Friday, September 7, 2012

Corn, Soybean Exports Fall Says USDA

A Friday report from the U.S. Department of Agriculture said exports for corn and soybeans dropped for the week ending August 30.

Corn exports plummeted to 235,400 metric tons, down 37 percent from the prior week, and a huge 55 percent from its four-week average. Major buyers were China, Japan, Taiwan, Mexico, Cuba and Jamaica.

Soybean exports plunged to 414,300 metric tons, dropping 23 percent from the prior week, and 16 percent from its four-week average. Major acquisitions came from China, Taiwan, Indonesia, Thailand and Mexico.

Corn exports for the marketing year ending August 30 dropped 16 percent from the previous year. A stronger U.S. dollar and higher corn prices were the impetus behind the lower exports.

Exports for soybeans were lower by 8 percent for the same time period.

The largest importers of U.S. corn were Japan, accounting for 31 percent of the total; Mexico with 25 percent; and China with 13 percent.

As usual, China was the largest importer of U.S. soybeans, acquiring 64 percent of all U.S. soybean exports. Mexico was far behind at 8 percent.

Monday, September 3, 2012

U.S. Corn Outlook Downgraded Again

The outlook for the corn crop in the United States was downwardly revised again by the U.S. Department of Agriculture, as the price of corn traded at a record $8.49 a bushel on Friday, with investors taking profits on Monday, as prices pulled back to $7.89 a bushel on the Chicago Board of Trade for December delivery.

For the year, corn is estimated to come in at 10.8 billion bushels, down 13 percent from the 2011 yield. The average yield per acre is expected to be at 123.4 bushels, the lowest level since 1995.

Next growing season has also drawn concern, as the drought could continue on through the latter part of October, resulting in the depletion of water and further soil damage.

José Graziano da Silva, director general of the FAO, called upon the United States to suspend the foolish (our words) federal ethanol mandate which takes 40 percent of the domestic corn crop and wastes it as fuel.

The price of corn could reach from $9 a bushel, all the way up to $10 a bushel, depending upon the actual amount of corn that is produced, which has yet to actually be determined.








Friday, August 3, 2012

Is Global Food Crisis on the Way?

With the drought in the Midwestern portion of the United States continuing to devastate the crops in the region, it has brought out the global alarmists who are using the situation to focus on the growing population needs through 2050, when the people on earth are expected to number over 9 billion.

One of the latest to throw his hat into the food crisis ring is Jeremy Grantham, who is the co-founder of the management firm GMO.

Grantham said this about the "food crisis": It “will threaten poor countries with increased malnutrition and starvation and even collapse. Resource squabbles and waves of food-induced migration will threaten global stability and global growth.”

CNBC reported the reasons Grantham believes there will be a food shortage, including "a spike in demand for food from an increasing global middle class, decreasing grain productivity, a tainted water supply, increasing fertilizer and fuel costs and climate change."

Of course this already skews Grantham's model, as there are no man-made climate change problems, as has been proven by the lies and distortions by so-called scientists who have used faulty models and locations to measure temperatures. Most notably are those temperatures measured in urban areas where temperatures are known to be higher than their rural counterparts because of more roads and buildings, among other things, that attract more heat.

As far as the other things, they are accurate, although I'm not sure what he's referring to specifically with the tainted water assertion. This could also be an unproven assumption based upon theories rather than reliable data.

But as far as the world being able to handle the population growth, it isn't a problem of being able to do it, as the boost in crop and animal production has risen exponentially for years. The major problem is corruption in the poor countries where the political entities are extracting what production there is from their people, or forbidding the free market system and entrepreneurs from doing their business without hindrances. This, more than anything, is the real crisis that is being faced. And until that is taken care of, we won't see the alleged food crisis solved.

Having said all that, the food crisis, whatever the cause, will result in higher prices, as will growing demand for raw materials.

Investors do need to look at agriculture over the long term, as they will with other resource sectors which will without a doubt soar in prices over the next couple of decades at least.

The commodity bull market is far from over, although it has taken a brief rest during the economic crisis.

Thursday, August 2, 2012

Drought Results in 1,584 Counties Being Declared Natural Disaster Areas

The ongoing drought has added another 218 counties to the natural disaster list of the U.S. Department of Agriculture, bringing the total in 32 states to 1,584, over half of the counties in those states.

How the USDA determines whether or not to include a county as being a natural disaster is U.S. Drought Monitor. What the designation means for farmers in those counties is being eligible for federal aid.

Agriculture Secretary Tom Vilsack announced that the government will open up as much as 3.8 million acres of conservation land for ranches to use for their livestock.

"The assistance announced today will help U.S. livestock producers dealing with climbing feed prices, critical shortages of hay and deteriorating pasturelands," Vilsack said.

Concerns are the income of farmers will be hit hard, exasperated by the strengthening of the U.S. dollar, which will continue because of the inaction of the Federal Reserve and ECB, which had been expected to take immediate action to stimulate the economy.

That's important because it puts pressure on exports when the U.S. dollar is higher. It also points to how weak the eurozone really is when they've had favorable trading conditions in light of the weak euro.

As for corn, approximately half of the corn crop in the United States is now rated poor to very poor, according to the USDA's National Agricultural Statistics Service.

Soybeans are now under pressure as well, with about 37 percent of the U.S. crop now being considered poor to very poor.

Monday, July 30, 2012

Corn Prices Reach for the Sky

While corn may not be reaching for the sky these days, as the drought and hot temperatures continue to hamper the crop, corn prices on the other hand are soaring, reaching another record high on Monday, settling at $8.20 a bushel, a gain of 21.5 cents, or 2.7 percent.

December corn climbed to $8.14 a bushel, gaining 20.75 cents, or 2.6 percent.

At this time a boost in rain in almost all parts of the U.S. won't help the corn crop, as pollination has been completed, and when that's the case, nothing can change the outcome of the crop yield. All that can happen is the kernels may fill out a little more, but the number of kernels are now locked in.

The hope was fields that hadn't been pollinated would be aided by rain, but that hope has largely passed for the majority of the corn crop.

With little rain expected in August, soybeans are now attracting attention as the next major crop to under go deterioration. Soybeans pollinate later than corn, so if enough rains had come, it would have boosted the yield significantly. That hope is now fading, as dry weather continues on with little chance of relief.

November soybeans jumped 41.57 cents to close at $16.435 a bushel, a gain of 2.6 percent. Along with the drought, low global soybean inventories are supporting higher prices.

Corn, Soy Outlook Continues to Weaken

The prospects for corn, and increasingly, soybeans, continue to deteriorate, according to the U.S. Department of Agriculture, which said in its latest report that corn in good-to-excellent condition as of Sunday stood at 24 percent and soybeans in the same condition were at 29 percent; both of them dropping 2 percent from last week.

This is the worst ratings of both crops since the devastating drought of 1988.

Even though there was some improvement is several states in the Midwest, the largest corn and soy producing states - Iowa, Illinois, Nebraska and Minnesota had their ratings drop from a range of 2-5 percentage points for corn and 3 to 4 percentage points for soybeans.

Corn has been hit so hard that it is rated 41 percentage point under the five-year average. At this time it's only 5 percentage points above the good-to-excellent rating it had during the same week in 1988.

The soybean rating was 34 percentage points under the five-year average and 10 percentage points over the same week in 1988.

There is little hope of relief in the next 10 days or so either, as less than an inch of rain in predicted throughout the period.

While the stress on the two crops have been slightly eased lately, they will continue to be under pressure going forward, according to agricultural meteorologists.

No soaking rains are expected, and the belief is both crops will continue to falter.

Friday, July 27, 2012

Japan Cutting Corn Imports on Higher Prices

The Japanese continue to keep its corn imports at its lowest levels in 26 years, as high corn prices has resulted in feed producers boosting acquisitions of alternative feeds.

According to Mitsuyoshi Haruno, executive director at the Japan Feed Trade Association, he told Bloomberg that Japan will increase "consumption of wheat, wheat bran and dried distillers’ grains with solubles, or DDGS."

Haruno added that corn imports will be close to the 15.3 million metric tons of 2011.

The Japanese finance ministry said feed wheat imports have surged this year from 62,415 tons last year in the same season to 334,349 tons this year. Of that, the U.S. supplied 198,699 tons, equal to 59 percent of the overall Japanese imports. Australia was the next largest feed wheat exporter to Japan, accounting for 127,807 tons.

Feed wheat imports for Japan this year were set at 764,000 tons, but that could be upwardly revised for the fiscal year.

So far for the year Japan has imported 4.36 million tons of grain for feed, down 3.1 percent from the same period last year. But for corn for all purposes, Japan has imported 6.51 million ton in the first five months of the year ended May 31, or an increase of 0.8 percent over last year.

During the same period the U.S. accounted for 85 percent of Japanese corn imports, which could drop to 80 percent for the year as Japan looks for less expensive options.

Little Rain for Iowa, Illinois, Nebraska, Kansas and Missouri

While some states will benefit from some cooler weather and rain, major corn and soybean producers Iowa and Illinois will get little relief from drought conditions, and neither will Nebraska, Kansas and Missouri.

Missouri's corn crop is already almost a total loss, and Indiana's isn't much better. Whether rains come in those two states in regard to corn won't have any positive impact on the yields.

Rains are predicted to move into the overall Midwest next week, but projections are only for up to one half inch at most for most areas.

The majority of Iowa, Nebraska, Illinois, Kansas and Missouri will probably only get at most a tenth of an inch or rain, while the states of Michigan, Minnesota, Wisconsin, northern Illinois and Ohio will get from .5 to an inch of rain. Combined it generates the .5 inches of rain mentioned earlier for the Midwest.

Some parts of Iowa and northern Missouri could also get on average about .5 inches of rain over the weekend. As usual, rain will be scattered and unpredictable as to how much it will help drought-stricken regions. But overall it doesn't look good.

In other words, the states with the majority of the corn will continue to suffer drought conditions, putting even more downward pressure on corn yields.

