Here it is in a nutshell: Prices of grains and cotton have skyrocketed year to date. The United States Department of Agriculture's (USDA) report released Thursday stated that corn and wheat prices have doubled in the past year. Soybeans were up 50% and cotton was up 155%, as reported in the Wall Street Journal.

What has caused these sharp increases? The key mover has been exports. China, India and countries in the Mideast are stockpiling grains over fears that they will not have enough to feed their people. Corn in storage fell 15% on March 1. Corn has been hit doubly hard because 40% of it is used for ethanol production and a large amount goes for livestock feed.

Continue reading USDA's Crop Report Signals Higher Food Prices

USDA's Crop Report Signals Higher Food Prices originally appeared on BloggingStocks on Fri, 01 Apr 2011 10:00:00 EST. Please see our terms for use of feeds.

March corn futures jumped 24.25 cents a bushel on Wednesday to $6.98. Corn contracts have risen 97% since June. You may be wondering why all this activity in the corn market in the middle of winter. The answer lies in a USDA report that said corn supplies are dangerously low. In fact, they are near the record low set 15 years ago.

What that means is that the corn stocks we have must last until our harvest starts in mid summer. Of the 12.4 billion bushels harvested last fall, we will have only 675 million bushels by Aug 31.To add more fuel to the problem, this new report is 9% lower than the USDA"s January projection, as reported in the Wall Street Journal (subscription required).

Continue reading Corn Surges on Short Supply

Corn Surges on Short Supply originally appeared on BloggingStocks on Thu, 10 Feb 2011 17:50:00 EST. Please see our terms for use of feeds.

There's a catch-22 in world food supply and demand. The demand for food from developing nations is putting pressure on supplies across the globe. But governments are getting increasingly nervous and worried about unrest. To try and preempt civil disturbances, governments have stepped in and are buying food staples. This government buying is driving prices still higher.

Algeria and Saudi Arabia have announced extraordinary purchases of wheat, driving prices to a two and a half year high. Last week Algeria bought 600,000 tons of wheat, much more than usual. Saudi Arabia announced plans to double the size of its wheat stockpile.

Continue reading Governments Stockpile Food to Avoid Panic Buying, Social Unrest

Governments Stockpile Food to Avoid Panic Buying, Social Unrest originally appeared on BloggingStocks on Sun, 06 Feb 2011 13:40:00 EST. Please see our terms for use of feeds.

This year get ready to open your wallet wider and expect higher credit card bills for the basics like food, clothing and energy. You are probably wondering what is going on. While you weren't paying much attention, the price raw commodities surged in 2010. Corn, sugar, wheat, cotton, coffee and soybeans prices soared last year, as reported in the Wall Street Journal.

A confluence of factors pushed prices up. We had and still have demand explosion from China and India. The United Nations Food and Agriculture Organization's monthly food index which monitors a basket of commodities including meat, dairy and sugar rose for the sixth straight month to a record.

Continue reading Higher Commodity Prices Are Grabbing Your Money

Higher Commodity Prices Are Grabbing Your Money originally appeared on BloggingStocks on Thu, 03 Feb 2011 14:30:00 EST. Please see our terms for use of feeds.

The next year may bring higher global grain prices. Several factors are coming together to create supply-demand shortages. Let's first look at the demand side.

Globally, the demand for grains, both feed and consumer products, is increasing rapidly. Developing countries are coming out of the recession and their people are demanding more food products. Food prices are rising across the globe. A Wall Street Journal (subscription required) article states that the United Nations Food and Agriculture Organization said its Food Price Index rose 3.7% to 205 -- 44 points in November -- the fifth straight monthly increase. This takes the index to just 8 points below its peak in June 2008.

Continue reading Global Grain Prices Likely to Rise in 2011

Global Grain Prices Likely to Rise in 2011 originally appeared on BloggingStocks on Thu, 02 Dec 2010 11:30:00 EST. Please see our terms for use of feeds.

Reuters quoted Federal Reserve Chairman Ben Bernanke as saying: "We're not in the business of trying to create inflation. Our purpose is to provide additional stimulus to help the economy recover and to avoid potentially additional disinflation, which I think we'll all agree could also be worrisome."

