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Forget Corn, Is Soy Poised For Lift-Off?

Tyler Durden's picture


By now everyone is aware of the silver-like surge in corn prices over the past month, driven by the recognition that what is quickly becoming the most severe drought in US history is here to stay indefinitely longer as elusive rainfall remains just that. As can been seen on the chart below, corn prices have risen by 54% since mid-June. What may come as a surprise is that another critical commodity - Soybeans - has only risen by half as much, or just 28% in the past month. Why "only"? Because as the following two charts from Morgan Stanley show, the fundamental picture for soybeans may be just as bad if not worse as corn, which would mean there is far more price upside in soy in the coming days, especially if strategies based on prayer, for either central bank intervention or rain, remain unasnwered.

First, a relative comparison of corn vs soybeans:

And now, here is what the Corn crop looks like compared to Soybeans: what may come as shock is that percentage of soybeans rated in "good or excellent" condition is even less than corn.

From an inventory standpoint, soy is actually worse than corn. Which means the squeeze may be on even sooner: as a reminder, the US is the world's biggest producer and consumer of soybean. Well, in 2012 it may just be consumer.

Finally, if soybean meal is also about to join corn in the parabolic department, one can just as easily expect downstream protein derivatives to not be long in joining the moonshot party, coupled with margins of unhedged fast food stores collapsing into negative territory in no time.


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Sat, 07/21/2012 - 20:00 | 2639463 Zola
Zola's picture

Why doesn't Bernanke print more rain ?? After all i thought the central banks were Gods ? Aren't the politicial midgets all praying on the altar of this divinity day in day out ?

Sat, 07/21/2012 - 20:28 | 2639501 TrustWho
TrustWho's picture

Exactly...Bernanke is the Wizard of Oz and the lack of rain may pull his curtain.

Sat, 07/21/2012 - 20:34 | 2639511 krispkritter
krispkritter's picture

What he's really 'growing' is Soylent Green. Greenbacks made from the sacrifice of labor and savings of the Muppets. Oh what I'd give to have a tree chipper and a lunchdate with Benny Boy...'...he put his chips ALL IN!...'

Sat, 07/21/2012 - 20:46 | 2639528 francis_sawyer
francis_sawyer's picture

Maybe this is natures way of saying FUCK YOU to the US Navy's ideas of going to biofuels...

Sat, 07/21/2012 - 21:01 | 2639543 Precious
Precious's picture

The Japanese have invented GMO plankton that's going to produce so many ocean fish they're going to be jumping straight into the boat.  

I swear I've seen it.

Sun, 07/22/2012 - 00:35 | 2639788 zhandax
zhandax's picture

The Japanese have invented GMO plankton that's going to produce so many ocean fish they're going to be jumping straight into the boat. 

Yeah; available in 8 glow-in-the-dark colors!

Sun, 07/22/2012 - 01:17 | 2639833 old naughty
old naughty's picture

Where are they growing these? FukuXXXma?

Sun, 07/22/2012 - 08:47 | 2639992 Comay Mierda
Comay Mierda's picture

MS trying to offload their long soybean positions, they are full of shit

look at this chart:$SOYB&p=W&yr=2&mn=0&dy=0&id=p99044456386

everytime RSI(14) is above 70 soybean spot either stops its rise or gets smacked down

now look where RSI(14) is

MS going for a muppet play

Sun, 07/22/2012 - 14:41 | 2640609 quebecgold
quebecgold's picture

What about Feeder Caddle? It went down about 15% in the last month while production cost involving corn and soybean meal went up. You guys think the price off feeder caddle will go up to reflect high grains price?

Sun, 07/22/2012 - 14:48 | 2640625 Xanadu_doo
Xanadu_doo's picture

Between high-high-higher grain prices and increased regulation (thanks, HSUS fuckers), many livestock proiducers are just selling out. Prices for farmers won't raise that much because of cost of production, but food inflation wwill continue.

Sun, 07/22/2012 - 23:41 | 2641603 engineertheeconomy
engineertheeconomy's picture

The curve is going parabolic for sure, it won't be long now








Sat, 07/21/2012 - 20:59 | 2639545 nmewn
nmewn's picture

At 26 bucks a gallon I'm on Gaia's side here.

I anxiously await the latest "green crony" excuse for this taxpayer rip off.


Sat, 07/21/2012 - 21:12 | 2639568 The Monkey
The Monkey's picture

Looks like we could get another blow off top in at least soft commodities. Along with crude, makes a great long hedge against short equity positions for the "monetary madness daze" ahead.

Let's print!

Sat, 07/21/2012 - 22:40 | 2639680 Raymond_K_Hessel
Raymond_K_Hessel's picture

What this article fails to mention is that corn is higher than soy because the damage has already been done to the corn crop, while if we get rain in August, most of the soy crop will make it. If it rains in aug, soy plummets. If not, we have a real mess on our hands, as this article suggests.