The conservative reports from the U.S. Department of Agriculture should come in with another drop in projected corn yields on Monday, and possibly more for soybeans; although some have benefited from the recent rains in the Midwest.

Most grain experts have about 20 bushels per acre less in yields projections for corn than the USDA has at this time. That should come closer to one another on Monday, depending upon whether private analysts even further downgrade expected corn yields.

In the middle of next week the Commodity Weather Group (CWG) says temperatures in the mid 90s to 100s will probably return Wednesday and into Thursday at least.

According to the CWG, other crops starting to feel the impact of the drought, besides soybeans, are rice and cotton.

Wednesday, July 25, 2012

Corn Reports on Indiana Counties

Indiana has been bearing the brunt of the drought hitting the Midwest portion of the United States, with reports from a number of counties coming in as to how bad it has gotten.

The Indiana counties surveyed by the MDA EarthSat July Crop Tour were were Putnam, Hendricks, Parke and Vermillion.

After touring fields in each county, it was found that the average was only 56.3 bushels an acre, plummeting from the 143.4 bushels an acre last year the farmers in those counties produced.

According to the USDA, the corn crop in Indiana has only 7 percent of it rated as good to excellent, dropping a percentage point from last week.

To show how bad some of these counties are, Parke County had better looking corn than the rest, and is expected to produce about 121 bushels an acre. That means Putnam, Hendricks and Vermillion counties will, on average, fall another 20 bushels an acre below the 56.3 bushels averaged out for all four counties.

Putnam County may be in the worse shape of all the counties, with the members of the MDA EarthSat July Crop Tour saying most of it will probably go unharvested because of the damage.

All of this is the best case scenario. Who knows where it'll all end if the rains don't come.

Corn, Soybeans Jump, Rains Too Late

Most experts who understand the pollination process of corn and soybeans say rains are too late for corn in poor condition, and for soybeans, it's marginal as to how much they will be helped by projected rain in the Midwest of the United States.

Consequently, the price of corn and soybeans reversed direction as the market consumed and understood that rains won't do anything to change corn, and it's not sure how much it'll help soybeans, which have a better change of improving because they pollinate later than corn does.

Once a crop is pollinated, as in the case of corn, nothing can be done to change the yields. All rain can do with corn once it reaches that stage is fill out the existing kernels more.

Corn and soybeans had dropped in price after forecasts for significant rains in the Midwest were recently made. But once the information was understood as to its effects on the crops, prices resumed their climb.

Corn rose another 1 percent on Wednesday, while soybeans got close to a 3 percent boost.

Wheat is being affected by corn and soybeans, but also by the increasing concerns over global supplies.

The projections of yields of corn per acre by the USDA are considered far too optimistic at this time by outside experts, who see corn at tops averaging 130 bushels an acre. It could fall as low as approximately 120 bushels an acre.

What still has to be taken into account is how much more damage will be done to corn that still has a chance to improve with the rains. Will there be enough rain to salvage the crop, or will it fall sporadically and quickly, not allowing for it to soak into the ground. That's the key to helping corn that still has possibilities for improvement. If it doesn't and the drought continues in those areas, it's unknown how badly the average yield per acre for corn will drop to.

But the U.S. drought isn't the only drought story affecting corn. There is also a drought in parts of Russia, Europe and Australia which could end up bringing down the global output for the year, which could continue to support higher corn prices.

The issue there is how many products using corn will experience reduced production because of the higher corn prices. That could pull they other way on corn prices, making it hard to project how high prices will go.

At this time, and with the current data, it appears about $9 a bushel is a good bet, although rapidly changing circumstances could alter that quickly.

Corn for December delivery were up 9.75 cents to finish at $7.88 a bushel and November soybeans rose 46 cents to $16.155 a bushel.

Tuesday, July 24, 2012

Time to Sell Corn?

For those just starting to take a look at corn as a potential investment, it's something that should be held off on, even though Goldman Sachs (NYSE: GS) recently raised their price target on corn to $9 a bushel, and Morgan Stanley to $10 a bushel.

Those price targets were based on nothing more than probable momentum, and most likely the USDA estimates for damage being lower than the reality of the situation on the ground, which is surely far worse than the conservative estimates of the USDA.

Having said that, corn has been rising in price so quickly that it needs to take a breather.

You can tell that from the response of traders to the news that significant rain should hit parts of the Midwest this week. Traders sold off some of their corn, resulting in the price falling by over 5 percent for December corn.

That's important because the damaged corn in the fields are beyond saving, which is up to 50 percent of the corn planted in the region.
In other words, traders were looking for almost any excuse to sell, even though rain will do nothing to boost the quality of the damaged corn, neither save any of it that has already pollinated and is in poor or worse condition.

If someone is interested in trading corn, the best thing to do would be to wait until this selling period ends and then take a close look at the overall picture.

Another element to consider is the threatening drought in parts of Europe and the same in areas of Australia.

For those holding corn, there is a lot of potential upside over the next couple of months, and seeing which usually highly productive areas of corn country are receiving significant rain will tell whether or not corn will continue to surge up in price.

Another factor is how the high price of corn will affect other uses of the grain. It's certain that some of the uses for corn will fall in response to the higher prices, which will do some to pull back on the rise in corn prices.

More devastating weather in the Midwest of the U.S., and other areas of the world, could overcome that response and send corn soaring.

But if the promised rains come and corn that can still be salvaged ends up doing okay, $9 a bushel is probably the tops we'll see.

Probably the only thing that would change that if corn in good condition recovers is if new investors get in bidding up the price without knowing what they're doing.

Rains Too Late for Corn

The announcement that rains will be finally arriving in some areas of the Midwest is a bittersweet forecast if it comes true, as once the corn is pollinated no amount of rain will change the yields of corn.

All that can help corn at this stage is to help the kernels that do grow to expand a little bit larger. It won't produce more kernels on the cob.

The key importance of the rain is for it to hit areas of the Midwest that still have corn that hasn't pollinated and is in decent condition. There is no hope whatsoever for the rest of the corn at all.

Approximately 50 percent of the corn is in poor or worse condition, meaning that it's a total loss.

Most investors are evidently clueless as to this reality, as so far in the trading week they've pushed down the price of December corn by 5 percent, even though the damaged corn will not recover or respond in any way.

Again, all the rains can do is help corn that is still in decent condition and not pollinated. And that assumes this rain will hit the right areas of the region.

Now the response to soybeans was a little more realistic, as they pollinate a little later than corn, so have a better chance of responding in a positive manner to a quality rainfall. Soybeans were down over 4 percent as of Tuesday.

Quality rainfall is rain that is steady throughout a period of time, and not a quick drenching which results in most of the moisture running off instead of settling in to the soil.

Another thing to take into account is the data released by the U.S. Department of Agriculture is far more positive than most of those that know about and cover the grain segment, and so it should be assumed that their numbers are better than the actual results on the ground.

So we can assume more than 50 percent of corn is poor or very poor, and that 26 percent of the corn that is listed as good to excellent by the USDA is probably closer to 20 percent.

Corn just recently broke a record of $8 a bushel, and Goldman Sachs (NYSE: GS) sees it climbing to as high as $9 a bushel.

There is no doubt the USDA will report far worse numbers in the weeks ahead, so traders and investors should be aware of that.

It's very doubtful corn prices will continue to fall in light of the existing corn conditions that are much worse that being reported by the USDA.

Few traders are following the increasing drought conditions in parts of Europe, as well as in Australia.

Most knowledgeable traders see this as a buying opportunity, although they would like to see corn drop about another 20 cents or so before entering back in.

Monday, July 23, 2012

European Corn Now Being Hit by Drought

While the focus on the hot temperatures and drought conditions in the U.S. have been garnering much of the news surrounding corn around the world, parts of southern Europe and stretching through into Ukraine are now starting to get hit by drought-like conditions as well, with temperatures rising to about 5 degrees Fahrenheit above normal, to 95 degrees Fahrenheit.

Accounting for approximately 16 percent of global exports, Europe is now adding to the concerns over how high the price of grains will go this year and how it will affect food prices.

Similar to corn in the U.S., the corn in the European region mentioned has now entered is pollination stage, which is the worst timing because it's that phase of the growth which determines the corn yield.

It is now clear that Europe will now have to import more corn and wheat than normal.

According to the USDA, EU corn yields are projected to drop about 12 percent over last year to about 6.73 tons a hectare, which is a little under two and a half acres.

Countries being hit the hardest in the EU are Italy, Hungary and Romania.

Since the middle of June, corn on the CBOT has soared by 57 percent to $7.9375 a bushel. Goldman Sachs (NYSE: GS) projects prices to climb as high as a record $9 a bushel within 3 months.

Wheat has been rising along with corn, with prices jumping to $9.4725 a bushel.

Soybeans, which are also in danger from under performance, has jumped to $16.4475 a bushel, a 36 percent increase. Along with corn, it has recently set all-time highs.

In early July the International Grains Council estimated the global corn crop to rise to 917 million tons this year, but the ongoing damage to crops around the world wasn't reflected in those numbers, which are sure to drop when the next report is released on July 26.

Wednesday, July 18, 2012

Kentucky Corn Harbinger for Rest of the Drought Areas?

If the results from recent rains in drought-stricken areas of Kentucky are an example of what to expect from other parts of the Midwest portion of the United States hit by drought, than the outlook for the highly anticipated yields is dismal at best.

Kentucky received above average rain last week, which according to farmers and University of Kentucky agricultural meteorologist Tom Priddy, won't be enough to salvage the corn crop in the state, which was rated at 75 percent poor or very poor as of Monday by the USDA.

So if up to five inches of rain falling on corn in some areas of Kentucky isn't enough, it doesn't give much hope to other regions of the country which are looking to rain to save their crops.

Of course it depends upon the quality of the crop in the particular regions of the Midwest rains could fall upon, but by any measure, no matter what happens going forward, a lot of the U.S. corn crop is lost for the year.

Just recently the U.S. Agriculture Department declared 26 counties in Kentucky as natural disaster areas. The western portion of Kentucky, which is the prime corn farming region, was the hardest hit by the drought, and received only scattered rain during the week.

