The Comedian's "Economic Holocaust" ping list...
Today is a good day to die.
I didn't say for whom.
Posted on 02/06/2011 9:39:48 PM PST by FromLori
Cotton, wheat, rice, and now corn. If revised Chinese import estimates by the US Grain Council are even remotely correct, look for corn prices of $6.80 a bushel at last check to jump by at least 15% in a very short amount of time. As the FT reports, "Corn prices – and with them, the price of meat – are set to explode if the latest import estimates from China are correct. The US Grain Council, the industry body, said late on Thursday that it has received information pointing to Chinese imports as high as 9m tonnes in 2011-12, up from 1.3m in 2010-11." Why is this a concern? Because "the US Department of Agriculture, which compiles benchmark estimates of supply, demand and stocks, forecast Chinese imports at just 1m tonnes in 2011-12." In other words, the whole forecast supply-demand equilibrium is about to be torn to shreds. And all this excludes the impact of neverending liquidity by the one and only, which will only make the speculative approach to surging corn relentless.
For those who think that there is any even remote hope of a respite in the endless climb in prices, we suggest reading the following:
The most China has imported in modern history is 4.3m tonnes in 1994-95 and 3m tonnes in 1978-79. For most of the past 50 years, Beijing has been largely absent from the international market, as domestic production was enough to meet demand.
But Terry Vinduska, the chairman of the council, said after visiting China that “estimates given to us were that China is short of 10m-15m tonnes in stocks and will need to purchase corn this year”. He pointed to about 9m tonnes in imports. “We learned the government normally keeps stocks at 30 per cent but they are currently a little over 5 per cent, which may lead to imports of 3m-9m tonnes.”
It is not the first warning of forthcoming massive imports. Recently, David C. Nelson, at Rabobank, one of the world’s largest lenders to the global agribusiness industry, warned that because China’s animal protein industry is so large, the order of magnitude of China shifting to become a net importer of corn could possibly be measured in tens of millions of tonnes, and in just a few years time.
“We note that China could become a net importer of 25m tonnes of corn as early as 2015,” he said. Senior executives at trading houses took note of Rabobank’s forecast. Is corn set to be another soyabean?
The US Grain Council did not disclose where it got the information and Chinese food import policy is erratic. With corn nearly at a record high, the country could very well opt to further drawdown stocks.
But the forecast of record imports still need to be taken seriously. When China started to import soyabean back in 1995, few thought the country would today be buying nearly 60 per cent of all the global trade in soyabean. While China waving it in needs little explanation for the observent ones, here's what this means from a third party:
Most of the traders I have spoken to believe that China will become a big corn importer, although none believe it will follow the same pattern as in soyabean. Even so, 9m tonnes is a huge number. Enough to push corn prices above the 2007-08 record of nearly $7.65 a bushel. In early trading on Friday, corn was at $6.65 a bushel. And with six sigma floods, record cyclones, massive snowstorms and abrnomal climatic patterns now a near-daily event courtesy of the Jet Stream having decided to take a sabbatical, the only thing the grains and softs market needs is a lit match to set the whole thing ablaze. Luckily we have our very own chaircreature doing his best to make sure that the commodities market makes eating an activity best enjoyed by those who will be bailed out by the administration the next time there is a downtick in the market.
Some people have convinced themselves that carbs are bad bad bad, and no amount of actual data will convince them that a pig shouldn't be on the Atkins diet. Heck they might even think that corn is bad for a pig because of its high fructose content!
So who has “actually raised a crop” here? Or sold a pig at auction? Ever butchered a pig? Ever studied metabolism and the Krebs cycle?
Show of hands?
I have.
Anyone else?
I’m talking to guys that raise several thousand confinement hogs at any one time and up to 30,000 head cattle. This is what they tell me: corn is fine...to a point. Too much and you have meat that’s way too fat. There has to be a proper carb-fat-protein-fiber-nutrient ratio. It’s not an Atkins diet, but it’s not a high-carb diet either.
