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Corn prices going berserk

Corn prices are kind crazy down here right now......using the unofficial exchange rate corn's running $0.36/kilo or $0.16/pound.

How's that compare to prices in the US?
 
$0.16/lb. equates to $8.96 per 56-lb. bushel. Now that's not a number we need to see in the cattle industry. The December corn contract is at $5.62 per bushel at the current moment. That's $0.10/lb. Plenty high all by itself.

HP
 
High Plains said:
$0.16/lb. equates to $8.96 per 56-lb. bushel. Now that's not a number we need to see in the cattle industry. The December corn contract is at $5.62 per bushel at the current moment. That's $0.10/lb. Plenty high all by itself.

HP
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A couple of years ago it was a third of the price it is today. And keep in mind, I'm using the unoffical rate for the value of the dollar. If I use the official rate it's something akin to $0.30/lb! :shock:

I've had a couple of locals contact me wanting to know if I wanted to buy corn for my cattle. At the prices they're asking I told them that I could buy commercial cattle feed for less money and far less work.....no grinding, mixing, etc.
 
Speculators should be kicked out of everything. They contribute nothing.
They are the main reason for oil prices being where they are. :mad:
 
It the run not partly predicated on a rumor of shorter supply than expected. ie a 150 bus crop compared to the expected 210?
 
Yes, the run-up is based on Friday's supply and production report from USDA. However, the speculative side of the market just loves to amplify the potential impacts of these reports, thus creating a bigger spike or trough in the price pattern than is justified by the supply and demand situation. Speculators (i.e. the hedge funds and others) just love volatility because big swings in the market create opportunities to make huge trades. Not too good for producers that are just trying to lock in a predictable profit 6-months down the road. It's insanity.

HP
 
Crop 'Shocker' Ripples Through Markets
This article is from the Wall Street Journal.

Government forecasters cut their estimates for the U.S. corn harvest Friday, with the prospect of tighter supplies triggering a surge in futures prices and a rally in shares across the agribusiness sector.

The U.S. Department of Agriculture forecast lower yields from what is still expected to be the third-largest harvest on record, but carry-out stocks are projected to be below the symbolic level of one billion bushels.

Futures on corn, soybeans and wheat all rose to their daily trading limits, while shares in tractor makers and fertilizer producers soared on the prospect of higher farm incomes. The food and meat sectors saw sharp slides in share prices because of higher animal-feed and raw-material costs.

USDA shaved a record 6.7 bushels per acre from last month's corn-yield estimate, and now projects 155.8 bushels an acre from the national harvest. The consensus among analysts was for 159.9 bushels an acre.

"Shocker may be an understatement," said Jason Britt, president of Central State Commodities, a Kansas City brokerage. "It's very out of character for the USDA to lower the corn yield so much."

The USDA was projecting a record corn crop as recently as August, but farmers have been disappointed as the harvest progressed. The plants suffered from excessive early-season rains that washed away nitrogen, a crucial nutrient. Crops also were stressed by unusually hot overnight temperatures during the summer.

Other agricultural commodities followed corn higher. Wheat and soybeans surged in part because both, like corn, serve as an animal feed. Livestock futures also climbed because feed is a major cost for producers.

"This is a very tight balance sheet we now have to live with for a long time," said Sal Gilbertie, lead manager of the Teucrium Corn Fund, an exchange-traded fund based on corn futures.

CF Industries Inc., the fertilizer maker, led the rally in agribusiness stocks, with its shares recently up almost 13% at $111.34, its highest level since the end of the commodity market boom-and-bust in 2008. Monsanto Co. was 6% higher $51.76 and equipment makers all rallied. Deere & Co. also hit a two-year high, recently trading up 6.6% at $76.60.

Meat processors were hit hard, with investors concerned about rising costs and a possible challenge to the supply discipline that has helped the sector return to profitability after being buffeted by the 2008 commodity boom.

