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Veteran Advisor

Floor Talk December 23

At the close:

 

 

The March corn futures settled 2 1/4 cents higher at $4.14 per bushel.
March soybean futures finished unchanged at $10.45 3/4.

 

 

 

March wheat futures finished 9 3/4 cents higher to $6.35. The March soybean meal futures closed $1.10 per short ton lower at $358.30. March soyoil futures closed $0.19 higher at $32.36.

 

 

 

In the outside markets, the crude oil market is higher by $1.92, the U.S. Dollar is higher and the Dow Jones Industrials are 81 cents higher, hitting 18,000 for the very first time.

 

Mike

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At mid-session:

The March corn futures are trading 3 cents higher at $4.14 per bushel.
March soybean futures are trading 6 1/4 cents higher at $10.52.

 

March wheat futures are trading 9 1/4 cents higher to $6.35. The March soybean meal futures are trading $2.20 per short ton lower at $359.40. March soyoil futures are trading $0.35 higher at $32.52.

 

In the outside markets, the crude oil market is higher by $0.71, the U.S. Dollar is higher and the Dow Jones Industrials are 81 cents higher, hitting 18,000 for the very first time.

 

Mike North, President of Commodity Risk Management Group, says this is a typical "Santa Claus" rally.

"Today is a typical trade immediately preceding a major US holiday.  Volume is light, trade is two sided and information is in short supply.  One piece of news that did carry some weight today was the 3rd Quarter GDP announcement of 5%.  Preliminary expectations pegged it at 3.9%.  The stock market saw the Dow hit 18.000 and revive spirits after the recent sell off.  On this strength, the US dollar began to move higher as well with the index now trading north of 90.  Long term, this added strength in our dollar does not do us favors in the export market.  This will be watched closely as we begin to experience competition from South America, where planting is practically done in Brazil and more than 75% complete in Argentina.  With the projection of record crops from Brazil, there is no doubt that they will be willing to compete with the US for export shipments.  With the end of the year coming, position squaring becomes a feature as traders manage, re-balance, or exit their positions.  This can cause prices to move sharply up or down for brief periods without any fundamental explanation.  While today's market is not trading wildly, it is certainly experiencing some of that influence in the void of hard data."

 

Mike

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At the open:

 

The March corn futures are trading 1/2 of a cent higher at $4.12 per bushel.
March soybean futures are trading 2 1/2 cents lower at $10.43.

 

 

 

March wheat futures are trading 6 cents higher to $6.31. The March soybean meal futures are trading $1.00 per short ton lower at $356.20. March soyoil futures are trading $0.10 higher at $32.27.

 

 

 

In the outside markets, the crude oil market is higher by $0.78, the U.S. Dollar is higher and the Dow Jones Industrials are 54 cents higher, hitting 18,000 for the very first time.

 

Mike

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At 8:00am:

 

Early calls: Corn is 1-2 cents lower, soybeans 2-4 cents lower and wheat 4-6 cents higher.

 

Trackers:
Overnight grain, soybean markets = Trading mostly lower.
Crude Oil = $0.65 higher per barrel.
Dollar = Higher
Wall Street =Higher with the GDP revised higher.

World Markets = Europe stocks were higher, Asia/Pacific stocks were mixed.

 

 

 

More in a minute,

 

Mike

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Veteran Advisor

Re: Floor Talk December 23

sounds like the AR farmers are increasing their famer strike mode now.

 

2 bad christina and co do not find a short pier and take a long walk off it there.

 

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Veteran Advisor

Re: Floor Talk December 23

Hey Mike,

 

did you see this good article from Earth Policy Institute?...a little old, but the ringing of it's sentiment seems to be getting louder:

 

February 25, 2014

 

Can the World Feed China?

 

Lester R. Brown

 

Overnight, China has become a leading world grain importer, set to buy a staggering 22 million tons in the 2013–14 trade year, according to the latest U.S. Department of Agriculture projections. As recently as 2006—just eight years ago—China had a grain surplus and was exporting 10 million tons. What caused this dramatic shift?

