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’Panic’ wheat buying across the US |
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Evergreen 
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 Topic: ’Panic’ wheat buying across the USPosted: February 27 2008 at 10:10am |
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North Queensland Register Breaking Rural News : GRAINS AND CROPPING 'Panic' wheat buying across the US By Arlan Suderman, Farm Progress grain markets analyst Tuesday, 26 February 2008 In the wheat price surge this week, the leading wheat contract in Minneapolis, US, has risen by more than the entire worth of the contract just months ago. Prices rallied by $5.75 a bushel on Monday, being up by nearly 30pc at one point compared with Friday’s close. Eight months ago on June 19, the lead Minneapolis wheat contract settled at over $US5.00 a bushel. Panic over commodity shortages continues to emerge as the dominant factor in the global markets, with both end user and speculative buyers of corn, soybean, cotton, rice and a host of other commodities taking note of what’s happening in the wheat pit. While US has made improvements to increase crop production efficiency in recent years, the world hasn’t really put sufficient investment into production agriculture for several decades. The net result has been declining stocks at the same time that expanding global wealth has demanded more raw commodities. The net result on Monday was new all-time record high prices for corn, soybeans and wheat on the same day. Sentiment in the marketplace is changing from, 'buying just-in-time' to one of, 'buy what you need at any price' and then to 'buy even more to restock the shelves'. In other words, there’s evidence to suggest that we’re beginning to enter the hoarding phase of the inflationary cycle. Along that line, commodity traders are attempting to hoard land on which to produce their respective commodities by bidding up prices in an acres war. The market should remain in this phase until supply reaches surplus levels and everything collapses, similar to what was seen in the late-90s. However, there’s little evidence at this point that the market will begin that collapse anytime soon, especially with the US growing season still weeks away and weather being as large as it’s ever been this year. That doesn’t mean that there aren’t risks and that there won’t be large price swings similar to what have been seen in the wheat pits over the past six months. But it does mean that end users and speculators alike, remain anxious to buy those price breaks when they occur. Corn was largely a follower on Monday, reacting to sharply higher wheat and soybean prices. Demand remains good, but most of the focus was with the above two commodities that are facing immediate supply shortfalls. The real strength in corn is in the fear that other crops will rob too many acres from the feed grain, rendering it short in supply in the next marketing year that begins September 1. Solid demand for soyoil and soybeans, especially from China, continues to fuel buying interest in the oilseed complex. China is said to be buying both to fight food inflation and to build inventories ahead of this year’s Olympics. Supply fears created by adverse weather in China’s rapeseed belt earlier this month, simply reinforced the sentiment. The outright panic seen in the wheat pits today sent additional tremors through the oilseed market, where traders couldn’t help wonder if a similar scenario could be in its future. The panic buying came on the day that Minneapolis lifted all daily limits on the March contract, hoping to ensure that the contract would enter into its delivery period in an orderly fashion on Friday. Nobody wanted to be a seller in this environment, causing the lead contract to quickly surge above $23/bus. The Minneapolis March contract eventually reached $25 per bushel, before correcting lower to $24 at the close, up $4.75 on the day. The deferred Minneapolis contracts locked the expanded 90c daily trading limit higher for much of the day. Limits on those contracts will expand to $1.35 tomorrow, beginning with electronic trade this evening (US central time). Chicago and Kansas City contracts locked the 60c daily trading limit higher today, with those limits expected to increase to 90c. (See separate Chicago report) SOURCE: Farm Progress, US, a Fairfax Media publication |
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235365 - Energy follows thought. As you think, so you are.
