Implications of Sequestration on Grains?

[bgold]

Would anyone have an informed view about the possible implications (if any) off Sequester on the grain markets and especially corn and wheat?

Thanks

 

[Predicabo]

US farmers who currently have access to credit to run their operation will no longer do so. It'll be short be approximately $35 million. If they don't get the credit dollars they can't produce or process their grain. Current estimates are a reduction of about $8 billion in grain exports. Which will reduce trading opportunities and increase grain prices. With the latter, you'll get competitive entry (on marginal operations) coming down a bar or two which will lead to increased grain production back up to around current levels along with a concomitant increase in trading opportunities as well as potentially some nice arbs as price comes off the skew.

 

[bgold]

US farmers who currently have access to credit to run their operation will no longer do so. It'll be short be approximately $35 million. If they don't get the credit dollars they can't produce or process their grain. Current estimates are a reduction of about $8 billion in grain exports. Which will reduce trading opportunities and increase grain prices. With the latter, you'll get competitive entry (on marginal operations) coming down a bar or two which will lead to increased grain production back up to around current levels along with a concomitant increase in trading opportunities as well as potentially some nice arbs as price comes off the skew.

Thank you. What percentage of production is a $8 billion reduction?

 

[Predicabo]

About 8%. But that's just export. Domestic production will drop by significantly more.