Wednesday, July 18, 2012

corn seen rallying to record $8.50 as drought kills crops

Businessweek | Corn may rally to a record $8.50 a bushel as the worst U.S. drought in decades cuts production in the world’s biggest exporter, driving global stockpiles lower, according to broker Newedge USA LLC.

The U.S. harvest may drop to 11.8 billion bushels (299.7 million metric tons), said Dan Cekander, director of grain research, who correctly predicted in March that soybeans would trade at the most expensive level relative to corn since 2010. Cekander’s output forecast is 29.75 million tons less than the latest estimate from the U.S. Department of Agriculture, and would be the smallest crop since 2006-2007. Futures traded as high as $7.89 yesterday, near the $7.9925 record set in 2008.

The drought is baking farms from Arkansas to Ohio, reducing yields, after frosts followed by drought cut wheat harvests in the former Soviet Union, prompting the United Nations and the USDA to pare estimates for world grain harvests. Dimming corn- crop prospects in the U.S. may push global food costs higher, the Food & Agriculture Organization said earlier this month.

“If it doesn’t start raining the rest of July, you’re going to have a significant shortfall here in production,” said Cekander, a fourth-generation farmer who grows corn and soybeans in Illinois, the second-largest U.S. grower of both crops. “That would put the 2012-2013 world corn carry-out below last year,” he said, referring to year-end stockpiles.
Soybeans Climb

Corn for December delivery gained 0.2 percent to $7.73 on the Chicago Board of Trade at 12:51 p.m. in Singapore, erasing a drop of 1 percent. Since reaching the year’s low in June, the grain has rallied 53 percent. November-delivery soybeans, trading at $15.905 a bushel, reached $16.07 yesterday, the highest price since 2008.

Corn yields will probably drop to 134.9 bushels an acre as crop conditions deteriorate, Cekander said in an interview yesterday, forecasting prices of $8.25 to $8.50 for December futures. That compares with the USDA estimate of 146 bushels, and a forecast of 138 bushels from AccuWeather.com. Last year’s harvest was 12.36 billion bushels, with a yield of 147.2 bushels.

“The fear is that the U.S. corn yield will decline to 125 to 130 bushels per acre if hot and dry weather persists through mid-August,” Cekander said. The 11.8 billion-bushel harvest estimate is based an area of 87.5 million acres (35.4 million hectares), lower than the USDA’s 88.9 million acres, he said.

About 55 percent of the contiguous U.S. states were in moderate-to-extreme drought at the end of June, the highest since December 1956, according to the National Climatic Data Center. USDA ratings for corn and soybeans as of July 15 were the worst for that time of year since a drought in 1988.

11 comments:

ProfGeo said...

I'm all for readable accounts as well as the minutiae, so I like The Omnivore's Dilemma (Pollan) for backstory on our corn dependence. (I got that in as a required text for my campus's entire freshman class a few years ago and several faculty colleagues are STILL grumbling, ha ha.) Even a cursory reading of it keeps one from being surprised at this year's corn crisis. Added annoyance for me is that I grew up in the Midwest and Iowa used to be a beautiful state before the corn totally took over.

CNu said...

Corn is the dominant species in North America and has been for many centuries now. Do not anger the corn, lest we all suffer its wrath!!!

Dale Asberry said...

ROTFLMAO!

ProfGeo said...

Corn's already irked, I'd imagine.

Anonymous said...

Hmm it seems like your site ate my first comment (it was super long) so I guess I'll just sum it up what I submitted and say, I'm thoroughly enjoying your blog.
I as well am an aspiring blog blogger but I'm still new to the whole thing. Do you have any helpful hints for beginner blog writers? I'd certainly
appreciate it.
Look into my web blog watch nfl games online

Anonymous said...

Excellent way of telling, and good post to take information regarding my presentation subject, which i am going
to deliver in school.
My web page :: old holborn giallo

Anonymous said...

Hey very interesting blog!
Stop by my weblog ... http://www.yourtobaccosstore.com/3-drum

Anonymous said...

Hi, I do believe this is a great site. I stumbledupon it ;) I'm going to revisit once again since I saved as a favorite it. Money and freedom is the greatest way to change, may you be rich and continue to help other people.
My page - borkum riff

Anonymous said...

Hello I am so grateful I found your web site, I really found
you by error, while I was looking on Aol for
something else, Anyways I am here now and would just like to say thanks for a marvelous post and a all round thrilling blog (I also love the theme/design), I don't have time to look over it all at the minute but I have bookmarked it and also added in your RSS feeds, so when I have time I will be back to read much more, Please do keep up the fantastic work.
Here is my web blog ; mac baren

Anonymous said...

Once we check out the term the term like, with terms of an enchanting marriage using an additional, however , as being a sense that is certainly engendered in case you have miltchmonkey an even better marriage with ourselves as well ( blank ) or perhaps as the experience of increased unity household as well as humankind ( blank ) therefore it gets even more magnificent that each any one is looking for in everyday life will be really like.

Anonymous said...

Its such as you learn my thoughts! You appear to know so much about this, such as you wrote the ebook in it or something.
I think that you just could do with some percent
to drive the message home a bit, but instead of that, this is excellent blog.

A fantastic read. I'll certainly be back.
My web page > boligityrkia.net

Covid And Covid Jab Deaths? Move Along Now, Nothing To See Over There....,

TUCKER CARLSON: “How can world governments kill more than 10 million people and leave some large undetermined number disabled for life? And ...