When a county is declared a natural disaster area, low interest lows are available to farmers eligible for them. Crop insurance will help the farmers hit by the drought, but it won't help in regard to higher food prices, which will without a doubt be passed on to consumers.

The question is generated by the rains in Kentucky of whether or not it's too late for corn that has already been under heavy stress. The answer appears to be yes, and the corn yields estimates in the U.S. undoubtedly will be downwardly revised again.

Jim Rogers Says Midwest Drought Nothing Compared to Real Agricultural Threat

Billionaire investor and commodity expert Jim Rogers has been talking about the real risk in relationship to agriculture for some time, and he recently said in an interview that that current effects of the drought in the Midwest portion of the United States will pale in comparison to what is soon to happen in the global farming community.

What Rogers says is the extraordinary risk is the rising demand for food and the dropping ability of farmers around the world to meet that demand.

The problem is, according to Rogers, that the average age of farmers in the U.S., for example, is 58. And there are relatively few young farmers coming up the pipeline to replace these veterans as they age and drop out of the market.

Rogers said this concerning the issue to Business Insider:

"The world faces serious problems in agriculture. We are facing shortages of everything. The inventories are near historic lows so any problem will have an immediate, profound effect. We are facing a shortage of farmers so any problems will turn into even bigger."

For those who may think large farming corporations can step in and take over the operations would be wrong, as you still must have someone that can run the place, which takes a lot of training and experience. Farms aren't run like factories in that way. Farmers must be experts in a wide variety of areas that will affect his farm. That takes time to accomplish; something the world and its growing population won't wait for.

Because of this, Rogers sees agriculture as one of the best sectors to invest in, as the price of food will continue to move up as shortages grow. He sees agriculture in a bull market for many years into the future.

Rogers has put his money wear his mouth is, buying up farmland in Australia with other investors.

He sees that as a key place to start farm acquisitions because of the proximity to Asian markets.

Other than that, Rogers has invested in agriculture mostly via futures.

There are many ancillary business that will benefit from the rise in food prices, including equipment makers and suppliers of fertilizers.

Friday, July 13, 2012

U.S. Corn Prices Approaching All-Time High

In Friday morning trading, corn futures jumped again, closing in on an all-time high for U.S. corn, as rising demand in Asia and a destructive drought continue to wreak havoc on the sector.

Weather forecasts were part of the boost in corn price, as they projected rising temperatures and little rain in key corn-growing areas.

Consequently, the condition of the corn will continue to deteriorate, with a growing percentage reaching the point of no return, as some farmers have already began to plow their corn under.

The only good news is the light rains could slow down some deterioration, extending slightly the time frame the corn needs for significant rains to salvage the season. It stands now at less than two weeks before it could become an extraordinary disaster if rains to come in the amounts the corn crop needs.

On the Chicago Board of Trade, the front-month July corn contract jumped to $7.92 a bushel, rising 20-3/4 cents. That's just below the all-time high of $7.99-3/4 a bushel.

Corn for December delivery on the CBOT rose to $7.45-1/4 a bushel, gaining 13 cents, at 8:20 AM CDT.

Price for the new crop contract have soared close to 48 percent over the last month, climbing 18 percent already for July.

If the drought continues, soybeans, which pollinate later than corn, could be the next victim of the drought if weather patterns don't change soon.

Soybeans and wheat continue to rise in price as well, with concerns over the effects of the drought on soybeans if it continues, and expectations wheat demand will rise as corn prices continue to soar.

Corn Futures Rise for Fourth Straight Week

Corn futures in Chicago rose for the fourth week in a row as the drought in the Midwest continues to devastate the corn crop. Weather projections hold out little relief for the key corn production areas of the region.

Corn for December delivery on the Chicago Board of Trade climbed to $7.47 a bushel, up 2 percent, as of 2:00 PM London.

Since the middle of June corn prices have soared 48 percent, and have already jumped 18 percent in July.

According to the National Drought Mitigation Center, parts of the Midwest which stood at 53 percent moderate to extreme drought last week, have grown to 63 percent as of July 10.

As for corn ratings, every day the drought continues, the quality of the corn drops by a little over 1 percent.

This week the U.S. Department of Agriculture slashed its corn yield estimates to 12.97 billion bushels, down significantly from June's estimate of 14.79 bushels. That will be significantly downwardly revised if the weather patterns hold.

Globally, in June the corn yields for 2012 were cut from 949.9 million tons to 905.2 million tons.

Corn Imports From Asia on the Rise

As corn continues to get hammered in the breadbasket of America, where the Midwest continues to be hit by the worst drought in 25 years, the demand for corn in Asian countries is on the rise.

According to Rabobank International, global corn supplies could be strained as China especially may have to up its imports far beyond the 5 million metric tons it imported in 2011-2012. Their estimates are for China to boost corn imports to 8 million tons.

Food & Agriculture Organization, which is an arm of the United Nations, says the amount corn China will import for 2012-2013 will rise from 1 million tons to 6 million tons.

The USDA, which is thought to have understated China's corn demand, only has corn imports at the same 5 million ton levels it stood at last year.

Most of China's rising corn demand is coming from internal farming changes, where small home farms are being replaced by larger commercial farms. The commercial farms include approximately 50 to 55 percent of corn in its cattle feed mix.

Estimates for China are for it to produce about 197.5 million tons of corn for 2012-2013, up from last year's 191.75 million tons.

With diminishing corn yields in America, it's not certain where the corn supply will come from at this time.

Thursday, July 12, 2012

Corn Prices Could Push Up cost of Baking, Snack Items

After doing a little research on the plethora of items that could very well be going up in price soon because of the rise in the price of corn because of the devastating drought in the Midwest, it's surprising how many of these we use on an everyday basis, and how it may affect us all going forward.

For example, prices of regular thing we use in baking and cooking, or snacks we may partake in on a daily basis could be surging in price soon.

Some of the cooking and baking items include all sorts of condiments, vinegar, jellies, corn oil, margarine, sauces and nonstick cooking spray, to name just a few.

For snack foods, things like chips, pretzels, gum, candy and cookies could easily rise in price as the year goes on.

The reason is because corn byproducts are used as either preservatives or thickening agents for snacks or cooking and baking items. It is also used for sweetening up certain products, which is why gum and candy, or even canned fruits may cost significantly more in 2012.

Rising Corn Prices Could Push Up cost of Animal Products

Concerns over the affect of the drought on food prices has many people concerned, with the immediate effect probably showing up in the boost in price of animal products.

According to the USDA, animal products projected to rise in price include pork, butter, eggs and cheese.

Other prices also almost sure to rise are beef, poultry, fish raised by farmers, milk, sour cream, yogurt, cream cheese and ice cream, to name a few.

All of these have significant corn inputs which are costing more because of the devastated crop.

Effect of Drought on Dairy Farms

The ongoing drought could result in dairy farmers taking a hit because of less corn silage, alfalfa and grain corn to feed their cattle.

Most of this will affect the dairy farmers in the fall, and they won't know until then the extent of the losses.

As to how that could have an effect on the price of milk, it's the futures, in the end, that determine that. But it's certain if the drought continues the milk futures are sure to rise in conjunction with it.

Beef cattle prices would have a similar response, as would any animal relying on corn for its feed source.

Wednesday, July 11, 2012

Illinois, Indiana Corn Continues to Burn

While the Midwest in general is getting hammered by the drought, which continues to devastate the corn crop, Illinois and Indiana are getting hit the worst of all the corn-producing states, with no relief in sight at this time as far as rain coming any time soon.

A little over 1 percent of the crop rating drops daily for every day it doesn't rain in the region.

The USDA gave a dismal report today where it dropped its corn yield estimates by 20 bushels an acre, down to 146 bushels. That was a much larger downward revisement than anticipated, causing the price of corn to jump over 3 percent in morning trading.

As for the corn supply, the USDA lowered its projections by 698 bushels over June's estimates, falling to 1.2 billion bushels at the end of 2012.

That shows how devastatingly quick the numbers are falling, and each day causes some damage to the corn crop in a way rain won't help it recover.

Corn Farmers Starting to Mow Down Fields

Some corn farmers in drought-stricken areas are already starting to mow their corn crop down as the devastating drought continues on in the Midwest and other corn-producing regions.

As the corn pollination process began, temperatures in the triple digits hit the Midwest, along with little or no rain for most farmers.

Lack of rain and corn struggling to pollinate properly once temperatures approach 100 degrees has some farmers throwing in the towel on this year's crop, although some may attempt another planting to see if favorable condition rise in the fall, although all can't do that because of the freezing temperatures which come in that time of the year, which could also devastate a crop if it comes earlier than expected.

Others may just bite the bullet and take their crop insurance money and wait until next year.

For farmers whose corn is still in decent shape, they could get a big windfall in profits if the weather breaks sometime soon, as corn prices guarantee a great year for them.

Corn Futures Climb on USDA Crop Forecast Cut

The price of corn continues to rise after the USDA unsurprisingly cut the projected corn yield of 166 bushels an acre for 2012 down to 146 bushels an acre.

All of this is related to the ongoing drought conditions plaguing the Midwest, where heat and dry weather has hammered the quality of the grain.

After the report the price of corn jumped 3.2 percent.

The report said this:

"Persistent and extreme June dryness across the central and eastern Corn Belt and extreme late June and early July heat from the central Plains to the Ohio River Valley have substantially lowered yield prospects across most of the major growing regions. Harvested area is also reduced slightly based on the June 29 Acreage report.

Reduced supplies and higher prices are expected to sharply lower 2012/13 corn usage with the biggest reduction for feed and residual disappearance, projected down 650 million bushels. Food, seed, and industrial use is also projected lower, down 105 million bushels, mostly reflecting a 100-million-bushel reduction in corn used to produce ethanol. Exports are projected 300 million bushels lower as tight supplies, higher prices, and strong competition from South American exporters limit U.S. shipments.

