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Corn Prices Near Record On Plunge In Corn Stocks, China Use Surge, Tightest US Corn Supply Levels In 15 Years

Tyler Durden's picture




 

So much for transitory inflation as corn prices are again pennies of a fresh all time high. Earlier today an update by the USDA showed that corn stocks will come in much lower than expected at the end of the 2011/12 marketing year at just 695 million bushels: this is far lower than the analysts consensus of 771 million bushels. The spring weather was blamed for the drop: "cold, rainy spring and flooding cut U.S. corn plantings by 1.6 percent, will reduce the harvest by 2 percent and will keep U.S. corn supplies at their tightest level in 15 years through the fall of 2012, the government said on Thursday." Another factor for the record price: surging China demand: "USDA also forecast a hefty increase in corn use by China -- up 8 million tonnes, or 5 percent, this year and up 13 million tonnes, or 8 percent, in 2011/12. China will draw down its stocks rather than import corn, USDA said." Just like in China where record droughts have been replaced with deadly floods, the weather continues to be unusually volatile, not just in the US: "Besides plaguing the eastern Corn Belt, rains and
floods have slashed the rice crop by 5.5 percent since May, USDA said.
Drought in the Southwest would reduce the cotton crop by 1 million
bales, or nearly 6 percent, to 17 million bales, and the rice crop, at
199.5 million hundredweight, would be the smallest in four years." This is probably the latest data the market needed to completely ignore today's worse than expected initial claims data, and go into full "Inflation: ON" mode. In other news, expect Obama to announce the launch of an Adverse Weather Task Force investigating speculative movements in air masses momentarily.

More from Reuters:

USDA projected the corn crop at 13.2 billion bushels, a record but 305 million bushels -- 2.2 percent -- lower than its May estimate. With high demand from ethanol makers, livestock feeders and exporters, consumption will exceed the harvest and the U.S. stockpile will shrink.

Traders said corn futures prices would rise by 10-20 cents a bushel because of the forecast of tighter supplies.

"USDA must feel comfortable we are going to lose acres, based on satellite (imagery)," said Jack Scoville, analyst for The Price Group. "We know we're going to lose the acres; it just depends how much. They didn't put them in beans."

The corn stocks to use ratio, a measure of supply, would be 5.4 percent this marketing year and drop to 5.2 percent for 2011/12. Both are close to the 5 percent ratio of 1995/96 and represent razor-thin supplies.

"Planting delays through early June in the eastern Corn Belt and northern Plains are expected to reduce planted area, more than offsetting likely gains in the western Corn Belt and central Plains where planting was ahead of normal by mid-May," said USDA.

It projected corn plantings of 90.7 million acres, down 1.6 percent from farmers' intentions, and harvest area of 83.2 million acres, down 2.2 percent.

USDA estimated the winter wheat crop at 1.45 billion bushels, up 2 percent from May. Traders expected a 2 percent drop. "Improved weather conditions during the past month in the upper Great Plains resulted in higher forecasted yields," said USDA.

Blame the evil speculators for the chart below:


 

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Thu, 06/09/2011 - 10:48 | 1354384 Nolsgrad
Nolsgrad's picture

I am cornholio!

Thu, 06/09/2011 - 11:11 | 1354466 mfoste1
mfoste1's picture

tp has went up substantially too

Thu, 06/09/2011 - 11:48 | 1354601 TheTmfreak
TheTmfreak's picture

Meaning he has a very dirty bunghole.

Thu, 06/09/2011 - 18:58 | 1356113 CPL
CPL's picture

I have 140 acres doing nothing....sigh...too late for corn though.  For all of us.

Therefore.  Short the crap out of general mills until next year or go long dog food.

Thu, 06/09/2011 - 10:59 | 1354414 mayhem_korner
mayhem_korner's picture

Where's the "peak corn" crowd...

Thu, 06/09/2011 - 11:10 | 1354461 RockyRacoon
RockyRacoon's picture

How 'bout the corn bubble?  You can't eat... never mind.

