Analyst Predicts Corn Rationing in 2008

[villager]

Source: AP

Analyst Predicts Corn Rationing in 2008


NEW YORK — A BB&T Capital Markets analyst said Monday corn rationing may be necessary this year, following a U.S. Department of Agriculture report predicting farmers would plant far fewer acres of corn in 2008.

According to the March Prospective Plantings Report, farmers intend to plant about 86 million acres of corn this year, down 8 percent from 2007, when the amount of corn planted was the highest since World War II.

Analyst Heather L. Jones said in a note to investors if the USDA estimate proves accurate, the year may produce just 200 million bushels of corn. That, she said, wouldn't be enough to meet demand, given current export and feed demand trends and higher ethanol demand. Both ethanol and animal feed are made with corn.

"That is an untenable inventory demand, in our opinion," she said. "Consequently, we believe demand must be rationed or there needs to be a big supply response from other growing regions of the world."

The plantings report caused nervousness among meat producers and food makers who spent last year struggling to offset higher corn costs. Even though acreage was high, demand for ethanol and need overseas pushed prices to record levels.

Jones said she expects corn prices to rise even more, especially if unfavorable weather damages any of the crop.

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Read more: http://www.chron.com/disp/story.mpl/ap/fn/5662307.html

[gasperc]

1. hmm..wheat prices have gone through the roof

because farmer's switched from wheat to corn because corn prices were...going through the roof. Now this report says corn production will be down 8%. Boy Bush really appointed some real jackasses to alot of these key departments. When Republicans fuck up, they do it in spades.

[selador]

7. how long have u followed commodity markets

that's what commodity markets DO.

trading places is actually one of my favorite movies, btw, and i don't trade them in the pit, but on the electronic book

soy was limit DOWN today. the markets are volatile, and if they were easy to predict, every dipshit would be trading them

farmer's grow what is in high demand and low supply. that's why "the best cure for low prices is low prices" in commodity markets. that's why scale trading works in these markets so well

[CatholicEdHead]

9. How did the Frozen Concentrated Orange Juice market do today?

How much for a dollar?

Trading Places is also one of my favorite movies.

[selador]

11. SELL MORTIMER SELL!!

TURN THE MACHINES BACK ON!!!!!!

trading places is one my favorite all time movies. and despite the fact that it is a comedy (which aren't known for being accurate portrayals), it is nearly universally loved amongst all my trader friends, even those who actually trade on the floor

[CatholicEdHead]

19. Even more, Al Franken has a cameo role in it

:D

Nice for the future Senator from Minnesota.

[PSPS]

31. "Baggage Handler #1" (Tom Davis was #2)

Amazing to realize that Trading Places was made 25 years ago!

Looking good, Billy Ray!

Feeling good, Louis!

[sam sarrha]

25. they do it with Spades because there are always a lot of dead to bury

[poppysgal]

2. what about

releasing some of the thousands of acres in CRP?:dilemma:

[villager]

4. CRP?

?

[poppysgal]

5. it is technically called the

Conservation Reserve Program

[villager]

8. So -- releasing acreage to be turned into cropland?

n/t

[poppysgal]

12. yep

I live in a very rural area in the midwest and I know that there is usable, farmable land here.

[villager]

14. well -- what happens to the "conservation" aspects? Especially if it's industrial scale

monoculture type "farming?"

[Art_from_Ark]

36. A lot of the useable, farmable land elsewhere

is being turned into housing developments, strip malls, and wasteland.

[NickB79]

34. CRP land makes crappy farmland, in general

In order to enroll land into the CRP program, the land must meet certain criteria. If you look at an average CRP plot, you'll find land that is hilly and easily erodible, and composed of soils that are sandy, rocky, full of clay, or in other ways very poor for crop growth. In order to get decent returns, you need large amounts of fertilizers and lots of manpower plowing, tilling, applying, etc.

This popular image in people's minds that there are vast untouched acreages of deep, flat black soil out there just waiting to be plowed up is a flat-out myth.

Enrolling CRP land into farmland will plow under massive amounts of grassland and restored prairie with very little return for crop production. The first year, the soil will be decently productive due to being undisturbed for years, but then the organic matter is burned up by the crop, and the next year your soil is marginalized again.

[sharesunited]

3. I've never heard of a commodities market analyst

who suggests that rationing can, should, or will be implemented. What happens in the real world is that price adjusts. In the situation of demand exceeding supply, that price adjustment is upward. Econ 101.

[selador]

6. just for the record - analysts

analysts are generally (in financial markets) idiots. often, even worse - idiots with an agenda. see: blodgett, etc.

history is full of a million examples. stock analysts downgrading AFTER a big selloff in a stock. iow, they loved it at 60, they hate it at 40!

and they were, on the whole, SWIMMINGLY wrong during the tech bubble collapse

most analysts are just that - ANALYSTS. if they were REALLY good at predicting, they wouldn't BE analysts. they would be TRADING their predictions.

much like brokers, i might add. who are often terrible traders, and terrible at market analysis. just lemming salesmen.

the futures market , generally speaking, is a better forward looking vehicle, because price is opinion. and the price is the sum total of opinions of all the market participants (commercial's, hedger, noncommercial specs. etc)

im just saying i could find an analyst that agrees with almost any prediction. iow, curve fit the choice of analyst to my preconceived notions.

the opinions i respect are those of the traders who are in the trenches. opinions mean a lot more when they aren't merely hot air but are backed up by capital bets. guys like bolling, or jimmy rodgers

[Hannah Bell]

10. Cognitive dissonance alert.

US farmers will plant 8% less corn next year.