A 52-million-bushel increase in beginning stocks and a 15- million-bushel increase in imports offset only a small portion of the expected reduction in this year’s crop. Ending stocks for 2012/13 are projected at 1.2 billion bushels, down 698 million from last month’s projection. The season average 2012/13 farm price for corn is projected at $5.40 to $6.40 per bushel, up sharply from $4.20 to $5.00 per bushel in June. "
Soybeans and wheat continue to be pulled up by the price movement of corn, with soybeans rising just under 2 percent and wheat futures increasing by 2.36 percent.

Tuesday, July 10, 2012

Potash (POT), Agrium (AGU), Mosaic (MOS) Shares Soaring on Rising Grain Prices

Shares of fertilizer companies like Potash (NYSE: POT), Agrium (NYSE:AGU) and Mosaic (NYSE: MOS) have been soaring since the early part of June, as a drought has been devastating the corn crop, and the resultant rising prices have pulled up price of soybeans and wheat with them.

The reason for the rise in share price for the fertilizer companies is that farmers will be able to pay more for inputs because of the boost in grain prices.

Yields for corn is already being downwardly adjusted in a significant manner, with about 1 percent of of the condition of the corn added daily as to being rated poor or very poor. It's dropping - as measured by percentages - a little over 1 percent a day, or about 8 percent a week nationally.

Corn prices have led the push in grain prices, soaring close to 35 percent over the last month, reaching $7.86 on a key futures contract.

Soybeans have been moving up in unison, climbing to an all-time high of $16.79 a bushel, even though they haven't had the damage the corn has endured, as they pollinate later and could be salvaged as far as to depth of losses if rains come soon enough.

The other side of this is those farmers who get a good crop could generate a lot of money this year, which is what the markets are looking at, and why the fertilizer companies have had their prices soar along with the crop prices.

The longer the drought lasts the better for the fertilizer companies, as every day that goes by some of the corn crop reaches a state of unrecoverability no matter if the rains come or not.

Shares of fertilizer companies like Potash (NYSE: POT), Agrium (NYSE:AGU) and Mosaic (NYSE: MOS) have been soaring since the early part of June, as a drought has been devastating the corn crop, and the resultant rising prices have pulled up price of soybeans and wheat with them.

The reason for the rise in share price for the fertilizer companies is that farmers will be able to pay more for inputs because of the boost in grain prices.

Yields for corn is already being downwardly adjusted in a significant manner, with about 1 percent of of the condition of the corn added daily as to being rated poor or very poor. It's dropping - as measured by percentages - a little over 1 percent a day, or about 8 percent a week nationally.

Corn prices have led the push in grain prices, soaring close to 35 percent over the last month, reaching $7.86 on a key futures contract.

Soybeans have been moving up in unison, climbing to an all-time high of $16.79 a bushel, even though they haven't had the damage the corn has endured, as they pollinate later and could be salvaged as far as to depth of losses if rains come soon enough.

The other side of this is those farmers who get a good crop could generate a lot of money this year, which is what the markets are looking at, and why the fertilizer companies have had their prices soar along with the crop prices.

The longer the drought lasts the better for the fertilizer companies, as every day that goes by some of the corn crop reaches a state of being unrecoverable no matter if the rains come or not.

One other factor is the health of corn in South America. The price dynamics of corn and fertilizers could change if there is a large crop there. Brazil has already been reputed to have sold up to 1 million tons of corn for delivery in October to December; although that has yet to be confirmed.

Brazil May Be Exporting Corn to U.S.

For several weeks there have been rumors that less expensive Brazil corn may have been bought up by livestock companies in the U.S. as corn prices surge from the ongoing drought, and the need to lock in product before it was acquired by other countries may have pushed the deals forward.

The numbers being thrown around, but which haven't been confirmed yet, are as much as 1 million tons of Brazilian corn may have been acquired for delivery in the latter part of 2012.

A consortium of livestock buyers are behind the corn import rumors, and if true, the deliveries would arrive between October and December in the U.S.

This would be especially attractive to the Southeast portion of the United States, where it's more expensive to buy domestically at this time than it is from Brazil.

That's not only because of the rising price of corn, but the lack of railways to deliver the corn from the Midwest to the Southeast.

At this time the price of Brazilian corn stands at $274 a ton for September shipments. Freight costs are an additional $30 a ton.

Corn delivered within the U.S. is priced at approximately $311 a ton when delivered to the Southeast region of the country.

Concerns in the U.S. remain for corn stocks, which have dropped to 16-year lows, and which the drought could end up hurting if it doesn't end soon.

Top Corn States' Corn Condition Getting Worse

The most recent U.S. Department of Agriculture report says that the top 18 corn producing states in the nation had the quality of the corn drop, as the drought continues to hammer the Midwest.

According to the USDA report, 30 percent of the corn crop in the top corn states is now considered to be in poor or very poor condition. That's an 8 percent drop since just a week ago, when it stood at 22 percent.

Expert have said there is only about a ten day to two week period left where significant rains must come in order to salvage the corn. Already in some areas it's too late for the crop, even if it was to rain hard.

The states being hardest hit at this time are Illinois and Indiana, with Indiana having 61 percent of its crop rated poor or very poor. Last week 50 percent of Indiana corn had the same rating.

Illinois, which is second only to Iowa in corn production, dropped from 33 percent last week to 48 percent this week as to the percentage of the corn crop being rated poor or very poor.

For the entire nation, the amount of corn rated good to excellent fell from 40 percent this week, down from 48 percent last week.

It appears for every day the drought continues, a little more than 1 percent is added to the poor or very poor rating and subtracted from the good to excellent rating.

While the amount of corn planted this year has given some leeway to the industry, a couple of more weeks of this weather will cut deeply into the earlier corn yield projections, which have already fallen quite a bit for the year.

Monday, July 9, 2012

Corn Downwardly Revised 35 Percent from USDA Forecast

The corn yield for 2012 was downwardly revised by 31 analysts surveyed by Bloomberg, dropping 35 percent from the June 12 projection made by the USDA.

If that is close to being accurate, that means that corn stockpiles in the U.S. will stand at close to 1.216 billion bushels (30.89 million metric tons), on September 1, 2013.

Even though the USDA will release its next harvest and inventory estimates on Wednesday, July 11, it's unlikely to confirm or deny these numbers, as they usually change projections incrementally rather than all at one time. There is no doubt though that the numbers will go downward from the last forecast.

Estimates are the USDA could cut corn production estimates by over 8 percent in its next announcement.

As of July 1, the U.S. corn crop was the unhealthiest it has been since the drought of 1988, even though in some regions corn is in better condition than its 1988 counterpart because it was planted earlier this year, which allowed for extended root systems and better ability to access soil moisture.

With soil moisture depleting at rapid rates, those areas will come under extreme stress in the days ahead. Rains in those regions aren't expected to come until about July 17th or 18th at earliest.

At this time less than 50 percent of corn grown in the U.S. is in good or excellent condition. That's also the lowest levels since 1988, and way down from the 77 percent levels as of May 18, according to government data.

Expectations are all of this could result in corn approaching a record $8 a bushel by December.

Many people are missing something in the corn story though, as the record sowing of corn for the 2012 season will probably still result in record yields, with production in the U.S. expected to climb 9.7 percent over 2011 levels.

That will help raise corn inventories from the 16-year low of 837 million bushels as of September 1.

Corn Prices Jump on Weather Forecast

The price of corn continues to soar as the latest weather forecast offers little hope of rain any time soon for the important Midwest area, especially in Iowa and Illinois, which together account for about 30 percent of the corn yield in the United States.

Since the middle of June corn prices have jumped 30 percent, and could soar much higher as rains aren't expected for over a week in the eastern portion of the Midwest states, with extended forecasts projecting the middle of next week as the earliest time for rain to come to the region.

The rain that is forecast for the nation is mostly for the southern states, offering no relief for the corn states.

Consequently, on the Chicago Board of Trade (CBOT) prices for new-crop corn climbed another 3 percent to a contract high.

In Asian trade front-month corn jumped to as high as $7.59-3/4 a bushel.

Illinois Corn Barely Holding On

Some factors in planting corn in Illinois in 2012 have helped the crop to endure the weather better than the last severe drought in 1988 devastated the corn crop across the Midwest.

It's centered around the fact Illinois farmers got their seed in the ground earlier this year, helping the roots spread out before the drought hit, helping to extract ground water to the plant.

Even though, overall, Illinois corn is in good shape (with the exception of the southern part of the state), concerns are rising as to how long the corn can get water from the ground, as it needs to be replenished soon for the corn to give a decent yield this year.

Approximately 66 percent of the corn crop is under extreme stress at this time, with much of the bottom third of the state under the most stress, which some experts say is close to being beyond the point of being able to come back, even if rains to come.

Another area where corn is under heavy stress is in areas with sandy soils, as those soils don't hold water well, and are the first to stress when rains diminish. The worst area in Illinois in that regard at this time is the Mahomet region.

Farmers with better soils continue to have a good corn crop in the state, but the available moisture is rapidly depleting, and the corn will come under more severe stress if rains to come soon.

In June, where corn needs to get about 8 inches of water for the month, it didn't get near that levels, and the corn needed about 6 or 7 inches of water to come from the soil during that period of time.

Because soil moisture is close to being depleted, Illinois farmers can't rely on that in July. Every day there is no rain is a cut into the yields for the season.

Most corn is not in the critical pollination state, and while 3-digit hot weather can have some impact on the yield, if there is adequate water it can overcome most of that. But the combination of hot weather and lack of weather will devastate a crop, as will lack of water in and of itself.

Experts around country say the next couple of weeks are crucial for the 2012 corn crop, and if significant rain doesn't come, the results will be catastrophic.

Saturday, July 7, 2012

Ohio Corn Farmers Project 30-50 Percent Drop in Yields

The drought conditions in Ohio appear to have no immediate relief in sight, and a number of farmers are predicting corn yields to drop by 30 to 50 percent over previous levels, with much of the damage to the crop already done, even if rain returns and falls on the crop.

