Corn Rallies on Short Covering, Technicals

I thought it was something Komrade Obama said last night, but apparently corn's rally today was due to short covering and buy orders that kicked in on the rally.

According to my broker, corn still sits about $.50 below the cost of production. I've read that for the most part, most grains and softs are currently sitting either below or just at their respective costs of production.

Reading this article reminded me that I completely forgot to roll my 2 March corn contracts - a couple more days and we might have seen a big old truck from Iowa pulling up at my doorstep to drop off a special delivery. Boy the wife would have loved that one.

So I just rolled them, but only picked up 1 May.

CBOT Corn Review: Surges; Short-Covering, Spread Unwinding

Rice Resilient

Maybe it's not time to quit on Rice yet!



Sorry - wrong rice :)

Close call for me - I had my stop down at 23.50. I was sure I was going to be stopped out, and am glad I hung on and waited to "take it like a man", rather than just selling around 23.70 (which I thought about).

After watching this market non-stop for the last two months or so, I definitely find today's rally (pleasantly) surprising. Lately rice has been stronger trading in the Asia sessions than the US - so I figured a down night in Asia last night would be the end of the line.

Stay tuned - we'll check back in on this one Sunday evening!

Sacramento Bee: Panic over rice prices hits home in capital

Well, when it hits the front page of your local newspaper, it's probably time to sell. It will be interesting to see where prices go this week. For now, the line is still going from the "lower left to the upper right", as Dennis Gartman likes to say.

Sacramento Bee: Panic over rice prices hits home in capital

If it asks for registration, try one of these logins.

Australian rice farmers switching to growing wine grapes

Another good one from Agora - courtesy of their 5 Minute Forecast (if you couldn't tell, I read this publication religiously):

On the other side of the world, extreme drought and telling profit margins have Australian rice farmers switching to growing wine grapes. Australian rice? Yeah, that’s what we thought, too. But the reduction in rice imports from Australia has helped add pressure to an already strained global market for the little white grains.

A multiyear drought has crushed the Australian rice industry. According to The New York Times this morning, the Aussie rice crop has been decimated… down 98% over the past six years.

As the weather worsens, Australian farmers have taken to growing wine grapes -- not because the grapes command higher selling prices, but because the water required to grow rice is too expensive.

Regardless what you think of their politics, The N.Y. Times makes great charts. We nicked this one for you this morning:

Slow Planting Pace for Corn

The U.S. corn crop was 2% planted as of Sunday, down from the five-year average pace of 7%, the U.S. Agriculture Department reported Monday afternoon in its weekly Crop Progress report.

Rude Awakening: "D" is for Demand

Great job by Dan Denning and the Rude Awakening crew on today's article.

They make the case that a steep decline in agriculture is unlikely. Only a decrease in demand would trigger that, and that does not appear likely at this point in time.

USDA Planting Intentions Report Released

3/31 Editor's note - Click here for coverage on the latest USDA Planting Intentions Report.

 

Report looks to be bullish for corn, bearish for what and beans. Full article from Farm Futures. And the markets are trading accordingly.

I just picked up a May corn contract at 576 - like the report, and overall strength the corn market has shown over the last several months.

Beans are really taking it on the chin, closing limit down.

Kevin Kerr: A Grainy Picture

Unfortunately Agora has not yet posted the full article yet in their Rude Awakening archives - keep an eye out.

Same story we all know - agriculture is poised to go much higher, and the softs (sugar, cotton, cocoa, coffee) look particularly undervalued.

DailyWealth: Brazil Key to Upcoming Food Crisis

Full article

Summary:

• UN says world food production must increase by 60% over next 20 years to meet demand
• Grain and meat production is extremely water intensive - many areas in the world do not have the excess water to ramp up grains and meats
• Brazil will be the key - it has 23% of the world's arable land, and 40% of it is currently unused
  

Kevin Kerr: Farmageddon

Full story

Summary:

• Kerr believes a sharp correction could arrive at anytime
• Corn prices are likely to remain high as long as the US gov't continues to subsidize ethanol
• Longer term, the bull market in ag commodities should continue for some time
  

USDA: Food Prices to Rise in 2008

Well...duh.

Full story

Summary:

• US retail prices in 2007 rose about 4% - highest gain in 17 years
• Similar gains expected for 2008
• Reduced production of meat and poultry expected in 2009 (our next investment theme, maybe?)
  

Potash CEO: Record Crops Needed to Avoid Famine

Full stories:

• Theglobeandmail.com
• Bloomberg

Summary:

• Potash CEO William Doyle says grain farmers need to harvest record crops every year to meet demand and avoid famine
• Potash execs are so confident in long term demand that they considered taking the company private in mid-January
• "We need a record crop in 2008 just to stay even with this very low inventory situation," Mr. Doyle said.