Thu, 06/09/2011 - 11:23 | 1354515 Ag Tex
Ag Tex's picture

They are with the Chinese shopping for food companies in Europe.  If the Chinese elite hate their own people and don't care if they starve, why are they so concerned about purchasing food companies?

http://online.wsj.com/article/SB1000142405274870435530457621468364022512...

Thu, 06/09/2011 - 11:36 | 1354550 mayhem_korner
mayhem_korner's picture

Control the food = control the people

Thu, 06/09/2011 - 11:57 | 1354630 Whizbang
Whizbang's picture

corn farmers are being payed not to plant in mississippi right now. This is a planned shortage. No more, no less.

Thu, 06/09/2011 - 12:06 | 1354680 NotApplicable
NotApplicable's picture

Don't forget that worthless, engine-destroying ethanol that is not only subsidized, but mandated.

Because as we all know, burning our food supply (along with the last 6 inches of topsoil) is far preferable to using dirty, foreign oil.

Now, any of you statist's out there, keep telling yourself how this is all good. I dare ya.

Thu, 06/09/2011 - 12:07 | 1354684 FreedomGuy
FreedomGuy's picture

Given record high corn prices does this means we can now stop corn subsidies? Can we stop giving more public money to farmers who are having their best years ever? Where are the fiscally conservative Republicans? Oh, wait, many of them are farmers and farm states, too. Government money is bad for YOU but not them.

Thu, 06/09/2011 - 13:54 | 1355041 Flyingtrader
Flyingtrader's picture

No...no they are not.  I don't know where you are getting this but it is wrong.

Thu, 06/09/2011 - 19:16 | 1356156 CPL
CPL's picture

I can't plant because there was too much water on the fields.  100 acres = 40k in seed.  nobody is growing because they can't eat 40k fool.  Fucking retarded suburbanite slobs, swear to christ they think the farming industry is that regulated.

 

Yes assholes get paid not to plant.  BUT IT"S SPECIFIC PLANTS.  Corn is an open opportuntity because it's a fickle bitch.  Any fucker can grow tomatoes, cucumbers...corn though is a wicked pain in the ass when trying to grow it in metric tonnes.  Roses are easier, at least they don't demolish the soil and force a one on one off cycle.

 

This year though.  The soil, my soil is going to weeds and clover.  Too late to plant anything.  Ottawa valley makes around 60 billion tonnes of your breakfast, beer, meat filler, orange juice stablizer, etc... worldwide.  Thought food prices were bad last month.  Wait until Oct.

 

Dumbass.  People are so fucking hung up on putting 10% of the corn in gas tanks they have ZERO clue what corn is used for.  Like condoms...guess what...corn in that.  Like coke...guess what the can and the sweet water have in common?  Corn.  Anyone wiped their ass lately?  Guess what...corn starch is used to hold that paper together so your fingers don't touch your ass.

 

That's corn.  There is a reason it's a commodity.  It cleans you, feeds you and even make bug traps happen to poison things.

Thu, 06/09/2011 - 21:35 | 1356641 StychoKiller
StychoKiller's picture

Still time to plant soybeans...

Thu, 06/09/2011 - 10:57 | 1354423 ziggy59
ziggy59's picture

All transitory speculation due to those futures speculators

Thu, 06/09/2011 - 13:41 | 1354997 thriftymost
thriftymost's picture

Not entirely true.  Temps are too low for corn: hear James McCanney, the world's leading living scientist, talk about crop failure in his last week's radio show: http://jmccanneyscience.com .

The bigger picture is Global Cooling.  See http://www.iceagenow.com .  We're right on schedule for the next ice age, and so expect to see more of the same, and then some, in northerly latitutdes.

Thu, 06/09/2011 - 10:58 | 1354426 TideFighter
TideFighter's picture

15% of my gasoline just went higher.

