Skip to comments.Corn Prices To Soar As Chinese Imports Increase Ninefold Compared To Official Projections
Posted on 02/06/2011 9:39:48 PM PST by FromLori
Cotton, wheat, rice, and now corn. If revised Chinese import estimates by the US Grain Council are even remotely correct, look for corn prices of $6.80 a bushel at last check to jump by at least 15% in a very short amount of time. As the FT reports, "Corn prices and with them, the price of meat are set to explode if the latest import estimates from China are correct. The US Grain Council, the industry body, said late on Thursday that it has received information pointing to Chinese imports as high as 9m tonnes in 2011-12, up from 1.3m in 2010-11." Why is this a concern? Because "the US Department of Agriculture, which compiles benchmark estimates of supply, demand and stocks, forecast Chinese imports at just 1m tonnes in 2011-12." In other words, the whole forecast supply-demand equilibrium is about to be torn to shreds. And all this excludes the impact of neverending liquidity by the one and only, which will only make the speculative approach to surging corn relentless.
For those who think that there is any even remote hope of a respite in the endless climb in prices, we suggest reading the following:
The most China has imported in modern history is 4.3m tonnes in 1994-95 and 3m tonnes in 1978-79. For most of the past 50 years, Beijing has been largely absent from the international market, as domestic production was enough to meet demand.
But Terry Vinduska, the chairman of the council, said after visiting China that estimates given to us were that China is short of 10m-15m tonnes in stocks and will need to purchase corn this year. He pointed to about 9m tonnes in imports. We learned the government normally keeps stocks at 30 per cent but they are currently a little over 5 per cent, which may lead to imports of 3m-9m tonnes.
It is not the first warning of forthcoming massive imports. Recently, David C. Nelson, at Rabobank, one of the worlds largest lenders to the global agribusiness industry, warned that because Chinas animal protein industry is so large, the order of magnitude of China shifting to become a net importer of corn could possibly be measured in tens of millions of tonnes, and in just a few years time.
We note that China could become a net importer of 25m tonnes of corn as early as 2015, he said. Senior executives at trading houses took note of Rabobanks forecast. Is corn set to be another soyabean?
The US Grain Council did not disclose where it got the information and Chinese food import policy is erratic. With corn nearly at a record high, the country could very well opt to further drawdown stocks.
But the forecast of record imports still need to be taken seriously. When China started to import soyabean back in 1995, few thought the country would today be buying nearly 60 per cent of all the global trade in soyabean. While China waving it in needs little explanation for the observent ones, here's what this means from a third party:
Most of the traders I have spoken to believe that China will become a big corn importer, although none believe it will follow the same pattern as in soyabean. Even so, 9m tonnes is a huge number. Enough to push corn prices above the 2007-08 record of nearly $7.65 a bushel. In early trading on Friday, corn was at $6.65 a bushel. And with six sigma floods, record cyclones, massive snowstorms and abrnomal climatic patterns now a near-daily event courtesy of the Jet Stream having decided to take a sabbatical, the only thing the grains and softs market needs is a lit match to set the whole thing ablaze. Luckily we have our very own chaircreature doing his best to make sure that the commodities market makes eating an activity best enjoyed by those who will be bailed out by the administration the next time there is a downtick in the market.
Well, I guess there won’t be anymore “starving kids in China”.
But let’s keep using corn as fuel! That makes sense... not.
I’ll believe Republicans are serious about cutting government spending when they abolish farm subsidies. As John Wayne used to say, “That’ll be the day.”
all I know is I’m going have to really do some shopping at Costco....the big stores carry the big cans of corn....
Anything we can sell them at a fair price, we should
Sure just preparing you all for food inflation here :)
“...and just a couple of weeks ago, the EPA announced that they would mandate an increase of ethanol usage in gasoline by 50%! 40% of the US corn crop was already going into ethanol. Do the math! And corn in storage is near 35-year lows already. It’s a good thing this grain has a golden color because it will be worth its weight in the yellow metal soon.”
does this mean we can stop giving farmers AG subsidies now?
I have the old plow out by the barn; guess I better start looking for a mule & some hitching harness for it.
1 pd wheat/loaf of bread @ 50 lbs/1,000 sq ft, X 43,560 sq ft/acre -50% weather, pest, and wild life losses... = 1/2 acre split by wheat, oats, rye, & barley; and maybe 25’ X 25’ of field corn to feed the feathered egg machines.