 

It wasn’t until 20 years ago, after I wrote an article entitled “Who Will Feed China?”, that I began to fully appreciate what a sensitive political issue food security was to the Chinese. The country’s leaders were all survivors of the Great Famine of 1959–61, when some 36 million people starved to death. Yet while the Chinese government was publicly critical of my questioning the country’s ability to feed itself, it began quietly reforming its agriculture. Among other things, Beijing adopted a policy of grain self-sufficiency, an initiative that is now faltering.

 

Since 2006, China’s grain use has been climbing by 17 million tons per year. (See data.) For perspective, this compares with Australia’s annual wheat harvest of 24 million tons. With population growth slowing, this rise in grain use is largely the result of China’s huge population moving up the food chain and consuming more grain-based meat, milk, and eggs.

 

Net Imports of Grain by China, 1960-2013

 

In 2013, the world consumed an estimated 107 million tons of pork—half of which was eaten in China. China’s 1.4 billion people now consume six times as much pork as the United States does. Even with its recent surge in pork, however, China’s overall meat intake per person still totals only 120 pounds per year, scarcely half the 235 pounds in the United States. But, the Chinese, like so many others around the globe, aspire to an American lifestyle. To consume meat like Americans do, China would need to roughly double its annual meat supply from 80 million tons to 160 million tons. Using the rule of thumb of three to four pounds of grain to produce one pound of pork, an additional 80 million tons of pork would require at least 240 million tons of feedgrain.

 

Where will this grain come from? Farmers in China are losing irrigation water as aquifers are depleted. The water table under the North China Plain, an area that produces half of the country’s wheat and a third of its corn, is falling fast, by over 10 feet per year in some areas. Meanwhile, water supplies are being diverted to nonfarm uses and cropland is being lost to urban and industrial construction. With China’s grain yield already among the highest in the world, the potential for China to increase production within its own borders is limited.

 

The 2013 purchase by a Chinese conglomerate of the American firm Smithfield Foods Inc., the world’s largest pig-growing and pork-processing company, was really a pork security move. So, too, is China’s deal with Ukraine to provide $3 billion in loans in exchange for corn, as well as negotiations with Ukrainian companies for access to land. Such moves by China exemplify the new geopolitics of food scarcity that affects us all.

 

China is not alone in the scramble for food. An estimated 2 billion people in other countries are also moving up the food chain, consuming more grain-intensive livestock products. The combination of population growth, rising affluence, and the conversion of one third of the U.S. grain harvest into ethanol to fuel cars is expanding the world demand for grain by a record 43 million tons per year, double the annual growth of a decade ago.

 

The world’s farmers are struggling to keep pace. When grain supplies tightened in times past, prices rose and farmers responded by producing more. Now the situation is far more complex. Water shortages, soil erosion, plateauing crop yields in agriculturally advanced countries, and climate change pose mounting threats to production.

 

As China imports increasing quantities of grain, it is competing directly with scores of other grain-importing countries, such as Japan, Mexico, and Egypt. The result will be a worldwide rise in food prices. Those living on the lower rungs of the global economic ladder—people who are already struggling just to survive—will find it even more difficult to get by. Low-income families trapped by food price inflation will be unable to afford enough food to eat every day.

 

The world is transitioning from an era of abundance to one dominated by scarcity. China’s turn to the outside world for massive quantities of grain is forcing us to recognize that we are in trouble on the food front. Can we reverse the trends that are tightening food supplies, or is the world moving toward a future of rising food prices and political unrest?

 

 

 

# # #

 

Lester R. Brown is president of the Earth Policy Institute and author of Breaking New Ground: A Personal History (W.W. Norton, 2013) and Full Planet, Empty Plates: The New Geopolitics of Food Scarcity. Check out our supporting slideshow for additional data. More resources are available at www.earth-policy.org.

 

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