Shareholder demands to shape modern agriculture

By Laura MacInnis
(Reuters) – Increasing investor demand for agricultural land and the funneling of big money into farms is raising questions about whether small, family-sized operations can survive. >>>> More

GRAINS-U.S. wheat drops on dollar, weather outlook

* Wheat falls to near one-week low on dollar, weather
* Soy down 0.4 pct, falls from 26-month peak
* Corn extends losses, down 0.7 pct to a two-week low
* EU wheat weaker, follows U.S. down
(Adds European session, updates prices, dateline pvs SINGAPORE)
By Michael Hogan
HAMBURG, Nov 10 (Reuters) – Chicago wheat futures slid almost one percent on Wednesday to a near one-week low as a firmer tone for the dollar and an outlook for rains in U.S. winter crop areas weighed on the market. >>>>> More

Commodities Soar As Surging Demand Meets Dwindling Supplies

A broad array of commodities hit multiyear highs as producers of metals and agricultural goods are finding it increasingly more difficult to meet robust demand. >>>>> More

Soft Commodity Technicals by Reuters

Published on November 10, 2010 by admin   ·   No Comments  

WHEAT
SINGAPORE, Nov 10 (Reuters) – The CBOT wheat December contract is expected to retrace further to $6.90 per bushel as the sharp drop on Tuesday is likely to continue. >>>>>> More

Agricultural Futures Climb On USDA Report, Led By Soybeans, Cotton

U.S. soybean futures surged to a 26-month high Tuesday as federal forecasters cut estimates for this year’s harvest in a crop report that showed tightening supplies across agricultural commodities. >>>>>>> More

Suddenly, Corn Costs More. Why Not Corn Flakes?

 
The price paid to farmers for a bushel of corn averaged $4.78 in October, up from $3.61 in the same month last year.
For months, prices paid to farmers for corn, wheat and soybeans have been shooting up. But so far, grocery prices have held steady for consumers. >>>>>>>>>> More

Corn Technicals from Reuters

   

SINGAPORE, Oct 15 (Reuters) - CBOT December corn <CZ0> is technically neutral as it is trapped within a narrow range between $5.53 and $5.89 per bushel.

A rise above pivotal resistance at $5.89 could trigger a very explosive rally towards $6.20, as the current five-wave cycle will make up a bigger wave, and a new rally would be the stronger wave three.

A retracement from the current level could find strong support at $5.53, and will be limited to $5.37 should $5.53 fail to hold up the fall.

Corn Technicals from Reuters

 

SINGAPORE, Oct. 14 (Reuters) - The CBOT corn December contract <CZ0> is technically neutral as it is doubtful if the uptrend can continue.

Corn needs to stand above a pivotal resistance at $5.89 to confirm a more explosive rally towards $6.20. On the other hand, a break below the lower channel line and a possible completion of the wave "5" have dimmed the bullish outlook.

A fall below a minor support at $5.67 will limit its loss to the wave "4" trough at $5.54, as the retracement is expected to be shallow.

Increase in grain prices tough on farms

Minnesota Public Radio News

Worthington — Grain prices moved sharply higher today, and that could have far-reaching effects. The jump came after the U.S. Department of Agriculture slashed its corn crop estimate.

The news could easily add a billion dollars or more to Minnesota’s farm income, but also could hurt livestock producers and push food prices higher.

Corn, soybean and wheat prices all went up the daily maximum after the U.S.D.A. delivered its forecast, which caught many by surprise. The agriculture department’s estimated soybean production fell 2 percent, compared to last month’s prediction. The corn yield fell four percent.

The harvest is still likely to be huge, but the reduction means there will be a smaller supply of grain than expected. Leading up to the report, there had been speculation in the grain trade that the nation’s corn crop would be much smaller than previously estimated but the decline was greater than expected.

“It was the largest decline from month to month in U.S.D.A. History,” said Jason Ward, a grain market analyst Northstar Commodity in Minneapolis.

Excessive rain and heat over much of the Midwest during the summer reduced the size of the harvest. In reaction to the prospects of lower supplies, grain prices moved up about 7 percent.

