November 30th, 2011

Corn futures fell in Chicago, extending a monthly decline, as Morgan Stanley forecast pressure on prices next year from higher South American exports of the grain.

U.S. corn shipments, the world’s largest, may slump 21 percent in the 2011-12 season to 1.45 billion bushels, the least since 1985-86, according to Morgan Stanley. That’s smaller than a Nov. 9 forecast of 1.6 billion bushels by the U.S. Department of Agriculture.

“Corn prices will likely come under pressure in the second half of the year as rebounding production in South America, and ultimately the U.S., increases supply,” analysts led by Hussein Allidina wrote in the report e-mailed today, referring to 2012.

Corn futures for March-delivery dropped 1 percent to $5.995 a bushel on the Chicago Board of Trade by 12:58 p.m. Paris time. Prices are down 7.3 percent this month.

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November 22nd, 2011

Corn futures gained, erasing earlier losses, on speculation that declining prices will increase demand for raw materials used to make food and biofuels. Wheat and soybeans also rose.

Corn has dropped 3.6 percent this year, soybeans are down 18 percent and wheat has plunged 23 percent. China’s soybean imports may rise to 60 million metric tons this year, more than the 56.5 million forecast by the U.S. Department of Agriculture, said Abah Ofon, an analyst at Standard Chartered Bank, in a report.

“Overall we still expect markets to trend higher in Q1-2012, although at a less aggressive pace than we saw at the start of the year, as they remain pinned down by uncertainty,” Ofon said. “We also believe investor demand will return, but this will depend very much on sentiment, which in turn hinges on developments in the euro area.”

Corn futures for delivery in March gained 0.2 percent to $6.065 a bushel by 10:45 a.m. London time on the Chicago Board of Trade. Futures have declined 6.2 percent this month, partly on concern that the European debt crisis won’t be solved, cutting demand for commodities.

Soybeans futures for delivery in January gained 0.3 percent to $11.52 a bushel. The most-active contract has declined 5.3 percent in November.

Wheat futures for March delivery rose 0.5 percent to $6.12 a bushel in Chicago. Milling wheat for January delivery traded on NYSE Liffe in Paris gained 0.4 percent to 180.75 euros ($244.61) a ton.

- Tony C. Dreibus in London at Bloomberg.

November 16th, 2011

Japan, the world’s largest corn importer, made its biggest purchase of European grain in at least a decade, seeking a cheaper alternative to U.S. supply.

The country bought about 800,000 metric tons from Ukraine after it removed a tax on exports last month. The purchase, made by five Japanese trading companies, was for shipments in November to March at prices that were about $20 a ton cheaper than U.S. corn, Nobuyuki Chino, president of Continental Rice Corp. in Tokyo, said in an interview today.

Japan, which sourced almost 90 percent of its corn last year from the U.S., the biggest exporter, is seeking different options after a drought hurt the U.S. crop, driving annual prices to an all-time high and curbing global food supplies.

“Japan joined other Asian buyers in finding cheaper alternatives to U.S. corn in feed as the American supply became too expensive,” Takaki Shigemoto, a commodity analyst at research company JSC Corp. in Tokyo, said today by phone. “A shift in demand will drag Chicago futures toward $6.”

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November 14, 2011

While both corn and soybeans appear to generate positive returns for 2012, corn offers growers $150/acre more given current prices.

“With the prevented planting we saw last spring in the Dakotas and the eastern Corn Belt, we could see another sizeable shift of land into corn production,” says Chad Hart, ag economist at Iowa State University. Futures indicate 2012/13 season-average prices in the $6 range for corn and the $12 range for soybeans. Futures markets aren’t quite as bullish as USDA’s crop price projection, he notes.

“With sustained high prices for both crops, the acreage competition should be interesting again,” Hart says in the November issue of Iowa Farm Outlook. “Corn looks to have the upper hand in the competition.” He notes, though, that crop input costs are headed up again, repeating the scenario of 2008 and 2009.

Hart continues that USDA expects a sizeable cutback, with corn export demand estimated at 1.6 billion bushels, down significantly from last year. Weakness in the U.S. dollar supports the export outlook, but the feed competition and increases in worldwide corn production offsets that effect, he says.

On the bullish side, biofuel development continues to support corn and soybean markets. Corn demand for ethanol topped the 5 billion bushel mark for the 2010 crop, and that figure is likely as well for both the 2011 and 2012 crops, Hart says. “Biodiesel demand for soybean oil will be a key variable to watch in 2012.” The latest monthly figures (from July) from the U.S. Department of Energy show record biodiesel production in the U.S. USDA expects another surge in biodiesel production in 2012 as the industry ramps up to meet the biodiesel portion of the Renewable Fuels Standard. While oil prices have had their ups and downs this year, overall, the energy price pattern continues to support biofuel production and crop prices, Hart says.

With higher demands and tighter-than-normal stocks, prices have been pulled to projected record levels, he notes. “Based on mid-points of USDA’s season-average price range, the 2011/12 crop year looks to be the most profitable in quite some time, if not ever.”

- Ed Clark, Top Producer Business and Issues Editor

November 8th, 2011

The U.S. is reaping its smallest corn harvest in three years after a drought damaged what was a record crop as recently as July, driving annual prices to an all-time high and curbing an expansion in global food supplies.

