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Thursday, August 16, 2012, 8:16 AM Soaring farmland values may soften the blow of drought on farmers’ incomes. Prices of non-irrigated farmland in the Midwest and West rose 26% Y/Y in the June quarter. Farmland prices nationwide had already nearly doubled in the past five years. Soaring prices, along with the widespread use of crop insurance, are insulating many farmers from the drought’s financial impact. Comment! [Commodities, U.S. Economy]
Wednesday, August 8, 2012, 6:15 PM “The drought should prompt a rethink of U.S. over-reliance on corn," William Moseley writes. "Farmers in the central plains used to grow a greater diversity of food and forage crops… But they gradually opted to grow more and more corn thanks to federal agricultural subsidies and expanding markets for corn in animal feed, corn syrup and ethanol." 3 Comments [Commodities, U.S. Economy]
Tuesday, August 7, 2012, 3:26 PM Surging corn prices likely will have a ripple effect on other agricultural commodities such as wheat, Goldman Sachs says. Wheat feeding will be required to supplement corn use to limit livestock liquidation, the firm believes, resulting in "a smaller wheat-to-corn premium than currently priced into the CBOT future curves." 1 Comment [Commodities, U.S. Economy]
Tuesday, August 7, 2012, 8:38 AM The condition of U.S. corn and soybean crops continues to get worse as the drought drags on. According to the USDA, ~39% of soybeans were rated poor to very poor as of yesterday vs. 37% a week earlier, while 50% of corn got the lowest ratings vs. 48% a week earlier. 23% of corn was rated good or excellent, marking the ninth straight weekly decline in the longest slump since at least 1986. 4 Comments [Commodities, U.S. Economy]
Wednesday, August 1, 2012, 12:20 PM Price spikes in corn tend to be followed by consolidation periods lasting several months, but even if the easy money has been made, Ned Davis Research says specialty chemicals should still outperform. Stocks with high sensitivity to the price of corn - including POT, MOS, CF and ROC - have beaten the S&P 500 by an average ~25% in the year after a corn spike. 1 Comment [Commodities, Quick Ideas]
Friday, July 27, 2012, 11:32 AM Smithfield Foods (SFD) CEO Larry Pope calls on Congress to pass a bill lowering the U.S. government's Renewable Fuels Standard, which requires a certain volume of ethanol - 15.2B gallons in 2012, mainly derived from corn - be blended into gasoline. Corn prices have hit record highs, but the program is "aggravating the problem and adding to the crisis," Pope says. (also) 3 Comments [Commodities]
Thursday, July 19, 2012, 5:49 AM Corn and soybean prices reach record highs as the worst drought since 1956 shows no signs of abating, with corn futures hitting $8.055 a bushel and benchmark soybeans $17.115. The forecast is for even higher temperatures in the central and western Midwest from early next week. "If I had a rain prayer or a rain dance I could do, I would do it," says Agriculture Secretary Tom Vilsack. Comment! [Commodities]
Tuesday, July 17, 2012, 12:48 PM Projections of corn crop yields are still too high, according to a report from AccuWeather's Alex Sosnowski. The Accu crew expects a fall yield of 138 bushels/acre, lower than the latest USDA projection based on its forecast of ongoing heat and drought conditions. "Eventually, these costs will be passed along to the consumer in the form of higher food prices." (earlier) 3 Comments [Commodities, U.S. Economy]
Friday, June 29, 2012, 12:49 PM "Sell, Mortimer sell!" It's raining on LaSalle Street. Corn gives up big early gains as rain hits the home of the CBOT - a possible break in the brutal drought covering a good portion of the Midwest. CORN +16.8% this month. 3 Comments [Commodities]
Friday, June 29, 2012, 10:39 AM 2012 corn planted is estimated at 96.4M acres, says the USDA, +5% Y/Y and the highest planted acreage since 1937. Soybeans are estimated at 76.1M acres, the 3rd highest on record. Though both figures are higher than trade expectations, planted acres are not the same as harvested acres, and the drought continues. Corn and beans are sharply higher in early trade. Comment! [Commodities, U.S. Economy]
Thursday, June 28, 2012, 2:50 PM Corn takes a breather from its big June run (up 27%), but a once-in-a-generation drought continues to bear down on the Midwest. A drought map shows the brutal conditions - originally centered on Indiana - making their way into Illinois and even Iowa. 2 Comments [Commodities]
Tuesday, June 26, 2012, 10:29 AM Fertilizer stocks advance for a second day after the price of new corn rises to its highest since November on the government's report of greater than expected damage to corn crops. Also providing a lift is a Macquarie note that fertilizer companies should be able to significantly increase their dividends. AGU +1.5%, MOS +4%, POT +4%, CF +3.4%. Comment! [Commodities, On the Move]
Monday, June 25, 2012, 8:58 AM Dahlman Rose raises its outlook on fertilizer shares, believing they largely reflect the valuation eroding impact of a large crop; given that backdrop, the firm sees only two possible outcomes, both of which point to higher share prices. It upgrades CF and POT to Buy from Sell, AGU, RNF and MOS to Buy from Hold, and IPI and UAN to Hold from Sell. 2 Comments [Commodities, Quick Ideas]
Tuesday, June 19, 2012, 12:43 PM Corn futures are getting a charge this week over worries that hot, dry weather in the U.S. Midwest will threaten corn inventories, with July futures +3.5% yesterday and +4.7% midday today. Fertilizer companies jump as the higher likelihood of tight corn supplies next year means farmers will plant more corn, driving up the need for fertilizer: CF +4.8%, POT +4.4%, MOS +3.9%, AGU +3.2%. Comment! [Commodities]
Friday, June 15, 2012, 3:21 PM A dramatic buildup in North American potash inventories is largely due to a lack of sales to India, but the situation won't last long-term, Agrium (AGU +0.6%) CEO Mike Wilson says, adding that two or three new potash mines out of a number of projects in the works could be built in Saskatchewan by 2020. (earlier) 1 Comment [Commodities]
Friday, June 15, 2012, 8:39 AM Dahlman Rose cuts its price target (to $38 from $41) and earnings estimates while maintaining a Sell rating for Potash (POT), citing the likelihood of sluggish potash export markets for the rest of the year and high inventories contributing to weaker pricing. The firm is bearish on the sector, also with Sell ratings for CF, UAN and IPI; AGU, MOS and RNF are Holds. Comment! [Commodities, Quick Ideas]

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