That just leaves pellets for the rabbits to buy.
Never thought I’d have to turn into a Hippie hillbilly after I “retired”.
Maybe time to get rid of the ethanol supports? Ya think!
And corn prices still have to double to get near the inflation-adjusted prices to give the farmer the same return as he had in August, 1973, just before the Six Day War and the Arab oil embargo shot fuel prices through the roof.
People in the US have had cheap food on the backs of farmers for nearly 40 years.
Thanks to the Fed and the Free Trade yahoos, we now have a situation where we have a huge trade deficit with China and about the only thing we have to export to China is food.
The Chinese can buy a tremendous amount of food with the trade surplus they have in US dollars that they no longer want to keep in the form of US Treasury debt.
And after the corn is used in ethanol production, it is used for animal feed.
Which was the majority of the US field corn market in the first place.
Here’s a listing of various animal feed products and prices:
See that “distillers grain” in the listings? That’s the by-product of ethanol production. “Wet” means just that, “dried” means the moisture was cooked off for denser transport.
More grain sales by U.S. farmers means more wealth at home. This is good because it is a renewable resource that can be expanded by planting on more land.
I’d rather it be used for something, anything HERE than putting it on a barge and sending it to China, for a great deal less profit.
Nothing’s wasted in ethanol anyway, the byproducts are used for animal AND human feed.
Meanwhile a close friend of mine here in Iowa has raised hogs for ages but now he's about to go out of business due to corn prices.
The ethanol boondoggle was doomed from the start as it takes more resources to manufacture than the fossil fuels it's supposed to replace. It doesn't even break even economically...which is why it has to be subsidized by us taxpayers.
I guess ethanol looks good on paper and in theory, but when you get down to the farm it's another story.
Shouldn't coal be cheap in Newcastle?
We produce almost all of the world's surplus food. Our capacity to grow is so much we pay farmers to NOT grow, so that the oversupply will not bring the prices down even further.
If there is a surplus of supply, even after it is artificially kept low, and a growing but limited demand, why shouldn't prices be cheap at the point of production?
“Nothings wasted in ethanol anyway”
40% of our corn crop. Wasted.
$8 billion a year. Wasted.
Additional wear and tear on engines. Wasted.
If ethanol made sense it wouldn’t need government subsidies.
Ignorant. How exactly is our corn crop wasted? Ethanol only uses the carbohydrate, the resulting DDGS are actually superior for feeding to animals. If we didn’t process it into ethanol it would rot on the ground. It might hurt the soda pop industry, but who cares? Corn fructose is not good for you at all.
The merits of ethanol as a fuel can be debated. The subsidies and mandates I agree shouldn’t exist, but that has nothing to do with the argument of using corn to make fuel.
Detail for me which programs pay farmers to not grow crops.
No, we don’t produce ‘nearly all’ of the world’s surplus.
The Australian, Canadian, Russian and Ukraine harvests also produce surpluses in wheat.
There’s a large (and growing) surplus of beans coming out of Brazil.
I could go on, but the point is that the US is no longer the only player in ag exports around the world, and hasn’t been for some time now.
So 40% of our corn crop is robbed of its carbohydrates, rendered inedible to humans, all to make a product that wouldn't be added to gas except for a mandate, and wouldn't be produced without a government subsidy.
Nice that you can still feed it to a pig, but I don't know how it is “superior”. The distillation process may render the protein more bioavailable, but the animal is still going to need carbohydrates from somewhere.
Using corn to make food wouldn't exist without subsidies and mandates. That is the argument about using corn to make fuel. If it made sense it wouldn't require a subsidy and a mandate.
“At issue is the Conservation Reserve Program, under which the government has paid farmers to stop growing row crops, such as corn and soybeans, on 34 million acres across the country. Designed in the mid-1980s to hold down production and bolster commodity prices, the $1.8 billion-a-year program”
Typical ADF for DDG is about 16+, and NDF is 30+.
That’s typical of good to mature alfalfa hay. The fiber and ash values for DDG are higher than steamed/flaked corn, yes, but they’re not worthless. They’re about that for hay.
Here’s a nifty little comparison chart for various feeds for cattle:
Bonus points if you can tell me what even half of those headings mean.
And, just for clarification, from where do you get your support for the claim that “takes more resources to manufacture than the fossil fuels it’s supposed to replace?” FYI, if you’re going to cite the various nonsense spouted by Pimmental, I can shred his studies in about five minutes off the top of my head by pointing out that the farmer already owns his equipment, we’re not going to light up a bunch of energy from metallurgical coal to cast his tractor axles and engine block JUST for ethanol.