Sun, 07/22/2012 - 09:05 | 2640008 logos5
logos5's picture


Sun, 07/22/2012 - 12:51 | 2640355 cbxer55
cbxer55's picture

Looks like we need old Wile E. Coyote to do one of his rain dances.

See around the 4:20 mark.

Sat, 07/21/2012 - 20:59 | 2639536 Muppet of the U...
Muppet of the Universe's picture

CORN is a C4 plant.  It retains the sugars it creates even when it lacks water. 

CAM plants, or C3 plants, consume their own sugars to stay alive when they have no water.


Corn can survive droughts b/c corn is a C4 plant.


WHEAT & SOY are C3/CAM plants.


EXPECT Wheat and SOY to die off in MASS QUANTITY as this multidecade level 4 & 5 drought continues, worsens, and spreads.

Expect Corn to be LESS AFFECTED by the drought, b/c corn is genetically drought resistant. 

Therefore, expect the correlation between the two to change in coming months.

Expect wild fires caused by drought to pose considerable risk to all agricultural products.

Climate Change WILL have an effect on agricultural output, and therefore, food prices.

Expect continued wild and out of control prices in agricultural commodities, etfs, and etns.


BOOYAKASHA.  Biology major became a drop-out wall street trader...

Sat, 07/21/2012 - 21:04 | 2639549 LawsofPhysics
LawsofPhysics's picture

Wrong. All the "C4" means is that corn has an additional pathway for converting carbon dioxide into sugar. ALL plants consume their sugars when there is no light. Corn just makes a lot more a lot faster. By the way, soybeans have the advantage of associating with nitrogen fixing bacteria. I can see why you dropped out but I hope you are right. We put in over 10,000 acres of soybeans this year. Bring it. Oh yeah, I accept gold.

Sat, 07/21/2012 - 21:04 | 2639556 Precious
Precious's picture

My magic 8-Ball begs to differ.

Sat, 07/21/2012 - 21:11 | 2639565 wisefool
wisefool's picture

What about the old saying that corn will sacrifice the plant to save the ear, beans will sacrifice the seed to save the plant?

I am not an expert, but thats what I've heard and seen. doesn't the bean plant "think" it can re-bloom later, where the corm plant knows it is one and done?

Sat, 07/21/2012 - 21:18 | 2639566 Muppet of the U...
Muppet of the Universe's picture

Yo Marshal Davidson Hatch!

Water-use efficiency is relative to carbon fixation strategies.

What up son?

C3 plants, accounting for more than 95% of earth's plant species, use rubisco to make a three-carbon compound as the first stable product of carbon fixation. C3 plants flourish in cool, wet, and cloudy climates, where light levels may be low, because the metabolic pathway is more energy efficient, and if water is plentiful, the stomata can stay open and let in more carbon dioxide. However, carbon losses through photorespiration are high.

C4 plants possess biochemical and anatomical mechanisms to raise the intercellular carbon dioxide concentration at the site of fixation, and this reduces, and sometimes eliminates, carbon losses by photorespiration. C4 plants, which inhabit hot, dry evironments, have very high water-use efficiency, so that there can be up to twice as much photosynthesis per gram of water as in C3 plants, but C4 metabolism is inefficient in shady or cool environments. Less than 1% of earth's plant species can be classified as C4.

Read more: :/ Although for the record.  I got the cam c3 thing totally mixed up.
Sat, 07/21/2012 - 23:01 | 2639704 disabledvet
disabledvet's picture

Gold for soybeans? WTF???? Really? If we have want relative to friggin soybeans it is by choice not because of need. To compare soybeans to gold is a RIPOFF. We have no drought here. Corn, soybeans, cows...even the gophers are having a good time. Simply "does not compute." a drought of this scale is bad for all. All lose as cash settlement and ultimately price becomes the final arbiter of the trade. This means the bankers win!

Sat, 07/21/2012 - 21:03 | 2639554 Disenchanted
Disenchanted's picture



Most winter wheat has already been harvested...and winter wheat is about 3/4 of US wheat production.


Sat, 07/21/2012 - 21:09 | 2639564 Urban Roman
Urban Roman's picture

CAM is a whole nother thing. Crassulacean Acid Metabolism.

It's a thing succulents do. They close their little pores in the daytime and conduct photosynthesis using carbon that they captured the previous night. At night the little pores in the leaves open up and take in CO2 when the water loss is not so bad. To do this, they have to burn some sugar, but not release the CO2, which builds up as (maleic?) acid in the leaves.

The drought is good news for purslane. For corn and soybeans, not so much.

Sat, 07/21/2012 - 21:21 | 2639581 Muppet of the U...
Muppet of the Universe's picture

yea I just realized that...  my bad :(

I majored in human A&P :(  not plant metabolism :|

Sun, 07/22/2012 - 14:56 | 2640648 Xanadu_doo
Xanadu_doo's picture

Indeed wrong. Corn will not recover even if we get rain in the Midwest. It is gone in many places and farmers have lost hope for this season. In fact, many corn farmers in Ill. already are plowing under their corn and calling the season a loss -- some others are cutting the scrabbly corn for animal silage before it loses all value (next week or two w/o rain). If we get adequate rain through the end of the season, soybeans WILL come back. It won't ever be a bumper crop - too much yield potential already gone - but better than plowing it under. Soybeans bloom much longer and are much more resilient overall. While many modern corn hybrids are drought TOLERANT, they are not drought RESISTANT.

