Skip to comments.An Autumn Surge In Corn Prices Will 'Shock The US And Global Livestock Industry'
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'
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 ...
Big Government Centralized Decision Making
What could possibly go wrong?
Look how well it worked for the Soviet Union.
I passed on steaks last night at the grocery, $15-$18 for small/medium rib-eye.
Wow, and gas and food prices will also spike. Ain’t this economy going just grand!
And yet Obama hovers around 50%? Does not add up.
Any idea what this will do to the price of big-Ag stocks like Archer Daniels Midland?
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.
Aint this economy going just grand!
Aint this O-conomy going just grand!
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.
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.
Higher prices are coming.
That reminds me I have a friend that raises cattle, might just have to buy one to divide up w/ my brother.
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.
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.
Per acre yields are a little bit misleading. There are millions more acres in corn than there were a few years ago.
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.
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.
Free and open markets?
No price increases until after elections - then all hell breaks loose.
Who’s kidding who?
Huh? 2007 thru 2011 has seen the biggest corn crops in the US EVER!
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.
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.