The government will forecast production of 314.7 million metric tons tomorrow, 27.4 million tons less than four months ago, the average estimate of 30 analysts surveyed by Bloomberg showed. The cut is equal to output in Argentina, the second- biggest exporter. The U.S. Department of Agriculture already expected a third annual drop in global corn stockpiles and the first in soybean inventories in three years, offset by an expansion in wheat reserves to the largest in a decade.

Corn, used mostly to make livestock feed and ethanol, is the only one of eight members of the Standard & Poor’s GSCI Agriculture Index to gain this year. At a time when global food prices tracked by the United Nations fell 9.1 percent from a record in February, U.S. consumers are paying the most ever for pork chops, ground beef, flour and cheese. World food costs are 68 percent higher than five years ago and combined corn, wheat and soybean stockpiles are dropping to a three-year low, data compiled by Bloomberg show.

“The situation has improved, but it remains tight,” said Michel Portier, the head of Agritel, a Paris-based adviser to about 2,000 farmers. “The smallest weather problems could cause a price jump. For now all goes well, but it’s clear that on a global level, we still need a good harvest in 2012.”

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October 5th, 2011

Corn futures advanced for the first time in four days on speculation that a 26 percent slump from this year’s high to yesterday’s close may attract importers seeking to rebuild stockpiles.

China, the world’s second-largest user, may need to import between 5 million and 10 million metric tons before the end of 2012 to replenish corn inventories, Thomas C. Dorr, president of the U.S. Grains Council, said yesterday.

“A number of analysts estimate China’s corn import requirements will be greatly above the numbers given by the U.S. Department of Agriculture, and that China could have an import need in the 2011-12 marketing year of between 5 million and 10 million tons,” Paris-based farm adviser Agritel said in an online comment.

Corn futures for December delivery gained 9.25 cents, or 1.6 percent, to $5.97 a bushel at 1:15 p.m. London time on the Chicago Board of Trade. Futures have plunged from a three-year high of $7.93 on June 9, touching $5.7225 on Oct. 3, the lowest level since December.

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September 8th, 2011

The hottest summer since 1955 in parts of the Midwest has eroded corn yields in the U.S., the world’s largest grower and exporter, sending prices to record highs for the harvest season.

The U.S. Department of Agriculture on Sept. 12 may cut its crop forecast for a second straight month, to 12.554 billion bushels, down 2.8 percent from an August projection of 12.914 billion, according to the average estimate of 30 analysts surveyed by Bloomberg News. Inventories before next year’s harvest will be the lowest since 1996, according to the survey.

Cash-corn prices in Iowa and central Illinois, the two largest growing states, have risen at least 71 percent in the past year to the highest ever before harvesting began this month, government data show. Crops in parts of the Midwest were damaged by the hottest temperatures in more than 100 years, boosting costs for livestock producers including Tyson Foods Inc. (TSN) and ethanol makers such as Poet LLC.

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September 2, 2011

Corn futures rose the most in a week and soybeans rallied on speculation that hot, dry weather has damaged U.S. crops more than the government forecast last month.

Production of corn will drop to a three-year low of 12.35 billion bushels, researcher and broker INTL FCStone Inc. said yesterday. That’s below last month’s U.S. Department of Agriculture estimate of 12.914 billion. FCStone forecast the soybean crop at 3.03 billion bushels, less than the USDA’s estimate of 3.056 billion and last year’s harvest of 3.329 billion.

“U.S. crop forecasts are falling and that will continue to support the markets,” Chad Henderson, a market analyst for Prime Agricultural Consultants Inc. in Brookfield, Wisconsin, said in a telephone interview. “Until we hear actual farmer harvest results, the uncertainly about supplies keeps end-users and speculators buying on price dips.”

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August 31st, 2011

Corn futures, wheat and soybeans headed for a second monthly gain in Chicago on speculation dry weather will damage crops in the U.S., the world’s largest exporter of the commodities, threatening to curb global supply.

Corn futures for December-delivery fell 0.6 percent to $7.7025 a bushel on the Chicago Board of Trade at 12:30 p.m. Paris time, trimming this month’s gain to 15 percent. Soybeans for November delivery fell 0.3 percent, while headed for a 7 percent gain this month.

Dryness will continue to stress corn and soybean crops in the Midwest, the largest U.S. growing region, with near to below-normal rainfall in the next four days, Telvent DTN Inc. said in a bulletin yesterday. Rainfall in the Southern Plains will be below normal, the forecaster said.

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August 26th, 2011

The hottest summer since 1955 in Iowa and Illinois is eroding yield prospects for corn and soybean crops in the U.S., the largest grower and exporter.

Signs of diminished output appeared this week during a four-day, seven-state sampling of about 2,000 fields in the Midwest organized by the Professional Farmers of America, which will report its findings later today. A Bloomberg survey of 25 tour participants showed all expected the government to cut its corn-harvest forecasts and 21 predicted a reduction for soybeans.

Corn prices have jumped 24 percent since July 1 and soybeans touched a five-week high on Aug. 24 as crops in parts of the Midwest were damaged by more than 35 days of temperatures above 90 degrees Fahrenheit (32 degrees Celsius), government data show. Corn, the biggest U.S. crop, is the main ingredient in livestock feed and ethanol, a gasoline additive.

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