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.

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.

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.

Corn Futures Fall on Japan Concerns

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

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

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

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




Source

Corn Prices and Iowa Corn Outlook

Corn prices soared to the 30-cent per bushel limit to $5.28 on the opening of the Chicago Board of Trade Friday after the USDA lowered its estimate of Iowa’s per bushel corn yield from 179 bushels per acre last month to 169 bushels per acre.

Soybeans soared as well, rising 70 cents per bushel to $11.35. Both corn and soybean prices are at their highs for the year.

The corn yield estimate, if confirmed in the final post-harvest tally by the USDA in January, would represent a 7 percent drop from the 2009 harvest.

Last year Iowa farmers averaged 182 bushels per acre.

The USDA lowered its national per-bushel estimates from 162.5 bushels per acre to 156 bushels.

Commodity analyst Arlan Suderman of Farm Futures Magazine called the USDA report “shocking.”

Don Roose of US Commodities in West Des Moines called the report “a game changer.”

“This means that there will be tight supplies and a real battle for corn acres next spring,” said Roose, who added that the price for the March contract on corn could reach $6 per bushel.

Des Moines commodity broker Tomm Pfitzenmaier of Summit Commodities said “the USDA was expected to lower their yield estimates, but no one expected them to lower it this much all at once.”

Darin Newsome of DTN in Omaha called the USDA report “extremely bullish for corn, with a possible limit move. Domestic ending stocks to use are the second lowest on record. Soybeans and wheat also saw bullish numbers, leading to expectations of large gains in all three grain markets.”

Iowa is the nation’s largest producer of both corn and soybeans. Together the two crops contribute about $15 billion in cash to Iowa’s economy.

The report and surge in grain prices made itself felt on the stock market. Deere & Co., Iowa’s largest manufacturing employer, was up $4.24 per share to $76.14. Monsanto, owner of the DeKalb and Asgrow seed lines and whose stock has been under pressure this year, rose $2.37 in early trading. DuPont, owner of Johnston-based Pioneer Hi-Bred, was up 44 cents per share to $46.67.

While the higher prices for corn will help farmers make up financially for the lower yields, the increased grain costs will work against the margins for Iowa’s hog and cattle producers as well as the state’s 40 ethanol plants.

Livestock producers are enjoying their first profitable year since 2007, predicated on both better market prices but also moderate corn prices. Record corn prices in 2007 and 2008 triggered three years of losses for hog and cattle raisers.

The higher corn prices had a predictable effect on cattle prices. Feeder cattle, those six months of age or older who are sent to feedlots to be fattened, were down $2.57 per hundredweight to $106.55 in early trading in Chicago.

This year’s corn and soybeans crops were hobbled by record rainfall in July, which flooded many plants just as they were pollinating. Then an unexpected cold snap in late July interfered with some pollination.

Because crops were planted earlier this year during mild weather at the beginning of April, the Iowa corn harvest had begun earlier than usual.

The smaller crop raises the specter of short supplies. Dick Gallagher of Washington, chairman of the Iowa Corn Promotion Board, said “I think, even with the slight down tick, I am confident we have the corn we need.”

Concerns about the supply of corn due to the poorer harvest had driven up the price of corn from $3.45 per bushel in June to above $5 per bushel last month. Then a week ago the USDA reported 300 million more bushels of corn in storage from last year that hadn’t been reported previously.

The USDA said that the nationwide corn harvest would be 12.7 billion bushels, down 4 percent from 2009.

Weather Driving US Corn Crop Quality Down

The weather continues to be the story for crops across the world, as the U.S. continues to be hit by hot, dry weather for the last couple of weeks, raising questions as to where it'll be at harvest.

Weather patterns aren't expected to change any time soon either, as the outlook is for the same weather conditions to continue.

Quality is the highest concern, as bad weather could lower the level of starch the plants send to the kernal.

Corn futures for December delivery increased 2 cents, or 0.5 percent, to finish at $4.20 a bushel in Chicago, ending the week at a gain of 3.3 percent.

On Thursday corn reached its highest levels since June 15, 2009, going as high as $4.39 on the most-active contract.

