Corn Supplies Tight on Record Demand

Corn and soybean supplies will remain tight this year even as increased plantings set the stage for record or near-record harvests, U.S. Department of Agriculture chief economist Joe Glauber said Feb. 24.

Exports and ethanol demand are expected to grow, keeping corn prices near historic highs and squeezing profit margins for beef, dairy and pork producers, Glauber said during an address at the USDA’s annual Outlook Forum in Arlington, Va.

“Unless this year’s weather is better than normal or plantings increase more than expected, stock levels for corn and soybeans should see only modest rebuilding in 2011-12,” Glauber said. “This will likely mean continued volatility in those markets.”

Corn futures in Chicago rallied 52 percent last year as the U.S. harvest produced weaker than expected results and prices continued higher in 2011, reaching a 31-month high near $7.25 a bushel earlier this week.

Rapidly escalating feed costs are an increasing concern for beef and pork producers, who in early 2010 returned to profitability after the 2008-09 recession contributed to deep losses.






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Corn: Is the Ethanol Party Over?

While some commodities in the precious metals sector will enjoy a banner year in 2009, grains, and specifically corn, won't be doing to well, as least in the first half the year, as corn futures drop below $4 a bushel.

Contrast that to last year when the sky seemed the limit when corn futures reached over $8 a bushel, and money was plentiful.

Even the drought in Argentina hasn't made an impact on corn prices, as similar to wheat, the harvest globally has been so good, that losing a significant amount like that hasn't made a dent in the price holding up at all.

One major reason for the downfall was the reliance on the taxpayer subsidized ethanol industry, which unsurprisingly has been hammered from the artificial industry, which doesn't have a chance of being successful, as most government hair brained ideas aren't.

The drop in oil prices has caused the ethanol industry to collapse, and even with subsidies, many have already filed for bankruptcy. While that will help silver producers with cost inputs, it evidently won't help the costly corn production process.

Corn farmers need to learn if they suck at the government teat, they're eventually going to get sour milk.

Only the gullible couldn't see the foolishness of the government ethanol program that already has been seen to be a failure. Oil would have to be well over $200 a barrel to make it sustainable, and there would be a consumer outcry if that were to happen.

Corn farmers are now looking to get out of a lot of their corn acreage this year, and revert to soybeans, which have much less costly inputs, and a much better chance at success than the heavily subsidized corn ethynal debacle.

Unfortunately for corn producers, they've become addicted to government entitlements, and then mistakenly follow their business advice which they have no expertise in. That's why it's better to rely on yourself and your own research than dipping your hand in the public till.

Because of the mismanaged and faulty ethanol hoax, farmers will now find it difficult to optain loans for planting and inputs, as the banking system is wary, and the harvests and corn markets very volatile.

So even though we love maize, not even the drought in a major corn exporting country like Argentina who had their corn outlet cut by over 25% could bring corn futures back up again.

As far as corn prices later in 2009, one thing that could eventually help, is the fact that there probably will be quite a few less acres planted in corn this year, especially in the U.S.

Much will depend on if that remains true in other parts of the world, In Argentina, this is the worst drought since 1971, so it's hard to picture them going through something like this again. So they should rebound and have a good corn harvest next year, which will have to be included in the corn price outlook going ahead.

One thing for sure, this year will be as unpredictable as it has ever been for corn farmers, and looking ahead it could be much better to plant acreage in a more predictable crop than toss the dice on seeding fields in the volatile corn market.

VeraSun Energy Requests Permission to Void Corn Contracts with 10-day Notice

Farmers are up in arms over the request by VeraSun Energy for a Delaware judge to give them permission to void corn contracts with a notice of 10 days.

The arguments by farmers was the action would take away their ability to sell corn to other potential buyers, while at the same time essentially killing expected revenue.

Because farmers have a contract with VeraSun, they would have to legally hold the corn until the they find out if VeraSun was continuing the contract, hindering them from lining up another buyer until a notice is officially received.

I don't have much sympathy for the farmers in this situation, as the farmers didn't mind lining their pockets with taxpayer subsidies for corn-based ethanol. When all you do is continue to beg at the government trough, and not become good at business, this is the risk you'll always take.

With the filing of the bankruptcy in Delaware, any agricultural organization or farmer would probably have to travel to the state to get legal counsel recognized by the government there. As of early Friday there hadn't been any objections filed in the case. Claiments had until 4 p.m. Friday to file.

On the 2nd of December the request by VeraSun will be reviewed at a hearing.

The entire ethanol fiasco needs to be abandoned, as it is a grotesque failure that continues to be one of the most idiotic wastes of time, energy and money.

For the quarter ending September 30, VeraSun reported a net loss of $476.1 million.

Happy Corn Subsidy Pacific Ethanol: Company Gets Clobbered with High Corn Prices

Talk about a self-inflicted wound! In a second-quarter report for Pacific Ethanol Inc. (Nasdaq:PEIX), the company said it lost to common stockholders of $10.5 million, or 23 cents a share. That's almost double the 12 cents a share loss analysts were looking for.