While the predictions are dire, farmers added that they really won't know the extent of the drop in corn yields until harvest time.

As for soybeans in Ohio, they could be salvaged more if rains do come in the near future.

Farmers around the Midwest conclude rains in drought-stricken areas must come in the next couple of weeks or the corn yield could be catastrophically low.

The one piece of good news is farmers around the nation probably planted more corn than any time in history, and so a reduced yield may not have as much of an impact, although that depends on how bad it actually gets.

Hot and dry conditions during the pollination period result in the ears of the corn not filling out, which is what reduces the overall yield.

Estimates are Ohio needs about 5 inches of rain to get back to normal levels in the state.

Agriculture produces approximately $105 billion in revenue for Ohio annually.

Minnesota Corn Tops in Country So Far

While Minnesota farmers are celebrating the fact that corn in the state is in the top condition in comparison to all other states, the weather turned hot last week, and has now put pressure on the corn, whereby there is a need in the next couple of weeks for significant rain to come in order to alter the changing circumstances.

Concerns are how long the subsoil moisture can continue to carry the corn crop, as it continues to draw on the diminishing water.

Corn is now entering the pollination stage in Minnesota, and more rain is critical to the yield of the crop. The quality of pollination is what determines the yield for corn, and if the rains don't come, it'll push down the amount of the corn yield exponentially.

Before the hot weather came, along with the lack of rain, the rating of Minnesota corn, according to Monday’s U.S. Department of Agriculture national crop condition report on July 2, was 82 percent of the corn was in good or excellent condition. That will quickly change if relief doesn't come soon.

Like other states, some parts of Minnesota received some good rain and the crop in those parts of the state are flourishing. Other parts of the state completely missed the rain, resulting in the deteriorating situation.

High Corn Prices Will Pressure Food Industry

Many companies will face increasing pressure on margins if the drought continues in the Midwest, which would push the price of corn, soybeans and wheat up higher.

The problem is the state of the American economy, which continues to flounder, and which has resulted in people being very cautious about what food products they buy, and if they go out to eat at a restaurant.

Higher corn prices especially is what will dictate the direction food prices will go, including the price of meat, cereals, soda, and anything that includes corn as the sweetening agent.

For investors, what needs to be researched and found out is how hedged and protected the companies are that will be most impacted by higher corn prices.

The most vulnerable will be the packaged-food companies, which must bear the impact of higher prices. They will have to make the decision of whether or not to pass the higher prices on to consumers, whose sentiment is very low at this time, or to eat the rise in prices and lower the margins at the company, which will be detrimental to earnings.

It's either keep sales at lower margins or raise prices and lose some sales at higher margins. Either position isn't one the industry wants to face - yet they will probably have to.

For restaurants they face a similar challenge, although fast-food chains are under less pressure because the franchise owners are those who will have to bear the costs of rising corn and meat prices.

Companies like Coca-Cola (KO), Pepsico (PEP), General Mills (GIS), McDonald's (MCD), Yum Brands! (YUM), Kellogg Co. (K) and Sysco (SYY) could come under pressure if the circumstances don't change.

In 2011 the prices of meat, fish and poultry surged 7.4 percent, and is on pace to jump another 4.5 percent in 2012. This is because of the cost of feeding animals is rising because of the jump in corn prices, which is the main ingredient in the majority of feeds.

Lower temperatures are reportedly coming, so that will help with pollination of corn, as it suffers dramatically when temps approach 100 degrees, which has been the case in many parts of the Midwest.

The other problem is rain, which isn't as promising in most regions. The rain also needs to be of the type that isn't quick and just results in runoffs. Ideally, the rain should be the type that soaks the ground throughout the day.

If the weather doesn't improve in the next couple of weeks, the corn yield could be significant less than projected. Even now a portion of the corn won't produce even if the rains come.

Friday, July 6, 2012

Nebraska Corn Quality Continues to Decline

The punishing hot, dry weather continues to hammer the corn crop in the Midwest, and Nebraska corn is declining in quality as the drought continues on.

Soil moisture in the state continues to decline, as the hot and dry conditions, with the additional strong winds, is parching up the soil.

According to the U.S. Department of Agriculture's most recent Monday report, corn in the areas of Nebraska which have irrigation, is rated at 70 percent good to excellent. Areas where it's dry has a good to excellent rating of only 35 percent.

Another problem is the temperature, which when it approaches 100 degrees can result in the kernels of the corn not pollinating, ending with an empty cob.

Last year in the same period the rating for Nebraska corn stood at 80 percent for an average, while in 2012 it's at 56 percent good to excellent on average.

For Nebraska soybeans, the ratings are 45 percent good to excellent, 52 percent fair to poor and 3 percent very poor.

Most grain experts say rain and temperatures need to change within the next couple of weeks in order for the corn season to be salvaged at meaningful levels.

North, South Dakota Corn Stocks Down

Corn stocks, along with wheat and soybean stocks, have plummeted year-over-year in North and South Dakota.

Corn stocks in North Dakota stand at 48.3 million bushels, down 18 percent over last year. South Dakota corn stocks are at 166.3 million bushels, a decline of 3 percent from 2011.

Soybean stocks in North Dakota are at 13.2 million bushels, a fall of 35 percent over last year, while South Dakota soybean stocks are at 24.5 million bushels, a decline of 17 percent.

Wheat stocks in North Dakota come in at 69.1 million bushels, down 22 percent from 2011, while South Dakota wheat stocks stand at 23.6 million bushels, falling 3 percent from last year's levels.

Michigan Corn Continues to Struggle

Corn in the majority of areas of the Midwest in the United States has entered its pollination stage, which is what determines the yield for the year.

Scorching temperatures and little rain has resulted in one of the driest months for June in Michigan, which could result in the worst losses in two decades, and possibly longer if the drought conditions continue.

Some rain has recently fallen, but it's the type that isn't that beneficial, and it hasn't fallen in the most needful corn areas of Michigan.

The problem as to the type of rain is it down poured quickly, which isn't much good in drought areas, as the hard ground prevents it from soaking in, and it simply runs off the soil.

What farmers are looking for is rain that falls over the period of a day, which will slowly soak into the parched ground. That would be beneficial to corn, not the flash rain storms that have been hitting some parts of Michigan.

The second negative factor is the heat, where temperatures play a factor when they approach the 100 degrees mark. In those cases the kernels won't pollinate, and the result is an empty cob.

Experts in the region say there is approximately a two-week window for the crop to recover. If it doesn't happen in that period of time, the losses could be staggering in Michigan, as it could be in many other states in the Midwest.

If the rain continues to be light or scattered, it could be the worst corn yield in Michigan, and the rest of the region, since 1988.

Thursday, July 5, 2012

Iowa Corn Crop Weakening

With corn it doesn't take long for the health of the crop to change drastically, as the Iowa corn crop, after looking robust just about a weak ago, has started to falter as the ongoing drought starts to effect the crop much more than it had prior to this week.

Not too long ago the Iowa corn crop for 2012 was rated approximately 15 below 2011, but were considered in far better shape than the states surrounding it, according to a report from the USDA.

The USDA gave Iowa a 68 percent good-to-excellent rating. Illinois, the No. 2 producer behind Iowa, fell to 37 percent good to excellent. For other states, their good-to-excellent ratings were this: Indiana, 27 percent; Missouri, 34 percent; and Ohio, 49 percent.

While the other states will continue to falter, along with Iowa, the largest producer of corn and soybeans in the nation will be sure to have its good-to-excellent rating downwardly adjusted from its most recent levels when the next report from the USDA is released on Monday.

The areas of Iowa that are worsening are the upper northwest region of the state, as well as the eastern area.

Indiana Corn Damage Irreversible

According to corn specialist Bob Nielsen of Purdue University, the damage already done to the corn in the state is "irreversible."

He said, "A break in the drought and heat for the remainder of the
season would certainly minimize further deterioration of the
corn crop but would not result in recovery to anywhere close to
normal yields."

In what was expected to be one of the biggest corn crop in U.S. history, as well as in many states in the nation, has now become a potential victim of the worst drought in the Midwest since 1988.

This is the same story across the Midwest, where new weather forecasts, if accurate, say it could be another couple of weeks before significant rains come.

On the CBoT December corn jumped 34 cents, or 5 percent, to $7.08-1/2 a bushel. It rose another 5 percent on the day, adding to the approximate 25 percent corn prices have risen over the last two weeks.

Corn Prices Climb Another 5 Percent

The price of corn continues to soar as the weather forecast shows little sign rain will be coming in time to rescue the U.S. corn crop as it enters its key phase in many parts of the country.

Corn prices reached their highest price level in over a year as crops in the Midwest continue to shrivel up in the face of the lingering drought.

Traders shrugged off the boost in the value of the U.S. dollar, focusing instead upon the effects that the drought could have on corn, in face of one of the largest corn planting in the history of farmers in the United States.

Over the last couple of weeks the price of corn has soared by almost 30 percent, pulling up the price of soybean and wheat with it; as soybeans approach record price levels as a result.

Pollination time for much of the corn in the nation has started, and that is what determines what the yield of corn will be for the planting. From now on every day without significant rain is a loss in corn production.

On the Chicago Board of Trade December corn climbed 34 cents, or 5 percent, to $7.08-1/2 a bushel,

For new-crop contracts, they reached a contract high of $7.13 a bushel.

Friday, June 22, 2012

Minnesota Corn Crop Healthy, Ahead of Schedule

While many of the nation's corn states are struggling because of the ongoing drought, northern states like Minnesota are doing very well, with the corn reportedly growing far ahead of the normal schedule for the state.

At this time in the state the corn height is usually about 12 inches tall at best. But on average it's about 23 inches tall at this time, and will be much more by the Fourth of July, where it's usually not even at the 23 inches it now stands. With a couple of weeks left till July 4, it could reach 30 inches, or maybe even a little higher.

Most of this is based upon Minnesota farmers planting their corn seed earlier than in the past, which accounts largely for the increased growth. The weather has cooperated well too, helping to boost growth.