Ward said prices could rise another 20 percent or so in the days ahead. That will boost revenue for Minnesota corn and soybeans farmers, whose crops bring in $7.5 billion a year.

But higher prices could hurt farmers who use corn as feed for hogs, cattle, turkeys or dairy cows. Combined, they’re a $4.4 billion industry.

Mark Greenwood vice president of agri-business capital at AgStar Financial Services in Mankato, said his clients reacted immediately to the jump in corn prices.

“My phone has rung off the hook,” said Greenwood, who works with hog farmers. “I think everybody’s in a little bit of state of shock.”

Corn feed is a major expense for those hog farmers. Right now hog production is profitable, after a deep and painful slump resulting from the last spike in corn prices two years ago. Tough times could return if corn prices continue to rise, boosting the cost of raising the animals.

Hog farmers got a break though — at least for today. Along with the jump in grain prices, the price of hogs also moved higher.

The rising farm commodity markets could eventually affect food prices. Over the past year consumer food costs have risen only a percent or so. The federal government predicts a two or three percent increase for next year. It could be more if grain prices continue upwards.

U.S.D.A. economist Ephraim Leibtag says food prices have increased about one percent the past year. He said the increase next year will be two or three percent.

“Part of that increase projected for 2011 is based on the higher commodity prices and ingredient prices that we’ve seen the last two or three months,” Leibtag said. “And certainly if prices were to rise more in the commodity markets that would have upward pressure on our inflation forecast as well.”

Commodities Advance to Two-Year High Led by Agriculture Futures

By Tony C. Dreibus

Oct. 11 (Bloomberg) -- Commodities rose to the highest in two years, led by agriculture futures, after a U.S. Department of Agriculture report last week showed corn production in the country would decline more than expected by analysts.

The Standard & Poor’s GSCI Index of 24 raw materials rose as much as 1.3 percent to 571.4810, the highest level since Oct. 3, 2008. The UBS Bloomberg Constant Maturity Commodity Index climbed to 1,490.731, the highest since Aug. 27, 2008. Corn futures gained as much as 8.5 percent and soybeans jumped to a 16-month high.

U.S. corn production will total 12.664 billion bushels, the U.S. Department of Agriculture said Oct. 8. That’s below the average estimate of 26 analysts surveyed by Bloomberg News for 12.977 billion bushels. Yields will be 155.8 bushels an acre, the USDA said, compared with analysts’ forecast of 160.2 bushels an acre.

“Friday’s news has been exceptionally bullish for the markets,” said Sudakshina Unnikrishnan, an agricultural commodities analyst for Barclays Capital in London. “If one looks at current prices, I don’t think we’re close to peaks. There is still further upside from the current levels.”

Corn futures for December delivery surged 42.75 cents, or 8.1 percent, to $5.71 a bushel at 10:34 a.m. London time on the Chicago Board of Trade. The price has gained 23 percent since Oct. 1.

Barclays forecast the grain’s fourth-quarter average price at $5.24 a bushel before the report, Unnikrishnan said. The first quarter average was expected to be about $5.40 a bushel.

‘See a Scramble’

Soybeans for November delivery rose 43.5 cents, or 3.8 percent, to $11.785 a bushel in Chicago. The price has jumped 7 percent this month. Wheat futures for December delivery gained 8 cents, or 1.1 percent, to $7.2725 a bushel.

With corn prices rising, more growers will plant the grain instead of soybeans and wheat, Unnikrishnan said.

“The fact that corn prices are looking more attractive, we could see a scramble for acres tilting in favor of corn,” Unnikrishnan said. “We see soybean prices needing to push up in terms of planting. In feed substitution with wheat, prices need to push up.”

Sugar for March delivery gained 0.88 cent, or 3.3 percent, to 27.2 cents a pound on ICE Futures U.S. in New York. The price earlier touched 27.24 cents a pound, the highest in almost eight months, on speculation that crops in Brazil, the world’s largest supplier of the sweetener, will be harmed by drought that lasted through mid-September.

Silver for immediate delivery jumped as much as 1.6 percent to $23.6325 an ounce, the highest since March 13, 1980. Silver for December delivery gained 0.8 percent, also extending a rally to a 30-year high.