The USDA said this week the amount of corn planted this year is lower than projected.

Corn Plunges to Lowest Level in Seven Weeks

Corn plunges as expected, as it was known if wetter and dryer weather was forecast, the price of a bushel would come under pressure, after a period of consistent gains.

Already a number of corn fields, and other crops, have received almost 2 inches of rain, with other expected to get at least 1.25 inches up to 2.5 inches this week.

Over the next week there is no hot weather expected in a sustainable manner, making it almost perfect growing conditions for corn.

“The market is taking out the weather premium after weekend rains boosted crops in areas that had been dry,” said Greg Grow, the director of agribusiness at Archer Financial Services Inc. “Forecasts this week are wetter and a bit cooler than expected.

Corn futures for December delivery plunged 13.25 cents, or 3.3 percent, to $3.94 a bushel on the Chicago Board of Trade, the biggest drop for a most-active contract since the latter part of May.

Corn Futures Fall to Earth as Inventory Higher than Analysts' Estimates

Corn farmers got a dose of reality, and analysts egg on their face, as a corn inventory forecast from the government surpasses analysts' estimates.

“People were a little disappointed,” said Greg Grow, of Archer Financial Services Inc. in Chicago. “We had a big rally, so traders are lightening up on some positions.”

With supply being the driving force behind the recent surge in corn futures prices, that pretty much bursts that media-induced bubble, as corn futures dropped 0.3 percent on Friday in response to the news.

On the Chicago Board of Trade corn futures for December delivery fell to $3.9525 a bushel.

Corn prices soared 2.8 percent for the week on speculation the wet weather damaged the crop in the Midwest, because of three times more rain than normal.

Corn Up on Farmers Withholding Supplies

Farmers in the U.S. have been withholding corn and cash premiums have risen as a result. Demand overseas has increased in the mix as well.

“Farmers are beginning to let loose of some corn and soybeans, but the pipeline supplies have not been replenished” to load ships, said Ron Uhe, a risk consultant for Mid-Co Commodities Inc. “We have a battle for supplies between processors and exporters.”

The corn premium surpassed September futures, increasing by 40 cents to 45 cents a bushel, in contrast to 40 cents to 43 cents a bushel.

Corn futures for September delivery increased 7.25 cents, or 1.9 percent, to $3.855 a bushel.

Hot, Dry China Weather Offering Corn Futures Support

The potential of low supply in the United States has corn prices pushing up, and add to that the hot, dry weather in China, and you have a couple of factors working together to offer corn prices support.

Although not proven yet, the perception that corn supplies will not be near as high as estimated has drawn traders to the market, and pushed up corn prices as a result.

For China, they could end up buying corn from the U.S. if the weather has indeed been as devastating on the corn crop in China as thought.

So for now, corn has entered into a bullish stage, at least until a firmer grip on supply is confirmed either way.

Corn Futures Settle Higher, Continuing Upward Trend for Week

Corn futures finished up again on Thursday, settling at 6 3/4 cents, or 1.8%, higher at $3.77 1/2.

December corn was up seven cents or 1.8 percent, at $3.96 1/4 a bushel.

Much of this is borrowed from concerns over wheat, which could yield less than projected, which would increase demand for animal feed, raising prices.

Expectations that the U.S. Department of Agriculture released on Friday will show a tighter corn balance sheet has increased interest in the corn market.

Corn Futures in India Drop

Few buyers show up to by in the Indian corn spot market, driving corn futures in India down.


India corn futures ended lower on Friday on sudden absence of buying by local feedmakers and exporters in the spot market, analysts said.

"Both domestic feedmakers and export enquiries were not seen in the market today," said Rahimtullah, a trader in Nizamabad, a major trading hub.

Prices fell by 4 rupees to 820 rupees per 100 kg in Nizamabad spot market.

Prices showed some positive trend in the past one month as demand from local poultry feed-makers started to pick up recently after being tamped down in recent months by a bird flu outbreak.

Government agencies, another major group of buyers in the past one month, almost stopped buying in the last 3-4 days, a trader said.