Tyson Foods Inc. was recently down 7.4% at $15.08, with Smithfield Foods Inc. off 6.3% at $15.04.

While many traders and analysts could see this year's corn crop yield drifting down to 155 bushels an acre, few expected the USDA to make such an aggressive revision so soon. The U.S. harvest is roughly 50% complete.

U.S. corn futures soared to a daily trading limit on the Chicago Board of Trade when the market opened, rising 30 cents, or 6%, to $5.82 1/4 a bushel, near a two-year high. Soybean and wheat futures also hit their exchange-imposed trading limits at the market opening.

Analysts said Friday's report reignites concerns that the market needs higher prices in order to discourage demand and stave off a supply crisis. The report could have other ramifications, since the government has yet to rule on a request to increase the amount of ethanol that can be blended in gasoline to 15% from 10%.

"This could (heighten) the debate on moving ethanol blends higher, and 'food versus fuel,'" Mr. Britt said.

—Bob Tita, Curt Thacker and Lester Aldrich contributed to this report.
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I figured that this would happen as I already sold my wheat--but $8.50 a bushel in the hand looked pretty darn good next to playing the gambling game....May wish I had sold the calves early.... :?
 
de-valuing the dollar motivates investors to speculate in commodities. Should have bought that Gold and Silver when all the spending started, I guess.


NEW YORK, Oct. 6 /PRNewswire/ -- Commodity markets rallied in September as investor sentiment turned positive amidst the prospects of further rounds of quantitative easing. A noticeable trend shift is taking place, suggesting fundamental supply and demand dynamics will take priority over macroeconomic indicators in determining prices over the long term.

Nelson Louie, Global Head of Commodities at Credit Suisse Asset Management said, "As reflected in Fed Chairman Ben Bernanke's recent comments, subduing deflation will likely continue to be a top priority of the Federal Reserve over the near term, and as more quantitative easing takes place, we expect commodities prices will continue to rise. While macroeconomic factors have driven returns over recent history, we expect fundamental factors to drive prices moving forward over the longer term."


Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy added, "Historically, Commodities prices have tended to perform best during periods of higher than expected inflation. Today we're seeing some major developed countries actively discussing or engaging in various fiscal and monetary measures, including devaluing currencies, in order to keep their exports globally competitive, while fiscal policy worldwide remains accommodative. As a result, investors may continue to seek out investments that should retain their value in spite of inflation. This has benefited commodities generally and precious metals in particular."
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http://www.earthtimes.org/articles/press/term-outlook-asset-class,1491660.html
 
Interesting times for sure, My sons back ground their calfs and this year locked them in for $116.50 for Feb 2011 at 820#. 101
 
The Cattle Report had a good column on the corn estimates that I agree with. They suggest that USDA needs to start updating their estimates more frequently, maybe even weekly. That seems to me like it would sure help take some of the volatility out of the markets that the professional paper traders orgasm over.

=========================


Taking Stock Redux

The news in the livestock sector was corn. The government has been releasing one report after another shocking the markets with each one. In a short time span, we have now seen a USDA report a month ago, underguessing private estimates, followed by another estimate increasing corn stocks, and now a report sharply reducing estimated yield -- the largest amount in a monthly change since 1995.

The meaning of all this ying and yang is significant or could be. First, it is important for the government to release more information at more frequent period -- maybe weekly. It also is important to disclose the modeling and how the government statisticians arrive at the results.

It is ironic that in a year when the national corn crop may set a record, the talk of the trade is rationing. Corn has moved from $3.50/bu. to $5.50/bu. in a short period of time. Harvest is still short of complete but is nearing the end and the crop is a large one. The appetite for corn also is large with ethanol pressing a never-ending need.

The second irony will come when politicians wake up one day with consumers clamoring for relief from high food costs. One after another they will jump on the bandwagon to do away with corn based ethanol until finally the political clout is sufficient to shut down a run away train wreck.

