Euro Climbs to Two-Week High Against Dollar

The euro soared to a two-week high against the U.S. dollar Thursday, as that and other factors accounted for a number of commodities also climbing.

Concerning the euro, European Central Bank President Mario Draghi reaffirmed his commitment to maintain and preserve the euro, as well as the monetary system of the area.
 
That announcement was what pushed the euro up against the dollar, which helped boost many other commodities as well.

Not only were commodities helped though, as the news from the ECB also helped Wall Street equities to soar as well.

Precious metals gold and silver were unsurprisingly higher, as was much of energy, although that was aided by Turkish strikes on Syria, which generated supply concerns, along with a fire at the largest refinery in the U.S, which is run by Exxon Mobil (XOM), along with another refinery fire in Russia.

In agriculture, corn, wheat and soybeans were all up on the day, after hitting a three-month low the day before. Sugar was also up.

Other metals rising included platinum and palladium in the U.S.

Rains Too Late for Corn

For corn that has already pollinate, the effects of the drought and high temperatures make it too late for that corn no matter how much rain comes in the near future.

The problem is rains won't affect the corn once it's pollinated, meaning the existing kernels could gain weight, but there will be no more kernels forming on the ears.

As of last Sunday (July 15) the USDA said 71 percent of U.S. corn was pollinating. That means when that's complete the corn yields are basically locked in no matter what the weather brings. Pollinated corn cannot be reversed once the process has happened.

Corn which is rated very poor in Iowa, which amounts to approximately 1.1 million acres, is now considered to be a probable total loss. Much of that is in fields sandy soils and hilly areas that don't hold water like lower and flatter regions.

Having said that, some areas of Iowa, which is the top corn-producing state in the nation, would be helped if rains do come. That means pollination has yet to set there.

Other states that could still have a lot of the corn salvaged if rains come are South Dakota and Minnesota. At this time Minnesota has the best corn crop in the nation.

The two worst corn producing states among the leading corn states are Indiana and Missouri. An unbelievably low 7 to 8 percent of the corn in those states is rated as in good to excellent condition.

Recently the entire state of Missouri was designated as a disaster area because of the effects of the drought.

At this time all of this is assuming rains will come. But it appears that may not even be the case, and the states that are still holding out hope could have them dashed as the drought seems to be pushing into those areas now.

Even the best case scenario at this time is rather bleak, but those corn farmers able to salvage corn will enjoy some major profits going forward.

Monsanto (NYSE:MON) Helped by Lower Corn Yield Projections?

With almost everything going against it, Monsanto (NYSE:MON) may get some help from the recent corn yield estimates which were about 25 percent lower than projected, which should inevitably drive corn prices up even more.

One of the major and successful strategies of DuPont (NYSE:DD) has been to put in the minds of farmers whether or not the added traits of Monsanto's SmartStax corn is worth the extra price.

When early returns from the field revealed yields were lower for SmartStax corn, that added fuel to the fire, and Monsanto is left wondering, along with their shareholders, where future growth was going to come from.

Now that the overall corn yield in the U.S. is far lower than expected, and corn prices sure to increase, that leaves higher margins for farmers to work with, which may persuade them to give Monsanto another try.

Of course DuPont will probably respond to that challenge and lower their prices to gain even more market share.

Even so, if yields are enough to generate interest from more northerly fields, which haven't revealed results yet, Monsanto just may get an unexpected boost from higher corn prices.

That could also include higher soybean prices as well, where soybean yields are over 20 percent lower than estimates too.

Deere (NYSE:DE), CNH Global (NYSE:CNH), AGCO (Nasdaq:AGCO) and Lower Crop Yields

Agricultural stocks have been blazing as corn, soybean and wheat ending stocks were all lowered from prior estimates, with corn falling 21 percent and soybeans 26 percent below consensus. Wheat dropped 5 percent below former projections, 2 percent below consensus.

UBS (NYSE:UBS) said this about the changes, "USDA lowered its forecast of 2010/11 corn production to 12.664B bushels, from 13.160B bu, on lower corn yield. Also, USDA lowered its forecast of 2010/11 ending corn stocks to 902M bu, from 1.116B bu, 21% below the consensus forecast of 1.149B bu. USDA lowered its soybean ending stocks forecasts to 265M bu (26% below consensus of 356M), and lowered its wheat ending stocks forecast by 5% to 853M bu (2% below consensus of 870M). Given that forecasted corn and soybean ending stocks were well below consensus, we see the report as bullish for corn and soybean prices."

