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.
Makes sense. China has huge inventory of dollars. So they buy stuff with the dollars before inflation reduces the value of their money.
Perhaps if the land wasn't being planted with ethanol-corn, then some other crop could be planted that contributed more to human food supplies.
HMMMMMMMM
See “Table 1” herein:
Taking away the blenders’ credit results in a price increase of about $.05/gal for E-10 gasoline.
“ethanol corn” is nothing but field corn, the same corn used for animal feed, corn chips, tortillas, etc.
It isn’t “corn on the cob” corn.
Now, as to what else would be planted on that land? Most of the land cropped for corn that is converted to ethanol is in a corn-bean (where “bean” means soybeans) rotation. The land isn’t straight-cropped to corn year after year but in a very few places - a rotation is necessary for IPM.
About half of our bean crop is also used for animal feed and oilstock.
If you really meant August, 1973 that would be the Yom Kippur War.
If you really meant the Six Day War, that would be June, 1967.
OK, to properly use quotes:
“So shouldn’t coal be cheap in Newcastle?”
No. Coal should be no cheaper “in Newcastle” (whatever that means) than anywhere else, modulo transportation costs. If you can’t ship the coal out of “newcastle,” then OK, coal might be cheap there.
As soon as you’re dealing with a global market, you’re no longer in control of pricing.
Farmers’ prices for their crops are cheaper than the quoted futures’ markets, and are adjusted by “basis,” which takes into account how much it costs to ship their crop to a delivery terminal. Once their crop is at a delivery terminal, it is priced like any other crop commodity, even if the delivery terminal is the middle of Iowa.
If the Chinese put in huge bids for hundreds of metric tons of corn, then corn futures go up and the price of corn sitting in an elevator in the middle of Iowa goes up.
Here’s a completely domestic example, tied to your quote about coal:
I can get sub-bituminous coal relatively cheap right now, because the economy is still sub-par with respect to electrical generation in the midwest. If I get my MSHA card, I can go up into Decker, MT and fill my pickup with coal at cheap prices - but the price varies according to power generator demand for that coal. It is not an “always cheap” price, unless I work for the mine (in which case one of their employee benefits it free coal for domestic use).
When the midwest (Wisconsin and Michigan) economies were doing much better, coal at the mine just up the road here (in Decker, MT) was higher in price than it is now (nearly double the current price, in fact) - because the demand in the midwest was setting the price, not local demand. The locals have to deal with the price of coal as set by the demand of electrical generation in the midwest, coupled with railroad transportation costs.
Indeed, I could have brought up that when “told” that the corn for ethanol is feed corn not sweet corn (I said edible, and feed corn is eaten by humans, just not as corn on the cob, but most likely as corn syrup or corn oil)- but of course your point is absolutely correct - if there was less demand for feed corn there would be more sweet corn planted.
If there was less demand for corn, more wheat (or soy, or whatever) would be planted.
But the point I was making is tangential to your point.
The sugar in the corn is turned to ethanol, and the distilled corn is not a complete waste, as it is then fed to pigs. Pigs LOVE corn starch in their diet! Humans do not eat the distilled corn with less starch, it would probably be a flavorless mess.
Yep, my bad. You’re absolutely correct, thanks.
I mean the Yom Kippur war, the one that the Israelis nearly lost but for big-time US intervention, which then got us the Arab embargo. Diesel fuel (off-road diesel fuel) used in farming shot up quite the bit when that embargo hit. While it seems like the “post-embargo” price seems like it is so low as to be a dream by today’s standards, the rate and percentage of increase back then was a swift kick in the teeth.
OK. Sorry. There is an economic adage that goes something like this “That is as stupid as shipping coal to Newcastle”.
You see, Newcastle is where they PRODUCED the coal.
So shouldn't coal be cheap in Newcastle? Supply is high, demand is the same as everywhere else, shipping costs are negligible.
Similarly, shouldn't food be cheap in the U.S.A.? Supply is high, demand is the same as everywhere else, shipping perishability and refrigeration are much less of a concern.
So why shouldn't food be cheap where the food is produced?
I live in California. Cheap fruit and veggies and nuts are everywhere. California is the land of fruits and nuts as my Drill Instructor told me in Basic Training, asking me which I was!
All: thanks for the information, makes me appreciate my carnitas more.
1 gallon of methanol = 62,800 Btu 1 gallon of ethanol = 84,400 Btu 1 gallon of gasoline = 125,000 Btu 1 gallon of kerosene = 135,000 Btu 1 gallon of crude oil = 138,095 Btu 1 gallon of diesel fuel = 138,690 Btu
It's a simple fact that it takes 131,000 BTUs to produce one gallon of ethanol (by far most of that energy is used by the distilling process...the rest is minicule by comparison) and the resulting ethanol is only good for 77,000 BTU is the kind of efficiency only a liberal could love.
The fact that the government has to subsidize it should be another clue.
The fact that huge political donors like Archer-Daniel-Midland are making money on this and they have enough political clout to force the taxpayers to funnel money to them by requiring a an ethanol blend, should ring a bell.
So, listening to a radio jingle is how you learned about farming? Goodness gracious, I trust the requirements for your day job were a little more rigorous.
>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
Actually THAT one *IS* a valid consideration.
Suddenly it was...
“Take a peak at Denio’s Farmer's Market and Auction,
Take a peak at Denio’s, Denio’s is sweet!”
So maybe before you make even more of a fool of yourself arguing for government mandates and subsidies on a conservative forum and making like you know anything about selling a pig at auction, you should learn something first.
Civility would be a good start!
Nobody is arguing for government subsidies for anything. But some folks get a little carried away when then claim to know things they don’t know with regard to corn, or ethanol or farming. That’s all.
While Pimental estimated that 131,017 btu's per gallon were consumed, and 21,500 of those were chargeable to co-products) the USDA reports that the consensus from scientific literature is 79,503 btu's by the wet milling method (with 33,503 btu's chargeable to co-products) and 74,447 by the dry milling process (with 28,415 btu's chargeable to co-products).
It is so obvious that you have no idea what you are talking about!
Why anyone who listened to Rush Limbaugh out of Sacramento back in the 80’s would be very familiar with a RADIO JINGLE advertising a farmers market and AUCTION that is still open and advertises to this day.
Now logic may not be one of your strong points, but wouldn't a ubiquitous radio advertisement for a Farmers auction indicate that such was a fairly common occurrence in the farming community?
Your credibility is SHOT! Your claims to knowledge of my life are ludicrous. Your idiocy about Auctions being a rare event even more ludicrous.
Almost as ludicrous as someone saying that ‘nothing is wasted in ethanol production’ or suggesting pigs would do better on a low carb Atkins diet!
OK, you apparently know of a farmer's market in southern California. Swell, but that has virtually nothing to do with American agriculture or the feed value of distillers spent grains.
I'm trying not to hurt your feelings, but you're not aware of how animals are raised, fed or marketed and were not aware that fat hogs trade at a discount to lean hogs. You can try to be as mean as you want, but anyone who has raised livestock can tell that you haven't.
If your arguments against ethanol are based on government subsidies, we don't disagree. Government interference in the marketplace will cause a long term injury to the future of fuel ethanol far greater than the short term benefit received by fuel blenders from the current tax credit.
But having said that, the notion that distillers wet or dried grains are not a valuable feed ingredient (especially for ruminants) is simply mistaken.
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