Taking into account the increase in net sales of $198 million, which is a boost of 74percent, it makes it even worse. During the second quarter last year net sales were $113.8 million.

Of that revenue increase, 52 percent was connected to increased sales, and another 10percent to increasing prices, among other things.

Gallons sold for the quarter reached 66.8 million, up from the 43.9 million gallons sold during the same period in 2007. Ethanol prices averaged $2.55 a gallon, up 23 cents.

Corn prices surged by 67 percent in the second quarter over the prices in the same quarter last year.

For the six-month period ending June 30, net losses came in at $359.5 million, increasing by 69 percent. Last year losses were $213 million net. Sales volume during the six-month perod grew by 52 percent or 126 million gallons, up from the 82.8 million gallons last year. Average ethanol prices for the period came in at $2.43, an increase from the $2.29 last year. Corn prices during the same time were up 64 percent on average.

The corn subsidy effect on prices continues to haunt those in the food industry, even those like Pacific Ethanol who are trying to exploit the taxpayer funded fiasco.

U.S. Agriculture Secretary Ed Schafer Says No Change in Biofuels Policy

The criticism and impact of the biofuels policy in the U.S. and Europe is causing food riots and protests across the world, as the prices of food surge; mostly on the continuing price increases of corn.

For U.S. Agriculture Secretary Ed Schafer to say there will be no shift in the subsidy of corn in the U.S. and it will be business as usual with ethanol, is irresponsible at least, and, as some are calling it, "a crime against humanity."

In the U.S. alone, ethanol is expected to consume about 25 percent of the corn crop, which is estimated at 13.1 bushels this year.

Now the uncertainty of heavy rains in respect to planting season, leaves no room for error in the U.S. If anything comes along to disrupt the season, corn prices would go through the roof. They're already expected to continue rising throughout 2008.

Investors in Pilgrim's Pride Corp (NYSE:PPC) were ecstatic this week, as the company announced they were cutting production based on high feed costs for the second time in the last 30 days. The reduced supply will cause meat prices to go up, adding to the other effects of corn on the market.

It's possible that the entry of goverments into the biofuels business may be one of the most obivous and public mistakes they've made.

Not too long ago, after 30 million deaths in Africa, DDT was finally reintroduced into the continent to battle mosquitos, which spread malaria to the inhabitants. It was done very quietly, as not to reveal the outrageous results and consequences of another irresponsible government program.

Corn Futures Will Continue to Rise because of Several Factors

Corn futures on the Chicago Board of Trade finished higher on Wednesday, with a number of factors continuing to contribute to its rise.

Future contracts for May increased to $5.52 1/4, up by 7 1/2 cents; July contracts finished at $5.65, and increase of 8 cents; December contracts ended at $5.68 1/2, an increase of 8 3/4 cents.

While speculators played some role in the increase, as consumer confidence reports and the dollar starting to drop again have brought them back to commodities, after their exodus last week.

Other drivers that should guarantee continuing price increases are the midwest corn fields which are being held back from being planted because of wet fields; and forecasts are it'll continue getting rain over the next week, further slowing the planting season - especially in the southeastern portion.

Overall consensus by analysts from a Dow Jones Newswires' survey are the number of acres planted in corn this year will fall by 6.2 million acres to 97.387 million. That's down from the 93.600 million acres planted in 2007.

Other bad weather news is the the northern half of the midwest could be hit with up to 2 inches of rain, which will cause them to delay corn planting, making the harvest even further off.

If this keeps on much longer, the price of corn will probably continue to go up, as there could be anticipated times of low supply.

Of course the ethanol issue continues to rear its ugly head as the battle for corn, acreage and planting other crops like wheat continues on, reeking havoc in American agriculture and the price of food.

Argentina Farmer Strike Causes Corn to Rise to Allowed Limits

After an export tax increase in Argentina, farmers protested by blocking ports and asserting they'll plant less crops this year than in the past - including corn.

The strike shut things down so completely that only 19 trucks entered the port of Rosario, according to reports, when a usual day in March can have up to 6,000 trucks delivering goods to the port. Rosario accounts for about 60 percent of the grain exported out of Argentina.

The protest is actually in reference to increases in export taxes on soybeans and sunflowers seeds, which was increased to around 44 percent from the 35 percent last week.

As a result, the possibility that exports for Argentina could be cut back, caused prices to rise as high as they're allowed for corn by the Chicago Board of Trade.

May delivery of corn futures rose by 20 cents, to reach $5.4475 a bushel, or 3.8 percent.

Over the last year, corn prices have risen by 35 percent and attained a record on March 11 of $5.795 a bushel.

Another factor causing the increase of corn prices is the weather in the U.S., which has been extremely wet in the eastern portion of the midwest, which is causing farmers to delay planting. It looks like the wet conditions will continue on for some time in some parts of this region of the country.

Finally of course, the artificially created market for ethanol continues to put pressures on corn prices, as the unproven fuel continues to reek havoc in the markets.

All this combined makes the price of corn likely to continue increasing in price over the next several months.