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Evergreen
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Posted: February 27 2008 at 10:12am |
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US has less than 2 weeks of wheat? D
FARM FUTURES The World Needs U.S. Wheat Demand for wheat offers opportunity. (2/27/2008) Bill Spiegel In the wake of historic high prices, the American Bakers Association believes the U.S. should hang onto its supply of wheat, at least until wheat harvest begins and wheat stocks can be replenished. That is not only unsound economics, it is illegal, says Alan Tracy, president of the U.S. Wheat Associates, a private- and federal-funded market development organization based in Washington D.C. "Only under compelling circumstances, if the president declares a national emergency, would this action be authorized by the federal government," says Tracy, who spoke to agricultural journalists a few days before the annual Commodity Classic in Nashville. "Overseas customers should have the same access to our wheat as anybody else." Tracy's comments are in response to an appeal by the American Bakers Association to USDA, asking for the agency to review its export guidelines and consider opening five to 10 million acres of ground now enrolled in the Conservation Reserve Program. The ABA says the U.S. holds less than two weeks of wheat in storage, well below the average of 27 days. Tracy, meanwhile, says the U.S. baking giant Sara Lee increased prices for its baked goods last fall by 5%, attributing the increase to the increased cost of flour. "I've done some calculating and with wheat prices at $7, the total value of all the wheat in a loaf of bread was paid for by the company's price increase," says Tracy. Furthermore, countries that import wheat from the U.S. namely Nigeria and Japan - continue to pay the going rate for high-quality wheat. "Japan buys only premium wheat and they'll pay these prices anyway," he says. "You'd think that in a country like Nigeria, demand would be more elastic. But there is an agreement between millers and the Nigerian government that food will be provided to its people." Tracy says wheat prices are driven by unprecedented demand for all grains, not just wheat. For instance, the world's middle class population continues to grow at a rapid pace. As people make more money, they seek to improve their diets by eating more meat. In turn, greater quantities of corn and soybeans are needed to feed meat animals. China's population, for example, consumed 50 kilograms of pork per person in 2007, compared to 20 kilograms per person in 1985. Each week, more than one million people are born in China, straining the world's ability to meet demand for food. And with more acres being planted to soybeans and corn, the wheat industry must "bid" for wheat acres, resulting in prices ranging from $12 winter wheat and $23 spring wheat offers at the nation's major wheat markets. This demand for grain poses opportunity for wheat, the most widely consumed grain in the world. But the world is consuming more wheat than ever before. In 2007, consumers around the world ate 1.66 billion tons of wheat, 89 million metric tons more than in 2006. Markets such as Japan and Nigeria continue to buy record amounts of U.S. wheat, despite the high prices. Mexico is the largest importer of U.S. wheat, buying 2.7 million metric tons in 2007, up from 750,000 metric tons in 1993, when the North American Free Trade Agreement was ratified. |
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235365 - Energy follows thought. As you think, so you are.
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Posted: February 27 2008 at 6:55pm |
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Have any of you people owned farm land. Do any of you know how much money is paid to farmers in this country to let the land stay fallow! If the government would quit paying the farmers not to farm then we would have plenty of everything. Do not fall into the trap that the news media wants you to believe that there is no Wheat!! Just let the farmers plant all their land quit paying them!!
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Penham
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Posted: February 27 2008 at 7:43pm |
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I live in oil/wheat/cattle country and the farmers here are growing corn now instead of wheat because there is more money in corn, because people are using it to make fuel. So since less wheat is being planted the prices are rising. I don't know of any farmers being paid not to plant grain/food.
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Penham
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Posted: February 27 2008 at 9:16pm |
According to the USDA.gov website the 1996 Farm bill farmers are "no longer required to plant within restrictive governmental controls" to receive subsidies, so basically they plant what they want to as far as grain is concerned with the exception of fruits and vegetables. The 2002 Farm bill continues the restriction of fruit and vegetable production. They have to actually grow the crops in order to receive farm subsidy payments, but are limited to the amount they grow (fruits and veggies). So looks like there are no restrictions for growing grain, peanuts and tobacco, but there are restrictions on growing fruit and vegetables, but they do have to actually grow a certain amount of fruit and vegetables to receive the farm subsidies (I hope that makes sense).
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Posted: February 27 2008 at 9:33pm |
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Good information, I just know that before 1996 our family got good money for not growing crops. But as I said that was before 1996. Thank you for the updated info. So we now have to pay more for wheat and corn. Looks like people who owe lots on their credit cards, have big mortgages, and big car payments are really going to get squeezed on food now. Hard times ahead for some people.
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Turboguy
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Posted: February 28 2008 at 5:32am |
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Good post!
Evergreen, I was watching CNBC while on break yesterday and saw some guy talking about how Wheat had gone up more than it used to sell for a few years ago in one day of trading! That's rediculous! Yesterday, it looks that it went down $54.50, but it's still sitting at $1225.50. My question is: How much is this panic buying of food commodities on Wall St. going to increase the prices of foodstuffs on the consumer. It's quite literally impossible to go even one day without eating something that is made from, or contains in some way, wheat. Now you've got people talking about Ammerica hoarding the wheat we're growing. That only really happens when people are scared of something they're actually seeing, not speculating about. |
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Evergreen
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Posted: February 28 2008 at 9:38am |
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Remember a few months ago when Italy had a "pasta crisis"? It was based on availability of wheat. Prices for pasta soared, people hoarded and took to the streets. I have to admit to buying a few more packages of pasta myself for my preps. Now I'm wondering if I should take another run at buying wheat products before the producers have had a chance to pass it on to the consumer. D
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235365 - Energy follows thought. As you think, so you are.
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coyote
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Posted: February 28 2008 at 9:42am |
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Go for it!!
 What time is Dinner? I'll bring the "Whole grain" garlic bread!
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Long time lurker since day one to Member.