Bernanke claims that inflation is below the Fed's 2% target. That's hogwash! Sure if you use the "core" CPI, which leaves out food and energy, that may be the case. Not to worry.

Continue reading Bernanke Says He Does Not Want to Create Inflation

Bernanke Says He Does Not Want to Create Inflation originally appeared on BloggingStocks on Sun, 07 Nov 2010 11:10:00 EST. Please see our terms for use of feeds.

Continue reading Gold Jumps to a New Record High

Gold Jumps to a New Record High originally appeared on BloggingStocks on Wed, 22 Sep 2010 10:00:00 EST. Please see our terms for use of feeds.

Continue reading Corn, Wheat and Soybean Prices Surge Higher on Weather Problems

Corn, Wheat and Soybean Prices Surge Higher on Weather Problems originally appeared on BloggingStocks on Mon, 20 Sep 2010 10:00:00 EST. Please see our terms for use of feeds.

In a surprise and unexpected move, Russian Prime Minister Vladimir Putin told Reuters that he was extending the grain export ban until 2011. "I would like to note that lifting of the export ban can only be considered after next year's crops have harvested," Putin said according to Reuters.

Russia is now suffering through its worst drought in nearly 100 years. Grain harvest have been cut by two thirds, down to 60-65 million tons from 97 million tons in 2009.

Continue reading Russia's Putin Extends Ban on Grain Exports

Russia's Putin Extends Ban on Grain Exports originally appeared on BloggingStocks on Fri, 03 Sep 2010 10:00:00 EST. Please see our terms for use of feeds.

World grain markets are in a state of confusion. A prolonged drought in Russia and neighboring Ukraine are causing prices to skyrocket. Wheat prices have risen 58% since May.

Russia plans to ban wheat shipments starting Aug. 15 after concluding that its grain harvest may be down as much as 38% this year, to 60 million tons. The drought is affecting not only this year's crop but also next year's. There is worry that Russia may not get enough rain to plant its winter wheat crop before the frost starts in September.

Continue reading Wheat and Corn Stockpiles Fall as Russian Drought Worsens

Wheat and Corn Stockpiles Fall as Russian Drought Worsens originally appeared on BloggingStocks on Thu, 12 Aug 2010 09:30:00 EST. Please see our terms for use of feeds.

The grain markets are weather related. Any change in the normal growing weather pattern sends the markets into turmoil.

The story of the day is Russia. The farm ministry said that Russia will harvest 85 million metric tons of grain, down 5 million tons from the previous forecast. Why is this news? Russia and Canada vie with the U.S. as the second largest world wheat exporter.

Continue reading Wheat Moves Sharply Higher on Rumors of Drought in Russia

Wheat Moves Sharply Higher on Rumors of Drought in Russia originally appeared on BloggingStocks on Tue, 06 Jul 2010 14:20:00 EST. Please see our terms for use of feeds.

Commodities often move counter to the U.S. dollar. The dollar is selling down, mainly because of the European Union agreement to support Greece.

Grain traders, seeing the weaker dollar moved in on the buy side of wheat and soybeans. Here are prices as of 9:30 EDT:

Continue reading Weaker Dollar Triggers Higher Wheat and Soybean Prices

Weaker Dollar Triggers Higher Wheat and Soybean Prices originally appeared on BloggingStocks on Mon, 12 Apr 2010 11:50:00 EST. Please see our terms for use of feeds.

Who is in charge of regulating the wheat futures market? That agency is the Commodity Futures Trading Commission (CFTC) which oversees trading in the futures markets. One area of regulation is the number of open contracts any one person can have at any given time. The limit is 6,500 contracts.

So then what caused the price of wheat to go wild last year? It seems that the CFTC was complicit in that they gave exemptions for traders to go beyond the 6,500 limit. One trader was allowed to hold 53,000 contracts. Then to make matters worse, six traders ganged up and held 130,000 contracts. According to Bill Tomson, the value of these investments jumped "from an estimated $15 billion dollars in 2003 to around $200 billion by mid 2008.

