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Record US corn crop possible despite drought-Texas A&M economist

 

* With improved yields, 13.4 bln bu crop possible

* Pork could top beef as No 2 US meat in 2014

* US corn and soybean output down three years in a row

 

Reuters

Mon Jan 14, 2013

 

NASHVILLE, Jan 14 (Reuters) - U.S. corn production, slashed dramatically by drought in 2012, could rebound to a record-large crop this year if yields improve moderately, said an agricultural economist from Texas A&M University on Monday.

 

The economist, David Anderson, also said pork production could top beef in 2014, pushing beef into third place in U.S. meat production. Poultry and pork production are on the rise while beef is held back by high feed costs and drought-damaged grassland.

 

"What we're trying to do is make it to the next crop," Anderson said, describing how livestock producers face several more months, at a minimum, of tight feed supplies.

 

High commodity prices will encourage farmers to plant roughly as much corn as last year, he said, and with higher yields, "you get a record crop," with lower prices that will ease the financial squeeze on livestock producers.

 

During a presentation at the annual American Farm Bureau Federation meeting, Anderson said corn plantings were likely to match the 97 million acres of 2012 and yields could run around 150 bushels an acre. With an average amount of abandonment, that would bring a crop of 13.4 billion bushels, topping the record of 13.092 billion bushels in 2009.

 

Large plantings allow a record crop even with below-average yields, said Anderson -- "It just doesn't have to be as awful as last year." The 2012 crop averaged 123.4 bushels an acre.

 

U.S. corn and soybean production as fallen for three years in a row with harsh weather pulling down yields. Drought persists in the Plains and western Corn Belt although rainfall levels in the eastern Corn Belt are improving.

 

On Sunday, Chad Hart, an Iowa State University agricultural economist, said corn, soybean and wheat yields "will likely remain below trend line in 2013" but production totals could "bump up." He did not suggest harvest size.

 

Demand for U.S. meat will be stable to growing this year, with beef output falling and production of poultry and pork rising, said Anderson. Pork exports are booming.

 

"I think it certainly could happen," Anderson told reporters, for pork output to exceed beef in 2014. "They're very close at that point."

 

more

http://www.reuters.com/article/2013/01/14/usa-agriculture-farm-idUSL2N0AJ73G20130114

 

 

Outlook - DDG

DDG Prices May Remain Strong Through Most of 2013

 

Cheryl Anderson DTN Staff Reporter

DTN/The Progressive Farmer - Tue Jan 15, 2013 06:42 AM CST

 

DAVENPORT, Neb. (DTN) -- The volatile ride that characterized the dried distillers grains market in 2012 may continue into this year. Conditions resulting from last summer's drought may keep prices of distillers grains strong at least through next year's harvest.

 

The last half of 2012 brought a great deal of volatility to the DDG market. Rising corn prices and decreased ethanol/DDG production resulted in record-breaking DDG prices from about mid-August to early September, when the DTN Weekly DDG Spot Price Average peaked at an average of about $300 a ton.

 

A larger corn crop than had been expected and lower corn prices pushed DDG prices into a downward trend from mid-September to mid-November, when the DTN Weekly Spot Price Average bottomed out at about $251 per ton. After Thanksgiving, prices rose again slightly, but leveled off in mid-December as plants tried to sell off some of their inventory to avoid building up excess product over the holidays.

 

Jason Charles, domestic export trader for Land O'Lakes Purina Feed in Minneapolis, predicts that prices may initially be lower during the first months of the year. He advised that producers may want to at least cover their immediate DDG needs for the coming months, but then wait for some market direction before proceeding.

 

DDG prices will likely remain strong, until at least next fall. "I would think prices will maintain their strength," Charles said. "There's no need for prices to go lower until we at least get next year's crop in the ground and additional corn comes into the pipeline. Distillers prices will probably maintain a firm tone throughout the new crop."

 

Still, prices will likely depend on the 2013 corn crop, especially in light of the lower stocks caused by last summer's drought.

 

TRANSPORTATION CHALLENGES FOR DDG

 

Besides the volatility the drought caused with prices, low water levels on the Mississippi River are causing some real challenges in logistics to ship DDG. Mississippi River barge traffic has either slowed down or is at a standstill in some locations, according to Charlie Staff, executive director and CEO of the Distillers Grains Technology Council.

 

The problems on the river that have limited barge and container traffic have also put an overload on railcars, which are in really high demand and difficult to book.

 

Unfortunately, more rain or snow during the winter is the only answer to remedy the situation.

 

"The low water levels won't fix themselves overnight," Charles said. "We need a lot of rain in the Ohio River Valley to fill the river back up."