Gold for immediate delivery rose $1.86, or 0.1 percent, to $1,348.60 an ounce. Futures for December delivery climbed $6.70, or 0.5 percent, to $1,347 an ounce. The most-active contract has gained 23 percent this year.

--Editors: John Deane, Dan Weeks.

To contact the reporter on this story: Tony C. Dreibus in Chicago at tdreibus@bloomberg.net.

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.

Corn Technicals from Reuters

SINGAPORE, Oct 11 (Reuters) - CBOT corn will rise to $6.74-½   per bushel over the next four weeks, as the bull run will speed up after the explosive rally sparked by Friday's USDA report.

A strong bull trend has been developing since the Sept. 8, 2009 low at $3.02, with the current wave (3) unfolding towards a bullish target at $6.74-1/2, the 261.8 percent Fibonacci projection level based on the length of wave (1).

The 161.8 percent projection level at $5.44 was just exceeded with a big gap, which characterizes a strong bullish momentum and an explosive wave (3) rally.

Above the current level, minor resistance is observed at $5.96-3/4, the 61.8 percent Fibonacci retracement on the fall from $7.79 to $3.02, and it may not trigger a deep retracement.

A target of $7.79 over the next four weeks could be too aggressive, but it may not be unrealistic to put this forecast slightly beyond one month, say into a two-month time frame.

Crop Report 'Shocker' Ripples Through Agriculture Sector

CHICAGO (Dow Jones)-- Government forecasters slashed estimates for the U.S. corn harvest Friday, causing futures prices to surge while igniting shares of many agriculture companies. 

U.S. corn futures soared to a daily trading limit on the Chicago Board of Trade when the market opened, rising 30 cents, or 6%, to $5.82 1/4 a bushel -- near a two-year high. Soybean and wheat futures also hit their exchange-imposed trading limits at the market opening. 

"Shocker may be an understatement," said Jason Britt, president of Central State Commodities, a Kansas City brokerage. "It's very out of character for the USDA to lower the corn yield so much." 

The crop report spilled into equity markets with tractor makers such as Deere & Co. (DE) climbing on the news along with seed and fertilizer companies such as Monsanto Co. (MON). Livestock and poultry producers such as Smithfield Foods Inc. (SFD), meanwhile, traded lower on expectations that higher crop prices would increase feed costs. Longer-dated future contracts for cattle and hogs rose as well. 

The U.S. Department of Agriculture projected a national corn yield of 155.8 bushels an acre, well below last month's projection of 162.5 bushels and lower than analysts' average forecast of 159.9 bushels per acre. 

The USDA was projecting a record crop a couple months ago. But farmers have largely been disappointed as harvest progresses. The crop faced problems from excessive rains early in the season that washed away supplies of nitrogen, a crucial nutrient, and was also stressed by unusually hot night-time temperatures all summer. 

While many traders and analysts could see this year's corn crop yield drifting down to 155 bushels an acre, few expected the USDA to make such an aggressive revision so soon. The U.S. harvest is roughly 50% complete. 

"This is a very tight balance sheet we now have to live with for a long time," said Sal Gilbertie, lead manager of the Teucrium Corn Fund, an exchange-traded fund based on corn futures. 

Other agriculture commodities followed corn higher. Wheat and soybeans surged in part because both, like corn, serve as an animal feed. Livestock futures also climbed because feed is a major cost for producers. 

Stocks for farm machinery manufacturers and other agribusiness companies rose on prospects that higher prices for corn will provide farmers with more money to spend on equipment, fertilizer and seed. Tractor makers Deere, CNH Global (CNH) and Agco Corp. (AGCO) are all higher, along with seed and fertilizer companies Monsanto, CF Industries Holdings Inc. (CF) and Potash Corp. of Saskatchewan (POT). 

Shares for crop processors Archer Daniels Midland Corp. (ADM) and Bunge Ltd. (BG) also moved up as tight supplies of crops provide them with leverage to raise their prices. But meat and poultry producers, including Smithfield Foods, Tyson Foods Inc. (TSN) , Pilgrim's Pride Corp (PPC) and Sanderson Farms Inc. (SAFM), were lower in morning trading. 