UBS kept a "Neutral" rating on Deere (NYSE:DE) and CNH Global (NYSE:CNH), while maintaining a "Sell" on AGCO (Nasdaq:AGCO), as farm as farm machinery makers go.

Lower yields should result in higher prices and margins, which could end up with farmers ordering more new machinery.

Archer-Daniels-Midland (NYSE:ADM) and Corn Crop

While a lot of excitement has been generated in the agriculture sector because of lower yields, especially with corn and soybeans, that doesn't necessarily mean something positive for every company connected to food, such as Archer-Daniels Midland (NYSE:ADM).

Deutsche Bank (NYSE:DB) has noted just that when downgrading Archer-Daniels-Midland from "Buy" to "Hold."

"Additionally, a tighter U.S. corn crop is incrementally negative for agricultural services segment volumes and profitability, while the current sweetener pricing letter does not appear to be adequate to offset higher corn, barring hedges. While F1Q11E (end Sept) should benefit from earlier corn harvest and fundamentals remain relatively solid, future positive catalysts are difficult to discern and valuation looks fair," said Deutsche.

ADM closed at $32.56 Monday, dropping $0.30, or 0.91 percent.

CNH (NYSE:CNH), Deere (NYSE:DE), Agco (NYSE:AGCO) Skyrocket on Lower Corn Projections

The downward adjustment of corn production by the U.S. Department of Agriculture has driven up stocks in the agriculture sector Friday, including farm equipment makers CNH Global NV, (NYSE:CNH), Deere & Co. (NYSE:DE) and Agco Corp. (NYSE:AGCO)

Major fertilizer movers are CF Industries (NYSE:CF), Mosaic (NYSE:MOS) and Agrium (NYSE:AGU).

For the farm equipment companies, leading the sector is CNH Global NV, which stood at $41.34, gaining $3.65, or 9.68 percent at 1:38 PM EDT. Agco Corp. was right behind them, rising to $42.81, a gain of $3.60, or 9.18 percent. Deere surged to $76.32, gaining $4.42, or 6.15 percent.

Corn, wheat and soybeans were all up on the downwardly revised corn expectations.

CF Industries (NYSE:CF), Mosaic (NYSE:MOS), Agrium (NYSE:AGU) Soar on Corn Forecast

The fertilizer industry is popping today on the U.S. Department of Agriculture’s crop forecast report which lowered its forecast for corn. CF Industries (NYSE:CF), Mosaic (NYSE:MOS) and Agrium (NYSE:AGU)

Major crops corn, wheat and soybeans all rose on shrinking corn expectations.

CF is leading the sector higher, skyrocketing by $11.72, to increase to $110.36, an 11.88 percent gain a of 1:25 PM EDT. Mosaic was next, rising a hefty $5.83 to $67.39, gaining 9.48 percent, and Agrium followed with a gain of $5.52, up to $80.92, a 7.32 percent increase.

Also helping to push up prices was a nod from mining giant Rio Tinto (NYSE:RTP) that they are starting to be impressed with the fertilizer sector, especially potash.

Goldman (NYSE:GS) Likes Energy, Down on Agriculture

Goldman Sachs Group Inc. (NYSE:GS) said over the next 12 months they see energy as the top performer in the commodity sector, while they view agriculture as the weakest.

Energy is projected to rise at a 27 percent clip, followed by precious metals at 17 percent, and industrial metals at 15 percent. Agriculture on the other hand, is expected to plummet by 10 percent during the same time.

The analysts' report said, "For the more cyclical commodities, oil and copper, while continued indications of more supportive policy in the U.S. and China, better macro data in these key countries, and improving commodity data have pushed prices higher within their respective trading ranges, we continue to expect them to break out to the upside in coming months."

In the short term they do see some agriculture products doing well, as they raised their outlook on raw sugar, cotton, corn and arabica.

Corn Prices Continue to Fall on Good Weather Conditions

Corn prices continue to fall as cooler and wetter weather continues to hit the Midwest of the United States.

Hot, dry weather had been pushing prices of corn up on concerns there wouldn't be a weather change, but now that it has come, prices will go back to where they should be at in light of the potential harvest.

Wheat and soybeans also continue to fall, with wheat falling on the reality it won't be needed for feed substitute now that corn production looks better.

Corn futures for December delivery dropped 5.5 cents, or 1.4 percent, to $3.885 a bushel at 10:00 AM on the Chicago Board of Trade.

Forecasts for cool and wet weather continue on for the next several days, giving the region what it should need to generate a bountiful corn harvest.

