Low U.S. corn supplies to affect food prices
#1
Inventories dwindle as U.S. farmers intend to plant near-record crop.

SAN FRANCISCO (MarketWatch) — Agricultural commodities traded higher in the futures market Thursday as a U.S. government report showed low corn inventories, a situation that threatens to keep upward pressure on food prices.

Corn stocks were down 15% to 6.52 billion bushels as of March 1, compared to the year-ago period, the U.S. Agriculture Department said.

Corn is a staple ingredient in many packaged foods and used as a feed grain by meat producers to fatten pigs and chickens. Corn use for ethanol is also growing, further cutting into end stocks.

Corn “inventories are a lot less than we thought,” said Kelly Wiesbrock, portfolio manager for San Francisco-based Harvest Capital Strategies, which specializes in the agricultural sector. “We are more susceptible to supply-side shock. You don’t fix inventory tightness in one year.”


U.S. corn inventories at low levels. One of biggest crops on record to be planted.

Corn for May delivery rose 4%, or 30 cents, to $6.93 a bushel in Chicago trade, hitting the maximum price-limit the crop can trade up in a single day.

Meat producers fell in midday trades.

Chicken processor Sanderson Farms (NASDAQ:SAFM) dropped 3%, while hog producer Smithfield Foods (NYSE:SFD) and meats maker Tyson Foods (NYSE:TSN) both fell 1%.

Agricultural machine suppliers rose. Deere & Co. (NYSE-DE) and AGCO (NYSE:AGCO) both rose 2%. Fertilizer makers CF Industries (NYSE:CF) rose 5%, while Agrium (NYSE:AGU) added 2%.

The grain stocks report coincided with a highly-anticipated USDA survey issued Thursday of how many acres U.S. farmers will plant to corn, soybeans, wheat and cotton.

Farmers are expected to plant 239.4 million acres of those crops in 2011, the USDA said in its annual “Prospective Plantings” survey, up nearly 10% over 2010. The USDA in February had pegged total acreage at 240 million.

Planned corn acreage came in at 92.2 million acres, slightly above the government’s prior estimate, and up 5% from 2010. If realized, it would be the second-highest planting on record behind the 2007 crop.

The U.S. is the world’s largest corn producer and exporter, with its 2010 crop valued at $66.7 billion.

Weather will be a factor as corn farmers in the midwest head to the fields in mid-April. Cold rainy weather could prevent farmers from planting the 92.2 million acres the government is forecasting. This would pressure already-tight supplies and affect the quality of the corn grown.

“Traders will now turn their attention to spring weather,” said John Sanow, an agricultural market analyst at TelventDTN. “Planting delays are very possible at this point.”
New York City's biggest produce market threatens to leave

The Hunts Point produce market in the South Bronx supplies restaurants and grocery stores throughout the tri-state region. When its lease expires in May, the merchants' cooperative is threatening to move to New Jersey -- taking 3,000 jobs with them. WSJ's Hilke Schellmann reports.

Low corn supplies is a reason market observers have been predicting corn prices will stay at lofty price levels for the rest of the year, especially since demand for corn from ethanol producers has been strong of late and U.S. meat exports are expected to remain buoyant.

Corn is up 100% over the last 12 months.

In other commodities trading, soybeans for May delivery jumped 3%, or 45 cents, $14.16 a bushel as of midday Chicago trade. The USDA reported March 1 soybean stocks were 1.25 billion bushels, down 2% from March 2010.

Wheat for May delivery rose 3%, or 33 cents, to $7.60 a bushel as of midday trading in Chicago. Wheat stocks were up 5% from last March to 1.42 billion bushels.

Cotton rose 4 cents, or 2%, to $1.98 a pound in early afternoon trading in New York. Cotton prices have skyrocketed 146% in the last 12 months, putting pressure on clothing companies and affecting prices at the apparel racks. High prices is making cotton enticing to farmers.

The USDA said cotton acreage will increase in every U.S. state that grows the fiber, with increases of more than 100,000 acres in North Carolina, Georgia and Mississippi. Texas, the largest U.S. cotton producer, is expected to post the largest acreage increase at 548,000.

   
Reply
#2
Is the crop low or are the farmers sitting on it till the price goes up some more. I live where they hoard it till they get top dollar for it.

SCo_hmmthinkCheckthisout
Reply
#3
Well its probably possible there sitting on it. Its such a shame greed has takin over ever faucet of life for some people.
Reply


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