This decade's investment: the agriculture play

Farmer Brown here again. One of my key longer-term themes for growth investing is and has been the Agriculture Play for a few years now. The global demographics, while seemingly moving at a glacial pace to the short-term thinkers, are simply undeniable over the intermediate to longer term....read more

Corn: Low Yields, High Prices

FOR CORN FARMERS AND FUTURES traders, the "new normal" might already be old news.

As recently as late spring, analysts were saying the long-term outlook was for prices of $3 to $4 a bushel. That would be roughly 50% below the record highs set in 2008, but above the $2 to $3 that was the historical average before the latest boom in ethanol use.

Since then, a historic Russian heat wave has sparked concern about global grain supplies, and U.S. farmers have reported disappointing yields. Investors are increasingly taking notice, and corn futures have surged 58% since late June. They finished Friday at $5.1325 a bushel on the Chicago Board of Trade. While a short-term correction is likely, ultimately bulls could have enough ammo to keep bears at bay for months to come...read more

Allendale Early Calls: Larger Corn Production Expected, Many Areas Not Moving Cattle Numbers

Grain Market Influences:

Weekly export sales are viewed as bearish wheat but neutral corn, soybeans, soymeal, and soyoil.

Harvest activity for this week should be the largest one week advancement of the year. Farmers are also telling us corn is drying down quickly now.

Corn summary… This morning showed a classic pattern by the funds that we have seen many times in the past. After a couple days of buying they often come in and buy some “clean up” orders before going to the sideline.

Three of four firms that have released crop estimates look for larger corn production. This also includes Allendale. USDA will give its take on Tuesday.

China purchased 6,000 tonnes of Thailand corn. This is not too surprising. Thailand has been trying to sell government stocks. This order was for quick delivery to a feed mill.

Soybean summary… It was an impressive start over 10 higher this morning. Like corn, it turned out to be some clean up buying. If that is the case we expect some steady drifting lower in the near future. Just imagine if we start trading the fundamentals.

Brazil’s government upped its estimate of the 2009/10 soybean production from a range of 62.26 - 63.27 million metric tonnes to a range of 62.50 – 63.6 mmt.

All four firms, including Allendale, that have released crop estimates look for larger soybean production. USDA will give its take on Tuesday.

Wheat summary… There is one market that still is attempting to follow the relationship to the dollar and this would be it. We now have a great head and shoulders top in which we will like to sell from if 487 or so is taken out. This is the only market we may need to watch outside markets for in the next few days.

Egypt may announce who will supply its tender for 55,000 to 60,000 tonnes of wheat later this morning. Also, keep in mind yesterday’s story that indicated they will start sending agricultural quarantine officials to inspect imported wheat at ports of origin starting with its next purchase.

Japan seeks 35,100 tonnes of food wheat in its regular tender. .....Full article here.....

Indonesia's Soybean Farmers to Raise Output by 35% Next Year, Ministry Says

As prices for soybeans recover from last year’s lows, Indonesian farmers are expected to lift their output 35 percent next year to 1.3 million tons, leading to a fall in imports, the Agriculture Ministry said on Thursday. This year’s harvest is projected to yield 966,000 tons.

“We plan to reduce the import volume of soybeans year-on-year by increasing productivity and adding planting land,” said Muchlizar Murkan, director of beans and tuber vegetables the Agriculture Ministry.

He said yields would rise 12 percent per hectare next year by using high-quality seeds, along with farmers expanding their area under cultivation by 20 percent to 874,000 hectares from 728,000 hectares currently....Full article here....

Ray Grabanski: The harvest from hades

This year's harvest has been an extremely trying time for corn and soybean producers who have struggled through perhaps the worst October ever for harvesting grain. As we enter November, only 25% of the corn and 51% of the soybeans are harvested - woefully behind the normal pace of 71% corn and 87% soybeans. This could be a disaster in waiting, and the market is starting to treat this serious threat to the 2009 crop with more and more price premium as time clicks on. The one thing that can seal the nail in this coffin is an early arrival of winter, effectively socking in a good share of the 2009 crop in the fields.

Soybeans could be more devastating than corn in this regard, as snow would shatter soybeans certainly more easily than causing losses in corn. But even corn could be affected, as corn needs time to dry down and also to get picked and dried in grain dryers. We already are getting well behind normal so that drying needs to occur at cooler temps in November instead of October - slowing the whole process down. The seriousness is even more evident when you consider that problem areas will take a while to dry down soils before being able to tackle the harvest. The time needed to do that will be frustratingly long, as the whole process of drying out soils takes longer in November under cooler conditions and shorter days than in September or October....Full article here