Soybeans Follow Other Grains Down on Improved Weather

There was no doubt corn, wheat and soybeans were going to plunge if wetter and cooler weather was going to arrive in time, and now that it has, the major agricultural products plunged in price today, with soybeans right behind corn in how deeply they dropped.

Of the major three, wheat future dropped the least, as other factors outside the United States, like the Russian drought, continues to play a role there.

Soybean futures for November delivery had a decline of 13 cent to $9.72 a bushel, or a 1.3 percent drop.

Corn for December delivery dropped 3.3 percent, or 13.25 cents, to settle at $3.94 a bushel.

Wheat Prices Drop as Corn Streak Ends

After concerns over the corn harvest in the Midwest was alleviated with a positive weather forecast of wetter and cooler, corn prices plunged, and wheat prices followed them down, although at a modest level.

Concerns over the drought in Russia have brought support to wheat prices, along with other weather concerns around the globe.

But as in other recent years, so many countries have started growing wheat successfully, that the supply has outstripped demand, keeping prices under pressure for years.

Now the idea that wheat may have to replace corn in animal feed will probably be laid aside, putting more downward pressure on the price of the grain.

Wheat for September delivery dropped 5 cents to finish at $5.8225 a bushel.

Corn Prices Plunge on Favorable Weather Forecasts

It was make or break for corn in the Midwest, specifically in the western and eastern parts of the region, as the corn was either going to be punished hard by the hot, dry weather, or it needed rain to save it.

The latest forecasts show the weather should be coming to the rescue, and consequently corn prices plunged on the news.

Both elements that were needed to give corn a chance, and wetter and cooler weather is on the way, and it will result in a solid harvest, assuming the forecasts are accurate.

Corn for December delivery dropped 3.3 percent, or 13.25 cents, to settle at $3.94 a bushel. That is corn that is still in the field and expected to be harvest in the fall.

Already harvested corn for September delivery fell the same amount, 13.25 cents, to $3.815 a bushel, or a decline of 3.4 percent.

What Marc Faber Likes ...

Marc Faber said in a recent interview that there is one particular investment sector he particularly likes, and that is commodities. Within commodities he likes agriculture, which he views as getting very cheap.

Commodity investment guru Jim Rogers has been saying the same thing for at least the last year, with the idea that agriculture prices are depressed, and ultimately they'll start to rebound, as demand isn't going to ever go away, and will only increase.

For the three favorite picks of Faber in the agriculture sector, he likes three of the majors: corn, soybeans and wheat.

The timing is everything of course with all of this, and it's impossible to know when agriculture will finally start to move forward again.

But it's only a matter of when and not if, and then, not only will these major crops start to rise in value, but there will be an additional price rise for fertilizer companies and other firms connected to the sector as all elements related to agriculture benefit.

Monsanto (NYSE:MON) Cutting Prices to Increase Profits

Monsanto Seed Prices

As a number of its customers have expressed dismay at the prices of Monsanto (NYSE:MON) seeds, the company has been receiving lukewarm responses to some of its product line, which has resulted in lowered sales. In response, Monsanto is ready to cut costs by about 15 percent a year on some of its seed to generate more profits.

Two of the seeds that have been underperforming are SmartStax corn seed and Roundup Ready 2 Yield soybeans.

A strategy is to to generate rapid adoption by farmers which would increase profit through volume of sales rather than margins alone.

In 2007 Monsanto has set a goal of doubling their gross profit by 2012, and with the resistance to their prices, that is not likely to happen now.

Original estimates for sales of SmartStax and Roundup Ready 2 have been lowered by a large 25 percent, to give an indication on resistance to prices.

Although sales of corn seed should remain about the same as far as market share, the high price of their Roundup Ready 2 and lower sales will cause them to lose market share in soybeans this year.

It seems Monsanto attempted to do business as usual in an economic climate that couldn't support it. Pricing from competitors and lower farm income from declining crop prices are the major reasons behind the slowing sales in Monsanto seeds.

Corn, Wheat, Soybeans, Oats Mixed

Corn, Wheat, Soybeans, Oats

With an abundant crop around the world in 2010, major agriculture prices continue to struggle to find support, and even after a bad week finished the work week before Easter weekend mixed.

Climbing for the day were wheat, oats and soybeans, while corn dropped on the day.

Even with the excessive inventory, most farmers continue to plow ahead with most crops to increase their plantings in 2010. After several years of this you would think they would learn, but they're probably getting taxpayer subsidies in relationship to the planting, otherwise it would make no sense.

