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An Autumn Surge In Corn Prices Will 'Shock The US And Global Livestock Industry'
TBI ^ | 9-11-2012 | Rob Wile

Posted on 09/11/2012 6:39:12 AM PDT by blam

An Autumn Surge In Corn Prices Will 'Shock The US And Global Livestock Industry'

Rob Wile
September 11, 2012

The historic U.S. drought caused corn prices to explode to record highs during the summer.

However, prices haven't budged in a month and stands near $8/bu.

In his latest note, Morgan Stanley commodities guru Hussein Allidina reiterates his thesis that the corn price rally isn't over. While the market continues to test what price will ration demand, it will eventually figure it out:

While many have cited recent weakness in ethanol production and exports as a sign that prices have risen enough to stanch demand, we expect that this weakness is only seasonal and these indicators should again tick up as the US harvests shifts into full gear.

We believe that price may have to trade into the double digits through the fall to shock the US and global livestock industry into contracting further in the coming months.


(Excerpt) Read more at businessinsider.com ...


TOPICS: News/Current Events
KEYWORDS: commodities; corn; prices
It's Always Something (IAS)
1 posted on 09/11/2012 6:39:22 AM PDT by blam
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To: blam
Big Government Centralized Decision Making

What could possibly go wrong?

Look how well it worked for the Soviet Union.


2 posted on 09/11/2012 6:47:02 AM PDT by Iron Munro ("In any compromise between good and evil, it is only evil that can profit." - Ayn Rand)
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To: blam

I passed on steaks last night at the grocery, $15-$18 for small/medium rib-eye.


3 posted on 09/11/2012 6:49:39 AM PDT by TexasCajun
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To: blam

Wow, and gas and food prices will also spike. Ain’t this economy going just grand!
/sarc on
Freegards LEX


4 posted on 09/11/2012 6:56:30 AM PDT by lexington minuteman 1775
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To: TexasCajun

And yet Obama hovers around 50%? Does not add up.


5 posted on 09/11/2012 6:59:19 AM PDT by Buckeye McFrog
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To: blam

Any idea what this will do to the price of big-Ag stocks like Archer Daniels Midland?


6 posted on 09/11/2012 7:00:45 AM PDT by mac_truck ( Aide toi et dieu t aidera)
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To: blam

13-17% reduction in corn crop due to drought

Nearly 40% reduction in corn for food and feed due to increased ethanol content from 10% to 15%.

At the animal nutrition conference last week all stops were coming out for what to feed stock. Drill in winter grains on pasture, plant turnips, radishes and some very unconventional fodder.

Chickens and hogs? They don’t graze. They are fed grain. Some hog operations have already shut down.

Throw in impacts to the cost of eggs one of our best and least expensive protein sources.

At the extreme the position is that we will not be eating much grain fed beef in the future. Just too expensive. Feed lots have no pastures to graze.


7 posted on 09/11/2012 7:12:17 AM PDT by Sequoyah101 (Half the people are below average, they voted for oblabla.)
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To: lexington minuteman 1775
Ain’t this economy going just grand!

Ain’t this O-conomy going just grand!


8 posted on 09/11/2012 7:16:21 AM PDT by Iron Munro ("In any compromise between good and evil, it is only evil that can profit." - Ayn Rand)
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To: blam
Trading food for fuel allows us to drive to some place nice to starve.
9 posted on 09/11/2012 7:28:23 AM PDT by tbpiper
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To: TexasCajun

We buy all of our meat at Costco now and then divide it up into dinner portions and food saver it for the freezer. We buy steak and high quality chicken for half of the cost of the low quality stuff at the grocery. We have noticed the price that stuff edging up also.


10 posted on 09/11/2012 7:55:01 AM PDT by Georgia Girl 2 (The only purpose of a pistol is to fight your way back to the rifle you should never have dropped.)
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To: TexasCajun

If you’re paying $18 a pound for steak, it’s not the farmer or rancher’s fault. Live cattle this morning are trading on the Chicago Merc for a hair over $1.26 a pound.


