USDA Forecasts Record Corn, Bean Crops

US corn inventories will rebound from one of their lowest levels on record to one of the highest in 2013-14, as the harvest hits a record, but "strong foreign competition" limits exports. Perhaps this is the reason soybean prices appeared to top out today.
The US Department of Agriculture - in its first detailed forecasts for the domestic corn balance sheet in the forthcoming season - revealed it had factored a yield of 163.6 bushels per acre into its estimate revealed on Thursday of a record 14.35bn-bushel crop this year.
"Fall and winter dryness have little correlation with conditions during the following growing season and eventual yield outcomes," the USDA said, referring to, in some areas, the persistence of the 2012 drought which sent the yield to a 16-year low of 123.4 bushels per acre.
But use of the grain will not grow as strongly, enabling a recovery to 2.177bn bushels (55.3m tonnes) in stocks at the close of 2013-14, in August next year – more than three times the level at which they are expected to end this season.
Inventories at that level would represent the highest in 26 years – since the end of a late-1980s build in inventories which drove Chicago corn prices below $1.50 a bushel, a low not reached since.
USDA chief economist Joseph Glauber on Thursday forecast a sharp drop in prices in 2013-14, of one-third to $4.80 a bushel.
Economists at the U.S. Department of Agriculture, gazing into their crystal ball, see American farmers planting and harvesting huge amounts of corn, soybeans, and wheat this year. They're predicting a record harvest of corn: 14 billion bushels, up nearly 40 percent over last year's drought-crippled level.
With supply up, prices will fall. The USDA thinks that the price of the average bushel of corn could fall by a third. And soybean production and price are expected to follow a similar track.
Of course, these predictions assume good weather. USDA Chief Economist Joseph Glauber admits that he predicted the same thing last year at this time, but a drought in the Midwest turned anticipated glut into scarcity. Grain prices went up, putting a major squeeze on farmers who raise pigs, chickens, and cattle.
This week, the weather appears to be cooperating. As Glauber and his colleagues laid out their forecast in a Washington-area hotel, a storm was dumping more than a foot of snow on some of the places that needs it most, including Nebraska, Missouri, and South Dakota.

Futures Daily for Feb 22, 2013

Quiet Commodities! There are few movers today! Only cocoa and soybeans are showing good volatility!

Soft Soybeans: Is this the manifestation of a top? The USDA says it expects a record crop this year along with good global supply. The pattern on the daily chart (left) looks somewhat like a gravestone doji, so I'll be watching to see if prices continue to fall during Sunday evening action.

Cocoa Confirmed: Yesterday's buy signal was confirmed, and I'm watching for stronger follow-through. Today's 1% move higher is a good sign that cocoa has bottomed and will now move higher.

Coffee Collapses, While Soybeans Surge

Coffee has been rising steadily, but over the past few weeks, the commodity is showing significant weakness. Coffee is down 2% today!

Meanwhile, soybeans are showing the strongest gains today! Dry weather in Argentina is affecting the crop there. This sounds familiar!
from Bloomberg:
"Soybeans reached a seven-week high and corn rose on speculation that warm, dry weather will reduce yield potential in Argentina, the world’s biggest shipper of soy-based animal feed and vegetable oil."

 

Drought, Heat Destroying Food Crops

Fired by fresh worries about drought, corn powered up 34 cents per bushel on the Chicago Board of Trade to $7.08, above $7 per bushel for the first time in a year.
Soybeans climbed 53 cents per bushel to an all-time high of $15.27.
The gains in Iowa’s mainstay crops have been breathtaking as farmers and traders factor in their fears that the heat and drought in Iowa and elsewhere in the corn belt will take yields down far below expectations.
As recently as June 1, corn traded for $5.20 per bushel and soybean at $12.50 per bushel on expectations of big crops that would increase U.S. domestic stocks and also moderate what has been a two-year record run of corn and soybean prices.
The U.S. Department of Agriculture has forecast a national corn yield of 166 bushels per acre and a soybean yield of 44 bushels per acre. Iowa’s yields historically are about ten percent above the national averages.
But private forecasters have cut their yield predictions for corn to as low as 148 bushels per acre and soybeans below the USDA projections.
Corn

 Soybeans -- new all-time record high

 Wheat

Corn Limit Up; Beans, Wheat Follow

Beans up 60 cents. Wheat up 50 cents. Food is going to cost more!

Grains Skyrocket in Anticipation of USDA Report, News of Russian Grain Export Limits

from the Demoines Register:
With a crucial U.S. Department of Agriculture report looming tomorrow morning, corn prices have shot up unexpectedly by 34 cents per bushel this morning on the Chicago Board of Trade to $6.39 per bushel for the December contract.
Soybeans are up 48 cents per bushel to $12.26.

from Agrimoney:

Grain prices spiked after Russia revived plans for grain export duties amid fears that its surging pace of shipments would deplete inventories.