Corn prices will rise next year.

Corn will be rationed next year.

[trogdor]

15. OR, we import corn.

Wonderful. We have become the Soviet Union. Come, comrades. Let's drink some vodka. It's cheaper than bourbon.

Seriously, I'm considering planting some corn in my back yard this year. Beautiful, delicious sweet corn. Mmmmmmmmmmm. /homer

[celestia671]

37. Really!

Last week, I commented to the checkout girl at the store that soon we may as well grow our own crops and get a cow to milk if prices keep going up!

[Tashca]

13. Premature

The report just came out today....the markets on some commodities are tanking and some climbing much higher. This is only a planting intention report. If these planned intentions held true then she might be right.
Todays market just switched the gross profit @$50.00 an acre higher to produce corn over soybeans...that's quite abit. For most of the farmers here in the corn belt.....these crops are profit driven. I don't think there will be any problem switching a few more acres toward corn...

[pinto]

17. No eonomist here by a long shot, but I would think rising prices would mean more acreage

going to corn, no? And possibly a bigger incentive for locally grown/locally sold smaller operations.

My interest is mainly in buying local whenever possible. If this means a better market share for local growers, that seems a plus. I realize there's a lot more to the equation, though.

[Tashca]

18. no economist either

Let me give you a simple formula....it has been fairly close for 30 years in figuring profitability between corn and soybeans.
The price of soybeans is normally about 2.5 times the price of corn. That is not set in stone, but has worked well around here for years. Today the profit jumped toward corn. These farmers aren't stupid.....the acres will come before spring.

[pinto]

21. Thanks. n/t

[cliss]

16. Thanks for posting villager.

I can only imagine the effect this is going to have in Mexico. I think there was rioting last year (?) because of a big rise in corn prices.

[villager]

26. Good point. You get everyone dependent on corn, and then you take it away...

"stability" does not necessarily immediately ensue...

[Prisoner_Number_Six]

20. Perhaps now we'll move away from HFCS

and back to cane sugar?

Nahhhh- that would make WAY too much sense. :shrug:

http://en.wikipedia.org/wiki/High_fructose_corn_syrup

[CatholicEdHead]

27. No, most cane sugar has left the US (Hawaii) and is now elsewhere

[Lance_Boyle]

41. but beet sugar abounds

Between US-grown sugar beets and Cuban sugarcane, we should be able to kick the HFCS habit. But the Miami Mafia and Big Corn will never let it happen.

[distantearlywarning]

22. Oh, please God yes!

Then maybe I will be able to buy normal food without HFCS in it!

Just think...sugar Cokes! Mmmmmm!!!

[MadinMo]

23. Who would be subject to the rationing?

The general population, or huge corn consumers like feed, fuel, and/or food producers?

Or, how about we curb the exports?

[sam sarrha]

24. i heard the wheat crop was down 40% last year.. everything is going up

[bellasgrams]

28. I don't know where you heard that., I made more on soy beans

this year than since the Carter days. Don't remember what corn was then but it did good this year. Sorta helped cover the rise in property taxes and property ins., limstone. etc.

[heliarc]

29. Don't you just love using food to produce fuel? nt

[Mountainman]

30. I don't get it, if prices are going up why are the planting less?

From what I'm told, farmers (that is corporate farmers) don't know what the market will pay at harvest time. They plant expecting to make money. If they cover their costs they made money. So if this early in the game it is announced that the demand and price are up why would they plant less than they could?

[amandabeech]

32. They hedge with futures.

They'll plant those corn acres with something, perhaps soybeans, which leave a little expensive nitrogen in the soil.

Or in areas where corn must be irrigated, like some areas of Nebraska, the farmers might be able to cut their irrigation and nitrogen costs by growing wheat. The wheat price is wildly high judged by recent years, in part due to poor crops in Australia, Canada and some parts of the U.S last year.

[NickB79]

35. Fuel and fertilizer is making corn an expensive crop to grow

Fertilizer prices are skyrocketing thanks to high natural gas prices. Crops that require less fertilizer, such as soybeans, are looking more attractive.

Also, I'm gonna guess that a lot of farmers jumped forward their crop rotations last year to take advantage of corn demand, and now have to plant something else or risk damaging their fields. You need to rotate crops between corn, soybeans, oats, alfalfa, sorghum, etc, to maintain good soil structure and fertility, or your yields start to suffer. They effectively hit the nitrous last year, and now they have to slow back down cause they're out of booster.

[tama]

39. Bingo!

Peak oil (which has been effectively reached and production is currently at the highest plateau than ever before or after, ie. not raising anymore to to satisfy growing demand but starting to go down big way quite soon) spells peak food via a number of well understood causal chains. And when food is in question, demand destruction spells f-a-m-i-n-e. These kinds of news are just the beginning, early warnings of peak human population.

[Infinite Hope]

33. Important to mention the lunacy of ethanol in relation to this shortage. n/t

[RantinRavin]

38. I'm glad my garden is started

Corn, peas, and beans are starting to sprout. Eggplant, squash, tomatos, watermelon, and cucumbers still to plant this weekend.

[Lance_Boyle]

40. Ugh - just kill the ethanol boondoggle and all's well.

No federal money for any project that uses food for fuel. Exceptions for the recycling of waste products, such as waste oil for biodiesel. But no virgin oil (or food) for fuel. That's simply irresponsible.

If the powers responsible for the ethanol boondoggle want to keep playing at it with tax dollars, force them to use non-food base for their fuel. It'll give * more opportunities to go on the teevee and say "switchgrass."