Analysts said Friday's report reignites concerns that the market needs higher prices in order to discourage demand and stave off a supply crisis. The report could have other ramifications, since the government has yet to rule on a request to increase the amount of ethanol that can be blended in gasoline to 15% from 10%. 

"This could (heighten) the debate on moving ethanol blends higher, and 'food versus fuel,'" debate, Britt said.

-By Ian Berry, Dow Jones Newswires; 312-341-5778; ian.berry@dowjones.com

Corn Jumps to Two-Year High After U.S. Cuts Supply Outlook

By Supunnabul Suwannakij

(Bloomberg) -- Corn futures in Chicago surged to the highest level in two years after the U.S. Department of Agriculture last week cut its supply forecasts. Soybeans and wheat also advanced.

Corn futures for December delivery rose the 45-cent daily limit, or 8.5 percent, to $5.7325 a bushel on the Chicago Board of Trade. That’s the highest level since September 2008. The U.S. Department of Agriculture on Oct. 8 cut its domestic corn- crop estimate for the second time in as many months, predicting a 3.4 percent decline from last year after flooding in June and hot, dry weather in August cut Midwest yields.

“Corn continues to draw strength from the bullish USDA report,” Luke Mathews, commodities strategist at Commonwealth Bank of Australia, said by phone from Sydney. The “USDA expects U.S. corn supply in 2010/2011 to contract to the tightest level in 15 years.”

U.S. corn production will total 12.664 billion bushels, down from 13.16 billion projected a month ago and less than last year’s record 13.11 billion, the USDA said in a report. The average estimate of 26 analysts surveyed by Bloomberg News was for 12.977 billion bushels.

Soybean futures for November delivery gained as much as 4.4 percent to $11.8475 a bushel in Chicago, the highest price since June 5 last year. They traded at $11.7475 a bushel at 9:52 a.m. in Singapore.

Wheat futures for December delivery advanced as much as 2.9 percent to $7.3975 a bushel, before last trading at $7.2975 a bushel.

U.S. Supplies

Unsold U.S. corn supplies on Sept. 1, 2011, before next year’s harvest, will total 902 million bushels, compared with the month-ago forecast of 1.116 billion and 1.708 billion this year, the USDA said. Analysts expect reserves of 1.15 billion bushels.

The U.S. soybean crop will be a record 3.408 billion bushels (92.8 million metric tons), compared with 3.483 billion projected in September and 3.359 billion gathered last year, the USDA said. August rains failed to boost yields, and the government reduced its acreage estimates. Analysts in the Bloomberg survey expected 3.501 billion bushels.

Global wheat stockpiles will total 174.66 million metric tons on May 31, down 1.8 percent from 177.79 million estimated last month, the USDA said. The average estimate of 13 analysts in a Bloomberg News survey was 177.43 million tons.

--Editors: Richard Dobson, Matthew Oakley.

To contact the reporters on this story: Supunnabul Suwannakij in Bangkok at ssuwannakij@bloomberg.net

To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net

Commodities Soar as Crop Forecasts Cut, U.S. May Buy More Debt

(Bloomberg) -- Commodity prices surged to the highest level in almost two years after the U.S. government cut its crop-supply forecasts and the dollar slumped on speculation the Federal Reserve will buy more debt to revive the economy.

 

The Reuters/Jefferies CRB Index of 19 raw materials jumped as much as 2.7 percent to 295.17, the highest level since Oct. 15, 2008. Every price advanced. Wheat, soybeans and corn led the gains, each jumping the most allowed by the Chicago Board of Trade. Copper climbed to a 27-month high, and crude oil topped $83 a barrel.

Since the end of May, the CRB index has rallied 16 percent, and the dollar slid 11 percent against a basket of six major currencies, as the U.S. sought to inject more cash into the economy and spur growth. Today, the greenback dropped below 82 yen for the first time in 15 years as a U.S. payrolls report showed employers cut more jobs last month than economists forecast.

“Everybody is printing more money except emerging markets, and those guys are buying commodities,” said Michael K. Smith, the president of T&K Futures & Options in Port St. Lucie, Florida. “We’re going to have an inflationary spike. This is a perfect storm for commodities going higher.”