What's even more important is farmers in Minnesota have planted the largest amount of corn in the history of the state, and so the harvest should be bountiful.

At this time it's too early to know whether that's good or bad news, as the drought in other areas of the country are positive for the price of corn, but the weak global economy, along with strong yields in parts of Brazil could end up with a supply glut, which would over the year put downward pressure on the price of corn.

Interestingly, approximately 17 percent of corn farmers in Minnesota are now concerned about there being too much water, as the region has been drenched lately, according to the USDA. Others say the moisture is exactly what they need.

At this time the USDA says that about 82 percent of the corn crop in the state is in good or excellent shape.

U.S. Corn Prices Schizophrenic on Drought, Economy

The price of corn futures went up and down the last several days as disparate forces pressure the grain from different sides.

First there is the force pushing the price of corn down, which is the ongoing global recession, which has been trying to pull the price of corn to lower levels.

Countering that is the continuing drought, which is now expected to last into July in some important parts of the country, which has turned a number of traders bullish on it.

Around the world the global economy has been floundering, as China reported another decline in its manufacturing sector, the eighth straight month for them. Europe's economy has dropped for the fifth month in a row, and U.S. manufacturing is growing at a declining pace.

So the price of corn in the U.S. is largely based upon this competing influences, where in the short term it appears the weather may have the largest influence; although that has been changes on a daily basis at times.

Another factor that hasn't been taken into account by many is the major corn crop in Brazil’s Mato Grosso state, which could end up boosting the supply glut even more. If so, that would put downward pressure on corn in the near future.

At this time it appears over the next two or three weeks the weather may be the biggest factor in corn futures prices, which means we may see it go up during that time.

Beyond that it's likely the economy and corn production will be the determining factors, which means corn prices will drop as the summer rolls on.

Of course it depends on the weather over time, and whether some important corn production areas in the Midwest get some pockets of rain.

Corn for December climbed to $5.51-1/4 a bushel, jumping $0.23 percent, on the Chicago Board of Trade.

Wednesday, June 20, 2012

Corn Futures Jump on Hot, Dry Weather in U.S.

Soaring temperatures and little rain in the Midwest of the United States has resulted in corn futures climbing to their highest levels in a month, as concerns over whether or not the harvest will be big enough to replenish corn inventories is weighing on the global market.

On Tuesday the corn futures for December jumped 29-1/2 cents to settle at $5.63-1/2 a bushel, a gain of 5.5 percent. It rose as high as $5.64 on the day, the highest level in 3 months.

Corn for December delivery has increased by 11 cents on the week so far.

The major forces driving the prices higher from an investment standpoint has been the commodity funds, which have acquired approximately 40,000 corn contracts over the last couple of days, implying they are bullish on corn at this time.

On Monday the U.S. Department of Agriculture reported the condition of corn was worst than expected, with current weather forecasts suggesting it could get worse. Meteorologists say the bad conditions could last for another couple of weeks in the region.

According to the USDA, 60 percent of the corn crop in the United States is rated from good to excellent condition. That was a drop of three percent from the prior week, and a percentage point less than expected.

With about 5 percent of the corn in the U.S. starting to silk, which means it's entering it's reproductive state, the ongoing poor weather conditions during that stage could have a major effect on yields.

The corn yield in the U.S. for 2012 was estimated to reach 166 bushels an acre by the USDA. Private projections have it at about 160 bushels an acre.

Wednesday, March 7, 2012

China's Corn Supply Less Than Reported

China's domestic supply of corn appears to be quite a bit less than estimated, as local and regional farmers, apparently in an attempt to boost their status with the Chinese government appear to have overestimated the corn harvest in the country.

Both the Chinese government and the USDA said the country had produced a record crop of 191.8 million tons in 2011, but that appears to be anywhere from 6.8 million tons to 24 million tons less than the actual corn production numbers.

Domestic Chinese corn has already started to jump in price in response to government agencies and private producers bidding for the grain in the tighter-than-expected market.

Originally the USDA estimated China's corn imports at about 4 million tons, assuming the accuracy of the 191.8 million ton figure. That could, and probably will change significantly as the situation unfolds. Some estimate that corn production in China for 2011 may be as low as 168 million tons.

China has officially come out and said they have enough corn reserves and won't need to import a lot of corn for 2012, but that could be a negotiating ploy to keep corn prices somewhat stable as demand ramps up.

Even so, and with the drought pressuring corn supply in Brazil and Argentina, China can easily enough shift to importing wheat as a secondary choice if corn prices rise too high, waiting for an opportune time when the price pulls back. It'll be an interesting year for corn imports and exports around the world, including the United States.

Tuesday, March 6, 2012

Wisconsin Corn, Crop Prices for February 2012

Prices for corn and other Wisconsin crops were mixed for February, with month over month and year over year prices fluctuating.

For corn, the average price per bushel climbed to $5.97, a gain of 19 cents over January's price, and a jump of 38 cents over the price of a bushel in February 2011. However, it was less than the average price of corn per bushel in the U.S. for February, which came in at $6.16 as of the middle of the month.

The price of soybeans, on average, was at $12.50 per bushel in the middle of February, up 60 cents a bushel over January, but dropping 40 cents a bushel against the February 2011 price. It was higher than the overall U.S. soybean average of $12.30 a bushel as of the middle of February.

Oats in Wisconsin generated $3.59 a bushel, up 31 cents over January and 47 cents higher than the price in February 2011. That was a little less than the U.S. average of $3.66 a bushel for oats.

For alfalfa hay, the price as of the middle of February was $125.00 a ton, $25.00 over the price of February 2011, but about the same as January 2012.

Monday, March 5, 2012

Corn and Midwest Storms and Hurricanes

Damage to corn and other crops have yet be assessed from the destructive hurricanes and storms which ravage much of the midwest and parts of the south.

States and surrounding regions most affected by the storms are Kentucky, Illinois and Indiana.

Of particular interest will be the extent of damage to any stored grains or crops, as well as on the building and storage units themselves.

It'll probably take some time before we know if there is enough damage to have a significant impact on crop prices or exports.

Argentina, Brazil Corn Production May Exceed Estimates

Corn production estimates last month by the U.S. Department of Agriculture for Argentina and Brazil may have been understated, as a report from Informa Economics on March 2 said.

Drought in both countries resulted in the USDA projection a 22 million ton harvest in Argentina and a 61 million ton harvest in Brazil. According to Informa, those numbers could reach 22.5 million tons of corn harvested in Argentina and 61.5 million tons or corn harvested in Brazil for 2012.

Offsetting that data was the news South Korea’s Nonghyup Feed Inc., the largest buyer of feed grains in the country, acquired 126,000 metric tons of U.S. corn on March second, which is scheduled for July delivery.

That has helped push up the price of corn futures slightly in Monday trading.

Friday, March 2, 2012

Brazil Selling 700,000 MT Corn to Domestic Market

The government of Brazil announced Friday it was going to sell as much as 700,000 metric tons of corn stock in its domestic market in response to the draught that has hit the southern states of the nation.

States targeted via auctions are Santa Catarina and Rio Grande do Sul,
where a sell of up to 500,000 metric tons of corn will be initiated.

The Brazilian Agriculture Ministry said this: "The measures are a way for the government to supply the market's shortage of the product and help the sector, which faces difficulty due to the smaller crop caused by weather factors,"

Other states in Brazil targets from corn sales are Minas Gerais, Rio de Janeiro and Espirito Santo. Corn sales are focused on those looking to acquire feed for the various meat industries.

The other 200,00 metric tons of corn is slated to be sold directly to Rio Grande do Sul and Santa Catarina, which have been hit the hardest by the drought. There the fixed price will be $12.18 for each 60-kilogram bag of corn feed.

Included in the fixed price sale will be agricultural cooperatives, along with buyers of feed for meat producers.

Corn farmers in the U.S. could boost production by 15 percent over 2011 as a result of the drought in Brazil and in Argentina. Corn exports in the U.S. are expected to rise in response to the lower supply in the region.

Thursday, March 1, 2012

Top Corn, Soybean Producing Counties in Illinois

According to data released by the U.S. Department of Agriculture, the top corn and soybean producing counties in America are located in Illinois.

Iowa of course remains the top corn and soybean producing state in the United States.

As for corn production, La Salle County was the leading producer, with 60.166 million bushels harvested in 2011. For soybeans, McLean County, in Illinois was the top producer with 14.374 million bushels harvested.

The two counties are the largest in Illinois, helping to boost corn and soybean production, but cooperative weather in the area for 2011 was also a big factor in the good harvest.

Other Illinois counties outperformed the two larger counties on average, with Woodford County have an average yield of 186.5 bushels of corn an acre against La Salle County’s 177.3 bushels an acre., and Knox County produced 61.2 bushels of soybeans an acre against McLean’s 55.4 bushel average.

Corn Exports Up 5 Percent

Corn exports are up 5 percent from last week, according to the most recent U.S. Export report from the USDA. They are also up 2 percent from the four-week average.

Corn exports rose to 818,100 MT over last week. Leading importers of U.S. corn were Japan (341,900 MT), Mexico (279,500 MT), South Korea (89,800 MT), Cuba (26,100 MT), Venezuela (22,000 MT), and Colombia (20,700 MT).

Corn futures opened down 2 cents as the market takes a breather after the February run up in prices.

Tuesday, February 28, 2012

Monsanto (MON) Lawsuit from Organic Farmers Dismissed

A lawsuit brought by organic farmers against Monsanto (NYSE:MON) has been dismissed by a federal court in New York.

Although a lot of the cotton corn, canola and soy in the United States is genetically modified, the major concern and probability is for corn to be the main crop which could migrate to nearby fields, which the lawsuit was about.

The two major concerned aired by organic farmers was over the possibility of being sued by Monsanto over the drifting of their genetically modified genes into the fields of the farmers, which of course hadn't paid for them.

Second, was the potential for organic farmers' crops to lose value because of the inclusion of some of the genetically modified crops mixed with theirs.

As of 2011, anywhere from half a percent to 2 percent of GMOs are mixed in with organic corn, generating some of the concerns from organic farmers.