Be that as it may, (and I don't raise swine commercially, by the way, I raise cattle) feeding a diet too high in carbohydrates vis-a-vis protein and minerals causes excessive, and lower quality fat. When I was a kid, and maybe when you were, lard was considered a frairly valuable product of a swine carcass. Not so much anymore.
When the energy requirement of a hog is met primarily by corn, soybean meal is added to the ration as a supplemental protein source. The distillers spent grain can replace a part of the corn ration as well as the meal ration.
... For them that do not work ... shall not eat
So your accuracy as to what I said “indicates” is as off base as the idea that pig fat is no longer a valuable product of a swine carcass. Lard is still used. Pig fat is still sold. Pigs are sold at auction by the pound. Pigs need a high carb diet to attain the full weight potential that they have, high fat, high protein also.
A pig farmer doesn't need to worry about his pigs eating a high fat high carb diet, thus the lack of commercially available pig feed advertising their low fat and low carb composition.
Pigs don't need to diet, they need to gain as much weight as possible, as cheaply as possible, in as little time as possible.
High carbs help that as much as carbo-loading helps an athlete. Fuel for the fire.
With very limited exceptions, hogs are sold on contract, not at auction. You should remember that the next time you claim to be a farmer.
Please realize that much of what you think you might know about farming may not be correct, or what other people know about farming.
Pigs don't need to be on the Atkins diet.
Ethanol is a big government boondoggle that is a huge waste that only survives because of government mandate and subsidies, both a government intrusion into the free market and antithetical to conservatism.
Please remember that the next time you claim to be a conservative.
NPPC asks for release of CRP acres
February 4, 2011 |
“In a letter sent Monday to USDA Secretary Tom Vilsack, NPPC also asked the agency to take “all other possible steps to open tight grain markets and provide access to USDA emergency programs to ensure that U.S. pork producers can feed the animals in their care.” The result will be, in addition to extreme price volatility, an economic environment in which U.S. pork producers may simply be unable to procure the grain necessary to feed the animals in their care.” NPPC is concerned that many producers may be hard-pressed to find feed grains at any price and that the recent rapid rise in feed prices may cause a repeat of the long-term losses producers suffered a couple of years ago.
From September 2007 to March 2010, U.S. pork producers lost an average of nearly $24 on each hog marketed mostly because of U.S. biofuels policy and grain crises in other parts of the world. And while producers returned to profitability in 2010, averaging $10.25 a hog, January’s forecast for 2011 shows profits shrinking to less than $5 a head, a drop driven entirely by pressures on feed availability and costs.”
http://www.porknetwork.com/pork-news/NPPC-asks-for-release-of-CRP-acres-.html
The reason those packers who will deal with small farmers like to purchase hogs on contract rather than at auction is that it allows them to control carcass quality. A lean carcass (with the fat there is being firm) is worth a boatload more than a fat carcass with soft fat; trust me, your father in law will confirm this.
The reason small farmers like to raise hogs on contract rather than for auction is that it provides greater price stability. Before a farmer has his hogs on his finish lot, he has some bargaining leverage; once they're on the lot he doesn't. A cattle grower has some leeway in the timing of the sale of his finished beef, but a hog starts to drop in price per pound after about 240 lbs.
The fact that your father in law complains about the low auction value at a time when hog prices are at historic highs pretty much proves my point.
An eyepopping report on the full range of subsidies, federal and state, is in the report “At What Cost. Government Support for Ethanol and Biodiesel in the United States” at http://www.globalsubsidies.org/
Yes, he complained because despite historic highs, his auction price wasn’t as high as he wanted.
You see that is the problem with auctions instead of a contract, sometimes nobody bids a higher price and someone walks away with your hog at a low price per pound.
If you point was that sometimes you don’t get the price you wanted at auction, good point! Hope somebody really learned something new from that one!
“
Corn Prices To Soar As Chinese Imports Increase Ninefold Compared To Official Projections
“
No shock.