The CRB index rose 7.81 to close at 295.11 at 5:10 p.m. New York time. This week, the gauge gained 3.3 percent, the most since April 2.

Crop Forecasts Cut

The U.S. Department of Agriculture today cut its domestic corn-crop estimate for the second time in as many months, predicting a 3.4 percent drop from last year. While farmers will collect the most soybeans ever, the total will be 2.2 percent less than forecast in September, the agency said. Global wheat inventories will be 1.8 percent less than projected last month.

“The government has shocked the grain industry with the huge cut in U.S. production,” said David Smoldt, the vice president of operations for FCStone LLC in West Des Moines. “There will be some scrambling for supplies today.”

Corn futures for December delivery rose the 30 cents, or 6 percent, to close $5.2825 a bushel. Soybean futures for November delivery soared 70 cents, or 6.6 percent, to $11.35 a bushel. Wheat futures for December delivery jumped 60 cents, or 9.1 percent, to $7.1925 a bushel.

Reduced supplies of corn may increase costs for meat companies and squeeze margins for makers of grain-based ethanol such as Valero Energy Corp., Poet LLC and Archer Daniels Midland Co.

The shares of Tyson Foods Inc., the largest chicken processor, slid $1.26, or 7.7 percent, to $15.01 in New York Stock Exchange composite trading. Earlier, they touched $14.82, an eight-month low. Smithfield Foods Inc., the biggest pork producer, fell $1.08, or 6.7 percent, to $14.97, the biggest drop in a year.

Freeport Climbs

Copper futures for December delivery increased 9.5 cents, or 2.6 percent, to close at $3.7745 a pound. Earlier, the price reached $3.8015, the highest level for a most-active contract since July 8, 2008.

Freeport-McMoRan Copper & Gold Inc., the world’s biggest publicly listed copper producer, climbed $4.11, or 4.5 percent, to $95.51. Earlier, the shares reached $95.91, the highest level since Aug. 1, 2008.

Crude-oil futures for November delivery rose 99 cents, or 1.2 percent, to $82.66 a barrel on the New York Mercantile Exchange. Earlier, the price reached $83.13.

Sugar rose to the highest price in almost eight months on concern that demand will outstrip supplies after adverse weather damaged crops in Brazil, the biggest producer.

Cotton futures jumped to a 15-year high after the USDA boosted a forecast for global demand. Textile mills will use 120.8 million bales in the year that began Aug. 1, up 0.2 percent from last month’s estimate, the USDA said.

--With assistance from Jeff Wilson, Whitney McFerron and Leslie Patton in Chicago: Patrick McKiernan, Steve Stroth

To contact the reporter on the story: Yi Tian in New York at Ytian8@bloomberg.net.

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net.

Minister mulls using excess maize for biofuel

SA needs to re-examine its current policy on biofuels which would see the country use its excess maize without threatening food security, Agriculture Minister Tina Joemat-Pettersson said on Friday.

"It is not only about food production. It is also about energy, development and saving and therefore with the excessive maize surplus, we as a government need to look again at our biofuels policy," she told delegates at the annual AgriSA Congress in Johannesburg.

The country needed to find new markets and opportunities for its agriculture products.

She cautioned that her department alone did not determine the country's biofuel policy.

A national biofuel policy, drawn up in conjunction with commercial farmers, was needed to ensure food security was not threatened.

The Democratic Alliance's deputy energy spokesperson David Ross welcomed Joemat-Pettersson's comments.

"[She] is to be commended for putting aside party differences and moving her department towards the adoption of DA proposals for an end to the ban on South Africa's maize being sold for ethanol production," he said.

The minister told delegates commercial farmers were not the enemies of the African National Congress, but were considered necessary for the country's future prosperity.

She said at the recent ANC's national general council in Durban it had been accepted that commercial agriculture had an important role to play.

"It is the first time in the history of the ANC that the words commercial farmers were not used as a swear word. It was a big breakthrough. It was the first time in the history of the ANC that [farmers] were not seen as the enemy of South Africa, but that commercial farmers are the cornerstone of rural development."