Sun, 07/22/2012 - 04:57 | 2639899 mrdenis
mrdenis's picture

Green Shoots up 

Sat, 07/21/2012 - 21:25 | 2639591 Aguadulce
Aguadulce's picture

If u guys actually want a good trade check out yc/ysb ratio during planting season this year. It had to go to 2.5 for beans to gain any more of the maginal acres from corn. Sx13/cz13 is down near 2.0 and MUST go to 2.5 to rebalance the soybean snd. This article is correct in the fact that the soy snd is far tighter than corn and something has to happen to the grain ratios to even it out.

Sun, 07/22/2012 - 00:15 | 2639766 Free Markets
Free Markets's picture

Beans still have a chance for good production. Corn does not. Supply will. BE way out of balance thus throwing the curve.

Sun, 07/22/2012 - 08:46 | 2639994 d edwards
d edwards's picture

IMHO, corn has spiked because the dumb asses in DC are having it made into ethanol, which if you figure in all the petroleum used in it's production, is a HUGE loser. Can't exist w/o subsidies.

Turn corn into beef and taco shells-forget ethanol.

Sun, 07/22/2012 - 09:30 | 2640031 DOT
DOT's picture

Must be my lying eyes.

I have inspected crops in 6 States.  Yields will be way down.

Sat, 07/21/2012 - 20:00 | 2639465 I think I need ...
I think I need to buy a gun's picture

phuck it all.......

Sat, 07/21/2012 - 20:03 | 2639470 Sutton
Sutton's picture

Will Ben raise rates to squash hedge fund hoarding of the world's foodstuffs? He may have to, to let the small of the world eat.

Sat, 07/21/2012 - 21:16 | 2639575 The Monkey
The Monkey's picture

Real rates will rise by themselves after a time. Monetary policy moves prices further up the trendline until, well, it can't.

I love blow off tops.

Sat, 07/21/2012 - 22:47 | 2639688 Amish Hacker
Amish Hacker's picture

What makes you think "letting the small of the world eat" is one of his goals?

Sun, 07/22/2012 - 00:43 | 2639799 zhandax
zhandax's picture


Sat, 07/21/2012 - 20:05 | 2639471 buzzsaw99
buzzsaw99's picture

MON doesn't have a genetically modified drought proof bean yet?

Sat, 07/21/2012 - 20:42 | 2639524 krispkritter
krispkritter's picture

My research says that 80-90% of US soybeans are GMO. So all my Vegan relatives swearing by the health benefits of a soy-based diet, along with plenty of pesticide-laced veggies, are probably not going to outlive me on a paleo diet of my own greenhouse grown tilapia, veggies, and grass-fed beef...of course, reading ZH tends to raise the BP...Where's HH?

Sun, 07/22/2012 - 01:44 | 2639848 slewie the pi-rat
slewie the pi-rat's picture



i don't care if it's damp or dewy
long as i got my plastic slewie
sittin on the dashboard of my caaarrr...

Sun, 07/22/2012 - 01:58 | 2639857 zhandax
zhandax's picture

Though I know it's loosing power
getting weaker by the hour
falling off the dashboard of my carrrrrr....

Sun, 07/22/2012 - 02:13 | 2639864 slewie the pi-rat
slewie the pi-rat's picture

with optional vasectomy, plastic fantastic dashboard slewie is genetically modified, BiCheZ!

Sat, 07/21/2012 - 20:06 | 2639472 AUD
AUD's picture

Yeah, well, apparently the world didn't end in 1988 either.

There was however quite the parabolic runup in commodity prices, before a huge credit bust in 1989.

Very similar in fact to 2008.

Sat, 07/21/2012 - 20:06 | 2639474 RRat
RRat's picture

One big difference is the ethanol mandate, which creates a huge government mandated demand for corn. The demand for soybeans is mostly free market, and therefore more price-elastic.



Sat, 07/21/2012 - 20:29 | 2639503 radicall
radicall's picture

Already wrote to my Senators/CongressPerson to get rid of the mandate at least for the year. Maybe they will see the light?

It takes 26 pounds of corn to make a gallon of ethanol. (although the remaining product called DDG is still used as a feed). That is a lot of Corn!

Sat, 07/21/2012 - 21:21 | 2639584 wisefool
wisefool's picture

It also takes something like 8 gallons of water to make one gallon of fuel.

As far as the mandate, the debate has under currents that many people don't fully understand. I am not saying I do either. But the 'just of it I got is that farmers want to export a refined good, instead of just raw commodity. The local/regional ethanol plants provide jobs in the area. Most of the small-mid sized farmers I know have salaried jobs off the farm when not harvesting, planting, hauling or spraying. Or their spouse/kids do. Ethanol provides both the jobs and mark-up.

