Saturday, March 12, 2011

Corn Futures Fall on Japan Concerns

Corn futures dropped on concerns Japan would cut U.S. corn purchases.

Light, sweet crude for April delivery fell as low as $99.01 a barrel early in the session Friday before recovering to settle down $1.54, or 1.5%, at $101.16 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures fell $1.59, or 1.4%, to settle at $113.84 a barrel.

Corn and lean hog futures saw some of the sharpest declines on fears the disaster would slow demand from a key buyer. Further selling came from traders looking to just exit commodities markets because of the overall uncertainty that follows a natural disaster.

"The immediate impact of the earthquake was extreme uncertainty—the condition most hated by investors," said Bryce Knorr, analyst for Farm Futures, an agricultural publication.


Friday, March 4, 2011

Jim Rogers on Corn, Inflation, Supply an Demand

Billionaire investor and commodity expert Jim Rogers has been touting the inevitable rise in commodities in general, and agricultural commodities in particular, for some time, especially concerning the price of corn.

While monetary policies of the Federal Reserve are a disaster and have played a large part in the rise in commodity prices, it's not the entire story, says Rogers.

He points to the simple fact of supply and demand for corn and other commodities as a major factor in the price increase, and it isn't solely a dollar/inflation scenario moving corn prices.

Growing middle classes in China and India are the major impetus behind soaring corn and commodity prices, and having a growing amount of disposable income, along with the desire for better food, is a big part of the rise in food prices, even though a large part of that is from the misguided policies of the Federal Reserve and other central banks, who continue to debase currencies.

Indiana's Corn Crop Susceptible to Western Bean Cutworm

Indiana and other corn farmers who thought that a new insect threat would be slowed by this winter's freezing temperatures may be disappointed, says Christian Krupke, a Purdue University Extension entomologist.

The western bean cutworm (WBC) is likely to emerge from winter in numbers capable of exacting a toll on Indiana's corn crop this summer, says Krupke.

"A question I've gotten a lot from farmers is, with the colder-than-average winter will we have a lot of mortality of the overwintering larvae?" Krupke says. "The answer is probably not. That's not because of the temperature of the air; it's more because we've had so much snow and relatively few days without snow, especially in those northwestern counties where overwintering western bean cutworm caterpillars are located."

Snow cover insulates fields and "keeps the temperature in the soil higher than it would be if the soil were bare, which actually helps the larvae survive," he says.

Fortunately, timely scouting of fields, insecticide treatments and some biotech (Bt) corn varieties have proved successful in controlling the bug.

WBC caterpillars feed on pollen and, if not controlled, the corn ear itself. That process begins after the female moths lay eggs on corn leaves about a week before corn reaches the pollination stage.

The insect was first detected in Indiana in 2006 after migrating from western Corn Belt states. Crop damage reached a peak this past year, with the most severe cases occurring in northwestern Indiana counties. WBC is most common in continuous corn and corn grown in sandy soils and no-till cropping systems.

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Illinois Corn Production Led by McLean County

Combined with Iowa, Illinois accounts for about a third of all corn produced in America, and in illinois, McLean country was the top producer for 2010.

Farmers in the central Illinois county produced a total of 60.5 million bushels of corn last year.

According to National Agricultural Statistics Services, the production came form 357,000 acres, with average production coming in at $169.5 bushels an acre.

Behind McLean county in Illinois was LaSalle Country, which produced 54.3 million bushels on 333,000 acres.

McLean also led Illinois in soybean production, reaching 15.8 million bushels from 270,000 acres.

Iowa Corn Production Drops in 2010

Corn production in Iowa for 2010 was down from 2009 levels, coming in at 2.2 billion bushels, falling 267,000 bushels.

Final 2010 crop numbers released Tuesday by the U.S. Department of Agriculture show more soybeans were produced statewide and less corn compared to the previous year.

Local commodity prices responded in the exact opposite way some people might think.

Typically, commodity supplies affect prices. In this case, cash corn at East Central Iowa Cooperative based in Hudson dipped since Tuesday's report and soybeans have gone up.

Corn at Monday's close was $6.96 a bushel, compared to $6.87 Thursday afternoon in Hudson. Soybeans steadily climbed about 10 to 15 cents a bushel each day since Monday, from $13.01 a bushel to $14.41 Thursday afternoon.

When it comes to grain, a local commodity expert said supply is only a part of pricing.

"It's a small piece of the puzzle," said Brad Stewart, ECIC grain merchandiser. "We used to look at supply and demand to see what prices should be. Now, (buyers) look at next year to see what other countries will need for protein."

Iowa farmers produced 496.2 million bushels of soybeans last year, 10 million more than 2009. The average yield remained the same at 51 bushels per acre. Harvested acres increased by 200,000 in 2010 to 9.73 million.

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Corn Prices Drop on Rising Fuel Costs

Corn prices fell on speculation that rising energy costs will put a damper the global economy, cutting demand for food and livestock feed. Soybeans rose on the possibility that South American shipments may drop.

Crude oil rose to a 29-month high on concern that unrest in Libya will spread to other north African and Middle East petroleum exporters. U.S. equities dropped as data signaled that growth in wages may fail to keep up with fuel expenses. Corn has gained 90 percent in the past year as demand jumped.

“The surge in energy prices will reduce consumer- purchasing power,” said Don Roose, the president of U.S. Commodities Inc. in West Des Moines, Iowa. “Traders are anxious to bank recent profit with all the uncertainty in the Middle East.”

Corn futures for May delivery fell 8.75 cents or 1.2 percent, to $7.28 a bushel at 1:15 p.m. on the Chicago Board. The grain rose 0.8 percent this week, the fifth straight gain. The most-active contract reached a 31-month high of $7.4425 on Feb. 22.

Soybean futures for May delivery rose 2 cents, or 0.1 percent, to $14.14 a bushel, capping a 2.8 percent weekly gain, the first since Feb. 4. On Feb. 9, the price reached a 30-month high of $14.5575.

Cargill Inc., Archer Daniels Midland Co., Alfred C Toepfer International BV, may be prevented from shipping oilseeds from Argentina after the government yesterday stripped them of their status as registered exporters amid a dispute over taxes.

Dry weather threatens about 20 percent of the Argentina soybean crop, and too much rain may slow harvesting in Brazil, according to the Commodity Weather Group LLC.

“Uncertainty about Argentina exports could give a boost to U.S. exports,” said Jim Gerlach, the president of A/C Trading Inc. in Fowler, Indiana. “Weather in South America is not adding to world production.”