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    Corn and the Drought

    Massive US Drought Leads to Worst Fears for Corn Crop - US Business News Blog - CNBC

    The biggest reduction in the demand forecast was for livestock feed, from 4.8 billion bushels to 4.075 billion. Demand by the ethanol industry, the biggest user of U.S. corn, was forecast to drop from a previous estimated 4.9 billion bushels to 4.5 billion, and exports were seen dropping to 1.3 billion bushels from 1.6 billion, he said.
    The markets must have had this figured out before the govt.


    Last edited by Wesley; 08-10-2012 at 12:55 PM.
    CFH HMagic bball season next year.
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    Re: Corn and the Drought

    Actual demand is not dropping as fast as the USDA says it is. They have to say demand is dropping to keep the balance sheet in line. If they told the facts how they were, I honestly think corn would go up to about $9.50 and beans in the $18 range.

    The problem is, when USDA fudges numbers it just messes everything up. Look at their unrealistic production estimate from the spring. Livestock guys who actually thought we would produce that big of a crop didn't buy corn, banking on the big crop coming in, and now they are screwed.

    This thing is ugly. The next 12 months could be the craziest times we have seen in ag for a long long time.



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    Re: Corn and the Drought

    Corn isn't done. Ethanol plants have a breakeven around $9.50 right now.



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    Re: Corn and the Drought

    Quote Originally Posted by isufan View Post
    Corn isn't done. Ethanol plants have a breakeven around $9.50 right now.
    Something has to give. What will it be?

    Ethanol? Apparently not with that breakeven.

    Exports? Mexico bought a whole bunch of corn early this week. The world has to eat.

    I think livestock is the one that will give. But it takes time to liquidate herds and slow down demand.



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    CFH HMagic bball season next year.
    Let my Fred's Four Horsemen ride: Georges, Hogue, Nader, and McKay.

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    Re: Corn and the Drought

    Time to lift the 25% mandate to ethanol to keep food prices from skyrocketing.



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    Re: Corn and the Drought

    How much of the typical American budget is spent on food?



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    CFH HMagic bball season next year.
    Let my Fred's Four Horsemen ride: Georges, Hogue, Nader, and McKay.

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    Re: Corn and the Drought

    Quote Originally Posted by isugcs View Post
    How much of the typical American budget is spent on food?
    13 per cent.


    CFH HMagic bball season next year.
    Let my Fred's Four Horsemen ride: Georges, Hogue, Nader, and McKay.

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    Re: Corn and the Drought

    Thanks for the links, Wesley.

    I think the drought is worse than the USDA is saying and production will be even lower than what they have predicted. I think the national yield is down closer to 110. They currently have Iowa pegged at 141, and I don't think there is a chance in heck we get there. More like 125 for the state average.

    Also, harvested acres will continue to go down as people chop for feed and acres get zeroed out.



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    Re: Corn and the Drought

    Quote Originally Posted by farminclone View Post
    Thanks for the links, Wesley.

    I think the drought is worse than the USDA is saying and production will be even lower than what they have predicted. I think the national yield is down closer to 110. They currently have Iowa pegged at 141, and I don't think there is a chance in heck we get there. More like 125 for the state average.

    Also, harvested acres will continue to go down as people chop for feed and acres get zeroed out.
    I agree 100% with what you stated but if I had to bet I'd say your numbers still may be high.


    I'd agree with you, but then we'd both be wrong.

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    Re: Corn and the Drought

    Quote Originally Posted by IceCyIce View Post
    Time to lift the 25% mandate to ethanol to keep food prices from skyrocketing.
    An ISU study recently said gasoline prices would be over $1.00 higher without ethanol. You want to see high food prices, raise transportation costs. Energy price hikes effect food costs at a 3x rate compared to the price of grain.

    The amount of grain in any 1 product is minuscule. Meat production is a little different. When a bushel of corn goes to ethanol production, between 30-40% comes out the other end as distillers dry grain (ddg's). This makes a fantastic cattle feed.



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    Re: Corn and the Drought

    Talked to a guy today who said their local ethanol plant had contracted mega bushels of corn this spring at $5.50. They're thinking about shutting down and selling what they have for $3.00 profit per bushel & retooling the factory during the shut-down.


    All truisms are false. All of them.

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    Re: Corn and the Drought

    Quote Originally Posted by Acylum View Post
    I agree 100% with what you stated but if I had to bet I'd say your numbers still may be high.
    I could definately see that, I was throwing out my most conservative guesses.



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    Re: Corn and the Drought

    Quote Originally Posted by farminclone View Post
    Actual demand is not dropping as fast as the USDA says it is. They have to say demand is dropping to keep the balance sheet in line. If they told the facts how they were, I honestly think corn would go up to about $9.50 and beans in the $18 range.

    The problem is, when USDA fudges numbers it just messes everything up. Look at their unrealistic production estimate from the spring. Livestock guys who actually thought we would produce that big of a crop didn't buy corn, banking on the big crop coming in, and now they are screwed.

    This thing is ugly. The next 12 months could be the craziest times we have seen in ag for a long long time.

    It's easy to say the USDA is a bunch of fudgers but they can only deal with what they know. In May, in my area, we had the potential for a HUGE crop. Anything beyond the current situation is a guess. I'll buy the national average for 110. I think we will be closer to 120. In my area, 140-150. Th USDA, early on took acres (given by growers, not their estimate) and took trendline yield. Trendline is trendline for a reason. We will be far below it this year but the USDA could not have seen this coming with record corn acres. Maps will show that the midwest has never seen this sort of widespread drought. Virtually every major corn producing area has been significantly affected.


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