Of the agricultural commodities, corn in the U.S. has become the biggest story. What was supposed to be the largest crop ever, was crushed by a drought in the Midwest. Corn is the main energy ingredient in livestock feed. It is also used as food and in industrial products. It is planted on approximately 80 million acres. About 20% of the corn crop from the U.S. is exported to other countries. In fact, it is the world's largest exporter and producer of corn. In 2008, 12% of the U.S. agricultural export value came from corn, and one-third of this came from Iowa and Illinois. Corn production continues to increase through technologies in fertilizer, seeds and machinery. The increase has been in response to demand generated from ethanol use. Inventories are low and U.S. production numbers were lower than expected. Look for corn to have a 2012 average price of $8.73/bushel (bu). My estimates have an average of $6.02/bu for 2013.
Soybeans can be traded in three forms: soybeans, soybean oil and soybean meal. Soybeans were originally cultivated in Asia, but the U.S. accounts for 50% of world production. Brazil is the second largest producer with approximately 20%. It is used as vegetable oil and poultry feedstocks. More importantly, it is catching on as biodiesel. In 2010, soybeans were planted on 77.4 million acres. China is the largest customer of U.S. soybeans, with purchases exceeding $10.4 billion. This was a significant number in 2010, as the total of American soybean exports was $23 billion. Mexico was the second largest highest importer at $1.5 billion. The same weather that hurt the corn crop could produce a poor bean crop, although to a much lesser extent. I believe the average 2012 soybean price will be $12.47/bu and the 2013 price averaging $12.97/bu.
Wheat is currently the second most produced agricultural commodity in the world after corn. There are no countries currently dominating world wheat production. The top two producers are China and India. There are six types of wheat grown in the U.S.:
1. Durum: Used in premium pasta and Mediterranean breads.
2. Hard Red Spring: Used in hearth breads, rolls and croissants.
3. Hard Red Winter: Used in Asian noodles, hard rolls and flat breads.
4. Hard White: Also used in Asian noodles, hard rolls and flat breads.
5. Soft Red Winter: Used in cookies and crackers
6. Soft White: Used in cakes and pastries.
As the U.S. moves more acreage to corn, we will continue to see decreased production. The drought will not hurt the wheat crop as bad as corn, but it could reduce yields none the less. I believe the average 2012 price of wheat will be $7.55/bu. This will increase to $7.98/bu in 2013.
ETFs & Mutual FundsThe weather has triggered a move in agriculture commodities. We'll take a look at several charts that are poised for a move higher.
ETFs & Mutual FundsAs summer approaches many commodity traders are looking for opportunities at the agriculture sector. We'll take a look at a few picks for how to trade the move higher.
TradingEach month can bring new growth opportunities, if you know where the right investment seeds are.
MarketsCorn is building an inverse head and shoulders base that could support a rally above 500.
TradingHedging with futures can protect those who buy and sell commodities from adverse price movements.
ETFs & Mutual FundsAgriculture stocks have experienced strong moves higher over recent weeks, but chart patterns on sugar, corn and wheat are suggesting the moves could be short lived.
MarketsLearn about the two sides of the argument on the effect biofuels have on food prices and about other factors that affect food prices.
MarketsCorning will send dividend payments on March 31 to shareholders of record.
MarketsWhile the planet’s food basket contains no single commodity that the entire world consumes, its ingredients are very similar.
MarketsCrude oil leads the pack as the most liquid commodity futures market, followed by corn and natural gas.