One of the sources I used this week is FarmFutures.com. I could extract information regarding the change in corn price from “Weekly Corn Review” and “Weekly Basis and Transportation Review”. In these reports they estimate that the overall price curve is going to change. In the past five or six years this kind of change was due to a weak dollar, fund investment in commodities and the ethanol boom. But this year is not the case anymore, since the ethanol industry is a mature one now, dollar is not the only currency weakening around the world (yen, euros also) and investors conclude after these years that investments in commodity increases the risk to a portfolio.
It is not realistic to declare that these factors were replaced by a rising demand from a growing middle class or by increasing weather risk due to global warming. The author’s research shows a “correlation between stocks-to-use ratios and the ability of futures to make new postharvest highs in short crop years”.
On the USDA web side it could be read the report on “World Agricultural Supply and Demand Estimates”. I quote production estimates for corn, wheat and soybean:
– Forecast corn production for 2012/13 is lowered 21 million bushels with higher area more than offset by lower yields
– Wheat production for 2012/13 is raised 1 million bushels based on the latest estimate from the September 30 Small Grains report
– Soybean production is forecast at 2.860 billion bushels, up 226 million based on higher harvested area and yield
http://www.farmfutures.com/mdfm/Faress1/author/252/2012/10/WCR101212.pdf
http://farmfutures.com/mdfm/Faress1/author/252/2012/10/WBR101112%20(3).pdf
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