 

Another challenge created by the drought that the industry will be forced to deal with into the coming year is mycotoxins -- aflatoxins particularly in some areas, as well as some pockets of fumonisin.

 

"When you have a drought, you have stunting of corn and it is less able to protect itself from fungal growth which produces mycotoxins," Staff said.

 

Ethanol plants now have the task of setting up more rigid testing of incoming corn and rejecting corn that has high levels of mycotoxins...

 

more

http://www.dtnprogressivefarmer.com/dtnag/common/link.do?symbolicName=/free/news/template1&paneContentId=5&paneParentId=70104&product=/ag/news/topstories&vendorReference=b88006fa-b53c-4980-88e5-e3a4e3a4d33e

 

 

DJ U.S. Corn Up On Demand Expectations, Argentina Weather Concern

Owen Fletcher - DJ/Agriculture.com - Jan 15, 2013

 

--U.S. corn futures trading up on improved expectations for domestic corn demand

 

--Drier weather forecast in South America could threaten crops

 

--Traders to watch whether futures settle above 50-day moving average

 

CHICAGO--U.S. corn futures are trading higher Tuesday morning, boosted by improved demand expectations and concerns about the weather for crops in South America.

 

In electronic trading, Chicago Board of Trade futures for March delivery are up 4 cents, or 0.6%, at $7.28 a bushel.

 

Corn futures are adding to gains made since the U.S. Department of Agriculture on Friday boosted its forecast for domestic corn demand in the current crop year. Greater demand from the meat industry for corn used in animal feed outweighed lower expectations for corn exports. This led the USDA to forecast much tighter-than-expected ending stocks of corn.

 

Corn traders on Tuesday will watch to see if March futures can hold above their 50-day moving average of $7.25 1/4 a bushel. A settlement above that level would be a positive technical signal that would likely drive further buying of corn.

 

Corn prices are also benefiting from concerns about South American weather. A drier weather forecast in Argentina poses a potential threat to the country's crops, though no major weather issues have hit the country so far this season.

 

Expectations for corn export demand remain largely weak, as prices have risen in recent days. But traders will still watch the results of world corn tenders...

 

more

http://www.agriculture.com/markets/newswire?page=story&id=8170698

 

 

DJ Soybean Futures Rise on Strong Demand, Argentina Dryness

Andrew Johnson Jr. - DJ/Agriculture.com - Jan 15, 2013

 

-- Demand remains robust while the supply of U.S. soybeans is tight

 

-- Stressful dryness is emerging in Argentina crop areas

 

-- Soybean basis levels trading at historically high levels

 

CHICAGO--U.S. soybean futures are trading higher Tuesday, expanding Monday's sharp gains amid strong demand and dry conditions emerging in Argentina.

 

Chicago Board of Trade soybeans for March delivery recently were up 10 cents, or 0.7%, at $14.28 a bushel.

 

Soybeans are drawing support from concerns that demand remains robust while the supply of U.S. soybeans is tight. Soybeans jumped 3% Monday amid continued strength in domestic and export demand.

 

Speculative buyers are also encouraged to buy back some prior bets on prices declining amid private weather forecasts noting stressful dryness emerging in Argentina crop areas. Argentina is the world's third-largest soybean producer after the U.S. and Brazil.

 

"There is definitely a little concern starting to develop from dryness and heat emerging in Argentina," said Jason Britt, president of brokerage Central States Commodities in Kansas City, Mo.

 

Still, futures could be in store for some volatile, choppy trade amid the absence of any fresh news on market fundamentals.

 

"Until some fresh news tips the scales in favor of the bulls or the bears, choppy trade will be in focus," Mr. Britt said.

 

Traders say the market appears to have confirmed an early winter low in prices, with prices needing to rebound to cool U.S. soybean consumption until South America can replenish depleted global stockpiles.

 

Companies that rely on soybean supplies, such as food processors and livestock companies, are counting on Brazil and Argentina to harvest record crops and relieve the strain of tight global supplies. The countries will harvest their crops in the next three months.

 

"We're still far from a major weather issue in South America," Joe Vaclavik, president of brokerage Standard Grain Inc. in Chicago wrote in a morning market note. However, "some slightly friendly weather news paired with big rallies in the corn and wheat markets is enough for a big short-squeeze in the bean market over the short-term."

 

U.S. cash soybean basis levels are trading at historically high levels for the month of January, as strong demand draws down available supplies. The cash basis reflects robust export and domestic demand in a market where farmers aren't replenishing inventories in the cash supply chain...