February futures NMZG9 on the National Commodity and Derivatives Exchange ended at 848 rupees per 100 kg, down 1.39 percent.

India corn futures should rise going forward though, as government agencies and other big players come back to the table.

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.

Dry Weather in Argentina Pushed Corn Prices Up Slightly

Dry weather in Argentina gave corn prices a boost today, after falling to their lowest level in a month yesterday. Argentina is only second behind the U.S. in exporting of corn.

Projections are the conditions in Argentina will continue, as expectations are that less than 1 inch of rain will fall in the major agricultural regions of Argentina over the next couple of weeks.

Corn responded by moving up as high as $3.695 a bushel on the Chicago Board of Trade in electronic trade, while closing at $3.66-1/2 a bushel.

Corn Plunges on Department of Agriculture's Projection of Larger Supplies

Corn fell to the lowest level allowd by the Chicago Board of Trade after the u.S Department of Agriculture said supply will be larger than originally projected in December.

Consequently corn futures dropped by the 30-cent limit to $3.8075 a bushel on the CBOT. That's closing in on the lowest price in two years experienced on December 5 of $3.055.

Corn inventories in the U.S. will come in at 1.79 billion bushels on August 31, a huge 21 percent more than the 1.474 billion bushels expected in December.

Estimates for the 2008 corn crop were also revised upward, adding another 0.7 percent to the total, while also cutting its projections for exports as well. As expected, production for animal feed and ethanol were also revised downward.

In 2007, corn in the U.S. was valued at $52.1 billion, the largest crop in the country.

Globally, corn levels will also increase from Decembers estimate, growing by 9.9 percent or 136 million tons.

DJ CBOT Corn Review: Ends Higher On Crude; Unchanged On Week

CHICAGO, Jan 02, 2009 (Dow Jones Commodities News via Comtex) --
By Ian Berry
Of DOW JONES NEWSWIRES

Higher crude oil and short-covering pushed Chicago Board of Trade corn futures higher Friday, as the market extended its rally from Wednesday, traders said.

March corn ended up 5 1/4 cents to $4.12 1/4 per bushel, May corn ended up 5 cents to $4.22 3/4 and July corn ended up 5 cents to $4.33.

The market was a penny or two higher for most of the day and gained a few more cents before the close. It remains firmly above key support at $4 as well as its 50-day moving average at $3.85.

"The market has given a clear indication -- not just corn, but wheat and soybeans -- that the Dec. 5 lows were fairly major," said Joel Karlin, analyst for Western Milling.

Higher crude oil and U.S. stocks set a supportive tone, although there was little fundamental news to boost the market, traders and analysts said. Weekly export sales of 269,900 metric tons were weak, traders added.

Traders and analysts add that the rally from a low of $2.90 in the nearby contract in December has been in light volume, much of it around the holidays. Many expect the market will give back some of its gains once traders return and activity gets back to normal next week.

Karlin said following the Jan. 12 crop report, the market will have "a renewed focus on fundamentals" including prospects for planted acreage this year.

Weak demand across all sectors continues to limit corn's gains, analysts say, and corn's recent gains will only hinder any rebound in demand.

Funds bought an estimated 1,000 contracts. Although the market closed higher for the third straight day, the March contract ended unchanged on the week.

CBOT oats ended slightly higher. March oats ended up 2 cents to $2.12 per bushel, May oats ended up 2 cents to $2.21 1/4 and July oats ended up 2 cents to $2.30 3/4.
Ethanol futures were mixed. January ethanol ended flat at $1.620 per gallon and March ethanol ended up $0.005 to $1.654.

-By Ian Berry, Dow Jones Newswires; 312-341-5778; ian.berry@dowjones.com
(END) Dow Jones Newswires
01-02-09 1543ET
Copyright (c) 2009 Dow Jones & Company, Inc.