Thu, 06/09/2011 - 12:57 | 1354853 pods
pods's picture

While simultaneously ruining my second new catalytic converter.

pods

Thu, 06/09/2011 - 11:04 | 1354437 SilverFocker
SilverFocker's picture

Which beggs the question. What will be worth more in the end, a bail of cotton or a bail of dollars?

Thu, 06/09/2011 - 11:40 | 1354583 duo
duo's picture

Can the fibers of FRN's be recycled into clothing?

Thu, 06/09/2011 - 11:01 | 1354440 Jack Mehoff
Jack Mehoff's picture

Slowly the grips of manipulation start to falter.

Thu, 06/09/2011 - 11:05 | 1354442 silvertrain
silvertrain's picture

Sugar is also on the launch pad..I have been watching that for awhile now along with Lumber..

Thu, 06/09/2011 - 14:47 | 1355269 Mentaliusanything
Mentaliusanything's picture

Oh Japan needs lumber - Lots of it ,millions of cubic feet. Glass, aluminium and insulation as well.

What it does not have is a hope in hell.

Need to send Obama over and give them that hopey changey thing

Thu, 06/09/2011 - 11:09 | 1354452 etrader
etrader's picture

Hugh Hendry' will be happy this week.

His long corn / short Olam

Thu, 06/09/2011 - 11:05 | 1354453 djcando
djcando's picture

Let them eat Popcorn!  Watch out for the backlash from hungry citizens.

Thu, 06/09/2011 - 11:08 | 1354467 RockyRacoon
RockyRacoon's picture

Has Frito-Lay broken a sweat yet?  I don't follow the stock but I do like their Scoops.

Thu, 06/09/2011 - 11:12 | 1354476 mayhem_korner
mayhem_korner's picture

Should be coming out with a Scoops 4-pak for 99 cents...er that's chips, not bags...

Thu, 06/09/2011 - 12:25 | 1354752 RockyRacoon
RockyRacoon's picture

That'll work.  Then they can package bean dip like they do Cheeze-Whiz.

Thu, 06/09/2011 - 11:32 | 1354539 pazmaker
pazmaker's picture

as much as corn is used in animal feed...look for tyson and smithfield to break a sweat as well.  They have probably locked in some futures at a lower price but overall the rise in grain cost effects most protein(animal source) prices as well.

Thu, 06/09/2011 - 11:38 | 1354572 mayhem_korner
mayhem_korner's picture

Corn is the be-all feedstock in industrialized food processing...

http://www.foodincmovie.com/about-the-film.php

Thu, 06/09/2011 - 11:07 | 1354465 Jason T
Jason T's picture

got a good size garden this year..gonna build a chicken tractor to house 3 or 4 hens soon too.  will have year supply of string beans thats for sure.  

being food and energy self sufficient is a good investment!! 

Thu, 06/09/2011 - 11:54 | 1354622 Note to self
Note to self's picture

Ricght there with you.  Just took delivery on 13 layers for the coop I built last summer - so far so good.  Corn is 8 inches high - planted it in the old 3 sisters method.  Lots of drying beans and winter squash.  25 lbs of Kennebec potatos in the ground.  Currently fighting with anonymous mice for the ripest strawberries.  

More than anything, it takes my mind off of this hugely troubled world.

Thu, 06/09/2011 - 12:15 | 1354709 Boonie
Boonie's picture

f'in bunnies have been going to town on my pole beans this year.  still have some in freezer from last year.  breaking out the .22 LR, as the putrid smelling spray stuff isn't working and dog only cares about squirrels.  wife and kids will just need to understand.  suburban neighbors won't have a clue what that sound is.  wonder what impact this corn situation is going to have on white tails come November? 

Thu, 06/09/2011 - 13:26 | 1354956 Note to self
Note to self's picture

Long Hassenfeffer!

Thu, 06/09/2011 - 13:39 | 1355006 trav7777
trav7777's picture

cats??  duh?

