were out there (which everybody but ol' Chuck knew was a pipe dream). What are we supposed to do now, Chuckles? Be embarrassed for questioning the almighty wisdom of the government? Why don't you develop some sense of morality and realize the only thing to be embarrassed about is being a United States Senator?
Posted by CATHARINE BUTLER at 4:31PM CDT 08/10/12
John....I really enjoy your articles...and this has nothing to do with you, but I didn't know how to get this message to the right place: on the Markets tab of DTN Livestock Professional, on the right hand side of the page under "Weather Coverage" title, "Our industry-leading meterologists....etc." in the 4th line "storms and draught"....I'm sure they mean "storms and drought"....just trying to help out. Thanks, Duane
Posted by Security National Bank at 1:51PM CDT 08/17/12
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