She said the media had focused so much on ANC Youth League leader Julius Malema that it had missed the NGC's "absolute horror and disgust" at the ongoing farm murders.

She told delegates that "expressions made by individuals" didn't necessarily echo ANC policies.

"My role is to speak for all farmers at all levels, not just the small farmers. It is a very difficult task. It is the first time that we accept that ANC politicians also speak on behalf of commercial farmers. That is a huge change that has taken place in our country."

She said she had informed ANC leaders in Durban of the difficulties faced by commercial farmers.

While she would on occasion have differences with farmers, Joemat-Pettersson promised to speak to them before going public with her differences.

Problems facing the agriculture sector included production costs and the strengthening rand. It could only meet the country's future food requirements if energy and electricity problems were properly addressed.

The energy affairs department had recently made efforts, with the assistance of Agri SA, to keep recent diesel price hikes to a minimum.

The minister said her office was forging ahead with the re-establishment of agricultural colleges to train aspiring farmers. - Sapa

Nebraska corn harvest down, but still at more than 1.5 billion bushels

While the U.S. Department of Agriculture reported Friday that Nebraska's corn crop is down 4 percent from last year's record crop, there's plenty of corn to go around, said Kelly Brunkhorst, director of research for the Nebraska Corn Board.

Based on Oct. 1 conditions, the USDA's National Agricultural Statistics Service, Nebraska Field Office, reported Friday that this year's Nebraska corn crop is forecast at 1.51 billion bushels, down 1 percent from last month and 4 percent below last year's record high. Yield is forecast at 170 bushels per acre, nine bushels below last month and eight bushels below the record high set last year.

However, according to the USDA, both 2010 production and yield remain the second highest of record. Acreage for harvest was increased 350,000 acres to 8.9 million, 1 percent above a year ago.

While USDA did lower its yield estimate for Nebraska - down from its 179 bushels per acre estimate in September, Brunkhorst said reports from fields "make it clear that 179 bushels was perhaps too optimistic for the state this year."

"While we had pretty good weather overall in Nebraska, a couple of weeks of hot weather right after pollination may have taken the top off yields a bit," he said. "Yet 170 bushels per acre is pretty darn good, obviously, when you consider it's the second-highest ever."

Nationally, USDA estimated yields at 155.8 bushels per acre, below last year's record of 164.7. If realized, that would put the U.S. corn crop at 12.7 billion bushels. As forecasted, both those figures would be the third-largest on record, Brunkhorst said.

"While the yield reduction appears to tighten the corn market a bit, we're confident about the current supply picture," Brunkhorst said. "At the same time, we'll have good supplies of other corn products, including some 4.2 million tons of distiller grains being produced by Nebraska ethanol plants this year alone."

Friday's crop report also pushed agricultural commodities futures up, including corn, soybeans and ethanol.

John Anderson, an economist with the American Farm Bureau Federation, said the big drop in both the corn yield and production estimates in October's crop report caught the industry by surprise. "Folks were expecting to see a drop in average yields from last month's report because of poor late-season weather conditions across much of the Corn Belt, but nobody was forecasting this big of a drop in the corn crop," Anderson said.

Anderson said the smaller-than-expected corn crop and the lowest stock situation since 1995 prompted USDA to forecast a market year average cash price of around $5 per bushel - up 60 cents from last month's price forecast.

"Corn producers will welcome the higher price, but livestock and dairy producers will have to pay more than they expected to for feed," Anderson said.

Friday's report said that state soybean production is forecast at a record high 281 million bushels, 5 percent below last month but still 8 percent above the previous record set last year.

State soybean yield is forecast at a record high 55 bushels per acre, unchanged from last month and 0.5 bushel above the previous high set in 2009. Area for harvest was decreased 250,000 acres to a record high 5.1 million, up 7 percent from 2009.

Nationwide, USDA said soybean production is forecast at a record high 3.41 billion bushels, down 2 percent from September but 1 percent above last year. Based on September 1 conditions, USDA reported that yields are expected to average a record high 44.4 bushels per acre, down 0.3 bushel from last month but up 0.4 bushel from last year.