Thu, 06/09/2011 - 11:20 | 1354490 justtotaketheedgeoff
justtotaketheedgeoff's picture

Drove thru Indiana to Michigan ten days ago.  It was a little disturbing to see hundreds and hundreds of acres, mile after mile of fields completely untouched because of all the rain.  Then there was a dry spell and the farmers could finally get out in the fields. The farmer near me had two helpers and was working 18 hrs a day for three days to get his fields planted. No kidding, I saw the lights on his tractor at midnight one night. So, the crops are in.  I was talking with another farmer and he said that 100% of his corn crop is contracted to the nearby ethanol plant.  So much for food inflation calming down...

Thu, 06/09/2011 - 11:32 | 1354543 Caviar Emptor
Caviar Emptor's picture

Yup. I've seen footage, but it's good to hear some corroboration. Winter wheat was badly hurt. Awful weather conditions persist. 

People rail against corn-based ethanol. But at least that's domestically sourced (money flowing back to the economy, better energy security). What they fail to see is that without the ethanol dilution in gasoline, we'd need to import even more, at higher cost and with less independence. 

Thu, 06/09/2011 - 11:43 | 1354595 duo
duo's picture

good idea.  It takes about a gallon of gasoline to make a gallon of ethanol, a wash at best.  Irreplaceable topsoil and oil are consumed forever. 

Thu, 06/09/2011 - 11:45 | 1354602 pazmaker
pazmaker's picture

+10000 duo.  Ethanol is part ofthe problem not part of the solution.

Thu, 06/09/2011 - 13:44 | 1355011 trav7777
trav7777's picture

corn ethanol is an abomination.

Other plantstuffs like sugar cane actually produce at positive EROI.

Corn ethanol is just effing proof the government is a total fuckup at whatever they do and everything is graft and boondoggles

Thu, 06/09/2011 - 13:19 | 1354935 mlbs
mlbs's picture

And of course there is always the possibility that weather in the midwest will be like last year. Around the end of June last year we stopped getting rain and barely saw any through October. We were fine then because our crops had all been planted and were already as tall as they needed to be. If the same happens this year the outcome will be very bad.

Thu, 06/09/2011 - 11:22 | 1354511 HungrySeagull
HungrySeagull's picture

Take that corn, ethanol the damn thing and burn it all.

What do you want? Gas to go get food which is being burned off in the Nation or food to eat and honest to goodness leaded gasoline that is so good for our engines.

 

Stop converting corn for something other than food and you will see a instant improvement in the overall situation.

Thu, 06/09/2011 - 15:46 | 1355458 Cathartes Aura
Cathartes Aura's picture

while I agree that food should not be used to fuel motor vehicles, particularly mandatory use - the majority of corn grown in amrka is GMO, and not really fit for human consumption - it's primarily used to gum up your engines, fatten your meat animals, and for high fructose corn syrup, another apparently "mandatory" ingredient in corporate fud-stuffs, since it's hidden in virtually everything packaged.

soybeans, corn, potatoes, sugar beets - all overwhelmingly Monsanto-fud now.

Thu, 06/09/2011 - 11:29 | 1354540 urbanelf
urbanelf's picture

It's the cornflationary end-game, bitchez.

Thu, 06/09/2011 - 11:51 | 1354562 swissinv
swissinv's picture

This proves that strong weather can even beat the bigest deflation -> but the sun will come and a strong dollar will arise -> god bless my fairy tale 

Thu, 06/09/2011 - 11:41 | 1354587 chistletoe
chistletoe's picture

its all because of magnetic flares on the sun.

 

http://www.spaceweather.com/swpod2011/07jun11/bestcrop.mov?v=Q_3u_0NN7OM...

Thu, 06/09/2011 - 11:46 | 1354609 Note to self
Note to self's picture

High Fructose, bitchez!!

Thu, 06/09/2011 - 11:48 | 1354617 quasimodo
quasimodo's picture

Here in the western part of Iowa the crop looks like shit compared to what it usually does. Late getting in, and it will be late getting it out, IF the snow stays away. Yields will be waaayyy down from normal.One goofy weather pattern here lately. Yesterday was hotter than a bitch, this morning I woke up and put a jacket on.

