Commodities

JULY 26, 2013
Cooler temperatures put a damper on corn prices.
This was not a good week to be a corn producer, at least not when it comes to prices. December corn set new contract lows on both Tuesday and Wednesday, and the price declines are likely to continue for until the harvest lows are hit.
“From a technical standpoint the market is clearly in a downtrend,” says Adam Stout, risk management consultant with INTL FCStone, Kansas City. “Traditionally the corn market bottoms out prior to harvest.”
Improving weather conditions were the main driver that sent December corn prices to lows not seen since November 2010.
“The bull is running out of time,” says Jerrod Kitt, director of research with the Linn Group, Chicago. He expects lows to hit over the next two weeks on corn as the weather premium is removed from the market.
Cooler Temps Cool Prices
Temperatures across the Corn Belt fell have plunged just in time for pollination. As of July 21, less than half of the nation’s corn was silking. This week and next week will be critical periods for the corn crop, and weather forecasts, for the most part, are calling for moderate temperatures.
“Even though it has been dry, temperatures have been so moderate that there is not as much concern over the lack of precipitation,” says Stout.
Heading for Record Yields
While harvest in the heart of the Corn Belt is still several weeks away, new-crop corn from Texas and the Southeast has started to hit the market. By mid-August corn producers should be harvesting in Arkansas, Tennessee, and Kentucky, with Missouri and Illinois harvest getting under way in early September.
“We would not be surprised to see record yields in the eastern Corn Belt,” says Kit. That would mean corn yields above 180 bushels per acre in Illinois, 171 bushels in Indiana, and 174 bushels in Ohio. “We could easily eclipse those levels,” he adds.
Longer term, the question is how low can corn prices go, particularly if the 2014 harvest is large
If this year’s corn crop is as large as expected and the carryout builds to 1.4 billion bushels, Stout does not rule out corn prices below $4/bu. in the 2014-15 marketing year.
“Land prices have seen their best days,” Stout adds.

JULY 18, 2013
By: Beef Today Editors

July 18 (Bloomberg) — Corn fell for a second day to the lowest level in more than a week as rain in the U.S. Midwest is forecast to reduce crop stress, easing concerns dryness will hurt a record harvest in the world’s largest grower.
Rain across the north-central and western Midwest will improve moisture this week, MDA Weather Services wrote in a forecast today. Corn conditions worsened amid persistent dry weather, with 66 percent of the crop rated good to excellent as of July 14 from 68 percent a week earlier, government data show.
“There’s certainly been a potential improvement in forecasts over the last 24 hours, particularly in the drier parts of the U.S. western Corn Belt,” Michael Pitts, a commodity sales director at National Australia Bank Ltd., said by phone from Sydney today. “If that comes to a fruition, and we don’t get any heat, then that should push us most of the way through the most dangerous part of the corn season.”
Corn for delivery in December fell 1 percent to $4.97 a bushel by 5:23 a.m. on the Chicago Board of Trade. Earlier it touched $4.95 a bushel, the lowest price since July 8.
A storm will move through the Corn Belt in the middle of next week, helping ensure rainfall will be near normal in most areas, Accuweather.com forecast yesterday.
About 16 percent of corn was at the silking stage as of July 14, behind an average of 35 percent in the previous five years, the U.S. Department of Agriculture said July 15. Silking is part of the pollination stage when drought and high temperatures can hurt yields, according to the Ohio State University Extension website.
Corn futures have dropped 29 percent this year as U.S. farmers planted a record crop, estimated by the USDA to climb to 13.95 billion bushels.
Soybeans for November delivery fell 0.6 percent to $12.7575 a bushel. Wheat for delivery in September added 0.3 percent to $6.67 a bushel in Chicago. Milling wheat for delivery in November traded on NYSE Liffe in Paris was unchanged at 194.50 euros ($255) a metric ton.

JULY 2, 2013
By: Bloomberg
(Bloomberg) — West Texas Intermediate crude rose to the highest level this year on speculation that U.S. stockpiles shrank for the first time in a month and as orders placed with U.S. factories rose in May.
Crude gained for the sixth time in seven days as inventories may have dropped last week to the lowest level since May 31, according a Bloomberg survey before government data tomorrow, signaling increased demand in the world’s largest oil- consuming country. Factory bookings rose 2.1 percent, the Commerce Department said. Brent’s premium over WTI narrowed to the lowest since January 2011.
“There is still some room for some bullish supply numbers,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “You really want to sell oil ahead of inventory data that may show some sharp drops? There is a lot of price chasing going on.”
WTI for August delivery gained 99 cents, or 1 percent, to $98.98 a barrel at 10:33 a.m. on the New York Mercantile Exchange after reaching $99.17, the highest intraday level since Sept. 17. The volume of all futures traded was 139 percent above the 100-day average.
Brent for August settlement rose 65 cents, or 0.6 percent, to $103.65 a barrel on the London-based ICE Futures Europe exchange. Volume was 1.6 percent above the 100-day average. The European benchmark grade’s premium to WTI narrowed to as little as $4.56 a barrel.
Crude Supply
U.S. crude stockpiles fell 2.25 million barrels, or 0.6 percent, to 391.9 million in the week ended June 28, the Bloomberg survey showed. Refineries probably increased operating rates to the highest level in more than 10 months as motor fuel production climbed before the U.S. Independence Day holiday on July 4, the survey showed.
Total petroleum consumption in the U.S., the world’s biggest oil consuming country, increased 3 percent in the week ended June 21 to 19 million barrels a day, the EIA, the Energy Department’s statistical arm, reported last week.
Motor-fuel demand is highest from the last weekend in May to the Labor Day weekend in early September, the prime vacation season in the U.S.
“It’s the peak demand season,” said Bill Baruch, a senior market strategist at Iitrader.com in Chicago. “The path of least resistance is higher.”
Factory Orders
Growth in May factory orders is faster than the 2 percent increase forecast by economists surveyed by Bloomberg. Factory orders excluding the volatile transportation component climbed 0.6 percent after a 0.2 percent increase the prior month, the Commerce report showed.
The U.S. accounted for 21 percent of global oil demand last year, according to the International Energy Agency’s monthly oil market report published on June 12.
“We are looking at a decline in inventories,” said Gordy Elliott, a risk-management specialist at Intl FC Stone LLC in St. Louis Park, Minnesota. “Brent is having more challenges to find a reason to rally. You’ll probably see WTI trading even at a premium to Brent.”
Goldman Sachs Group Inc. has forecast since February 2012 that the Brent-WTI spread would shrink, even while the differential moved […]