The judge ruled against the organic farmers because "not one single plaintiff claims to have been so threatened" by Monsanto concerning a lawsuit.

According to the ruling, the judge added that the farmers overstated the magnitude of patent enforcement" by Monsanto, which on average brings about 13 patent-enforcement lawsuits annually. The judge said that "is hardly significant when compared to the number of farms in the United States, approximately two million."

In regard to patent rights, Monsanto asserted they don't bring lawsuits against farmers where small amounts of traits from their genes land in the fields of the organic farmers, or others.

Monday, February 27, 2012

China Corn Import Speculation Supporting Prices

Speculation that China may boost its corn imports from the United States has offered support to corn prices, even though other factors point to weakening conditions going forward.

For now though, corn futures for May delivery climbed to $6.485 a bushel, a gain of 0.7 percent.

As for China, the assumption is it will want to build up diminished inventory before the corn season in that country begins.

At this time it's less expensive for China to import corn from the United States than to use its domestic supply.

Drought conditions in crucial corn-producing areas of South America make the United States a probable choice for Chinese corn imports.

Tuesday, February 21, 2012

Monanto (MON) Battles France Over MON810 Corn

Monsanto (NYSE:MON) has won legal battle after legal battle in its pursuit of introducing MON810 corn into the French market, and with little recourse left to it, France continues to fight against the release of the genetically modified (GM) corn into the country.

MON810 is the only genetically modified crop that has been approved by the EU for planting in EU member countries.

After being ruled against by the European Court of Justice in September, 2011, France was also ruled against by the highest court in November, leaving them with just a plea to the EU that they not allow the rulings to go forward.

The question is what legal standing does France have left, as the plea has already been addressed and legally rejected.

It appears the only recourse for France is hopes of the EU deciding to allow individual countries in the region to decide. The problem with that is of course whenever the population of a certain country in the EU resists decisions, it undermines the group of countries who are fighting to keep the EU from collapsing altogether.

If France has no desire to abide by the rulings, the best thing the country could do is just quit pretending it's part of the EU and leave it; then begin to use its own currency again, while reasserting its own sovereignty.

Trying to have it both ways, even with something as small and relatively insignificant as GM corn, underscores the weakness of the EU, which is continuing to teeter on the precipice of collapse.

Friday, February 17, 2012

Iowa 2012 Corn Acre Planting Projections

With a tight supply and declining production in South America because of an ongoing drought, farmers in the United States are expected to boost the amount of acres they plant in corn, with Iowa farmers contributing significantly to those upwardly revised numbers.

Even so, the results of a coupld of recent surveys, one an online survey and the second a survey conducted at the Iowa Power Farming Show, show farmers in Iowa are looking to plant about 300,000 more acres than originally thought, a smaller increase than expected.

Iowa farmers also said they'll probably plant an additional 50,000 acres of beans.

What surprised those conducting the surveys is there has been a lot of talk by farmers in Iowa about boosting the number of acreage planted in corn. Evidently that was more talk than action being seriously considered by the farmers.

At the national level, farmers have been estimated they're going to boost corn acres planted by about 94.9 million acres, an increase of 2.9 million acres over 2011.

For soybeans, there isn't near as much change, with the number of acres projected to be planted nationally to rise by just over 500,000 to 75.5 million for 2012. In 2011, the number of acres planted in soybeans in the United States was just under 75 million.

The decision to plant more acreage isn't without risk though. If weather conditions are good, the increased number of acres planted in corn could push the price down.

Midwest Farm Values Soar on High Crop Prices, Low Debt

A report from the Federal Reserve Bank of Chicago said farm land in the midwest of the United States has jumped the highest for a one-year period in 36 years, soaring 25 percent during that time.

Confirming the numbers, the Kansas City Fed also reported a 25 percent gain in farmland prices in the region year-over-year.

Most of this has been the result of price jumps in many areas of farming, including dairy, livestock and various crops.

The report from the Federal Reserve Bank of Chicago asserted that "... 2011 may go down in the annals of U.S. agriculture as a once-in-a-generation phenomenon."

Another key factor in rising farm prices is the interest by investors in farm land, as the realization there isn't going to be any more land to farm even as the world population increases.

In the short term the soaring farm prices have generated concern over the possibility of a bubble, but because of lower debt loads by farmers than they held in the 1980s, as well as what appears to be sustainable prices of crops, has a number of analysts believing a bubble in farm land is an unlikely scenario.

Farmland prices have also slowed down in growth, rising in value by 4 percent over the last quarter of 2011. Expectations are farmland prices will continue to climbe in the first quarter of 2012.

South Dakota Corn Production Soars 36 percent

Corn production in South Dakota climbed in a big way in 2011, as the value of corn soared for the year.

According to estimates from the U.S. Department of Agriculture, corn jumped in value in South Dakota to $3.95 billion, a huge improvement of 36 percent over corn value in the state for 2010.

Other production results had soybeans ending 2011 valued at $1.72 billion, while hay came in at a value of $1 billion. Wheat came in just shy of $800 million, finishing the year at $799.5 million. Alfalfa hay was just behind wheat in value for South Dakoto, closing 2011 at $793.1 million.

Thursday, February 16, 2012

Deere & Co. (DE) Projects Lower Corn Prices

Agriculture equipment maker Deere & Co. (NYSE:DE) said on Wednesday they see corn prices dropping for 2012-2013, along with the price of soybeans, cotton and wheat.

Using a date for the starting the year of September 1, Deere said they see corn prices falling on average to $5.30 a bushel for 2012-2013, down from the average of $6.40 a bushel in 2011.

Soybeans are expected to drop significantly by Deere, with estimates of price per bushel falling from $13 a bushel in 2011 to $10.50 a bushel for 2012-2013. That's down from the November estimate of $11.25 a bushel.

For wheat, Deere sees prices dropping from $7.40 a bushel in 2011 to an average of $6.70 a bushel for 2012-2013. That's a little up from the November estimates of $6.60 a bushel for wheat.

Cotton is forecast to plummet from 88 cents a pound in 2011 to 75 cents a pound on average for 2012-2013.

Tuesday, February 14, 2012

Bunge Limited (BG) 2012 Outlook Better

After quarterly earnings plummeted by 34 percent in 2011, Bunge Limited (NYSE: BG) appears poised to rebound nicely in 2012.

Bunge is looking for a 15 percent boost in its share price in 2012, with analysts having a mixed outlook recently.

Bunge Limited had its price target cut by Barclays Capital (NYSE:BCS) from $81.00 to $79.00. They have an “Overweight” rating on the company.

Bunge Limited had its “Sell” rating reiterated by Goldman Sachs (NYSE:GS).

Bunge Limited was upgraded by TheStreet to a “Buy” rating.

Bunge Limited had its price target raised by Credit Suisse (NYSE:CS) to $80.00. They have an “Outperform” rating on the company.

The agribusiness company has placed an estimate of $73.25 on its shares for 2012, with some analysts looking at $80.00 a share for the year. They have a dividend of $1.00, yielding 1.7 percent.

Amrit Banaspati Co Ltd., the edible oils and fats business, will be soon acquired by Bunge.

That and the organic push at the end of the year bodes well for the food company.

Thursday, February 9, 2012

Corn Stockpile Estimates Cut by USDA for 2012

Projections for corn stockpiles in the United States has been lowered by the U.S. Department of Agriculture for 2012.

The downwardly revised U.S. corn stockpile estimates come from the continuing dry weather in South America, especially Argentina, which will probably result in inventories being down because of exports going up as countries gravitate to the American corn supply to make up for the shrinking South American corn yield.

Officials at the USDA slashed expected 2012 domestic corn inventory to 801 million bushels, a drop of 5.3 percent.

Argentina corn production estimates were cut by the USDA to 22 million metric tons, a decline of 15 percent. Brazil, which analysts had believed would also have corn production estimates lowered by the USDA, was kept the same, although that could be downwardly revised as the impact of weather conditions on the corn yield are clearer.

Since the middle of December, corn prices have climbed about 10 percent, in response to the first news reports dry weather was having a significant impact on the South American corn crop.

The second-largest producer of corn in the world, behind the United States, is Argentina.

Wednesday, February 8, 2012

U.S. Corn Farmers to Plant Large Acreage Say Analysts

In a Reuters poll of 24 analysts, consensus is U.S. farmers will plant the largest amount of acres in corn in 68 years. Expectations are a faster than usual planting because of mild and drier weather will help raise the corn acreage planted.

Estimates are a total of 94.2 million acres will be planted, which could result in a record crop of 13.8 billion bushels produced, based upon a yield of 161.4 bushels an acre. The previous record is 13.1 billion bushels.

If the estimates are accurate, it'll be the largest amount of acreage planted in corn since 1944.

Some think the higher corn planting estimates are premature, citing farmers who haven't made a decision yet on whether to go with soybeans or corn. Corn is expected to be more profitable, but also has higher input costs.

Most believe higher corn prices are sustainable, which should drive up the earnings per acre by about $100 more than soybeans, matching performance over the last three years.

That assumption is based upon low supply and high demand. The drought in Argentina is also considered a major support for corn prices this year, and a reason for U.S. farmers boosting the number of acres planted.

The thought is if corn is above $6.50 a bushel, farmers will plant more acreage in 2012.

Thursday, February 2, 2012

Corn Production Should Increase says Glauber

Talking to agribusinessmen in Indiana, Joe Glauber, the leading economist for the USDA, told the group that he believes in the spring of 2012 more acreage across the country will be planted in corn.

He said most of that will be in the southern part of the United States.

“Just where soybean prices are relative to corn seems to favor corn planting. Last year there was a lot of competition for acres by cotton, but this year cotton has come down,” said Glauber.

Production in 2012 is only the beginning, according to the economist, who estimates about 93 million acres to be planted this year. Over the next month there will be a few production projections leading up to the report of planting intentions scheduled to be released in the latter part of March.

That report is based upon surveys of farmers.