Thu, 06/09/2011 - 11:49 | 1354620 Chasecran
Chasecran's picture

transitory...I see

Thu, 06/09/2011 - 12:12 | 1354708 Quinvarius
Quinvarius's picture

It is almost as if interfering in commodity markets to keep prices articfically low reduces supply.  I don't know.  I watch a lot of TV and I don't really believe that is possible.  It can't be.

Thu, 06/09/2011 - 12:42 | 1354810 huckman
huckman's picture

Tightest corn supplies for what, food or ethanol? 

Thu, 06/09/2011 - 12:51 | 1354832 cbtrice
cbtrice's picture

I was sitting here this morning looking at the temps nearly 50% lower than yesterday (97 to 51) and thought it is strange that I haven't heard much about how a declining La Nina event screws up weather in the US with the south being hot and dry and the north being cold and wet. Everybody has gotten so wound up in global climate bullshit that they have forgotten one of the most observed and recurring weather patterns and what it does to the US and Asian weather systems. I guess Nina and Nino are no longer as in voque as they used to be, of course that doesn't mean they aren't just as important as they always have been, just climatologists are concentrating on what brings in the grant money vs what may be one of the largest key factors in what is really going on. mpw

Thu, 06/09/2011 - 14:03 | 1355094 trav7777
trav7777's picture

every hotter than normal day is caused by Global Warming and every colder than normal day is just an aberration...or caused by Global Warming

Thu, 06/09/2011 - 12:48 | 1354833 slewie the pi-rat
slewie the pi-rat's picture

i was watching the prices of corn and wheat in chicago d0-si-d0ugh earlier in the week.   i thought:  is this a spread, now, and about to get some megabux play?  in the few short years i've been paying my intermittent, often externally-controlled, attention to the commodes, CBOT wheat has always cost more than CBOT corn.  not since yesterday!  Commodity Futures Online Trading - Bloomberg

i call this the Commodities 4 Dummies page.  and it leads to good times watching between the BiChFlation commercialz.

so, the goobermint #'s?  round up the usual suspects.  they got their data from the farmers?  well, bet the fukin ranch, then! 

the wheat prices just went ape-shit b/c of drought, and they couldn't plant the corn (at the same time) b/c of flooding.  someday, when us old fartz are pushing up cannabis in a garden near you, you young zer0z will be sitting your grangkids on your knees, telling them about these times, 2011, the year of the fuk_u 4 banger, the flood/drought, the in-de-stag-bi-flation, the debt ceiling, the silver roller coaster named blythe, and they will ask you, demanding:  "what happened?"

and you will knowingly respond:  "it's a secret!"

Thu, 06/09/2011 - 12:58 | 1354859 Michael66
Michael66's picture

Obviously, there is a misunderstanding of using corn to produce ethanol.

 

When field corn is brewed it yields ethanol and brewers' mash.  Brewers' mash is an exceptionally nutricious product to feed to cows, hogs, chickens and ducks.

 

Brewers' mash contains more available nutrition than the uncooked corn from which it is made.

 

The production of ethanol from corn INCREASES the food supply.

 

 

Thu, 06/09/2011 - 14:08 | 1355098 pazmaker
pazmaker's picture

obviously...NO  

Current Ethanol production drives up the price of corn and doesn not increase the food supply. hat byproduct your reffering to is only used in 20-30% of cattlefeed

 

see this: http://www.feedstuffsfoodlink.com/ME2/dirmod.asp?sid=&nm=&type=news&mod=...

and this: http://www.cbo.gov/ftpdocs/100xx/doc10057/MainText.4.1.shtml

 

see this as well: to learn about what that ethanol byproduct does when used to feed cows:

The Problem with Ethanol By-Products:    

http://www.foodfirst.org/en/node/2079

 

Thu, 06/09/2011 - 16:05 | 1355498 Cathartes Aura
Cathartes Aura's picture

thanks for those links paz, particularly the last one, highly recommended for continued awareness on corporate food supply.