Area for harvest in the United States is forecast at 76.8 million acres, down 1 percent from the previous estimate but up 1 percent from 2009, according to the USDA.

Statewide, the USDA also reported:

-- Sorghum production is forecast at 7.05 million bushels, up 15 percent from last month due to an increase in harvested acres. This production is still 46 percent below a year ago and the smallest since 1953. Yield at 94 bushels per acre is unchanged from the previous month but up 1 bushel from last year. Harvested acreage was increased 10,000 acres to 75,000 but down 46 percent from previous year and smallest since 1947.

-- Sunflower production is up 43 percent due to increased acreage and yield from a year ago.

-- Dry edible bean production is up 37 percent from last year due to more acres.

-- Sugarbeet production is down 19 percent from 2009, a result of fewer acres for harvest and a lower yield.

-- Alfalfa hay production is forecast to be 4 percent higher and all other hay production is unchanged compared to a year ago.

robert.pore@theindependent.com 

Published: Saturday, October 9, 2010 12:03 AM CDT

 

Ethanol Futures Surge Most in Five Years on Lower Corn Yields

Ethanol futures surged the most in more than five years in Chicago after a government report forecast corn supplies will be lower than an earlier estimate, signaling higher costs for plants that make the biofuel. 

Futures climbed after the U.S. Agriculture Department estimated the domestic corn crop will fall 3.4 percent from a year earlier, the second reduction to its forecast in as many months. The grain is the primary ingredient used to make ethanol in the U.S. 

“The big story is a very bullish grain report,” said Dan Flynn, a trader at PFG Best in Chicago. “The profit margin to make ethanol is going to go up because it costs more to make it.”

Denatured ethanol for November delivery advanced 19.6 cents, or 9.9 percent, to settle at $2.184 a gallon on the Chicago Board of Trade, the highest price since Sept. 30, 2008. The percentage increase was the biggest one-day gain since September 2005. Futures have followed the price direction of corn in 15 of the past 16 sessions.

Corn production will total 12.664 billion bushels, down from 13.16 billion projected a month ago and less than last year’s record 13.11 billion, the U.S. Agriculture Department said today in a report. The average estimate of 26 analysts surveyed by Bloomberg News was for 12.977 billion bushels.

Corn for December delivery rose the exchange limit 30 cents, or 6 percent, to $5.2825 a bushel in Chicago. One bushel of the grain distills into about 2.75 gallons of ethanol.

‘Driving Force’

The corn report “will be a driving force” in the ethanol market over the next few trading sessions, Flynn said.

“There’s no way they would sell ethanol with corn at these prices sub-$2,” said Jason Ward, an analyst at Northstar Commodity Investments LLC in Minneapolis. “I wouldn’t. Based on corn prices you’d lose money if you did. That’s why it’s so critical for the end-user to be awake.”

In cash market trading, ethanol in Chicago gained 14.5 cents, or 7 percent, to $2.225 a gallon and in New York the biofuel jumped 13.5 cents, or 6.2 percent, to $2.315, according to data compiled by Bloomberg.

Ethanol on the West Coast increased 11.5 cents, or 5.2 percent, to $2.315 a gallon and in the U.S. Gulf the additive gained 9.5 cents, or 4.3 percent, to $2.30.

With ethanol at these prices, producers should buy corn right now to lock in margins and hedge against corn prices going higher over the next several days, Ward said.

Volatile corn prices and bad bets on the grain contributed to the bankruptcy of at least a dozen ethanol producers over an 18-month stretch that started in October 2008, which included VeraSun Energy Corp., once the largest American distiller.

Poet LLC, in Sioux Falls, South Dakota, is the largest U.S. ethanol maker, followed by Archer Daniels Midland Co., in Decatur, Illinois, and Valero Energy Corp. in San Antonio.

To contact the reporter on this story: Mario Parker in Chicago at mparker22@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.

Record corn, soybean crops projected for Minnesota

Minnesota farmers are projected to harvest record corn and soybean crops this fall.

