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Goldman Raises Corn Price Forecast By 30% Just As Corn Surges To Highest Since 2008 Food Crisis
Unprecedented strength in corn continues, with futures rising by 4.5% on Thursday, following strong demand for corn to make food and fuel. That demand has whittled down the corn supply, which was already at its lowest level in 15 years in the United States, the world's top exporter of the grain. Per Reuters: " Demand has been strong from the livestock and ethanol sectors, and from importing nations, including China which is believed to have purchased 1.25 million tonnes last week. This week's rally, triggered by the U.S. Agriculture Department's lower-than-anticipated quarterly U.S. corn stocks estimate on Thursday, rekindled worries about food price inflation. The near-term supply concerns have largely overshadowed USDA's forecast that U.S. farmers will plant the second-largest corn acreage since 1944." Yet whether due to fundamental reasons or pure momentum, Goldman has just added more fuel to the fire by raising its corn price forecast, after having lowered it a whopping 10 days ago, from $6.00/bu and $5.80/bu to $7.80/bu and $7.00/bu, for 6 and 12 months respectively. Of course, all those who followed Goldman's recent downgrade made some very inverse profits. So it may well be time to trade against the squid yet again.
From Goldman Sachs:
The USDA Grain Stocks report featured corn stocks significantly below consensus expectations. These tighter old-crop inventories will require higher prices in the short term to finally ration demand. Further, despite corn winning the acreage battle, we reiterate our expectation for only a modest build in corn inventories in 2011/12. As a result, we raise our corn price forecasts to $8.60/bu in 3-mo, $7.80/bu in 6-mo and $7.00/bu in 12-mo. We recommend that consumers take advantage of the current backwardation in the corn futures curve to enter into longer-dated hedges.
Old-crop corn significantly tighter than expected…
The real surprise in yesterday’s USDA reports came from corn stocks, which were below the low end of expectations. This confirms that recent high prices have yet to achieve a slowdown in feed demand, and with strong weekly ethanol and export demand, point to a further drawdown in old-crop inventories. As a result, we believe that corn prices need to rise strongly in the near term to ration demand, including feed. Accordingly, we are raising our 3-mo corn price forecast to $8.60/bu. We expect ethanol demand rationing will be harder to achieve, as a $3.00/gal RBOB price and a $0.45/gal blender tax credit require prices above $10.00/bu to push the ethanol production cost above the price of gasoline.
… leading us to raise our corn forecasts despite acreage gains
We had lowered our new-crop corn price forecast on March 20, on the view that stabilizing inventories, as reported in the Feb/Mar WASDE, and higher acreage would allow for a modest inventory build and in turn moderately lower prices in 2011/12. While we maintain our outlook for the 2011/12 corn supply response, lower beginning stocks mean that our forecast for a sequential modest decline in prices will start from a higher level. As a result, we raise our 6- and 12-mo price forecasts to $7.80/bu and $7.00/bu from $6.00/bu and $5.80/bu previously, above the current forward curve.
Focus now shifts to weather, with price risk skewed to the upside
In the short term, the focus will be on precipitation in the Midwest as wet conditions lead farmers to swap corn for soybean acreage. Further, lower inventories suggest strong asymmetry in the price response to weather: it would take very favorable weather to push new-crop prices significantly lower than our new forecast, while any weather disappointment will limit inventory build and push corn prices even higher to further ration demand. We therefore recommend investors and consumers layer in upside exposure/hedges in Dec-11 corn prices.
In other words it is likely time to sell it all...
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Inverse profits bitchez!
It will soon be costing so much to flatten these prices through derivatives that the pressure will be forced off the Pm's. When it does expect a self feeding rally as all commodities take off.
It may be time for us to get over our taboo regarding eating human meat.
To that end, here are some processing tips: http://www.churchofeuthanasia.org/e-sermons/butcher.html
I'm already long soylent green. Does that count?
Man have been eating pussy since the begining of time...
True, thanks for the reminder. Here are more processing tips on that subject: http://www.ooze.com/ooze13/cats.html
last time I tried that it nearly had my fuckin' face off...
Now I stick to budgies...
for a nasty minute there I thought you were going to show me a recipe book.
Step one, take one stiff and hang till dry...
add salt, take chainsaw and...
Your surname wouldn't be Lechter would it by any chance?
