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Corn fell to a one-year low and soybeans dropped the most in five sessions as a slowing global economy eroded demand prospects for U.S. crops used in livestock feed, fuel and food.
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The U.S. is the world's largest producer and exporter of both corn and soybeans.
A drop in pork and poultry production also will curb demand for corn and for protein feed made from soybeans, said Jerry Gidel, a market analyst for North American Risk Management Services in Chicago.
Pork Production
The U.S. may produce 23.452 billion pounds of pork this year, down 0.3 percent from an October forecast, the Department of Agriculture said yesterday in a report. While that's up from 21.943 billion pounds produced last year, output may fall 1.6 percent to 23.075 billion pounds in 2009, the USDA said.
Chicken production is forecast to fall 1.1 percent to 36.74 billion pounds next year from a record 37.142 billion forecast in 2008, the USDA said. The number of chicks placed on feed for slaughter fell during the week ended Oct. 24 to the lowest since November 2003, as losses mounted for Pilgrim's Pride Corp. and Tyson Foods Inc., the two biggest U.S. poultry producers.
Tyson fell as much as 28 percent today in New York Stock Exchange composite trading, after JPMorgan Chase & Co. cut its rating on the shares to ``underweight'' from ``overweight.'' JPMorgan said Tyson may fall 40 percent as losses next year endanger the company's ability to meet its debt agreements.
``Pork and poultry reductions planned for 2009'' will reduce demand for corn and soybeans, Gidel said. ``The poultry situation is ugly.''
Corn is the biggest U.S. crop, valued at a record $52.1 billion in 2007, with soybeans in second place at $26.8 billion, government figures show.
``The two things to look for here is the U.S. dollar and crude,'' said Akhilesh Kamkolkar, head of futures at Halifax Investment Services in Sydney. ``There is limited support from weather also that's threatening more delays in harvesting.''
Wheat for December delivery was unchanged at $5.2325 a bushel as of 3:17 p.m. Singapore after trading between $5.19 and $5.2725. Futures are down 61 percent from a peak $13.495 on Feb. 27.
I have to admit that I'm no "expert" on commodities......but.......my gut is telling me this is a bad situation that will hit both consumers (of the end products) and owners of the stock of agricultural/meat producing companies.
It concerns me overall because America's greatest strength really has been it's ability to produce food. Now to see weakness even here and the fact that we are going through a economic crisis at the same time has gotten me...................nervous.
I don't know guys. Is there anyone out there that got a better handle on this.? And could explain why or why not this maybe a big problem for the U.S.?
Location: Sitting on a bar stool. Guinness in hand.
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Originally Posted by 509er
Before I read the article, wasn't corn too high to begin with? I mean, for the last year or so.
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Originally Posted by TexianPatriot
It's okay. The government will destroy crops and pay people not to grow them (oh wait, we do that already).
I can't argue that corn price did reach highs during the biofuel craze.
But I got this feeling that even if the price does come down a bit it not going to show itself to the end consumer and possibly the agricultural companies. As Texas Patriot pointed out we'll let the stuff rot before letting the floor drop out on these commodities. But what about the meat aspects???......As far I remember for the last couple of years prices have been very good.....Now that they have backed off......what going to happen there? And actually what about milk and eggs how much are they going to be effected?
And of course what about our exports? What happens to them?
Beginning of a major deflation in prices of everything. Just what the big boys want to avoid. Too bad for some but deflation is the real answer to speculation driven inflation.
You have deflation going on but cost and wages are not deflating so you are at odds.
It's cheaper to let your field go fallow and have the gov't pay you then to plant the corn seeds.
The cost of the seeds, fertilizer, etc HAVE not gone down. You'd be at a loss the minute you planted that seed.
As I've said on another post..we are at the abyss looking into it. This credit unwinding is working it's way through the system.
Soon enough the shelves at the supermarket won't be "as full" as they used to be.
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