Continue reading Have wheat speculators gone wild?

Have wheat speculators gone wild? originally appeared on BloggingStocks on Wed, 24 Jun 2009 18:10:00 EST. Please see our terms for use of feeds.

In farms, as on Wall Street, prices drop originally appeared on BloggingStocks on Fri, 21 Nov 2008 18:42:00 EST. Please see our terms for use of feeds.

The press is making a big deal about the extent to which oil and commodities prices dropped during July. The reporting is misleading.

According to the FT, "Commodities prices suffered their largest monthly drop in 28 years in July as crude prices nose-dived more than $20 from an all-time high of $147.27 a barrel." Prices on agricultural commodities fell sharply as well.

Oil at $125 is still disastrous for the global economy, and corn and wheat prices are still fairly near historic highs. In other words, the fact that these costs have come down is purely relative. Consumers and businesses cannot face the sort of inflation that even slightly lower prices create.

In terms of commodities' prices, it is much better to look forward than to look back. Oil production may have peaked -- that has not changed. Exports from large producing nations including Mexico and Indonesia have dropped sharply. Meanwhile, demand for oil may be off a bit, but developing nations, especially India and China, are not going to curtail their use of gas and diesel. Too much of their GDP depends on transporting goods for export.

The idea that agricultural product costs will drop much further is nonsense. Hundreds of thousand of farmers in Africa have been displaced by political turmoil. The U.S. and Canada can only produce so much. The competition between food and ethanol is not going away, and consequently, corn prices will stay high.

Near-record oil and commodities prices are here to stay. The underlying economics are simply too compelling for costs to come down much more.

Douglas A. McIntyre is an editor at 247wallst.com.

Oil price drop number is misleading originally appeared on BloggingStocks on Fri, 01 Aug 2008 08:53:00 EST. Please see our terms for use of feeds.

Continue reading Mexico freezes prices on 150 food products

Mexico freezes prices on 150 food products originally appeared on BloggingStocks on Thu, 19 Jun 2008 18:06:00 EST. Please see our terms for use of feeds.

Continue reading Corn flirts with $8 a bushel on Midwest crop damage from floods

Corn flirts with $8 a bushel on Midwest crop damage from floods originally appeared on BloggingStocks on Mon, 16 Jun 2008 14:48:00 EST. Please see our terms for use of feeds.

Continue reading Corn surges to record on heavy Midwest rain, inflation hedge factors

Corn surges to record on heavy Midwest rain, inflation hedge factors originally appeared on BloggingStocks on Mon, 09 Jun 2008 14:02:00 EST. Please see our terms for use of feeds.

July rice traded as low as $18.52 per 100 pound bag, down about 5.5% and at its lowest level since March 24, 2008. Rice has now declined about 26% since its record high in April 2008.

Wednesday's downward catalyst? Improving rice planting conditions in Asia and the United States, along with falling wheat prices in the U.S. Rice is a staple for about 50% of the world's population. The U.S. Department of Agriculture announced Tuesday that 72% of the U.S. rice crop was in good or excellent condition, up from 65% a week earlier. Further, wheat also fell to as low as $7.40 per bushel, which is 45% lower than the February 2008 record of $13.50 per bushel.

Shortages not likely

Economist Glen Langan, whose specializations include agricultural economics, told BloggingStocks Wednesday the food supply data points do not negate the two macro trends driving grain commodities higher -- rising developing world food demand from expanding middle classes and institutional investors chasing outsized equity returns -- but they do suggest one battle is being won: the battle over shortages.

Continue reading Rice prices hit two month low on increased global supplies

Rice prices hit two month low on increased global supplies originally appeared on BloggingStocks on Wed, 28 May 2008 15:26:00 EST. Please see our terms for use of feeds.

Continue reading Large wheat harvest unlikely to lower U.S. bread, pasta, pizza prices

Large wheat harvest unlikely to lower U.S. bread, pasta, pizza prices originally appeared on BloggingStocks on Wed, 14 May 2008 15:55:00 EST. Please see our terms for use of feeds.