You must be sure that in becoming a cannibal you do not destroy your own humanity. It is a slippery slope. To that end:
Five Rules of Moralistic Cannibalism (in descending priority)
1. Only become a cannibal if you will starve otherwise.
2. Do not kill others for their meat.
3. Eat dead loved ones before dead enemies.
4. Meat must be dead.
5. Remember that you are what you eat.
Ok, and let's not forget the Fave beans and a nice Chianti.
So nice to hear from you again Hannibal, now I know why I don't post personal information on public websites.
Top tip, rule no6 make sure when you chow down that they haven't got prosthetic limbs.
plays havok with your teeth...
don't you know...
inverse prosperity bitchez!
With these price increases, soon the world will have to inverse their recently acquired sophisticated diets.
It would seem to be a good time to re-read this:
http://www.zerohedge.com/article/ag-commodities-and-coming-inflation
Is not the news predicting record floods thruout the midwest soon?
As long as it's "global warming" related, it will do.
They must be warming up Haarp. If you are one that believe's in that conspiracy.
This should make Chipotle Grill go to 400.00 ha ha wtf
Silver is green. Where is long juan silver? Time to change your name again to long gone silver.
Will the grocery stores open up their own finance arms?
I like to get a loan for my frosted flakes.
Just get a ebt food card, you can get it at any local social services..Oh, also, sign up for fuel assistance and they will hook up your utility bill for you also..
I don't know if this is the sort of subject anyone ponders regularly, but it seems that this is how an excess supply of humans in the ecosystem corrects itself. Not with a bang, but with the whimpers of millions of people, primarily the very young or very old, who gradually become too poor to purchase food.
But apart from that, there must be a trading opportunity in there somewhere for speculators in commodities.
Kind of, but more a case of poor people get pissed off and vote for the first arse hole who promises them a free lunch. The world them marches to war and the problem resolves itself for a few more generations.
According to the World Food Council there were more than 240 million people living in poverty due to high food costs in 2008.
That number is rising by the day.
What does a government do when it can't feed its people?
Historically they march them over a border where they either get shot or they get fed, but either way the problem resolves itself.
@ kickaha congratulations! you are a winner! the trifecta of post-modern materialism: social darwinism. moral relativism. economic determinism. bravo!
I'm glad they don't make fuel out of asparagus.
Well, the only rational response to this type of event is to continue paying farm subsidies!
If food is fairly priced, and we have 240 million people starving because they can't afford it, why do we need subsidies?
Because if we don't pay subsidies, we may need to lay-off thousands of DC lobbyists. Who in their right mind would pass that type of job-killing legislation?
Once again, farm subsidies subsidize the consumer, not the farmers.
http://www.zerohedge.com/article/food-riots-commence-feds-loose-money-policy-leads-first-violence-2011#comment-853238
The only way you can have a fiat based cerdit system work is if you can control commodity prices.
The whole system works on the basis of we all get wealthy without spending it, because spending it results in rising prices which requires higher interest rates which busts the housing market. We have to keep food prices low.
How many of you think you have investments in commodities? Where is your investment? If I want to invest in rice I go out and buy rice, but when you consider how many agricultural commodity investors are invested not in agricultural commoditues but in paper and credit instruments you can see how derivatives lower the cost of food stuffs by diverting that money to paper. It is the same with precious metals.
Of course, if food pricfes were too low farmers wouldn't be able to plant, so we have an economic system throughout the US, UK and Europe which relies on derivatives to reduce prices and then makes up that loss tofarmers through subsidies. It's why half the world is starving and the rest can't make a living selling bananas and other produce.
the system requires that half the world lives in poverty to sustain it.
Maybe they can bundle up corn contracts of various terms and sell them to clients. Then turn around and short those contracts. They'll make a bundle. John Q public is so stupid they bailed them out once they'll do it again.
sure picked the right day to stop drinking moonshine!
try colloidial silver instead.
The stupid sheeple deserve suffering the ravages of inflation till they get a clue who is causing it. the Federal Reserve Corporation is the root of all evil. The Fed prints trillions of dollars and gives it at near zero interest to people in their friends network who use that money to speculate commodity prices higher and higher. It's as simple as that.
Did you even read the fucking article?
Or are you one of those brainwashed, whacked-out libertarians who is conditioned to blame the Fed for everything on Earth, regardless of facts?