Same issue was part of the revolution, and the civil wars - of many countries - not just america. If those red states start getting angry, everybody goes hungry. like in wiemar germany.

Sun, 07/22/2012 - 00:55 | 2639812 zhandax
zhandax's picture

Well these red states are hell and beyond angry but I doubt that causes anyone to go hungry because ADM, Cargill, and the like either own or lease the production and they are all over beans, corn, and wheat like stink on shit.

Sat, 07/21/2012 - 21:17 | 2639577 Aguadulce
Aguadulce's picture

Amen to that. Ethanol was invented to create demand for an oversupplied grain. We use 3x more corn for ethanol than we export. Shut er down and $2 corn is back.

Sat, 07/21/2012 - 20:07 | 2639476 Seize Mars
Seize Mars's picture

Comparing today's conditions to those of years gone by is not possible. Most farms nowadays are using newer strains that are ridiculously resilient.

Also, realize that soy plants are fucking epically more hardy than corn.

Just sayin'.

Sun, 07/22/2012 - 01:05 | 2639822 zhandax
zhandax's picture

Keep in mind that the big selling point for GMO is the farmer can use Round Up to kill the weeds without slowing the GMO crop down.

Sun, 07/22/2012 - 01:31 | 2639840 fourchan
fourchan's picture

fuck you monsanto.

Sat, 07/21/2012 - 20:08 | 2639477 duo
duo's picture

I spent 7 hours flying over Missouri and Illinois at about 5000 ft.  The soybean fields were still green, but the corn fields looked bad.

Rain at this point won't help the corn, but the soybeans could still be saved if they get rain soon.  None in the forecast going out 10 days, unfortunately.

Sat, 07/21/2012 - 20:12 | 2639481 buzzsaw99
buzzsaw99's picture

Beans are just a rotation crop in those states.

Sat, 07/21/2012 - 23:49 | 2639745 post turtle saver
Sat, 07/21/2012 - 20:12 | 2639482 eigenvalue
eigenvalue's picture

Brazil and Argentina also produce soya beans. Simply focusing on the US will be quite misleading. 

Sat, 07/21/2012 - 21:35 | 2639600 Gordon Freeman
Gordon Freeman's picture

They're fresh out.  Too bad...

Sat, 07/21/2012 - 20:22 | 2639486 francis_sawyer
francis_sawyer's picture

We're so lucky to have central banksters & TPTB's to help manage the prices for the good of all humanity to eat... If left to doomer libertarians... or otherwise without the help of 'IVY league' educated types & benevolent government entities involved in the process, the human race might perish...


(that was my best MDB imitation on a Saturday night)...

Sat, 07/21/2012 - 20:35 | 2639514 krispkritter
krispkritter's picture

I bet you still couldn't type that with a straight face...

Sat, 07/21/2012 - 20:50 | 2639534 nmewn
nmewn's picture

Farmers didn't plant any of that!!!

Sun, 07/22/2012 - 01:10 | 2639829 zhandax
zhandax's picture

Why do you think it's called the IVY league?  That's all those miserable cocksuckers can grow.

Sat, 07/21/2012 - 20:19 | 2639487 infiniti
infiniti's picture

Commercial futures traders have moved to a record net short position over the last few weeks, and I wouldn't bet against them.

Sat, 07/21/2012 - 21:20 | 2639583 The Monkey
The Monkey's picture

Short squeeze. Speculators betting on the weather to change may be due for a long summer.

Sat, 07/21/2012 - 20:23 | 2639490 TahoeBilly2012
TahoeBilly2012's picture


Sat, 07/21/2012 - 20:37 | 2639517 krispkritter
krispkritter's picture


Sat, 07/21/2012 - 20:42 | 2639492 Tom Green Swedish
Tom Green Swedish's picture

Too high too fast.  Your article is incorrect.  Only 10-15 percent crop decline.  Prices have already shot up way past that.  Scam.


All artilces written by the Wall Street Casino, where the gamblers are also the owners and use your money to play should all be taken with a grain of salt.  Does it even matter what the retail investor thinks anymore?  Why do they even bother printing this stuff?  They are the ones who own your 401K.


Next thing we will be hearing is the Global gold mining will be short of estimates and the price will shoot up. Never mind it only costs 400 dollars an ounce to mine. 


Wonder what it costs to make a bushel of corn.

Sat, 07/21/2012 - 20:45 | 2639526 eigenvalue
eigenvalue's picture

I sometimes suspect that the current drought is overhyped. Yes, there is a drought. But is it that serious as the media report? 

Sun, 07/22/2012 - 00:23 | 2639774 Free Markets
Free Markets's picture

I work in Ag covering Illinois, Iowa, & Wisconsin and this is a major problem. Iowa is not too bad but Illinois will average 60% of what it did last year. Corn will go higher, but dont bet on the fert companies. Farmers will not fertilize this coming year since their is plenty left from this years non growing crop.

