Replies to post #2464 on The Rising Influence of Rising Affluence

[DewDiligence]

It didn’t take long!

Corn for May delivery matched the June 2008 all-time high of $7.65 a bushel and set a new record settlement price of $7.6025 a bushel at the Chicago Board of Trade. The previous highs were set in June 2008 during a broad-based surge in commodity prices that was quickly undercut by the global financial crisis.

http://online.wsj.com/article/SB10001424052748703806304576242731291184872.htm

[DewDiligence]

Corn Sets All-Time High on USDA Supply Forecast

[MON and DE were each up 3% today on this news. See #msg-61657936, #msg-61383009, #msg-61133646, and #msg-60647612 for related stories.]

http://online.wsj.com/article/SB10001424052702304259304576375500185333970.html

›JUNE 9, 2011, 12:49 P.M. ET
By TOM POLANSEK And BILL TOMSON

Low corn supplies are here to stay, with federal forecasters cutting the outlook for this year's harvest and projecting inventories to stay at levels not seen since the mid-1990s.

The U.S. Department of Agriculture crop report caused futures prices to surge to a new, all-time high of more than $7.90 a bushel at the Chicago Board of Trade.

U.S farmers have struggled this spring to get their crops in the ground as wet weather has plagued portions of the corn belt. As a result, federal forecasters pegged U.S. corn production at 13.2 billion bushels this year, a 2% decline from its May estimate, yet still a record crop.

Corn prices will rise due to higher demand in China [#msg-61383009] as well as a rain-drenched season that damaged crops, Dow Jones's Leslie Joseph reports.

The large harvest isn't seen boosting low domestic supplies, with the agency slashing its forecast for end-of-season inventories for next year to just 695 million bushels, below the 900 million bushels predicted in May. That is slightly below end-of-season corn supplies estimated for this year, but above a record low set in the 1996.

"I'll say it three times: 'bullish, bullish, bullish,' all the way around," said Jason Britt, president of Central States Commodities, a Kansas City brokerage.

The USDA monthly crop report said wheat supplies are expected to tighten, while soybean supplies are expected to grow. Corn futures for July delivery were 2.6% higher to $7.8425 a bushel in late morning trade, slightly paring earlier gains. Wheat and soybean were near flat in recent trading.

Shares of companies connected to the business of farming climbed on the report, with fertilizer producer CF Industries Holdings Inc. up 3.7% to $154.07, while tractor-maker Deere & Co. climbed 3.1% to $82.45. Meat producers such as Smithfield Foods Inc., which uses grains for animal feed, showed some weakness in morning trading.

Persistent rains and flooding in the eastern Corn Belt and northern Plains reduced how much corn was planted, according to the USDA. Acres were submerged along the Ohio, Missouri and Mississippi rivers. Farmers are thought to have planted just 90.7 million acres, a drop from the 92.2 million acres federal forecasters were expecting a month ago.

Demand is expected to keep supplies tight. Corn consumption by ethanol producers remains at a record high, with the USDA leaving its forecast unchanged from last month at 5.05 billion bushels. The USDA left its forecast for inventories for the current crop year, which ends Aug. 31, unchanged at 730 million bushels.

Estimated inventories shrank overseas as well. The USDA cut its 2011-12 world corn stockpile forecast 13% to a five-year low of 111.9 million metric tons due to higher estimated corn consumption for livestock feeding and industrial use in China.

"Not only is the U.S. short of corn—so is the world," wrote analysts at AgResource Company, a consultancy in Chicago, in a note to clients.

The USDA raised its expectations for wheat production in the upcoming season to 2.058 billion bushels, from last month's forecast of 2.043 billion bushels. Yet forecasters trimmed what is expected to be left over from last year's crop to 809 million bushels, down from the May estimate of 839 million bushels.

As for soybeans, inventories are expected to expand in the coming year due to weakening exports. China, the world's top oilseed importer, is expected to buy fewer soybeans from the U.S. in the coming year as Brazil harvests a record crop.

Federal forecasters said extreme weather is expected to hit the upcoming cotton crop. They reduced their harvest estimate by one million bales to 17 million. Cotton futures for December delivery were 2.3% higher at $1.3320 a pound in late morning trade on IntercontinentalExchange.‹