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Rockhound
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Posted: February 29 2008 at 7:24am |
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I went to the store last night good God price have gone up. #5 of flour have almost doubled. and every can of canned food has gone up about 20%. when something is on sale I buy alot of it. canned food,penut butter, pasta, flour, anything that will last.
about a week ago I was at the Army Navy store, last yr a folding shovel was about $12 dollars last week it had doubled to about $24. The lady sayed it was becouse of the shipping and fuel cost |
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Will you let everbody in your house?
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Penham
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Posted: February 29 2008 at 4:49pm |
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[QUOTE=Rockhound]I went to the store last night good God price have gone up. #5 of flour have almost doubled. and every can of canned food has gone up about 20%. when something is on sale I buy alot of it. canned food,penut butter, pasta, flour, anything that will last.
I know, the prices are getting really bad. I am buying what's on sale and stocking up only when it's on sale and using lots of coupons to go with it. Things that used to be considered cheap like flour, pasta, rice, beans are all getting expensive. Eggs are $2.09 a dozen, milk $4.09 a gallon, a lof of bread is now $1.12 used to be .78. It seems like every time I go to the store things have increased .10 or .20 from the last time. I buy this hot bread Walmart sells for $1.33, a year ago it sold for .99.
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Evergreen
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Posted: March 07 2008 at 1:04pm |
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From The TimesMarch 7, 2008 Already we have riots, hoarding, panic: the sign of things to come? Carl Mortished, World Business Editor The spectre of food shortages is casting a shadow across the globe, causing riots in Africa, consumer protests in Europe and panic in food-importing countries. In a world of increasing affluence, the hoarding of rice and wheat has begun. The President of the Philippines made an unprecedented call last week to the Vietnamese Prime Minister, requesting that he promise to supply a quantity of rice. The personal appeal by Gloria Arroyo to Nguyen Tan Dung for a guarantee was a highly unusual intervention and highlighted the Philippines’ dependence on food imports, rice in particular. “This is a wake-up call,” said Robert Zeigler, who heads the International Rice Research Institute. “We have a crisis brewing in rice supply.” Half of the planet depends on rice but stocks are at their lowest since the mid1970s when Bangladesh suffered a terrible famine. Rice production will fall this year below the global consumption level of 430 million tonnes. Street protests and rioting in West Africa towards the end of last year were a harbinger of bigger problems, the World Food Programme said. The global information and early warning system of the Food and Agricultural Organisation (FAO) has monitored outbreaks of rioting in Mexico, Morocco, Uzbekistan, Yemen, Guinea, Mauritania and Senegal. There have also been protests in Jakarta, the Indonesian capital, over government price increases.Population pressure and increased wealth are mainly to blame for the resurgence of food insecurity. More people are eating meat and dairy products in Asia, which increases the demand on the animal-feed industry. Milk powder prices rose from $2,000 to $4,800 per tonne last year as rising consumption of milk products in Asia coincided with shortages in the Western world. Drought in Australia has worsened the problem as have government policies in Europe and America to increase the use of biofuels. Mounting concern about rice has prompted the Indian Government to restrict exports of certain varieties. The measure triggered a surge in global rice prices, which have risen 50 per cent in a year, according to the FAO. The rice shortage is even felt in Britain where the price of basmati, the biggest-selling variety, is rising rapidly. Wheat is suffering even greater pressures, with prices up 115 per cent in a year. A succession of droughts in Australia has put upward pressure on the cost of a food commodity that is already in short supply. Stocks are at a 40-year low and exports are being restricted from Beijing to Buenos Aires. Ukraine started closing its door to grain exports in June and Russia set a 40 per cent export tariff on wheat in January. Argentina has delayed the reopening of its wheat export registry until April to protect domestic supplies, and China, a net exporter of corn, rice and wheat last year, has imposed export quotas on grain in order to stem runaway food price inflation. A surge in its inflation index in December was blamed entirely on rising food prices, notably pork, which rose 48 per cent. Farmers worldwide are worried about feed costs. In Europe pig and poultry breeders are threatening to cut production unless they are paid higher prices. © Copyright 2008 Times Newspapers Ltd. |
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235365 - Energy follows thought. As you think, so you are.
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Whitley MD
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Posted: March 07 2008 at 7:25pm |
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A farm adjacent to one of my father's ranches has been in the CRP program for many years. They are paid $40 per acre not to plant.
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It is better to give than to receive.
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Posted: March 07 2008 at 9:27pm |
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Whitley MD Thank you for your reply. Years ago the government paid more than that per acre. It is interesting that they are still doing it.
Saw an article from India I think that said it was stupid for us to be using our farm land in the U.S. to grow corn for fuel. We will all die of starvation before the we die from the green house effect. So the government should quit paying to keep land fallow and quit trying to convert corn into fuel. But duh, when was anyone in the government smart! |
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