Maybe 15 years ago, I remember reading that as the Chicoms left the
countryside for industry jobs in the big city...
importation of food/grain was going to “necessarily” skyrocket.
I’m suprised the Chicom guvmint hasn’t improved domestic food production
by going higher tech (more tractors, etc.).
OK. I’m just checking, because lots of people here on FR assume that we still are operating under the FDR-era systems of quotas. We’re not. The CRP program is the only program left that “pays farmers to not farm” and that program isn’t hugely supported by farmers - the biggest political support for that program comes from hunting and conservation groups who want farmers to set aside “critical habitat” grounds on their farms - eg, “potholes” on the prairie for ducks, or land with erosion issues or land surrounding lakes, rivers, streams, etc.
CRP doesn’t pay farmers to “stop growing crops.” CRP pays farmers to not use the land. If it was pasture, you can’t hay the pasture under CRP - you’re supposed to leave the land fallow for wildlife. In the 2008 Farm Bill, a farmer can now graze CRP ground for 60 days per year, but that’s it.
CRP isn’t a huge win for the farmer unless he has some hugely unproductive land or commodity prices are in the absolute toilet. In the 2002 Farm Bill, CRP was paying (on average) a bit less than $50/acre.
Here’s some hunting groups that are big supporters of CRP:
http://www.ultimatepheasanthunting.com/info/crp/
http://www.edf.org/article.cfm?contentID=6294
Farmers have had to contend with these wildlife and environmental organizations since the 80’s on how to run their own lands. As a result, farmers are in the CRP, because the pittance received for CRP payments is cheaper than dealing with these groups in court when they decide to sue you for impacting wildlife habitat.
Here’s Ducks Unlimited wailing about acres coming out of CRP and going into production, which is what I presume you want to see happen:
http://www.ducks.org/news-media/news/6317/du-says-crp-losses-astounding
Maybe next time, before you CLAIM to have any particular knowledge about farming, you should listen to the radio jingle of the Denio’s Farmer's Market and Auction. Very catchy tune.
Maybe talk to the people down at Denio’s. They would be very interested to learn that selling pigs at auction was such a rare event that saying you had experience with such would indicate that you were only CLAIMING to be a farmer!
And where did they get their numbers?
Pimmental. I told you to not throw those numbers at me, because I’ve run his numbers down and he’s a out-and-out fraud.
Pimmental considers all of the following to be “energy inputs” to ethanol production:
- fuel in the machines used to plant, grow and harvest the crop
- heat sources used to smelt the iron used to make the steel that went into
this equipment
- energy used in the production of fertilizer
- the food the farmer ate.
The biggest problem with Pimmetal’s numbers is this: the farmer was in the business of raising crops (including corn) REGARDLESS of whether that corn was going to go into ethanol or not. He didn’t buy that equipment just to grow corn for ethanol. So all the energy “inputs” for making the steel in the farm equipment is a bogus input. The only way to remove that energy input is to put the farmer out of business and recycle the steel.
Next, we have the energy in the food that the farmer eats. The only way to remove that energy input is to kill the farmer.
See why Pimmetal’s studies are frauds yet?
Then there’s additional issues with Pimmetal’s numbers in the yields he projected farmers receive on growing corn (he was using numbers out of the 1970’s when corn yields go up on average every year). In short, his studies have serious factual issues in them.
I said they paid farmers to not grow.
I didn't say it payed farmers to “stop growing crops”, but that it paid farmers to not grow, to keep the prices artificially higher.
So shouldn't coal be cheap in Newcastle?
INDEED.
True, but the VAST majority of people shooting off their fingers on these threads act as tho the corn is used for ethanol production and that’s the end of it, it is all used up. They keep spouting about “40% of our corn crop is used for ethanol!” and such “factoids.”
The reality is that this is simply not the case. Yes, the sugars are fermented off, but then the result afterwards is still used. What is more is that DG’s avoid the problems of acidosis in cattle feeding. But that’s another issue for another time, since most people here still need to start back at square one, ie “What are distillers’ grains and what are they used for?”
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