which azz are they going to pull more acres across the board, out of?

[Tom In Ont]

ah yes, we are back talking 160 bu corn already.....stupid chits don't realize the drought has merely gone into dormancy.

Goldman upbeat on corn, despite big sowings ahead

Goldman Sachs recommended a commodity bet including a long position in corn despite forecasting a rise in sowing's of the grain to a 77-year high in 2013, while putting soybean plantings on for a record.

The investment bank included corn, crude oil and a long position in copper balanced by a short in aluminum, in its so-called "CCB commodity carry basket" of raw materials set to outperform.

The trading recommendation springs from an overall forecast that commodities will return to trading patterns of the 1980s and 1990s, when near-term lots traded more frequently above far-away contracts, rewarding investors for buying and holding raw materials.

"As economic growth improves into the latter half of 2013, we believe that current fundamentals are likely to remain tight, increasing the positive carry in forward curves with near-term prices above long-term prices, which will likely create significant investment returns," the investment bank said.

"This stands in contrast to the 2000s, when forward curves for many commodities had negative carry with near-term prices below long-term prices, which acted as a drag on returns."

'Demand lag'

The bet on corn came despite the prospect of US corn production topping 14.0bn bushels next year for the first time, boosted by a rise in plantings of some 900,000 acres, and a return in yields close to 160 bushels per acre.

This was "sufficient to bring Chicago corn prices sharply lower in the second half of 2013, and potentially near $5.00 a bushel, as the recovery in demand will lag the production rebound", the bank said.

"Livestock herd expansion is a slow process, while rising ethanol imports from Brazil and the slow adoption of E15 will keep US corn ethanol production below its 2011-12 level."

'Corn prices are too low'

However, the bank foresaw the potential for corn prices to remain elevated at least for the first half of next year, given a disappointing US 2012 harvest, which "in the face of resilient demand requires prices to rise further to avoid inventories from falling to critically-low levels.

Goldman forecast for US corn 2013-14 and (year-on-year change)

Sowings: 97.5m acres, (+0.6%)

Yield: 158.0 bushels per acre, (+29%)

Production: 14.096bn bushels, (+32%)

Feed use: 4.80bn bushels, (+15.7%)

Fuel: 4.80bn bushels, (+6.7%)

Exports: 1.60bn bushels, (+39%)

Year-end stocks: 2.08bn bushels, (+221%)

Comparison with USDA estimates 2012-13

"While the upside potential for soybeans is greater should weather in South America deteriorate further, we have a stronger conviction that corn prices are too low. "Further, corn prices should follow a rally in soybean prices as corn cannot afford to lose acreage ahead of next spring's US planting season."

And corn prices may persist above $8.00 a bushel "should the US drought extend into the summer of 2013".

'Large supply response'

For soybeans themselves, assuming no weather hiccups, the "large ramp-up" in South American production expected at early-2013 harvests "will likely bring soybean prices to underperform corn prices," Goldman said.

Goldman forecast for US soybeans 2013-14 and (year-on-year change)

Sowings: 79.0m acres, (+2.3%)

Yield: 43.2 bushels per acre, (+9.9%)

Production: 3.362bn bushels, (+13.1%)

Crush: 1.625bn bushels, (+4.2%)

Exports: 1.45bn bushels, (+7.8%)

Year-end stocks: 310m bushels, (+123%)

Comparison with USDA estimates 2012-13

"Average weather conditions in 2013 would bring a large supply response in the US and bring prices sharply lower in the second half of the year."US soybean sowings next year were pegged at 79.0m acres, a rise of 1.8m acres year on year, and enough to take production potentially to a record of a little under 3.4bn bushels.

However, the "key to soybean prices remains the transition from the current strong US export pace to the South American export ramp-up in February-March", Goldman said.

"Disappointing weather conditions during South American planting create risks that harvest and exports are delayed, pushing US stocks lower and prices sharply higher."

'Already-poor start'

Wheat prospects for 2013-14, meanwhile, are already clouded by setbacks to winter wheat seedlings in parts of Europe, with northern France and the UK beset by unusually persistent rains, and dryness hurting crops in the former Soviet Union and the US.

Goldman forecast for US wheat 2013-14 and (year-on-year change)

Sowings: 58.0m acres, (+3.6%)

Yield: 44.0 bushels per acre, (-5.0%)

Production: 2.182bn bushels, (-3.8%)

Food, seed use: 1.025bn bushels, (+0.2%)

Exports: 1.150bn bushels, (+4.5%)

Year-end stocks: 624m bushels, (-11.4%)

Comparison with USDA estimates 2012-13

"As we turn to 2013-14, we see risks that the supply response may be limited as winter wheat crops in the northern hemisphere are off to an already-poor start," Goldman said.

Indeed, the bank forecast a small decline in US wheat output next year, as lower yields more than offset a rise in seedings.

"A further decline in global supplies in 2013 creates risks that global wheat inventories decline even further.

"Such an outcome in the face of inelastic food demand would likely push wheat prices sharply higher and well above corn prices to price wheat out of feed demand."

[ses]

Probably just a prelude to USDA release of a few million acres of CRP.

[drdiederich]

I sure hope they don't pull them out of my arse as I think that would be quite painful...

[glowplug]

Early CRP release is off the table, (never was on the table). There's way too many envirowackos (and some sportsmen) who believe that idle acres are the ideal for wildlife (never mind that there is nothing to eat on idle acres so the wildlife opts to live by cropped acres).

Yup, lots of seed corn sold but...............

- some of it is in S. America production (comparative to our US growing season, it's in the July growth stage there) so it's yield is not a done deal.

- some US seed has problems. We will see what germ tests are showing.

- and soybeans are over due for a rally to buy 2013 acres. Some farmers just looking for a reason to switch corn acres to beans. Need a good weather scare from S. America which just might be coming soon.

Frankly I'd love to see the USDA cut by 80% in staff. Put Moe, Curley and Larry to work picking rocks on Faust's farm.

[db51]

What a bunch of hooey. Idiots all. Return to trendline and above yields. lmfao. Same folks massaging jobless numbers.

We're screwed.

[villageidiot]

They dont want to start a panic, heck, we are going to run the risk of running out, they are going to hope current prices, which is unprofitable for endusers, curb demand enough. enduser demand distruction is still a concern, if they set up a scenerio for 8 to 12 dollar corn or higher, the livestock industry dumping animals will look like george kastanza exiting the apt. fire, equals unemployeed meat plant workers, not the kind of folks you want to get upset.

[villageidiot]

They will do all they can to prevent a panic.

Here is exclusive footage of their simulation if the released the truth.
http://youtu.be/zDAmPIq29ro

[Tas]

Fuel: 4.80bn bushels, (+6.7%)

Exports: 1.60bn bushels, (+39%)

There's no way in God's green earth these numbers will be made in 2012-13.If there talking about 2013-14 seems kinda early don't we need to get thought 2012-13 first...