JUNE 3, 2013
By: Ben Potter, Farm Journal Technology Editor

University of Minnesota study looks at water usage for 16 major row crops.

Ever wonder how much crop you’re getting per drop? A group of research scientists were, and they just published a study on their findings. Scientists with the University of Minnesota’s Institute on the Environment (IonE), along with the Institute of Crop Science and Resource Conservation at the University of Bonn (Germany) conducted the study.

IonE postdoctoral research scholar Kate Brauman led the research team, which looked at crop production, water use and crop-water productivity across multiple climate zones for 16 different crops , including corn, soybean, wheat, potato and more. They found a wide range of variation in crop-water productivity in places that have similar climates, which could translate into water savings opportunities.

“For example, disease presence or nutrient availability can cause big yield changes even though water consumption is the same,” Brauman says.

The implications for capitalizing on these “crop per drop” variances are substantial, Brauman adds. The researchers calculated that in drier regions, farmers could raise enough food to provide for an additional 110 million people without increasing water use or using additional cropland – simply by improving the very lowest performers to just the 20th percentile.

“Because crop production consumes more freshwater than any other human activity on the planet, the study has significant implications for addressing the twin challenges of water stress and food insecurity,” Brauman says.

As part of the study, researchers calculated total water consumption, rain fed consumption and irrigation consumption across the 16 crops. Here are the top 5 irrigated U.S. crops, for example:

1. Corn
2. Soybean
3. Rice Wheat
4. Sorghum

MAY 22, 2013
By: University News Release
By Darrel Good, University of Illinois
Corn and soybean prices rallied sharply beginning in July 2012 as U.S. drought conditions unfolded. It was generally expected that prices would follow the pattern experienced in other “short crop” years, with prices peaking near harvest and then returning to pre-drought levels later in the marketing year. That pattern has generally unfolded, with some differences between corn and soybeans and between old crop and new crop prices.
For old crop corn prices, July 2013 futures peaked at $8.24 on Aug. 10, 2012, nearly $3 above the June 2012 low. That contract is currently trading near $6.50, well below the peak, but still above the pre-drought level. Due to an inverted price structure, spot cash prices have been above July futures in much of the Corn Belt since January 2013 and that strong basis continues.
Prices remain generally high as it is not yet clear that the small crop of 2012 has been sufficiently rationed. Exports remain weak, but ethanol production is rebounding from the low levels in the first half of the marketing year. Uncertainty still surrounds the magnitude of feed and residual use of corn.
There is some expectation that the slow rate of use for the second quarter of the marketing year implied by the March 1 stocks estimate will be followed by a higher rate of use implied by the June 1 stocks estimate to be released by USDA on June 28. That report will indicate whether sufficient rationing has been accomplished and will set the direction for old crop prices.
For new crop corn, prices have completed the transition back to pre-drought levels. December 2013 futures peaked at $6.64 on Sept. 10, 2012, about $1.50 above the June 2012 low. That contract is currently trading just over $5.15, about $0.05 above the summer 2012 low. This past week of rapid corn planting progress has reduced some of the concern about acreage and yield prospects.
A larger than average percentage of the 2013 crop will be planted later than is optimum for maximum yield potential, but there is growing confidence that the 2013 crop will be large enough to meet market requirements at much lower prices than experienced over the past year. However, the season for determining average yield and production is just beginning.
Soybean prices have behaved similarly to corn prices, but are still well above pre-drought levels. July 2013 futures peaked at $16.05 on Sept. 14, 2012, about $3.85 above the June 2012 low. That contract is currently trading near $14.60, still in the upper half of the trading range of the past year.
Due to the on-going futures price inversion, spot cash prices in the Corn Belt have been above July futures all year, with basis levels strengthening in recent weeks. Old crop prices are being supported by prospects of a minimum level of year ending stocks and the need for consumption to remain under the pace of a year ago.
For example, available supplies are expected to limit the domestic crush […]