Thu, 06/09/2011 - 13:18 | 1354909 sabra1
sabra1's picture

what goes great with corn you ask?

FDA finally admits chicken meat contains cancer-causing arsenic

and:

Dramatic Proliferation Of Herbicide-Resistant Weeds Threatens U.S. Crops

 

 

Thu, 06/09/2011 - 13:57 | 1355051 Byronio
Byronio's picture

Obama pushed ethanol HARD, so that makes LESS corn available as fodder for livestock and FOOD for humans.

Then, thanks primarily to the efforts of the US over the last 60 years, the Third World population has exploded and, again, thanks to the cryptocracy in US, American jobs were exported to these same countries and NOW they can OUTBID, the US taxpayers for FOOD, this is not something trivial, this is a BIG DEAL.

IT will be obvious to all soon enough.

Control the food supply, and you control the population.

Just read what the ancestors of the current crop running the show in the US did to Ukrainians during 1932-33.

Thu, 06/09/2011 - 14:00 | 1355064 Rodent Freikorps
Rodent Freikorps's picture

Humans who allow themselves to be put in that position deserve to die.

 

Thu, 06/09/2011 - 13:58 | 1355069 Flyingtrader
Flyingtrader's picture

For you forward thinking traders out there... this is VERY bullish cattle; hogs....

 

 

Thu, 06/09/2011 - 14:04 | 1355084 AldoHux_IV
AldoHux_IV's picture

The bigger speculators being of course the centrally planned policymakers who seem to think choosing which prices should go up and which go down will be good for their accounts (read the overall economy). Don't worry though, the very same people are vigilant and ever more convinced that this (like time in general) will pass.

Thu, 06/09/2011 - 14:07 | 1355113 Flyingtrader
Flyingtrader's picture

In the case of corn, for instance,they do this by controlling the weather right? Let me guess...HAARP?

 

Thu, 06/09/2011 - 16:11 | 1355519 Cathartes Aura
Cathartes Aura's picture

"When most people look up they see clouds, we see potential"

Now, more than ever, the worldwide need for solutions to atmospheric necessities such as water resource management and environmental quality monitoring, is critical. With nearly a half-century of successful programs, our experience speaks for itself.

Let us help you better manage your atmospheric and water resources.

 

http://weathermodification.com/index.php

Thu, 06/09/2011 - 14:31 | 1355177 The Butchers Dog
The Butchers Dog's picture

So, the satelite doesn't show corn in the fields and that means no corn?  If it were simple supply demand (and nothing to do with the dollar) I would probably sell into this.

I am in a farming area and although we're all late getting it in the ground EVERYONE I know who is about to plant has short season seed.  I am not sure, but I don't think the sattellites show that...  :)

 

Thu, 06/09/2011 - 14:36 | 1355200 Flyingtrader
Flyingtrader's picture

90 day corn produces a lower average yield per acre than its 120 day cousins...  Short season varieties combined with late planting could be trouble down the road.  Your attention to the dollar is important. Virtually every break in the price in the price of corn from Feb until now was dollar driven and unrelated to supply/demand. 

Thu, 06/09/2011 - 15:25 | 1355375 The Butchers Dog
The Butchers Dog's picture

Yep, very true on the yields.

I should have clarified that this is GM seed, round up ready with added nitrogen, so it tends to be a pretty good yeild.

More important all together will be how wet the Fall is.  That defines the loss if you can't get the corn dried down.

Regardless, the "Price" is defined what you're trading for it.... Dollars or another commodity like oats or hay.

Thu, 06/09/2011 - 14:40 | 1355217 Flyingtrader
Flyingtrader's picture

double post... sorry

Fri, 06/10/2011 - 02:08 | 1357065 HungrySeagull
HungrySeagull's picture

I miss the Dutch Country, we used to drive down the small roads measuring by the month or week during summer the height of the corn. Usually by a certain time you know it's going to be a good harvest. None of that bullshit that goes on these days.

 

Silver queen is partiuclarly good early in the summer.

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