As for the coming years, stockpiles are expected to grow, although it'll take time in Glauber's view because of the strong demand for corn.

For levels to increase, he sees a need to return to yields of about 160 bushels an acre. Poor weather has kept the yields weaker over the last several years.

Of course we need to eliminate the ethanol mandate as well, and allow people to make decisions as to what fuel they want in their vehicles. That has put enormous pressure on the corn supply.

The majority of corn demand over the next decade will come from China.

Wednesday, February 1, 2012

Wisconsin Corn Damage from Sandhill Cranes Calls for Hunt

The growing number of sandhill cranes from misguided attempts to boost the population, has done just that in Wisconsin, resulting in a growing amount of corn crop damage as a consequence.

That has led to the introduction of a bill by a Wisconsin lawmaker, which would allow a hunt of the birds to thin the population and corn damage.

According to the Wisconsin Department of Natural Resources, it is estimated the sandhill crane is now the most abundant crane species in the world, numbering at about 600,000.

In what is called the eastern population, Wisconsin, along with Michigan, in the United States, and Ontario, Canada, to the north, are now the major nesting grounds of the prolific bird. the eastern population is estimated to be at about 70,000. Of that, Wisconsin has about 25,000 of them within its borders.

Many crane advocates want no management whatsoever, which is of course a naive and uneducated outlook. All animal populations must be carefully managed so things like the devastation of corn by the sandhill crane is kept to a minimum.

Cranes eat corn seed an young stocks. Southern Wisconsin landowners were issued 55 permits, according to the United States Department of Agriculture.

Now thirteen states in the U.S. have instituted crane hunts.

Corn Concerns Push Ethanol Higher

Rising demand for corn exports from the United States pushed up the price of ethanol futures for the second day in a row, as worries over production costs pressured ethanol higher.

Assumptions the distilleries will be forced to compete for supply with foreign buyers, drove corn to a three-week high Wednesday.

On the Chicago Board of Trade, denatured ethanol for February delivery climbed 0.2 cent to $2.169 a gallon.

Corn futures for March delivery rose 3 cents, or 0.5 percent, to $6.42 a bushel in Chicago.

In the ethanol cash market, prices rose in New York 1.5 cents, or 0.7 percent, to $2.285; on the West Coast it was up 2 cents, or 0.9 percent, to $2.295; in Chicago it increased 2.5 cents, or 1.2 percent, to $2.18; and in the U.S. Gulf it jumped 2 cents, or 0.9 percent, to $2.265.

Tuesday, January 31, 2012

Prime Iowa, Minnesota Corn Country Faces Drought

Prime corn-growing regions of Iowa and Minnesota are facing challenges similar to the last major drought in the region in 1988, causing some growing concern in a year starting with tight corn supply.

Some of the more productive parts of northwest Iowa and southern Minnesota are under pressure, and there's little relief seen to be coming at this time.

While the weather this year is in fact very similar to 1988, the one difference is it is happening earlier than that disastrous year, and so has more time to rebound if wetter weather arrives.

Of course if that doesn't happen, there will be some production and supply problems emerging from the area. If it continues, expectations are parts of eastern Nebraska could be affected as well, and it could spread from there; although that is more the worst case scenario.

In 1988, on average, the drought resulted in about 25 percent less yields for corn.

One major change in corn farming since than has been more drought-resistant corn seed, which should help alleviate some of the effects of dry weather.

That would make it better than 1988, but it would still have a major impact if the weather patterns don't change.

You can see on the map how conditons look at this time.

Archer Daniels Midland (ADM) Crunched on Earnings Miss

Shares of Archer Daniels Midland (NYSE:ADM) got hammered Tuesday, dropping over 4 percent (including after hours trading), as higher corn prices weighed on the company's performance in the last quarter.

Other notable factors having a significant impact were miniscule margins for oilseed processing, as well as the changing global supply market for grains.

For the latest quarter, net income plummeted to $80 million, or 12 cents a share, a dramatic fall of 89 percent from last year in the same quarter, where the company generated a net income of $732 million, or $1.14 a share.

Taking into account one-off events, earnings came in at 51 cents a share, down by 58 percent over last year.

Profits for its agricultural services business were under heavy pressure for the quarter, dropping 63 percent, with the company citing “poor international merchandising results and lower US export volumes.” That particular unit acquires grain from exporters and sells it to importers.

Recognizing the ongoing challenges, early in January 2012, Archers Daniels Midland said it's going to lay off 1,000 workers.

ADM closed Tuesday at $28.63, falling $1.08, or 3.64 percent.

Monday, January 30, 2012

Brazil Drought Effect Downgraded

The severity of the effect of the ongoing drought in Brazil's Parana state, located in the southern region of the country, is worse than originally believed, according to a Dow Jones Newswires report.

Agroconsult's Fabio Meneghin, said, "The western part of Parana, near the border with Paraguay, has been particularly affected. I didn't expect it to be so bad."

Quoting one farmer from the region, the story said corn losses are estimated to be 40 percent on his farm, with soybean losses even higher, estimated to be about 60 percent.

There was no rain in the region for about 45 days, added the farmer.

Ukrainian Corn Planting Expected to Jump 25 Percent

According to the Ukrainian Agribusiness Club, the amount of corn sownin 2012 could rise as much as 25 percent, climbing to 11.1 million acres (4.5 million hectares).

Corn production could be as high as 25 million metric tons, in contrast to the 22.8 million tons yield in 2011, the organization said in a statement e-mailed to Bloomberg.

Michigan Corn Produces Record Yields

After a dubious start to the 2011 corn season, where cold weather and wet fields delayed the Michigan corn planting season, it ended strongly, with corn rising to a record yield of 153 bushels and acre, according to the Michigan Field Office of the U.S. Department of Agriculture National Agriculture Statistics Service.

Jay Johnson, director of the USDA NASS Michigan Field Office, said, "The pollination period had ideal conditions, the weather cooperated, and we escaped what could could have disastrous crop. We had ideal conditions throughout the season in most of the state."

A significant number of Michigan farmers weren't able to complete planting until the first week of June, a full month later than usual.

Johnson said the reason for the higher yields is attributable to breakthroughs in seed quality as well as technological improvements.

Friday, January 27, 2012

Iowa Corn Profits Projected Lower for 2012

Chad Hart, Iowa State University agricultural economist, said the outlook for corn profits for state farmers doesn't look as good as it did in 2011.

“In Iowa, we’re projecting season-average prices to range between $5.30 and $5.40/bu., and we’re projecting inputs costs to be about $4.40/bu. So, if that holds true, the market in Iowa will be offering 90¢-$1/bu. in profits to grow corn for 2012. Returns from growing corn in Iowa last year have averaged about $1.60/bu., but that corn is still being sold,” Hart said.

Economic uncertainty continues to weigh on corn overall corn profits, in Iowa, and elsewhere in the U.S. Prices could fall as low as $3 a bushel, but could rise as high as $7 a bushel, according to Hart.

All factors inputed, I would bet on a more downward movement in price than upward for corn in 2012.

Corn, Ag, Looking for Direction

A variety of factors have generated uncertainty for corn and other agriculture futures, as corn was the only pit ending the Friday session higher.

Continual macro-economic concerns over the European debt crisis, as well as the extent of the corn production, and other crop shrinkage in South America related to weather, has made traders tentative.

Another factor in the mix is the hint of an export ban in Russia, which would offer up more support.

Expectations are grains still have some room to move upwards before leveling off or falling.

Friday corn closed 7 1/4 cent a bushel higher on the nearby contract, ended the trading day at $6.41 3/4.

Nearby contract for soybeans dropping trading 3 3/4 cents and 6 1/4 cents lower, to $12.19 and $6.47 1/4.

Thursday, January 26, 2012

Corn Exports Up 25 Percents Says USDA

A U.S. Export Sales report from the USDA siad that corn exports for the week were up 940,700 MT from last week.

Top export regions, according to the report, were Japan (214,000 MT), Mexico (193,300 MT), South Korea (126,700 MT), China (120,200 MT), Saudi Arabia (70,200 MT), and Taiwan (48,700 MT).

The announcement by the Federal Reserve that it was going to keep interest rates supressed through 2014, had a positive impact on corn futures, which were up on Wednesday's close, and were called up 8 to 9 cents on Thursday.

Argentine Corn Farmers Hit by Heat Wave

The effects of La Nina continue to wreak havoc in Argentina, as well as Mexico and Brazil, as corn farmers in Argentina could lose up to 33 percent of the corn for the 2011-2012 season.

Already struggling from recent drought conditions, the projections are the corn in the Pampas agricultural zone will experience drought conditions through February 2.

Expected tempertures are expected to go above the 104 degrees Fahrenheit in parts of the region, with little rain expected to dampen things down.

Rick Tolman, chief executive officer of the National Corn Growers Association, said this in Buenos Aires, “It looks very similar to what we experienced in 2011." He added that the rain “seemed to be timely enough to help the soybean yields, but for a lot of the corn, it may be too little, too late.”

The worst case scenario for Argentina could result in the harvest dropping to as low as 20 million tons, 10 million less than the 30 million projected.

For the December through March season, the estimated corn havest was cut from 7.4 million tons to 6.1 million tons. The soybean harvest estimates were slashed from 14.1 million tons to 11.7 million tons during the same period.

Archer Daniels Midland (ADM) Ratings Reiterated

Archer Daniels Midland Company (NYSE: ADM) had its “Neutral” rating reiterated by Goldman Sachs (NYSE:GS).

Looking forward to the release of its quarterly report on January 31, 2012, analysts' consensus is for earnings to drop to 78 cents a share, from $1.14 a share last year in the same quarter.

Earnings are expected to come in at $2.98 a share for the fiscal year. Revenue for the year is estimated to be $89.56 billion. Quarterly revenue is estimated at $23.1 billion, a gain of 10.4 percent over last year.

The majority of analysts recommend for investors to hold on ADM. Over the last quarter sentiment on the company has improved a little.

Archer Daniels Midland closed Thursday at $29.84, dropping $0.24, or 0.80 percent.