Commodities Bubble Burst? Big Clue Comes Monday

[john_for_u80]

What do you guys think about Crop planting report on Monday?

http://www.cnbc.com/id/23847469

[BuyOnDips]

Wheat should probably come down in price this year if the weather cooperates. Corn prices should probably remain steady. I think the demand for ethanol will be lower(high gas prices equals less driving), but that will be offset by less corn being planted. My Dad talked to a farmer yesterday where he buys his grain and the farmer stated that fertilizer costs have gone up 60% since last year. I bet a lot of farmers will plant more wheat and soybeans instead of corn since growing corn costs more because it needs more fertilizer than the other crops. It will be interesting to see how the fertilizer/agriculture stocks play out this year.

[john_for_u80]

Wheat should probably come down in price this year if the weather cooperates. Corn prices should probably remain steady. I think the demand for ethanol will be lower(high gas prices equals less driving), but that will be offset by less corn being planted. My Dad talked to a farmer yesterday where he buys his grain and the farmer stated that fertilizer costs have gone up 60% since last year. I bet a lot of farmers will plant more wheat and soybeans instead of corn since growing corn costs more because it needs more fertilizer than the other crops. It will be interesting to see how the fertilizer/agriculture stocks play out this year.

Thanks. I hope report comes out good for fertilizers stocks. I am in TRA & it is doing bad since few days. I want to sell that stock if report is bad coz then i see the downtrend. Thanks for the reply on Transportation stocks. BNI is good bet as Warren Buffet is in that stock. Lets see..

[aiki14]

The WSJ had an article on the report:

New Grain Report Is
Likely to Make Waves
By LAUREN ETTER
March 29, 2008; Page A2
Investors from Wall Street to the Great Plains will be watching Monday morning when the U.S. Department of Agriculture releases its annual report on how much farmers will be planting of which grains. The report holds big implications for livestock farmers, ethanol plants, food companies and consumers.

The USDA report gives the planting season's first official peek at how much corn, wheat, soybeans and other grains farmers intend to plant. Traders make investment decisions based on the expected number of planted acres, while farmers use the report to decide which crops might maximize their profits.

Last year, the report stirred intense global interest as the USDA predicted -- correctly -- the largest planting of corn acres since World War II. With grain prices pushing higher, the new report will be just as closely scrutinized for how an expected reduction in corn acres ripples through the U.S. economy.

Analysts have been predicting that the report will show that farmers intend to plant as few as 86 million acres of corn -- about seven million fewer acres than last year -- and more soybeans and wheat. Those expectations have been largely folded into current grain prices, so the report isn't likely to spur wild price swings Monday on the Chicago Board of Trade.

Corn already is trading near its record-high price of $5.70 a bushel, more than double the price of two years ago. Soybeans are hovering near $13 a bushel, nearly double last year's level.

But with stocks of corn and other staple grains lower than they have been in decades, grain markets are anything but stable. Agriculture exports are expected to rise to a record this year as China, India and other foreign nations clamor for grains to eat and to feed livestock. As corn-fueled ethanol production keeps growing, corn used for ethanol will make up more than 30% of the corn crop by next year, up from 14% in 2006. Packaged-food companies are hoping not to have to push further price increases for bread and other staples onto consumers.

Already corn stocks at the end of this year's marketing year, which ends the last day of August, are projected to be the lowest in decades at 542 million bushels, says Joe Victor, a grains analyst at brokerage firm Allendale Inc. That is equivalent to about 28 days of corn. In 2005, the grain cupboards had about 70 days of corn. "We're living on the edge of a knife," Mr. Victor recently told a group of investors at the Chicago Board of Trade. "There is no room for error."

Drought or flooding could make matters worse, sending corn and other prices higher. So far, reports from the National Oceanic and Atmospheric Administration suggest that drought this year in the Corn Belt is less likely than previously thought.

But some grain users have started to ration demand; livestock farmers, for example, are slaughtering parts of their herds -- in some cases large parts -- and sending the meat to market to manage the costs of feed grain.

Farmers are doing their best to plant as much grain as possible, in some cases spooking environmentalists who fear row crops will overrun wetlands, duck habitats and wildlife preserves.

Write to Lauren Etter at lauren.etter@wsj.com

[BuyOnDips]

My Dad came back from the hay auction today. Large round bales of hay that used to cost $25 a bale 2 years ago, now cost $50. And the bales seem a little smaller. Anyway, all the farmers were bitching about the high price of fertilizer. I'll have to check the price of Miracle Grow the next time I go to Walmart. Also diesel prices have exploded higher, much higher than gas. Running those large tractors is not cheap.

Anyway, with less corn being planted this year and more of the corn going to ethanol production, I guess we can expect food prices to continue to rise. Many farmers will start decreasing their herds of cows/pigs because of the increased cost of corn and fertilizer to grow corn. Expect beef/pork prices to rise in the future as well. Hello food inflation. :(

[Horsefish]

My Dad came back from the hay auction today. Large round bales of hay that used to cost $25 a bale 2 years ago, now cost $50. And the bales seem a little smaller. Anyway, all the farmers were bitching about the high price of fertilizer. I'll have to check the price of Miracle Grow the next time I go to Walmart. Also diesel prices have exploded higher, much higher than gas. Running those large tractors is not cheap.

Anyway, with less corn being planted this year and more of the corn going to ethanol production, I guess we can expect food prices to continue to rise. Many farmers will start decreasing their herds of cows/pigs because of the increased cost of corn and fertilizer to grow corn. Expect beef/pork prices to rise in the future as well. Hello food inflation. :(

Not to worry.......Food and energy are not part of core inflation. Nobody will be hurt.