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  • farmlegend farmlegend May 11, 2012 8:45 AM Flag

    nice knowing you MOS

    Betty -
    More acres planted to corn = less acres planted to soybeans, not more acres planted to soybeans. Note the robust soybean futures and weaker corn futures as evidence of expected shifting of acreage from soybeans to corn. Less soybean acreage = less need for potash in 2012.

    I'm long both MOS an POT, but don't see much upside until 2013 at least.

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    • I know the point you are making however, its mitigated imo. The USDA report is just another estimation of theirs in a long string of horrible forecasts which are practically always way off the mark. While its true soy beans are more potash intensive, corn really is too, the difference is not terribly great. The other factor is that corn takes a longer time to harvest than soybeans so with the same acreage levels a farmer can turn over a greater number of generations of soy than corn and with soy prices soaring compared to falling corn prices, there is a greater incentive to switch gears and plant more soy.
      More soy means more potash, however, again, the difference in what is needed is not that great.

      The traders have always erroneously tied some kind of tight 1:1 correlation between these various factors and it just plain does not exist in the real world. Every tick corn prices fall they tick down fert equities but then if lesser corn plantings corn prices move up and they bid up ferts yet supposedly the ferts should be selling less because there is less corn getting planted, none of it makes sense.
      We have seen these bogus correlations that make no sense in the marketplace for years now and its getting old. When are investors just going to realize the soil fertility levels are dynamic on much longer time frames than the commodity trades (based on supply/demand of softs) and its the underlying soil fertility levels that really influence decisions as for fert levels at the farmer level? Yes, soft prices play a role into economics but for the ferts they will just cut production if demand drops off, as long as fert prices can remain stable they will still be profitable.

      The logic you use would work in a tinker toy world, but its reality and its not that simplistic. "Less soybean acreage", nope, I dont think so, soybeans planted will be greater than ever, especially as farmers decide in the next few months which crops they want to plant as they look up at the boards and see soybean prices sky rocketing. I guess we'll see how the crop comes out in the fall.
      Just my opinions.

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