Viktor Zubkov, the Russian deputy prime minister who in June voiced proposals for a levy, said on Tuesday that the government was considering reviving the plan to prevent its grain stocks falling below 15m-16m tonnes.

While Russia has seen a sharp revival in its grains production from last year's drought-affected levels of 61m tonnes - with Mr Zubkov pegging the harvest at 90m-92m tonnes and Prime Minister Vladimir Putin last week estimating the crop at 95m tonnes – keen prices have seen a surge in supplies leaving the country.

Food Commodities Know No Bounds

Grains are at similar levels to the commodity bubble of 2009, but there is no media coverage any more. These charts are today's chart for soybeans. Other food commodity prices are similarly leaping higher.

Intraday (today)

Daily chart -- that trend doesn't look "transitory" to me!

Corn -- highest price levels in three years! Up 120% since last summer! Corn is up 25% since July 1st!

Grains, Cotton Plunge on USDA Report

Corn is limit down

Cotton is near limit down

Soybeans plunged

Wheat plunged, near limit down also

Grains Skyrocket Across the Board

More costly food! All the grains show parabolic rises today.

Corn Limit Down on USDA Report

from Arlan:
Grains hit hard at open, but bargain hunters emerging; prices well off their lows; corn dn 22, beans dn 9, wht dn 16 to dn

Grain Prices Grow Skyward

After spending more of the past year rising rapidly, grain prices blasted even higher today across the board. This one is for wheat. Inflation is coming, and it is going to be serious!

Beans Blast Off Following USDA Report

from Arlan Suderman tweet:

140 mln bu bean stocks replace the old 110 mln bu as pipeline bottom; It's about % of usage, which is at record tight levels
Sense that USDA is defining bottom of pipeline supplies at 675 corn & 140 beans; Simply "can't" get tighter; prices must ration

Ag Commodity Inflation Is Here and Going to Get Worse

from Along the Watchtower blog:

Longtime readers will recall that we've had several conversations here regarding the impact that the Fed's quantitative easing policy is having on the costs of everyday food items. Soaring prices of agricultural commodities are going to continue to have a devastating effect on the purchasing power of average Americans and consumers around the globe. Since prices have now recovered some from the selloffs after the Japanese earthquake and tsunami and since there is no end in sight to QE, I thought it was time to once again take a look at out favorite commodities and assess where their prices may be headed over the spring and summer.

Let's start with the grains because rising grain prices cause all sorts of inflation. Not only are grains the raw input to countless consumer goods, grains are also the primary foodstuff for cattle ranchers and hog finishers as they prepare their herds for slaughter. Let's start with wheat, which is being influenced not just by the falling dollar. Price is also feeling the impact of the ongoing drought in the "winter wheat zone" of the high plains of Kansas, Oklahoma and Texas.
http://www.bloomberg.com/news/2011-03-24/worst-texas-drought-in-44-years-eroding-wheat-beef-supply-as-food-rallies.html
Now take a look at the chart. Long-term support held at $7.50 and wheat looks almost certain to catapult higher very soon.

OK, so how about corn? Corn is extremely important in food production as it is used not only as a primary ingredient but as a sweetener, as well. First, let's look at the chart. Support was found, as expected in the area around $6.50. I have no doubt that corn will soon resume its upward move along its primary trendline from last summer.

Now here's the deal with corn...it's expensive to grow! The primary fertilizer that Midwestern corn farmers utilize is anhydrous ammonia. Last year, anhydrous ammonia cost your average farmer about $425/ton. This year, the cost has almost doubled to $750-800/ton. So, while it might be tempting to seed a lot of acres with corn to capitalize on the high price, the input and production costs are so high that many farmers will choose to plant soybeans, instead. Less acres of corn planted lead directly to less production. Less production leads directly to even higher prices. (Remember that below when we get to cattle.)

So what about soybeans? Soybeans are the one grain that I don't expect to rise in price. They will, most likely, stay rangebound through the summer. Why? Besides the fertilizer costs affecting plantings, soybeans get extra acreage for another reason: Weather. Because soybeans have a shorter growing season, they are a "fall back plan" for many farmers who struggled to get corn planted due to overly wet spring conditions.
http://www.galesburg.com/news/x1777821638/Galesburgs-spring-outlook-cool-and-wet
If the upper Midwest spring turns out cool and wet, many farmers will forego corn planting and turn, instead, to soybeans. Extra supply = Lower cost.