 

more

http://www.agriculture.com/markets/newswire?page=story&id=8171090

 

 

DJ U.S. Wheat Up on Demand Expectations, Threats to U.S. Crop

Owen Fletcher - DJ/Agriculture.com - Jan 15, 2013

 

--U.S. wheat futures trading up on stronger demand expectations, threats to U.S. crop

 

--Wheat up for third straight session after USDA report Friday forecast stronger feed-wheat demand

 

--Weather forecast for Plains is dry

 

CHICAGO--U.S. wheat futures are trading higher Tuesday morning, boosted by stronger demand expectations and threats to the U.S. winter wheat crop.

 

In electronic trading, Chicago Board of Trade futures for March delivery are up 6 3/4 cents or 0.9% at $7.73 3/4 a bushel. Kansas City Board of Trade March wheat is up 7 3/4 cents or 0.9% at $8.31 1/4 a bushel. MGEX March wheat is up seven cents or 0.8% at $8.59 3/4 a bushel.

 

Wheat futures are up for a third straight session, building on gains that began on Friday when the U.S. Department of Agriculture issued crop estimates reflecting stronger-than-expected demand for wheat used in animal feed. The USDA also forecast tighter-than-expected ending stocks of wheat for the current marketing year and estimated lower-than-expected acreage of winter wheat planted by U.S. farmers last fall.

 

Futures are benefiting from the expectation that feed demand for wheat will remain strong until prices have risen further.

 

Wheat is also rising due to concerns about unfavorable weather for winter wheat crops in the U.S. southern Plains, where persistent drought has left the soil extremely dry.

 

Some analysts were concerned about sub-zero temperatures in areas of the southern Plains over the last two nights, though meteorologists said the temperatures were unlikely to have significantly damaged crops.

 

"These temperatures are kind of marginal for winterkill," said Mike Palmerino, a senior meteorologist in Woburn, Mass., for private forecaster Telvent DTN.

 

The areas most subject to possible damage on Tuesday morning were parts of western Nebraska and eastern Colorado, where low temperatures generally ranged from negative four to 10 degrees Fahrenheit, he said. Temperatures weren't low enough in most of Kansas overnight to pose any threat, he said.

 

The bigger threat to winter wheat crops in the southern Plains is still dry soil...

 

more

http://www.agriculture.com/markets/newswire?page=story&id=8170247

 

 

U.S. corn posts longest rally since June on tight stocks

 

Michael Hirtzer, Reuters 

via Dairy Herd - 01/14/2013

 

U.S. grains notched their highest prices in three weeks on Monday, with corn posting its longest rally since June after a government report last week forecast stockpiles in the world's top producer to hit a 17-year low by summer's end.

 

Soybean futures jumped more than 3 percent for the biggest daily bounce since August following the announcement of No. 1 soy importer China's fourth large purchase of U.S. soybeans in two weeks.

 

Sustained drought conditions in the southern U.S. Plains wheat belt and a turn to dry conditions in Argentina also propped up grain markets, with wheat rising sharply the second straight session.

 

"There is a weather element that is starting to develop. We've got some talk of La Nina in Argentina. Argentina was flooding; now it's turned hot and dry," said Roy Huckabay, analyst at brokerage The Linn Group in Chicago.

 

Severe drought reduced harvests last year in both the United States and South America.

 

Expectations for a rebound in corn and soybean production in Brazil and Argentina last week helped bring grain prices to six-month lows before they rebounded in the wake of the U.S. Agriculture Department's forecast on Friday for tighter grain stocks.

 

"We're getting some fairly good follow-through buying after the report last week," Citigroup futures specialist Sterling Smith said during the trading session.

 

A weaker dollar also supported grains, with the greenback hitting an 11-month low against the euro and making commodities priced in the U.S. currency more attractive to importers. The Thomson Reuters Jefferies index of 17 commodities jumped to a five-week high.

 

Chicago Board of Trade corn futures for March delivery gained 2.2 percent, or 15-1/4 cents, to $7.24 per bushel, posting their biggest daily increase since October.

 

Corn had their sixth straight session of gains - the longest streak of higher prices since the first days of the June rally that stirred futures to a record peak in August.

 

Most-active March soybeans climbed 44-3/4 cents to $14.18 per bushel, a gain of 3.3 percent and their largest daily increase since Aug. 9.

 

Soybean futures declined following the release of USDA's monthly supply and demand report on Friday even as the government forecast the tightest stocks-to-use ratio since 1965. "It's a little delayed reaction to the report," Central State Commodities president Jason Britt said of Monday's rally. Speculators last week slashed bullish long bets in soybeans by the most in more than a year, putting the commodity at risk of a bounce if traders cover short positions.

 

Weather in Argentina, the No. 1 export of soybean products, also is turning drier even as forecasts overall in South America remained largely beneficial to developing crops...

 

more

http://www.dairyherd.com/dairy-news/latest/US-corn-posts-longest-rally-since-June-on-tight-stocks-186852772.html