Hog guys are always in a boom/bust cycle. They’ve invariably over-expanding and cutting their own throats by cratering their own prices, just like the dairy guys I used to sell to. When prices are good, they cannot help themselves and they put a ton more sows on the line, and in a year to 18 months, they’ve cratered their own prices. We saw the same thing happen when corn was down around $2 too. Go back and look at hog prices in the mid-90’s and how much money was shoveled into hog producers from Uncle Sugar back then.
They get our corn, but we get those paper drink umbrellas and toy harmonicas.
Important to note that there is a not a one for one replacement of distillers grains for corn. For feeder cattle, it is not recommended to go above 20% distillers grain in the feed. The distillers grain is is used as a protein supplement.
The only ingredient of corn consumed by ethanol distillation is the starch. How much more corn starch do you think the average American should add to his diet?
People don’t eat the distilled corn.
Pigs and such eat it.
How much corn starch do you think your average farm animal should add to its diet?
Farmers don’t want carbohydrate. They want protein. If they could have their way they would take the DDGS without the stillage, which has the fat, and just take the DDG.
The food value of corn carbs for humans and animals ain’t much. The problems of fructose consumption are numerous and documented. That stuff should be fermented into useful products, including but not necessarily ethanol. Personally I think think we’ll be doing ethanol fuel in 10 years anyway. With tech advancements I see us doing bio-gasoline or other fuels or fuel enhancements.
As far as mandates and subsidies, there shouldn’t be mandates and subsidies by the govt on anything, ethanol or otherwise. I agree, ethanol needs to stand on it’s own. I’m not however against fermenting corn carbs to fuel or any other useful product. I’d rather use it here and give jobs and income to the farmer than ship it to our enemies.
Farmers want big fat pigs. The higher protein in distilled corn per gram makes it a good supplement, and it is great that it is not going to waste - but the pig still needs carbohydrates. The distilled corn is not itself a reasonable diet, only a dietary supplement.
I am not against turning corn into fuel either, if it could be done without government subsidies and mandates.
Heck even with just a mandate it wouldn't be enough. Imagine if I told you that I was going to make all Americans buy your product, and you told me that you STILL couldn't do it unless I also paid you to help produce the product that I mandated that Americans buy?
But obviously the day when corn can EFFICIENTLY be turned into fuel at a PROFIT is not yet here. Until someone shows me that it is, I will be against turning corn into fuel.
Great ideas like that qualify you to be president of the United States.
The issue is not about wasting the byproduct, or using it after it is processed. The issue is, that at a 10% mandate for fuel, it is taking 40% of all Corn produced to comply with the fuel mandate. Think about it! for every 10 truckloads of corn produced, 4 go for ethanol. Make that ratio 15% and 6.5 out of 10 truckloads will go for ethanol.
That processed corn is taken away from human consumption. If it were going to feed cattle and hogs, then why is the price of those foods going up so high? would the price of meat not be the same or lower if there were this abundance of feed for them resulting from ethanol?
Finally, your argument is rather ignorant of the biggest fact of all. And that is; If every square acre of farmland on this Continent were used solely for Ethanol production, there is only enough crop capacity to provide about 28% of our daily needs for fuel. We are already using 10% of that quota which means that 18% of our land capacity is going for food.
Farmers don’t want fat pigs and they don’t want fat cows. They want muscle - meat - and that takes protein. What they want very little of is carbs and fat. DDG is superior to regular corn, the problem is that most ethanol plants mix in the stillage to make DDGS. Stillage has the fat, if they’d keep that separate they could feed the DDG as a hi-protein feed and it would be better than corn.
Ethanol is profitable, right now, without the mandate or the subsidy. The problem is ethanol is water attracting, the subsidy is for the blender to give him incentive to deal with it because it needs special handling.
Personally I don’t think ethanol is what we need to be fermenting the sugar to. After you extract the protein and fat and other products like vital steroids, the carbs should be fermented to something either more value or a higher BTU fuel that doesn’t have the water attracting issues.
That’s right, but ruminants don’t need starch to produce sugar; their digestive systems will do it quite nicely from roughage, so any inclusion of distillers grains in excess of 20% of a steer’s diet wastes the extra nutrition. On the feedlot where most commercial operations run a lot of corn through cattle to add a finish, most of the food value of the corn ends up in the manure lagoon; but, at least then there’s a reason for feeding the extra corn.