Sun, 07/22/2012 - 01:19 | 2639836 zhandax
zhandax's picture

More than Kroger is willing to pay.  Have you noticed in the last two years, you can't get fresh corn in the supermarket after about June?

Sat, 07/21/2012 - 20:27 | 2639495 Its_the_economy...
Its_the_economy_stupid's picture

Corn decimated in delaware and MAryland. Crop insurance scoring 1-20 bushels to the acre. Still hope for beans. Many farmers are cutting the corn and putting short season beans in now. Some going fallow till winter grains.

Sat, 07/21/2012 - 20:29 | 2639504 Jason T
Jason T's picture

Saw corn in grocery store a few hours ago..Wegmans upstate NY ... 5/$2.00  

I am growing corn in my garden... i got about 40 ears ...should be ready in a week or two.

Sun, 07/22/2012 - 09:44 | 2640059 Oleander
Oleander's picture

We sell corn here for 75¢ an ear.  Cannot keep up with demand. I thought most corn grown in midwest was for commercial use and not for immediate human consumtion. I can walk in to a field here and eat the corn raw as I pick it. 

Sat, 07/21/2012 - 20:34 | 2639512 A Lunatic
A Lunatic's picture

soybeanomania...........Get some.

Sat, 07/21/2012 - 20:37 | 2639518 TrainWreck1
TrainWreck1's picture

GM Volt is Soy85-ready.

Sure, mileage will be crap, and the will smell even worse, but if it wipes one tear from Al Gore's porcine countenance, is it not worth the sacrifice?


Sat, 07/21/2012 - 20:41 | 2639519 Disenchanted
Disenchanted's picture



There could be a big downdraft coming soon in grains...not to say they might not go way up again closer to fall/harvest when yield numbers become more clear(if yields way down).


This trader sez he's getting nervous...(I'm not trading or hedging so it's no skin off my bones.)


Things are getting a little weird up here

Jul 19, 2012 excerpt:

I really don't know that we have done enough price rationing to stifle demand, and I really do not know what the final yield will be for corn or soybeans but I have to say that price action over the last few days has been concerning, especially for corn.  And, as traders we look at the date and we know very well what this time of year usually means for corn and in a week or two for soybeans.


For now I am long and holding on.  But I see some warning signs out on the horizon and with all the wild things that we are seeing in the markets I take away one thing - caution.  Maybe corn and soybeans keep rallying for months and maybe the key reversal in November 13 soybeans does not mean anything but maybe this is indicative of topping action.  I don't know as my crystal ball is out for repairs but I do have an overwhelming urge to exit as much risk as I naturally can and wait for things to become less strange.

We have had some nice rainfalls(around 2" since Wed.) here in my area of IN (south of Indy) the past few days, but it was not widespread. The heat was down nicely as well...



Sat, 07/21/2012 - 20:50 | 2639533 eigenvalue
eigenvalue's picture

We need Sean7k. I remember that he is a farmer. We need his take on the current drought. In my opinion, his opinion will be more objective than those Wall Street banksters.

Sat, 07/21/2012 - 20:57 | 2639541 Disenchanted
Disenchanted's picture



I'm not a farmer now, but have been well exposed to that gig(dairy farming) earlier in my life. The drought here in my locale has been bad but we haven't yet beaten any all time records. If I remember correctly records(drought and heat) from 1988 and 1936 are still standing here.

Sun, 07/22/2012 - 01:29 | 2639838 zhandax
zhandax's picture

Nashville got maybe 1/2" for May and June combined.  In the last two weeks, it has officially rained over 8" (over 10" at my house) which makes it the wettest July here since 1897.  All that gulf moisture is still streaming north.

Sun, 07/22/2012 - 14:01 | 2640522 Flakmeister
Flakmeister's picture

He already chimed in...

Corn in his area is toat and bean are hanging in but still not enough rain....

Sat, 07/21/2012 - 20:40 | 2639522 world_debt_slave
world_debt_slave's picture

I remember as a 6 or 7 yearold in Nebraska in the late 60's/early 70's, seeing a farmer proclaimnig the next profit making crop besides corn, soybenas.

Sat, 07/21/2012 - 20:59 | 2639546 Tom Green Swedish
Tom Green Swedish's picture

The last thing we need is an unwarranted price spike on this stuff to retard housing bubble price levels so we can further "subsidize" the farmers for no reason and spend more on SNAP card people.

Sun, 07/22/2012 - 01:31 | 2639841 zhandax
zhandax's picture

1988 is the first time I ever heard "Beans in the teens".  I don't remember anyone getting rich off that.

Sat, 07/21/2012 - 21:08 | 2639547 krispkritter
krispkritter's picture


Sat, 07/21/2012 - 21:21 | 2639578 Arvo Particleboard
Arvo Particleboard's picture

Maybe yes, maybe no. Soybeans are more flexible in adapting to drought stress than is corn. The corn is already tasseling and silking, and thus at a critical stage for moisture. Soybeans, though, are yet to reach full pod stage when moisture will then be critical for them. Were the drought to continue, then yes, prices would rise. But if it rains (enough), then no, prices will likely decline. IMHo, as someone who lives in Illinois farm country, both are currently accurately priced...until it rains.