Marc Faber: Food at 200 Year Low

Marc Faber on Food Commodity Prices

Recently Marc Faber was talking food commodities and stated as a whole they are at their lowest levels when measured by real time dollars.

Faber said: “Food commodities are at 200 year lows in real time dollars.”

The question for the majority of food commodities is whether the supply of food will increase at a rate the demand is through a growing population.

Right now it seems there is a huge supply because, in fact there is. But that supply has come from a number of countries increasing their domestic acreage to grow a variety of commodities, especially major ones like wheat, corn and soybeans.

Once this come to fruition, the question then will be answered as to how the price of food commodities will react in the years ahead.

Even droughts and other events which bring down crop production hasn't dented the larger agricultural commodities because of the enormous amount being planted.

Eventually all of this will come to a head, but for now it seems a lot of the major food commodities will have downward pressure on prices.

One other major factor is the cost of inputs, which have seemed to rise in price some lately, but that can be offset by genetically modified plants which largely reduce the needs of those inputs, depending on which particular crop you're talking about.

The bottom won't hit with food commodities as a whole in my opinion, but they will be hit on a crop by crop basis, even more so the further you move from the major foods we eat.

Marc Faber on Food Commodity Prices

Commodities: Grains Up on Weather

Grain Prices Up

With weather projected to have a negative impact on spring planting, grains responded by rising in price, with major crops wheat, corn and soybeans all increasing today.

Other factors helping grains jump up were the stock market rising and the dollar weakening again.

In the Midwest, it's expected to be wetter than it normally is, and in southern States like Texas, it's expected to be cooler; bringing doubt as to how the planting season will launch.

Floods are forecast for a number of Midwestern states, including Minnesota, Iowa and North Dakota.

This is all typical of this time of the year, and once acreage is detemined by the USDA, things always settle back down to market forces and usual grain pricing behavior follows.

Grain Prices Up

Corn Futures Down on Dollar, Inventory

Corn Futures, Dollar, Corn Inventory

Corn futures dropped again as the stronger U.S. dollar made investments and exports unattractive, and the significant global corn inventory has left no base to work from.

As with wheat, as mentioned in my last post, when the prices of grains surged in 2008, farmers seeded huge amounts of wheat, corn, soybeans and rice, which all but assured there would be downward pressure on grain prices in the years ahead.

I'm not sure why the farmers continue to do this, or if they're being told wrongly, but farmers need to understand that if they put huge seedings of crops in the year after a big price increase, they can be sure huge numbers of farmers around the world will do the same.

While there is always the possibility of weather having a devastating impact on some crops, as last year showed, there was so much grain on the market that even when their were droughts or other weather problems, there was so much available it didn't have much of an impact.

With corn this is the story, and will continue to be a bearish story until some farmers drop planting it based on past performance.

Eventually there will be major demand around the world for food, but we are far from that with grains at this time, even though analysts and wealthy investors like Jim Rogers tout food and agriculture in general as a great future investment.

It will be all of that, but when farmers plant far more than global demand warrants, we're always going see downward pressure on corn futures and other grains until it corrects itself.

Corn Futures, Dollar, Corn Inventory

Corn Prices Rise on Weather

Corn Prices 2010

Although it's only speculation at this time, corn prices surged on the possibility melting show in the mid-west will result in flooding, which will in turn cause a smaller planting of corn by farmers in the spring.

A smaller planting of course will end up with a smaller yield of corn.

Even so, estimates from the USDA have corn acreage to be planted this year at some 89 million, up from the 86.5 million acres in 2009.

With weather expected to be at very cold levels in the region for the next three weeks, along with a potential 6 inches of water inherent in the snow laying on the ground of the great plains and the mid-west, that will put back the normal time of the spring thaw, making it harder to plant as well as harvest corn.

Taking that all into consideration, the question is whether the additional corn acreage planted in 2010 will make up for the late season and possible crop shortage in some areas.

Corn Prices 2010

Monsanto (NYSE: MON) Will Meet Profit Targets

Monsanto (NYSE: MON)

Monsanto Co. announced this week that the profit targets they set for themselves should be reached for the year.

After taking charges for restructuring, the company said they're on track for earnings of $3.10 to $3.30 a share in 2010.

Thomson Reuters analysts had estimates at the high end of those Monsanto projections, with expectations of $3.28 a share.

As for their crop strategy, they are focused primarily on soybean and corn products going forward, and are continuing to look forward to increasing growth in Latin American countries; their major growth markets.

Monsanto (NYSE: MON)