Weren't soaring food prices one of several primary reasons for rioting in Egypt? How can people be so giddy about a mediocre NFP report when oil and food prices are surging.
because they need to believe something and they have no idea about an alternative. The asset management industry has been in the same rut now for fifty years with nothing and no one capable of structuring anything that doesn't involve equities, credit or a credit instrument. That is the market.
See any new product recently that isn't a repackage of the old?
They are clueless...
They are millions in number...
They have done nothing new...
and they need your account fees...
so stay invested for the good of everyone... except yourself, of course.
Exactemundo. Riots in 2008 in Egypt were started by the soaring price of bread, and this time around it will be even more severe. Expect riots in several countries within the next 12 months.
Wait till the price of corn bread and watermelon goes up...there will be riots in the streets
Stop Shipping USA FOOD allover the World.
Keep it at home for a crisis to be named later.
that's bad capitalism and...ALL corn goes to ethanol when oil is at 150!
We are going to use 27% of that food to fuel all the GM cars sitting on lots this year. So we can all drive to fast food restaurants and complain about the high cost of food.
Price controls, price controls, what do we do? We need price controls...
Burn the grain storage, slaughter the livestock! No, wait that was FDR.
Bulldoze the Houses! No, wait that's the Zionists...
Rob the Sheople blind -- increase price$ ACROSS THE BOARD (suppress monetary metals)! Print more money and raise interest rates at the same time..... while we bulldoze houses and invade the MiddleEast...That's the ticket!
This adds up to more protests, more riots, more civil wars, and more failed states.
http://www.wallstreetexaminer.com/blogs/winter/?p=3798
A good time now to increase the ethanol quota in gasoline!
</sarc>
It be a good time to drop the 2.5% duty and the USD $.54 /gallon ethanol tariff with Brazil.
and drop the $.45 tax credit to mix in ethanol with gasoline....the veetc
You know who gets it. Alec Baldwin. He'd be good president. He's critical of Obama, and mad at nuclear bullshit
If we want to create change, we can start it. Or we have discussion on who we choose for president. Then we get them on ballot. I nominate Baldwin. If agree with me, everyone try to contact Baldwin, let's get his name on the ballot.
I'm putting message on more posts for feedback.
Stop using corn to produce ethanol it is that simple which of course means it's complicated.
Masa de maíz, a little carnitas a little cilantro, a little lime ... a little cazadores, and lotta cleavage.
of course corn is one of the main grains used in animal feed. It's estimated that about 40% of US corn production this year will go to ethanol.
Which means your tortillas will cost more even if you do make them yourself de Maseca y tus carnitas van a subir tambien because those cows eat corn!
olvidaste una chela!
That's what the Cazadores is for...
muy fuerte! :)
Yeah, but my biggest concern is what's this going to do to the price of my sour mash bourbon?
We all remember Golden Slacks' $200/barrel call in 2008...
Golden slacks went deep shitty as 'la tourista' hit it hard with Hanka Banksta Paulsen's hole in the wall gang...which killed off Lehman Bros at WS OK corral.
OT: ...When everything goes...Wrong Side Up...
http://www.youtube.com/watch?v=W0Uju3tYS2s
As corn holio prices inflate don't forget tp for your bh.
http://www.youtube.com/watch?v=19NYstwdKcw
Is it because of food and fuel demand?
Or Bernanke printing money hand over fist?
Manipulated GMO corn is going up because the manipulated money supply.
Nice country America.
I laughed at your user name.
I'm pretty sure silver will end the day green again.
if it goes green you'll have to go to a moslem country to fetch it!
There is a severe misunderstanding of corn and ethanol. In reality, he production of ethanol INCREASES the food supply.
Corn is cooked during the alcohol production process. The alcohol production process converts the starch in the corn to alcohol. The remaining byproduct is called mash.
The mash is fed to cattle, hogs, chicken, turkeys, ducks, etc.
Mash, since it is a cooked product, is MUCH MORE nutritious to animals than raw corn. 83 pounds of cooked mash is equal in food value to 100 pounds of raw corn.
Ethanol is a Win- Win situation. More food plus a good energy source.
I know a whole bunch of dairy farmers who will tell you differently.
That's a surprising level of bullshit even by corporate PR paid-troll standards.
Are you Ann Coulter?
The law of thermodynamics disagrees with your bs.
Rememebr there was a time when oul was trading close to $150, when goldman raised its "forecast" by 30% to $200? What happened between then and the QE1?