Now, let's get back to corn. Have you ever heard the term "corn-fed beef"? Most of the best steakhouses proudly champion corn-fed beef because, frankly, its tastes a helluva lot better than grass-fed. The high sugar content of the corn gets converted into fat. The fat makes its way into the muscle and you, Mr. Steakeater, get yourself a beautiful, marbled "prime" steak. Fat cows are also desirable at slaughter because, well, they weigh more and cattle are sold by the pound. OK, so now, pretend for a moment that you're a cattle rancher. As your cattle are growing and being prepared for market (the term is "finished"), you want to feed them as much corn as they'll eat and you can afford. Corn at $7.00/bushel really cramps your business plan. Your first reaction is to control costs by thinning your herd, i.e. you sell some prematurely, before they are "finished". You might also simply want to sell some of your herd to take advantage of today's high prices.
http://www.saljournal.com/news/story/Cattle-prices-32411
Either way, this extra supply in the short term has actually worked to keep cattle prices from soaring at the same rate as the grains. But this is temporary. By this summer, supply will decrease as cattle that would have been coming to market just then have already been slaughtered. Are we already beginning to see this play out on the chart? Well, take a look:

Many of the same dynamics are in play in the pig market. Note the similar chart pattern of a recent breakout to new highs.

So what does all this mean? It means you'd better prepare. Maybe you're comfortable and you have all the disposable income you need. Great, but what about your sister, trying to raise her three kids on 50 grand a year? What about your neighbor or your best friend who is trying simply to make ends meet after losing a job? What can you do to help them?

You start by warning them about the coming surge in food costs brought about by quantitative easing. All of the factors discussed above, combined with soaring fuel costs, will most certainly lead to a much higher "cost of living" in the near future. The time to act is now.

While Food Commodities Go Parabolic!

Grain Stocks Paper Thin

from various tweets regarding the USDA's grain report this morning:

US soybean stocks at 140 mln bu equates to a 15.2-day supply - the tightest of the past 40 years!

China buys 40k tons US soyoil 

USDA's tight soybean stocks est was only achieved by "assuming" that prices would ration beans available for domestic crush 

Global corn stocks fall to just a 55.4-day supply; 2nd tightest of past 35 years; 2nd only to 54.9-day supply 4 yrs ago

Today's USDA #s are bullish long-term, altho we could see profit taking if buying int wanes today

Today's USDA data means that corn needs 93 mln and soybeans need 79 mln acres w little margin for bad weather

USDA tightens stocks leaving no room for error in next season's plantings and will require rationing of ethanol demand

from Futures Knowledge:


Cotton prices ended the day limit bid and are trading near limit gains this morning.  The USDA January supply/demand report was supportive for cotton but was quite bullish for grains and soybeans which is causing cotton to rally.  For the US, USDA raised US production of cotton by 50,000 bales to 18.32 million bales. Raised Use by 100,000 bales to 3.6 million and left exports at 15.75 million bales. And left ending stocks at 1.90 million bales.  For the world, USDA lowered production by 70,000 bales to 115.46 million bales, raised World Use by 280,000 bales to 116.58 and reduced World ending stocks by 550,000  bales which puts them at 42.84 million bales.  Whenever world ending stocks are reduced it is bullish on its face. The USDA left production unchanged in Australia, India, and China though they are likely to lower those estimates later. They raised Brazil’s production by 100,000 bales to 8.2 million. USDA raised India’s cotton consumption by 500,000 bales to 21.5 million. USDA lowered soybean ending stocks by 25 million bushels to 140 million. USDA lowered wheat ending stocks by 40 million bushels to 818 million.  USDA lowered corn ending stocks 87 million bushels to 745 million.  Today, the US Dollar Index is down 38 points at 80.75. Crude oil is up 55 cents at $91.65. March soybeans were up 14 cents overnight at $13.71. March corn was up 5 1/2 cents overnight at $6.12 ½. July wheat was up 11 ½ cents overnight at $8.19 ¾. China’s cotton futures and forwards were higher overnight.

Dollar Tanks, Commodities Rebound

US Dollar - broke below 12-14 support today

Crude Oil

Gold

Silver - breaks out to new record

Grains

Soybeans Elevate from 1300 to 1400 in One Week!

Commodities Surge to New Highs

Grains have hit new 2010 highs today, especially corn and soybeans. Gold is above $1400/ounce again, and silver is also surging. Sugar just hit a new 29-year high. Cotton, after a limit down move yesterday, just erased all those losses! Copper just hit a new high also. Livestock futures are setting new records today also. Inflation is here, like it or not!
NYBOT weekly, daily chart:

NYBOT monthly chart -- higher than 2008 high!

Grains Against Sprout Wings

The grains have surged again just one day after several touched limit down.

Even Beans Are Limit Down!