Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

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

© 2005-2022 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