Amplify’d from www.marketwatch.com

Corn prepares for its battle for land

Soybeans, wheat, cotton and corn are among the agricultural commodities in the U.S. which compete for land each crop year, and among those, “corn is the most endangered market,” said Todd Hultman, president of DailyFutures.com. “2011 is shaping up to be a critical time” for corn.

Corn prices (CZ10 587.00, -2.75, -0.47%)  have already rallied 30% year-to-date to reach a two-year high near $6 per bushel on the Chicago Board of Trade.

“Cotton, corn, wheat and other agricultural commodities are all fighting for the same land,” said Tony Sagami, editor of Asia Stock Alert. “Farmers, like any other businessmen, will always allocate their resources to the most productive (profitable) options and normally make the right decision,” he said.

Even in this time of global shortage, “the U.S. produced five times more cotton than it actually used,” said Hultman. So “from a domestic viewpoint, only corn is in danger of being under-produced, and policy makers should take note.”

In January, the USDA raised its estimates on the nation’s corn crops by 2% from its November forecast to a record level of 13.2 billion bushels. Read a story from January on corn’s price drop.

Since then, those expectations have been cut down. In October, the government agency said it expects corn production of 12.7 billion bushels, down 4% from the September forecast and down 3% from last year’s record production of 13.1 billion.

A rally in wheat prices, fueled by droughts and fires in Russia that damaged wheat crops and a ban on Russian wheat exports, was likely what initially triggered the big climb in corn prices, said Milne. Read more at www.marketwatch.com

 

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