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John_Walter
Advisor

Markets hot news--Feb 10

Fresh off the wire and around the horn this morning:

 

* Rabobank  is predicting that US corn prices will hit record highs in the first half of the year as the market tries to buy acreage, DJ reported this afternoon.  The bank also sees a "risk of a return to widespread government intervention through stockpiling or trade bans appearing increasingly likely in 2011" for grains markets generally.
* Spoke with our own Mike McGinnis, Marketeye, who's on a ten-hour drive in Brazil to his next farm stop. He's reporting now that there are some serious harvest delays in parts of Brazil, that beans are late maturing, and that there could be a "huge bottleneck" in the system before it's all over. Here's a link to a fine set of reports from Brazil by Mike:

http://www.agriculture.com/news/crops/scoping-out-brazils-crops_2-ar14586

 

* Corn futures bounced back mid-morning to match a 31-month high. The declines were countered by "investor buying amid the market's need to push prices to levels that may ration usage,"  DJ said.  CBOT March corn recently  traded 4c higher at $7.02/bushel.

 

* Russia is expected to maintain its ban on grain exports until 2012, according to one source.  

 

" USDA Chief Economist Joe Glauber is taking tough questions at a commodity conference regarding federal mandates for use of corn-based ethanol," according to Dow Jones. "Some agriculture industry members worry strong demand for ethanol threatens the food supply, as end-of-season US corn stocks are projected to come in at a 15-year low. Nearly 40% of the US corn crop is used to make ethanol, but Glauber says that segment "just isn't responding much to price."

 

* ICE cotton futures have set a new post-Civil War high after India said it would leave this season's export quota unchanged, ending ideas that the second-largest cotton grower could ease global supply concerns with its exports. March Cotton was recently trading up 2.3% at $1.8483/pound.

 

* Lean hog futures are expected to open firm on support from flat to stronger indications in the cash markets and a modest gain in wholesale pork prices Wednesday."

 

 

* Gas futures are falling on a warmer weather outlook.
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5 Replies
old man
Senior Contributor

Re: Markets news notes--Feb 10

Is there any estimate of what the price of gasoline might be if the 10% ethanol in gasoline were eliminated?

What would be the price of corn if no use for ethanol??

Would the extra price that we pay for petroleum be greater than the benefits of cheaper corn??

Shouldn't we think of our own benefits first??

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docharing
Veteran Contributor

Re: Markets news notes--Feb 10

The only way off of ethanol is to get off of foreign oil. Once we get our own oil, Gulf of Mex, Alaska or wherever we can be self sufficient and eat our corn again. Until then we need to dilute foreign oil to keep our oil costs down. Hopefully the next President will want to drill baby drill.

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old man
Senior Contributor

Re: Markets news notes--Feb 10

I AGREE

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cornhead64
Frequent Contributor

Re: Markets news notes--Feb 10

I think its all well and good, but not sure we ever get the whole story of usage, and re-use.  I think we only consume 10-15% of our corn crop, and while the ethanol number may look big, 30-40%, you never see the credit back for DDGs, WDGs, corn oil, etc.

 

Before starting to talk of ending the subsidies for the ethanol industry, so ethanol "can stand on their own", perhaps we should look at the oil industry as well, and look closely at exploration, drilling, refinery, and transportation credits.  Think the oil industry is mature and old enough to do the same?

 

http://www.nytimes.com/2010/07/04/business/04bptax.html

 

"But an examination of the American tax code indicates that oil production is among the most heavily subsidized businesses, with tax breaks available at virtually every stage of the exploration and extraction process."

 

Be careful what you wish for!

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k-289
Senior Advisor

Re: Markets news notes--Feb 10

Amazing thing going on with the pipeline going from tar sands of Canada to Texas--pushing crude to Port Arthur TX. to refine and then distribute back thru USA ?? Maybe the Gulf doen't have a long lasting supply afterall or is there more product than can be consumed domestically --time will tell ?  

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