That’s why I’m not for subsidies or mandates. I am however for not putting our grain on a barge and shipping it overseas to our enemies. I’d rather process here to useful things, create jobs here, give farmers more income here, etc. I have no problem converting it to fuel either.
Transportation, i.e. oil prices are the big factor in food going up. The next one is we’ve had crappy harvests for two years and that makes grain and oilseed prices go up. Ethanol doesn’t really affect the animal feed issue in and of itself.
The way we should be doing things is taking the protein and fat and any other valuable substance off first, then fermenting the carbs to something useful. Not necessarily ethanol, but not saying you can’t either. Let the market decide, but more importantly keep it here.
Her's a relevant quote:
"producing corn and processing it into 1 gallon (3.7 liters) of ethanol requires 131,000 BTUs of energy; but 1 gallon of ethanol contains only 77,000 BTUs [source: Health and Energy].
And since farmers are using fossil-fuel-powered equipment to plant, maintain and harvest the corn and are using fossil-fuel-powered machinery to process that corn into ethanol and then, in almost all cases, to ship the product to collection points via fuel-powered transport, the ethanol industry is actually burning large amounts of gasoline to produce this alternative fuel. That ethanol could end up containing less energy than the gasoline consumed to produce it."
There is no demand for low carb low fat pig feed. Dream on.
Are you an Atkins-ite? You seem to think pigs should be on the Atkins diet!
Mr. Durden appears to have been drinking as he wrote this article .... Some of those sentences just flat-out don’t make sense.
I feel so good. Every time I fill up my car I starve another third-world person to death. Great...just great!
You are completely ignorant of farming in 2011. The only game in town is lean, low-fat meat and has been for years. If you raise otherwise you aren’t going to sell it. I have sat down and talked to farmers with 100 to over 30,000 head of cattle. They want protein and a just enough carbs and fat to give the animal enough energy to finish out, make milk, etc. Hogs have a higher energy requirement than cattle, but the farmer still doesn’t want any more carbs or fats than necessary. That why hogs are finished out on corn-soybean meal feed and not straight corn, to make sure they get enough protein.
Grains are in short supply. There are 5 major grain producers in the world. The US, Russia, Canada, Australia, and to some extent Argentina. Russia has banned all grain exports because of drought and fires; in an attempt to feed their own people. Australia is coming off of a series of droughts, and this year for much of the country instead of drought they are more suited for growing rice due to massive rainfalls and flooding. The US is devoting 1/3 of its grain output for energy inefficient ethanol production, instead of for food. You cant make this stuff up.
There is less grain for all that money to chase. Thus the price rises even more. I mentioned Europe. There may be some measurable effect on food prices there, but not as bad as in the underdeveloped world.
Food riots are taking place in North Africa and the Middle East. It includes Egypt. It brought down the government of Tunisia. There are riots in Morocco, Algeria, the Sudan, and of course also across south Asia.
I have sold dozens, and was raised on a farm.
Are you at Atkins-ite?
Where are the numerous and documented problems pigs have from eating fructose in corn?
8 billion a year is wasted.
A lot of energy every year is wasted.
40% of our edible corn crop is “wasted” and made into a pig food supplement.
You ARE ignorant!
Distillers spent corn is digested much more efficiently.
I myself have none, but as I said I know and grew up with many farmers who have several thousand pigs in the confinements at any given time. I am telling you what they are telling me.
Too much corn produces fat. Fructose not needed for energy converts to fat. Farmers don’t want fat meat. That’s why they finish with corn-soybean meal feed here in Iowa, to get the right ratio of carb-fat-protein-fiber to produce meat with low fat. It’s pretty simple really.
Nice try with the Alinsky tactics though. You’re desperate to get a ‘Atkins-ite’ label, or any label on me because your argument isn’t holding water. Since you’re obviously high on carbs, does that make you a PETA person?
-——But lets keep using corn as fuel!———
Corn as fuel or corn as dog food...... which should we curtail?
Fuel of course. We can’t starve granny by limiting dog food sales
It is your argument that is attracting water to engine parts, not holding any water. ‘Nothing is wasted with ethanol’ is a ludicrous argument. The ‘numerous and documented problems with pigs eating fructose’ are in your imagination.
“Obviously high on carbs”?
Yes, a delusional Atkins-ite who thinks PIGS should be on a low carb diet!