Cattle feeders will find large changes in the way they do business. Once again, lighter cattle will be removed from the placements. This will leave a smaller pool of cattle to be placed on feed at a time when the national herd is in decline and the feeder cattle pool is also declining. Look for round two of feedlot closures.

http://www.agcenter.com/newcattlereport.aspx
 
corn prices are affecting alcohol prices also.moonshine hit 35 dollars a gallon in the ozarks.

http://coppermoonshinestills.com/

:oops: :roll:
 
Texan said:
The Cattle Report had a good column on the corn estimates that I agree with. They suggest that USDA needs to start updating their estimates more frequently, maybe even weekly. That seems to me like it would sure help take some of the volatility out of the markets that the professional paper traders orgasm over.
Click to expand...

Are you sure that the volatility is a bug of the model? I am becoming more and more convinced that there has to be some back channel, or maybe even explicit reward to these idiots for their horrible track record. How many times can they be wrong before we start to see a pattern. Report comes out, speculators trade on the report. Correction of report comes out, speculators trade on the correction. Correction of the correction of the report comes out, speculators trade on the correction of the correction. Wash, lather, repeat. In the meantime the actual producers are being yanked back and forth and having the crunch put to them, for what? So a bunch of speculators can skim a pile of cash off the market. How about we insist that you can't sell a contract that there isn't commodity to deliver? Any other time that I try to sell something that only exists on paper it is called fraud, but now it is vital to the functioning of the market? I am not real smart but something about this whole system stinks. One thing is for certain, it was not designed by or for the producer.
 
rancherfred said:
Texan said:
The Cattle Report had a good column on the corn estimates that I agree with. They suggest that USDA needs to start updating their estimates more frequently, maybe even weekly. That seems to me like it would sure help take some of the volatility out of the markets that the professional paper traders orgasm over.
Click to expand...

Are you sure that the volatility is a bug of the model? I am becoming more and more convinced that there has to be some back channel, or maybe even explicit reward to these idiots for their horrible track record. How many times can they be wrong before we start to see a pattern. Report comes out, speculators trade on the report. Correction of report comes out, speculators trade on the correction. Correction of the correction of the report comes out, speculators trade on the correction of the correction. Wash, lather, repeat. In the meantime the actual producers are being yanked back and forth and having the crunch put to them, for what? So a bunch of speculators can skim a pile of cash off the market. How about we insist that you can't sell a contract that there isn't commodity to deliver? Any other time that I try to sell something that only exists on paper it is called fraud, but now it is vital to the functioning of the market? I am not real smart but something about this whole system stinks. One thing is for certain, it was not designed by or for the producer.
Click to expand...


:clap: :agree: :clap:
 
Big Muddy rancher said:
rancherfred said:
Texan said:
The Cattle Report had a good column on the corn estimates that I agree with. They suggest that USDA needs to start updating their estimates more frequently, maybe even weekly. That seems to me like it would sure help take some of the volatility out of the markets that the professional paper traders orgasm over.
Click to expand...

Are you sure that the volatility is a bug of the model? I am becoming more and more convinced that there has to be some back channel, or maybe even explicit reward to these idiots for their horrible track record. How many times can they be wrong before we start to see a pattern. Report comes out, speculators trade on the report. Correction of report comes out, speculators trade on the correction. Correction of the correction of the report comes out, speculators trade on the correction of the correction. Wash, lather, repeat. In the meantime the actual producers are being yanked back and forth and having the crunch put to them, for what? So a bunch of speculators can skim a pile of cash off the market. How about we insist that you can't sell a contract that there isn't commodity to deliver? Any other time that I try to sell something that only exists on paper it is called fraud, but now it is vital to the functioning of the market? I am not real smart but something about this whole system stinks. One thing is for certain, it was not designed by or for the producer.
Click to expand...


:clap: :agree: :clap:
Click to expand...

:nod: :agree:
 

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