At this stage, betting on baseball might be more rewarding.

Sat, 07/21/2012 - 21:21 | 2639585 q99x2
q99x2's picture

GMO and Bill Gates did it.

A floating island sounds really good about now.

Wait a minute that's not the right one. This is more like it.

Sun, 07/22/2012 - 01:34 | 2639843 zhandax
zhandax's picture

And until you come up with cheap desalination, you will starve on it without a fat wallet.

Sat, 07/21/2012 - 21:21 | 2639586 RobotTrader
RobotTrader's picture

Parabolic rises in softs are almost always followed by spectacular busts.  I remember Spring Wheat awhile back, had a huge parabolic runs, only to be followed by huge bear markets.

All Bernanke has to do is open his piehole and start flapping his gums about potential "intervention" or threaten "interest rate hikes" or implement steeper margin requirements or something.

Just watch.

If he can control the gold market with ease, the soybean and corn markets will be a piece of cake.

He's just sitting back and waiting for the specs to finish piling on.

Sat, 07/21/2012 - 23:22 | 2639722 I should be working
I should be working's picture

Except the day after he hikes rates the entire US banking system will probably collapse.

Last time rates went up the housing bubble imploded. Can't wait to see what happens next time. Can you say Corzined?

Sun, 07/22/2012 - 01:40 | 2639845 zhandax
zhandax's picture

The bernank's piehole is getting pretty shopworn after a year and a half of running with no tribute.

Sun, 07/22/2012 - 02:19 | 2639871 slewie the pi-rat
slewie the pi-rat's picture

i certainly agree that in your case R_T, the parabolic rises in the softs are a leading indicator of a spectacular bust

Sat, 07/21/2012 - 21:40 | 2639607 otto skorzeny
otto skorzeny's picture

I would hold off on this trade. a lot of Midwest is going to be getting on the edge of a "ring of fire" storm pattern this week and soybeans aren't yet into the danger stage-tread lightly

Sat, 07/21/2012 - 22:29 | 2639667 Nobody
Nobody's picture

I just came from a national soybean conference.
The general consensus was that the market had not come close to accessing the damage to this year's crop from this drought.
Very anecdotal, but very much of an industry cross section analysis.

Sat, 07/21/2012 - 22:43 | 2639683 Zone1
Zone1's picture

I live in Decatur, IL, "soybean capital of the world".  At the beginning of the week beans looked pretty good.  At the end of the week, you could start to see parts of the field head south.  A lot of the corn crop in the area is totally gone.  ADM reports on the 31st.  It should be a good conference call.

Sat, 07/21/2012 - 22:57 | 2639702 pbmatthews
pbmatthews's picture

The true extent of the damage won't be known for some time.  But what we do know is that this year's national BPA will be a lot lower than last year.  Starting with that base and extrapolating, the market's function at this point is to drive prices high enough to destroy demand. 

The other thing is all these guys are talking that soybeans could get rain between now and mid-August "because that's when the crop is made."  This is NONESENSE this year because the crop went in 2-weeks early.  We were already setting pods on 16% of the crop as of a week ago and we will likely be 40% in Monday's progress report.  Another week of hot and dry weather (especially in Iowa) will mean probably 60% of the nation's crop "set pods" in absolutely terrible conditions.  This will destroy yield. 

I already think the crop is under 2.7 billion bushels and that number may be dropping as we speak.

Sun, 07/22/2012 - 00:33 | 2639787 Lednbrass
Lednbrass's picture

This is a good point that is rarely mentioned.

Many growers from large scale farmers to small gardeners planted early this year, the USDA changed its climate zones for 2012 and most areas went up the scale (my area went from 7b to 8a for example). Crops were planted sooner than usual all across the country but I doubt the majority of the financial speculator types would be aware of this.

Sat, 07/21/2012 - 22:51 | 2639693 RiverRoad
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If this isn't a Depression, I don't know what the hell it is.  We've even got The Grapes of Wrath going on here.  Why won't our government give the American people their dignity back and at least call this thing the Depression that it is?!

Sat, 07/21/2012 - 23:23 | 2639723 I should be working
I should be working's picture

Depressions seem to be highly correlated with dust bowls. Proof god has a sense of humor.

Sat, 07/21/2012 - 23:45 | 2639739 Monedas
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Jim Jones' "Grapes of Wrath" cyanide laced Kool Aid .... stops thirst dead in it's tracks .... no one asks for second helpings !  I could have made a lot of money for General Foods if I had been an ad copy writer back then !         Monedas      1929       Comedy Jihad Drought Dry Humour

Sat, 07/21/2012 - 23:07 | 2639707 JackT
JackT's picture

Can't eat gold..wait..