DJ CBOT Corn Review: Up Slightly Amid Pre-Holiday Positioning

CHICAGO, Dec 22, 2008 (Dow Jones Commodities News via Comtex) --
By Ian Berry Of DOW JONES NEWSWIRES

Chicago Board of Trade corn futures inched slightly higher Monday in light, pre-holiday trade, with weak demand limiting any bullish sentiment, analysts said.
March corn ended up 1 cent to $3.81 3/4, May corn was up 1 cent to $34.92 and July corn settled up 1 1/2 cents to $4.02 1/2 per bushel.

Prices had been a couple cents lower for most of the day before mounting a mild rally late. The market tends to gain in the days leading up to Christmas and the day after, and some traders "will try to pick up on some of these statistical tendencies to try and pick up a few pennies here and there," said Arlan Suderman, analyst for Farm Futures.

Some analysts said China's reported purchase of 20 million metric tons of corn was likely supportive, although not a clear factor in Monday's trade. Analysts questioned its long-term impact.

"It seems like the higher Chinese market is what gave it its support on the open," said Chad Henderson, analyst for Prime Ag Consultants. "But when the dust settles on it all, it just looks like they're trying to support their domestic prices. It does nothing to alleviate the glut of grain on the world market."

After climbing $1 from its recent low, lingering weak demand has kept corn from climbing any higher, analysts added. Demand in exports, ethanol and feed is all weak, they said.

You have the corn farmers saying 'man, I don't want to give my corn away at $3.50 cash,' and you've got the hog farmers saying 'look, I'm losing money on $3.50 corn,'" Henderson said.

Volume is expected to be light all week because of the Christmas holiday.
The trade continues to eye weather in South America, which some analysts say is supportive because of dry crops. Others say the region appears to be getting enough rain.

CBOT oats futures ended flat. March oats closed at $2.19 per bushel and May oats closed at $2.28.

Ethanol futures were lower. January ethanol ended down $0.011 to $1.559 per gallon and March ethanol ended down $0.010 to $1.570.

-By Ian Berry, Dow Jones Newswires; 312-341-5778; ian.berry@dowjones.com
(END) Dow Jones Newswires
12-22-08 1545ET
Copyright (c) 2008 Dow Jones & Company, Inc.

Corn Futures Increase from News on Initial Government Injection of Capital into Banks

The emotional boost given by the announced plan of the U.S. government to take $250 billion of the $700 billion bailout and inject it into "healthy" U.S. banks, has caused many commodities to rise over the last couple days, but that will be short lived.

For corn, it partook in the overall boost by increasing by 6.75 cents for December delivery to reach $4.18 a bushel on the Chicago Board of Trade. Earlier in the day it was higher at $4.29 a bushel.

So far this year corn maturity has dropped significantly from last year, as a recent report from the USDA says, where as of October 5 it was only as 73 percent maturity, in contrast to last year during the same period where it was at 95 percent. Later today the U.S. Department of Agriculture will release their weekly crop report.

USDA Raises Monthly Corn Forecast

The monthly forecast by the U.S. Department of Agriculture on Friday reported corn production for the year could be a much higher 12.2 billion bushels, a significant increase over September's projection of 12.1 billion bushels.

While wetter weather has a strong impact on production, the resultant success will probably put more downward pressure on corn prices, as the agency revised its season-average per bushel to a range of $4.20 to $5.20. That's a drop of 80 cent from September's estimate.

At the end of Thursday's session on the Chicago Board of Trade, corn for December delivery ended at around $4.38 a bushel.

Corn Prices Move Up After Fed and Other Central Banks Cut Interest Rates

Corn for December delivery on the Chicago Board of Trade climbed by 10.5 cents Wednesday after the U.S. Federal Reserve and several other central banks around the world cut their interest rates. After the interest rate cuts corn did rebound settling at $4.275 a bushel on the CBOT, a 10.5 cent or 2.52 percent gain.

While many other commodities dropped, which temporarily made central banking officials feel good because of the usual response of inflation emerging from declining interest rates, corn was one of the few that responded in the positive as demand falls because of a variety of inflationary pressures.

Interest rates in the U.S. were cut from 2 percent to 1.5 percent in hopes of stimulating the economy. Other central banks working in unison with the Fed cut rates by half a percent as well.