11 posted on 09/11/2012 8:29:36 AM PDT by Mr. Lucky
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To: blam

Higher prices are coming.


12 posted on 09/11/2012 8:32:41 AM PDT by Signalman
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To: Mr. Lucky

That reminds me I have a friend that raises cattle, might just have to buy one to divide up w/ my brother.


13 posted on 09/11/2012 8:46:52 AM PDT by TexasCajun
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To: Sequoyah101

Usda report on corn comes out tomorrow. Spring estimates projected corn yield at 164 bushels per acre. Estimates for tomorrow’s report are showing a 119 bushel yield. That would be close to 30 percent reduction.

Cattle can graze if winter crops can be sown and grow. Drought condtions persist. Yes, beef could become a luxury in the future. High crop prices will mean more acres will go to crops, even pastures.


14 posted on 09/11/2012 9:36:44 AM PDT by taterjay
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To: taterjay

Standing corrected. My numbers were from earlier estimates of course.

Cattle can graze on alternative feeds if the soil moisture will support it.... many areas won’t.

Chickens and Hogs, not so much of course.


15 posted on 09/11/2012 10:06:07 AM PDT by Sequoyah101 (Half the people are below average, they voted for oblabla.)
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To: Sequoyah101
Chickens and hogs? They don’t graze. They are fed grain. Some hog operations have already shut down.

Drudge: [UK]Pig farmers quit as feed prices soar

16 posted on 09/11/2012 10:11:14 AM PDT by PapaBear3625 (Charlie Daniels - Payback Time http://www.youtube.com/watch?v=EWwTJj_nosI)
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To: taterjay

Per acre yields are a little bit misleading. There are millions more acres in corn than there were a few years ago.


17 posted on 09/11/2012 10:20:08 AM PDT by jjotto ("Ya could look it up!")
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To: jjotto

Yup, you are right. I got a bit ahead of myself. One other thing to look at is carryover. I think now it is in the 500 to 750 million bushel range. I think that carryover under 500 million basically means we are out of corn. There were about 94 million acres of corn this year. I have heard 2 reports, one saying 100 million acres next year and the other saying 90 million with more going to soybeans. The answer is big crops. There has not been a big corn crop for 5 years.


18 posted on 09/11/2012 11:28:59 AM PDT by taterjay
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To: jjotto

One other point. That next acre that comes into production is probably not as productive as the ones already producing. That means it is more difficult to achieve the extra bushels needed to alleviate the shortage.


19 posted on 09/11/2012 11:31:52 AM PDT by taterjay
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To: taterjay

Free and open markets?
No price increases until after elections - then all hell breaks loose.
Who’s kidding who?


20 posted on 09/11/2012 1:07:00 PM PDT by tbird-james
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To: taterjay
There has not been a big corn crop for 5 years.

Huh? 2007 thru 2011 has seen the biggest corn crops in the US EVER!

21 posted on 09/11/2012 2:06:00 PM PDT by jjotto ("Ya could look it up!")
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To: jjotto

I guess again we are talking yield versus volume. My research shows only 1 above trendline yield in the past 5. That was in 2009. ‘08 was trendline and 10, 11, 12 are below trendline. Yes acres are going up and volume was stable, but volume will be low now. When I say big crop, that means above trend yield plus big acres. If we had 100 million acres next year and a trendline yield, which would be in 165 to 170 range, that would be about 17 billion bushel, or a BIG crop. To sum up, you know what Mark Twain said about statistics.


22 posted on 09/11/2012 4:01:28 PM PDT by taterjay
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To: taterjay

mmm...

The only thing that matters to prices is volume.

Overall yield suffers when millions of acres of marginal land is put in corn production. No surprise there.

The heart of the Corn Belt has never seen higher yields than the last few years. This year is a big exception.


23 posted on 09/12/2012 10:14:36 AM PDT by jjotto ("Ya could look it up!")
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