Best of the Week
Most Popular
1.UK House Prices BrExit Crash NOT Likely Despite London Property Market Weakness - Nadeem_Walayat
2.BrExit Morning - New Dawn for Britain, Independence Day! - Nadeem_Walayat
3.LEAVE Wins EU Referendum - Sterling and FTSE Hit Hard, Pollsters, Bookies and Markets All WRONG! - Nadeem_Walayat
4.BrExit Implications for UK Stock Market, Sterling GBP, House Prices and UK Politics... - Nadeem_Walayat
5.Trading BrExit - Stocks, Bonds, Sterling, Opinion Polls, Bookmaker Odds and My Forecast - Nadeem_Walayat
6.FTSE and Sterling Brexit Trading, Deconstruction of the EU Referendum Result - Nadeem_Walayat
7.UK Interest Rate Cut to 0.25% Imminent and More QE Money Printing - Nadeem_Walayat
8.Trading BrExit - British Pound Plunges, FTSE Stock Futures Slump on LEAVE Shock Referendum Win - Nadeem_Walayat
9.The Stock Market is Reading it Wrong! - Chris_Vermeulen
10.Breakouts Galore in Gold and Silver - Jordan_Roy_Byrne
Free Silver
Last 7 days
Bitcoin $650 Still in Play - 26th July 16
Deutche Bank Stock Price Crash - The EU Has Problems Far Beyond the Brexit - 26th July 16
The Forex Markets Are Getting Exciting! - 26th July 16
Underpriced Silver Is the “Rip Van Winkle” Metal - 25th July 16
Declines in Multiple Market Indexes - 25th July 16
Retailers Are Doomed as Most Americans Are Too Poor to Shop - 25th July 16
Here’s One Currency That Could Go to Zero - 25th July 16
Stock Market Top is Expanding - 25th July 16
Silver Manipulation – Because They Needed the Eggs - 25th July 16
Silver Market COT Stuns: What's Going On Here? - 24th July 16
Gold Demand Remains Stable During Sector Weakness - 24th July 16
Sernova, Diabetes and Haemophilia - 24th July 16
Russia: Tensions, Turmoil, and Western Hubris - 24th July 16
Soybean Commodity Price to Soar Again - 23rd July 16
SPX Stock Market Uptrend Continues - 23rd July 16
Gold And Silver – Debt Addiction Will Carry Precious Metals Higher, Guaranteed - 23rd July 16
Pokemon Go - How to Play, First Use, Balls, Stops, Catching Pokemon's... Great Excercise! - 23rd July 16
7 Signs That the Gold Market Remains Resilient - 23rd July 16
Basic Income in The Time of Crisis - 23rd July 16
Silver Bull Faces Correction - 22nd July 16
The Serious Warning No One’s Talking About - 22nd July 16
Stock Market Insight from Greed, Volatility, and Put/Call Ratio - 22nd July 16
What Will Happen To the Stock Market When Interest Rates Rise? - 22nd July 16
How to Escape the World’s Biggest Ponzi Scheme - 22nd July 16
Addicted to Debt - We Can’t Borrow from the Future Anymore - 21st July 16
Not Everything Is Bullish for Gold - 21st July 16
Don’t Get Sucked Back Into the Stock Market - The Big Picture Hasn’t Changed - 21st July 16
Silver – Caught Inside - 21st July 16
Forex: "The Markets Are Getting Exciting!" - 20th July 16
China Economic Troubles - Is Kyle Bass Finally Getting His Revenge? - 20th July 16
Why Lithium Will See Another Price Spike This Fall - 20th July 16
The Peak Oil Paradox Revisited - 19th July 16
SPX Challenges the Upper Trendline - 19th July 16
Missing ’28 Pages’ of the 9/11 Report Released into Blitzkrieg of World Events - 19th July 16
Likelihood of Organized Disruption at GOP Convention - 19th July 16
More on the ‘Breadth Thrust’ and Stock Market Internals - 19th July 16
FX Traders: Get a Free Week of Forecasts (Details inside) - 19th July 16
Ups and Downs in Gold and Crude Oil Price - 19th July 16
Keep an Eye on ‘Bitcoin’ as the Next ‘Financial Crisis’ Starts! - 18th July 16
Erdogan Might Have Known about the Coup but Didn’t Prevent It on Purpose - 18th July 16
More Deflation Ahead: Silver, Gold And Their Mining Stocks A Must-Have - 18th July 16
Stock Market Minor Top? - 18th July 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The Power of the Wave Principle

American Grain Harvest Impact on Agri-Food Prices

Commodities / Agricultural Commodities Feb 01, 2010 - 01:48 PM GMT

By: Ned_W_Schmidt

Commodities

Best Financial Markets Analysis ArticleThe North American Agri-Food harvest is either complete, or almost complete. We say that as much of the corn crop remains still in the field due to being wet, frozen, or covered with snow and ice. For all the best efforts of those involved in the Global Warming Scam, the winter of 2009-10 has been far more powerful than their now clearly questionable documentation would have suggested. Despite the weather, the North American 2009 harvest appears to have been good, with both corn and soybeans seeming bountiful.