Sat, 07/21/2012 - 23:32 | 2639728 Monedas
Monedas's picture

Maybe the drought is hyped so Obama can raid crop insurance reserve funds to buy votes and goose the rural economy with a perverted Keynesian finger by election time ?

Sun, 07/22/2012 - 04:25 | 2639851 zhandax
zhandax's picture


Sun, 07/22/2012 - 04:29 | 2639896 Poetic injustice
Poetic injustice's picture

Europe and Russia drowns.

Sun, 07/22/2012 - 00:26 | 2639777 Psyman
Psyman's picture

I hope the drought goes global and lasts 10 years.  I want to watch billions of mud people starve to death as they assuredly would without the white man's technology and benevolence.

Sun, 07/22/2012 - 00:38 | 2639793 Lednbrass
Lednbrass's picture

Oh, white folks are going to drop in large numbers in that scenario too.  You average food growing redneck isnt going give a shit if a bunch of city dwelling types keel over in a multi year drought, whatever they do grow will be consumed locally and the large population centers will be in very deep trouble.

Sun, 07/22/2012 - 00:47 | 2639803 Psyman
Psyman's picture

Can't make an omlette without breaking a few eggs.  I believe whites will fare far better than shitskins under such a scenario.  First of all, North America and Russia are large bread baskets for the world.  In a famine scenario, they will feed their own people first while the Indians, South East Asians, Africans, and perhaps South Americans die off.  Besides, Obese Americans/Brits/Germans are famine resistant.


But your specific scenario is laughable.  DHS/military/etc will size all food related assets well before people start starving to death in the U.S.  Those "red necks" will be lucky to not end up in a FEMA camp while ownership is shifted to the state and workers are brought in from the urban areas you speak of.

Sun, 07/22/2012 - 09:05 | 2640009 magpie
magpie's picture

Smack down the counterrevolutionaries, just what Mr. Davis ordered.

Sun, 07/22/2012 - 01:05 | 2639823 rockraider3
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What I really want to know is how the butternut squash crop is shaping up?

Sun, 07/22/2012 - 01:08 | 2639824 rockraider3
rockraider3's picture

By the way the corn I grew was delicious. I'm going to rip out my flower beds to plant more next year.

Sun, 07/22/2012 - 01:11 | 2639827 jonjon831983
jonjon831983's picture

Wait... so limited supply can cause prices to sky rocket?  Thought they could just naked short the price down to levels that will make people not want to buy these commodities....



World is turning upside down... soy bean = tofu.  No tofu = unhappy.  Unhappy = soylent green.

Sun, 07/22/2012 - 02:52 | 2639877 onebir
onebir's picture

Worth considering the impact of soy prices on China.

Fortunately for Chinese food prices, rice has also lagged:

Any ideas why?

Sun, 07/22/2012 - 05:27 | 2639909 Pinktip
Pinktip's picture

I'm late to this thread, but here's my .02c .....

-Soybeans have the most Genetic Modification of any plant, it's border line poison

-Corn is way over used in our diets.  Cow sare not designed to eat corn, only grass/hay

Cows have 4 compartment stomach for a reason, they are ruminants, they ruminate (chew their food twice)

it is regurgitated from the first stomach,  Ruminants are the most effecicent converter of grass to energy (more so than a horse, they hae a single stomach and a cecum) look at their manure.  Corn wasn't fed to cows untitl the 40's.....prior 6000 yrs, grass.  NO ruminant in the wild eats corn (deer used to eat farmers corn, but not any more.  I planted 2 acres of Heirloom corn (non hybrid, can replant kernals) next to hybrid gmo corn.  A tropical storm hit the east coast last year and flattened both fields.  By the time I got to pick the corn, there wasn't an ear left.  Every critter (Turkeys, Racoons, Deer) picked it clean.  The gmo field wasn't touched,Watch a commercial dairy/beef cow (~50% corn silage diet) take a more cow "pattie"  it comes out liquid becuase of the fiber in corn.

90% of Farmers apply Fertilizer as N,P,K and sometimes S.  That's all the plant needs.  Mammals, as the consumer, Need over 60 elements, plus they piss out the N (ammonia NH3).  That's why trace minearal blocks are avaialable to supplement.  The Plant is just the carrier of nutrients from the soil.  Plant the same crop on the same ground yr after yr eventually rob the soil of the trace's vertually dead and your food (cron, soy, wheat) is "hollow",  lacking trace minerals.  One theory on overweight people is that your body knows the food is hollow, so you eat more to get nutrients also you body stores fat as a defense mechanism because it nows it may not see more "food"coming.

Sun, 07/22/2012 - 07:24 | 2639949 hooligan2009
hooligan2009's picture

interesting...still...its a little odd that the only people we can get to draw pretty charts are the same bankers who give us pretty charts on the economy in general and where they can profit, in particular? I am getting more than a little antsy about looking at charts drawn up by the likes of SocGen, Citi and Morgan Stanley who are the biggest trough feeders at the taxpayers expense, whether this is corn slops, gold slops or economic slops.

Sun, 07/22/2012 - 07:53 | 2639960 billwilson
billwilson's picture

God thing there is no global warming or else I might be worried that we would get more of this in the future.

Sun, 07/22/2012 - 08:52 | 2639998 sudzee
sudzee's picture

But, but, but there are cheaper alternatives so no inflation in the economy.

Sun, 07/22/2012 - 09:04 | 2640007 magpie
magpie's picture

Hedonically adjust to oatmeal gruel ?

Sun, 07/22/2012 - 09:31 | 2640034 fattail
fattail's picture

August is the important month for the bean crop.  If rains come in the next month the bean crop will be hurt by the drought but it will outperform from a production aspect the corn crop , which is toast.

Looking at the c/b ratio in 2013, keep in mind the south americans will be planting in october and november and they had a bad crop last year.  With these high prices their acreages are going to be way up, and with normal weather they will produce a record soy crop that will come onto the market in March 2013.

Sun, 07/22/2012 - 10:03 | 2640086 DOT
DOT's picture

Just how levered are the corn producers ?  They have been expanding into marginally producing soils big time for a long time.  How exposed are the local community and Ag lenders ?  Who will produce the next crop ? kids bussed in by MS,BA,and GS ?

"What belongs to no one in particular, is wasted by everyone."  -James Wilson




Sun, 07/22/2012 - 10:07 | 2640092 DavosSherman
DavosSherman's picture

1990 China grew 14 million tons of soybeans and consumes 14 million tons.

2010 China grew 14 million tons of soybeans and consumed 70 million tons.

30% of soybeans will make it.

Do the math.

Sun, 07/22/2012 - 11:21 | 2640224 Lohn Jocke
Lohn Jocke's picture

Ever heard of Brazil? They don't just grow sugar and tits down there. Early reports indicate a record planting based on current foreward sales by their farmers. This whole grain bonanza has missed the boat and the upside is running on brokers buying November beans and December corn. Export basis has dropped off, we've rationed out and now Trader Joe is inflating the coarse grains. There will be an adjustment.

Sun, 07/22/2012 - 11:56 | 2640241 FieldingMellish
FieldingMellish's picture



There has been little question that Brazil, with its warm, wet climate and vast expanses of undeveloped land, would eventually charge past the U.S. to become the world's soybean champion in addition to the No. 1 producer and exporter of commodities such as sugar, coffee and orange juice.

But that day may come sooner rather than later. Closely watched consultancy Agroconsult said Friday it expects Brazil's 2012-13 soybean production to rise 25% from the previous year to 83.1 million tons, barely eking out the U.S.'s drought-hampered crop as total acreage expands 11% and yields recover, thanks to El Niño.

China buys 2/3rds of the Brazilian crop or about 50m tons

Sun, 07/22/2012 - 11:36 | 2640254 ebworthen
ebworthen's picture

Expensive Tofu and Soy Milk?  How ever will the Whole Foods crowd survive this?

Sun, 07/22/2012 - 12:29 | 2640348 FieldingMellish
FieldingMellish's picture

The same way the obese masses will survive the increase in corn prices. Both products are used in just about everything from twinkies to paint. I would be surprised if more than half of the crop of either product was used for direct human consumption.

Sun, 07/22/2012 - 12:15 | 2640328 RiverRoad
RiverRoad's picture

Let them eat daffodil bulbs.

Sun, 07/22/2012 - 14:26 | 2640570 Cthonic
Cthonic's picture

And raw kidney beans.

Mon, 07/23/2012 - 05:30 | 2641768 Disenchanted
Disenchanted's picture




...and don't forget...peas.

Sun, 07/22/2012 - 14:22 | 2640561 Memphis10
Memphis10's picture

Soy doesn't require NEARLY as much water as Corn does... Something an elliot wave, 200 DMA, Boilinger Band or Parabolic SAR won't tell you.

Sun, 07/22/2012 - 14:38 | 2640603 marco1324
marco1324's picture

Not soya but as things get fracking mad...

Sun, 07/22/2012 - 23:29 | 2641593 mademesmile
mademesmile's picture

I live in Missouri, and in 30 years have never see it so dry. The pastures are scorched. Hay is selling for $8 to $12 a sqaure bale and is being fed out in July, which is UNHEARD of. What will it be when winter hits?  The corn is shot. Wheat was harvested in early June. soy beans are ankle high and are green, for now, but with 0 rain in the forecast it's not looking good. We did have about 1/2 an inch last week - but it didn't soak in. It was the strangest thing to see the gullys immediatly filled when the ground is so incredible dry. It will take more than a single rain to make any difference. Oh, and spiders and ground wasps are thriving. It's like a plauge, but most people are glued to the TV or not leaving the AC to notice.

Mon, 07/23/2012 - 05:34 | 2641769 Disenchanted
Disenchanted's picture




But don't rigged markets, realities(fundamentals) mean squat.

Mon, 07/23/2012 - 10:22 | 2642413 Remington IV
Remington IV's picture

Jim Rogers says ... buy 'em all

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