In its updated production forecast Friday, the U.S. Department of Agriculture estimates Minnesota's corn crop at a record 1.26 billion bushels, up nearly 16 million bushels from last year's record. It also forecasts a record yield of 175 bushels per acre, compared with last year's record 174.

The USDA is forecasting soybean production at 329 million bushels, up 16 percent from last year and breaking the 2006 record of 319 million. The average soybean yield is estimated at 45 bushels per acre, up five from last year.

Sugarbeets and dry beans are also expected to set production records for Minnesota.

Nationally, corn production is forecast at 12.7 billion bushels, down 3 percent from last year's record. Soybean production is projected at a record high 3.41 billion bushels

Wheat and corn rise as Ukraine limits exports

By Javier Blas in London and Mark Rachkevych in Kiev

Published: October 7 2010 19:24 | Last updated: October 7 2010 19:24

Wheat and corn prices rose after Ukraine said it would impose export restrictions on agricultural commodities until the end of the year after a drought this summer devastated the country’s cereal crop.

Kiev said it would cap overseas sales of wheat and barley at 500,000 tonnes each and corn at 2m tonnes.

The cap announcement by first deputy prime minister Andriy Klyuev needs to be confirmed at a cabinet meeting next week.

“We introduced them [the quotas] on Monday,” he told reporters in Kiev.

Analysts said Ukraine had exported 4.2m-4.5m tonnes of winter grains, mostly wheat and barley, so the limits would leave little room for further sales.

Traders said the move to impose official export limits followed weeks of de facto limits in overseas sales using customs and administrative measures.

Andriy Yarmak, a Kiev-based agribusiness consultant, said the move would “adversely affect Ukraine’s global position on the grain market”, being another of Kiev’s frequent interventions in the market to ban or limit grain exports.

Dmytro Ushenko, agriculture analyst at BG Capital in Kiev, said the move came after “an acceleration in the pace of grain exports and the need to replenish state food grain reserves”.

He added that the export limits were also aimed “at bringing prices in check before the upcoming municipal elections to be held at the end of October”.

In Paris, Liffe December milling wheat rose 1.4 per cent to €206.75 a tonne.

Wheat prices are still below the two-year high hit last month at €238 a tonne after Russia announced an extension of its export ban in grains until mid-2011.

In Chicago, CBOT December corn prices rose 2.5 per cent to $5 a bushel.

Corn hit a two-year high of $5.28½ bushels in late September on concerns about a lower than expected crop in the US, the largest exporter of the cereal.

Barley prices in Europe also rose, with the cost of the grain in the physical market in northern France quoted at €185 a tonne.

Prices are below the highs reached this summer, when barley in Europe traded at an unusual premium to milling wheat.

Elsewhere in commodities markets, crude oil prices fell sharply amid profit-taking after three days of large gains and as the US dollar strengthened against the euro and other currencies.

In late afternoon trading, Nymex November West Texas Intermediate dropped $1.56 a barrel to $81.67 a barrel while ICE November Brent fell $1.86 to $83.23.

Crude oil prices remain within the $70-$85 a barrel range in place for most of the last year.

Traders will watch next week’s Opec meeting in Vienna for signals about the direction of the market.

The oil cartel is expected to maintain its production unchanged.

US natural gas prices fell nearly 5 per cent to $3.686 per million British thermal units on ample supplies.

Base metals prices fell, but prices remained high ahead of London Metal Exchange Week, the annual gathering of the industry in London.

Sugar futures headed for the biggest gain since May on concerns supplies in India, the world’s second-biggest producer, would be disrupted. Raw sugar for March delivery rose 1.38 cents to 24.92 cents a pound.

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Corn Technicals from Reuters

 

   

SINGAPORE, Oct 7 (Reuters) - CBOT December corn <CZ0> may shoot up to $5.08-¼   per bushel, the wave "b" peak, as a consolidation between $4.87-¼   and $4.96-¼   may have ended.

Corn is characterized with its strong momentum when a trend is established such as a shallow retracement in an uptrend or a moderate rebound in a downtrend. 

A possible inverted head-and-shoulders pattern is developing, with a neckline at $4.96-1/4. A rise above that would lead to bullish target of $5.38. 

A fall from the current level may be limited to $4.80.