Analysts can talk of nothing but the size of the North American harvest. As they do, it seems to get larger on a daily basis. As they think about that bounty, they ponder what seems is going to be a good harvest in South America. One might think that the world is in an era of Agri-Food plenty that will last indefinitely. However, that thinking would be wrong. A good harvest in both North and South America had nothing to do with intentions and effort. It was simply chance, and not likely to be repeated. Now, the harvest is being consumed. Grains are grown to be eaten, not preserved as a curiosity.

In a hungry world, when Agri-Food supplies are plentiful in some region, consumers will be found buying. Our first chart this week, above, is the year-to-year percentage change for the major  U.S. grains on two measures, that which has already been exported and export sales yet to be completed. For each of wheat, corn, soybeans, and rice, the right-hand bar represents the percentage change in export sales. The left-hand bar is the percentage change in already completed exports.

For examples, consider soybeans. This grain is one of which China has become a major net importer.  For the current crop year, U.S. soybean exports have risen more than 40% from a year ago. At the same time, export sales are also up in excess of 40%. North American soybeans seem to go directly from the field to the rail car to the port to China.

Wheat has been the bountiful grain of recent times. That may change as plantings of wheat have plunged and will fall further. Sorry, but wheat is not produced in a factory. As can be observed in that chart, U.S. wheat exports for the current crop year are down more than 40% from a year ago. That situation, however, is turning around. As shown in the graph, U.S. export sales not yet completed are up more than 20%. Again, in a world essentially short of food, those with the grains are making huge sales gains.

Our second graph above brings it all together. The left-hand bar is the percentage change from a year ago of U.S. grain exports, measured in millions of tons. Yes, they are off due to the drop in wheat sales noted in our first chart. The global recession also caused a massive destocking of all goods, including grains. However, the second bar is an indication of today’s demand for U.S. grain. Total U.S. export sales not yet completed are up in total more than 40% from a year ago. A hungry world is now being served by North American Agri-Food producers. How many industries or economic sectors have unit sales at the margin up 40%?

As we mentioned in the beginning, the harvest in North America has been exceptionally good. That seems to be the likely case in the South American harvest now in process. Combined, those two harvests are filling the storage bins. However, we must note that this is as good as it will be.

Two good harvests, here in the U.S. and in South America, at the same time occurred purely due to chance. These results were not due to planning, good  intentions, or genius. That reality means that the stored amount of Agri-Foods in the Americas is as good as it is ever going to be. The odds of again having this level of Agri-Food bounty are somewhere between slim and none, as they say.

The global reserve of Agri-Food grains, taking rice, wheat, corn and soybeans together, relative to  demand will likely never be this high again. Certainly from now through the Fall of 2012 grain reserves will decline.  As prices are set at the margin, the prices for Agri-Food grains will likely rise for the next two years. We are now experiencing generational lows for many Agri-Food prices. 

Some of you will be able to tell your grandchildren of living in an era of soybeans less than $10 and corn under  $4. And they will respond to you, “Yes Grandpa, that is why we keep our corn in the bank.” The implication of the passing of historic lows for Agri-Food prices is likely to be positive for the value of Agri-Food investments. Investors might derive great benefit from researching Agri-Food investments at the present time. To start learning about Agri-Food use this link:
   http://home.att.net/~nwschmidt/Order_AgriValueRECENT.html

By Ned W Schmidt CFA, CEBS

AGRI-FOOD THOUGHTS is from Ned W. Schmidt,CFA,CEBS, publisher of The Agri-Food Value View , a monthly exploration of the Agri-Food grand cycle being created by China, India, and Eco-energy. To receive the most recent issue of this publication, use this link: http://home.att.net/~nwschmidt/Order_AgriValue.html

Copyright © 2010 Ned W. Schmidt - All Rights Reserved

Ned W Schmidt Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife