Corn prices are up 92% in the past year. The key driver of the surge in prices is demand from China. According to the U.S. Grains Council, China expects to import 9 million metric tons of corn this year. This is double its previous record of 4.3 million metric tons in 1995.

March corn futures jumped 16 cents to close at $6.785 per bushel, as reported by Bloomberg/Businessweek. This is the highest level since July 17, 2008.

Continue reading Demand from China Drives Corn Prices to 30-Month High

Demand from China Drives Corn Prices to 30-Month High originally appeared on BloggingStocks on Sun, 06 Feb 2011 11:40:00 EST. Please see our terms for use of feeds.

Last year, Archer Daniels Midland (ADM) was included in my stock picks for 2010 and it lost 4.9%. I gave some consideration to keeping it in the mix this year but thought more highly of other stocks in 2011, so I cast it off.

The turning of a calendar page is arbitrary and investments have only modest correlation to it in most instances. However, two weeks into the year ADM is already up, closing Wednesday at $32.56.

Corn prices have been rising and when last I checked futures were up another 1.47% in early morning trading.

Continue reading Chasing Value: Corn Soaring, ADM Boring, Investors Snoring

Chasing Value: Corn Soaring, ADM Boring, Investors Snoring originally appeared on BloggingStocks on Thu, 13 Jan 2011 12:00:00 EST. Please see our terms for use of feeds.

Grain markets have been on a roller coaster since the summer, when Russia banned exports due to drought conditions. Friday, the United States Department of Agriculture (USDA) cut its projection for this year's corn harvest by 3.8%, as reported in the Wall Street Journal.

That news was like pouring gasoline on a fire. The grain markets exploded to the upside, closing limit up. Some exchanges place a limit on how high or low prices can trade on a given day. The limit for corn is 30 cents, for wheat 60 cents and for soybeans 70 cents (each penny equals $50).

Continue reading USDA Forecast Drives Grain Prices Limit Up

USDA Forecast Drives Grain Prices Limit Up originally appeared on BloggingStocks on Sat, 09 Oct 2010 12:40:00 EST. Please see our terms for use of feeds.

What is the connection between feeder cattle and corn? Feeder cattle are placed on feed lots to fatten up before slaughter. Their weight gain is between 800 to 1,200 pounds each. The biggest expense for feedlot owners is grain. Corn is used as the main feed grain. Therefore if corn prices drop, feedlot owners pay less for feed and consequently will reap higher profits.

What kicked off the drop in corn prices was a report by the U.S. Department of Agriculture (USDA) that inventories before harvest were the highest in four years, as reported in Businessweek. That news hit the corn market hard. December corn futures traded at $4.95 per bushel, down 9.4 cents.

Continue reading Feeder Cattle Prices Jump as Corn Slumps

Feeder Cattle Prices Jump as Corn Slumps originally appeared on BloggingStocks on Fri, 01 Oct 2010 13:30:00 EST. Please see our terms for use of feeds.

Pacific Ethanol (NASDAQ: PEIX), the largest West Coast-based marketer and producer of ethanol, closed at $4.64 on Tuesday. Goldman Sachs said on November 27: "We are adding PEIX to the Americas Sell List, as we believe that ethanol equities will continue to lag the energy sector and broader stock market." PEIX overall option implied volatility of 75 is above its 26-week average of 50 according to Track Data, suggesting larger price risks.

VeraSun Energy (NYSE: VSE) operates as an ethanol producer. VSE closed at $10.14 on Tuesday. Friedman Billings says: "Sources tell us House staff hope to complete draft energy legislation today with hopes of a Floor vote next week. Proposed RFS increases exceed existing expectations for near-year corn ethanol legislative demand increases." VSE overall option implied volatility of 64 is above its 26-week average of 53 according to Track Data, suggesting larger price fluctuations.

Aventine Renewable Energy (NYSE: AVR) a producer, marketer and end-to-end distributor of ethanol. Corn futures are down 0.56% to 398.50 and WTI Crude futures are at 94.48 according to Bloomberg. AVR overall option implied volatility of 75 is above its 26-week average of 57 according to Track Data, suggesting larger price risks.

Daily Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Option update: Ethanol producers volatility up as shares at record lows originally appeared on BloggingStocks on Wed, 28 Nov 2007 10:00:00 EST. Please see our terms for use of feeds.