Armada Intelligence » Food

Wheat Crop “Worsens” $

karen — Wed, 01 May 2013 17:43:18 +0000

The USDA issued a preliminary report on the wheat crop condition in the United States. The report showed that the quality and condition of the wheat crop has worsened as a cold snap is hitting the Midwest. Conditions in Kansas, Oklahoma, and Texas have worsened of late as a result of this cold snap. A late season freeze warning is out for much of the upper Midwest for the latter part of this week – and based on the timing it could hit at a bad time.

Wheat quality conditions have a big impact on the market for those grains. Only the highest grade of wheat can make it into human-consumption products. Lesser grades of wheat are typically used in cattle feed and other types of non-human uses. A full report on

Grain Prices “Plummet” $

karen — Fri, 29 Mar 2013 19:17:14 +0000

In the farming community, a daily drop that hits the Chicago Board of Trade’s daily limit is considered to be a “plummet”. We reported to you last week that acres planted by farmers for corn and soybeans are going to hit some highs not seen since the bumper plantings in the 1930′s. Following up on the plantings report, we also got a USDA report that showed that there was a bit more inventory in national grain stores than previously expected. The reason why corn prices have dropped so much today after the report was released is that

World Food Prices Remain Flat $

karen — Fri, 29 Mar 2013 19:13:48 +0000

We keep tabs on the global situation for food prices. The US military believes that the price of food on a global basis can be one of the greatest sources of unrest and conflict. From an economic perspective, US consumers spend about 13% of their household income on food (including eating out). Other countries that we count on for growing global consumerism (such as the emerging markets in China, India, Brazil, etc.) have food costs that can run as high as 40% of total household income. Therefore, when global food prices are higher, we see more pressure on

Grains Hit by Heavy Winter Weather – in a Good Way $

karen — Sat, 09 Mar 2013 00:38:09 +0000

The commodities sector is interesting because what is sometimes good for the commodity trade is bad for consumers and businesses – and vice versa. So, we have a situation where we are getting a mixed bag of news – largely because of the strong winter weather that has hit the nation’s grain belt over the past

Wheat Drops on Midwest Rains $

karen — Fri, 08 Feb 2013 18:39:12 +0000

Remember when we wrote about the lessons gained during the Dust Bowl era? Especially the one regarding wheat and how quickly it can rebound after a small amount of rain? We are getting another great example of this recovery in wheat production estimates as a result of recent moisture content improving across the grain belts in the US. Because of how winter wheat germinates, even if the fall growing season is not as strong as would be considered to be “good”, early spring rains can help it fully recover – it primarily gets delayed.

Take a look at the commodity reports from the GSCI index produced by S&P. You can get the full list of GSCI indexes at its official website at S&P GSCI. The most recent chart for agriculture shows the recent drop in wheat prices as a result of the recent rains throughout the Midwest. Wheat prices are down about 2.11% year-to-date and down about -2.31% for February alone. Since wheat is the only commodity currently in the ground, it is the one most impacted by the most recent rains throughout the region, but others have shown some of the same bearish activity as well.

Demand conditions have also created a bit of a bearish condition against most grains. News out today that order sizes from many emerging markets where a bit less than expected – suggesting that perhaps the demand and economic conditions in certain emerging markets (India, China, Southeast Asia, etc.) is weaker than many thought.

Drought conditions continue to play a role in the outlook for food prices. We will have a full report on global food prices in several days when January reports are released. For now, the drought monitor map shows that the deep-rooted drought still has a lock on big portions of the country – and this will be the third potential year of difficult drought conditions on the country. There has been some easing of drought conditions in Texas and what the map doesn’t show is some really strong rains that moved across eastern and central Texas this week – which will help ease the drought even further. Even Kansas and Nebraska got some rain this week (approximately an inch in some areas) which could start to ease drought conditions even further. If this is the pattern that spring rains will take, we can begin to foresee a period in which the drought has lifted, ponds start to refill, rancher herd sizes start to expand, and grains and food products start to come on better than in years past. Note: it will still take about 3 years for cattle herd sizes to recover – pigs, sheep, and poultry can recover in a year. That would help to ease food prices (for many products) and hopefully help to lower food prices overall for consumers. Again, we want to ultimately see consumer discretionary income improve – that will lead to broader spending and a healthier economy. These elements, all working together, should help to improve at least this one segment of the economy.

Grain Prices Getting Bumped Around on Fundamental Outlook $

karen — Fri, 04 Jan 2013 17:30:08 +0000

Grain prices are generally settling a bit despite what would seem to be a continued drought in the United States. Even US Wheat is facing price pressure despite areas of the nation’s Midwest that are facing a complete loss of crops. One interview with a grain district manager in Oklahoma said that this year’s crop won’t even “produce enough to get seed wheat out of it”. Despite these observations on the supply side,

Wheat Prices Fall on Outlook for 2013 $

karen — Wed, 12 Dec 2012 15:36:45 +0000

It may seem surprising because the United States is still seeing significant growing regions still in drought conditions. But, the USDA has said that its forecast for 2013 wheat is improving – but not because of what may happen in the United States. The USDA cut its forecast for wheat because of what is happening in markets that compete against US wheat on a global basis. Reportedly, wheat can be grown just about anywhere and even with poor drought conditions in the US, we can still get enough rain at a critical time in the spring and see wheat harvests grow. And, in markets that suffered from poor soybean and corn harvests last year, many regions have planted wheat because they know they can likely get a crop out of it. The US Drought Monitor is shown at right, and one can see the continued pressure that the growing regions are under as a result of

Most Grain Commodities Soften on Global Demand Concerns $

karen — Fri, 09 Nov 2012 17:08:12 +0000

It may be hard to believe but commodity prices are generally a bit softer in late trading this week on fears that global demand could be dropping. Reuters reported that export sales from the US were about 192,000 tons for the latest week, which were about 600,000 tons short of forecast. This included a cancellation of a sale to an unknown country of about 545,000 tons. Quality concerns

Corn Prices Surge on USDA Report $

karen — Sat, 13 Oct 2012 16:19:43 +0000

The USDA update on the corn harvest forecast showed that the harvest was going a bit worse than expected. The USDA cut its estimates for production and the beginning inventory stocks going into the 2013 planting season, saying that it had reduced its forecast for beginning stocks by more than 193 million bushels. It also lowered its production forecast by 21 million bushels. The wheat forecast

China Aggressively Purchasing Soybeans and other Grains $

karen — Sat, 07 Jul 2012 18:18:50 +0000

Soybeans are a $1.95 a bushel higher than it was a year ago. And although the forecast of easing temperatures next week and the weak jobs numbers report this morning helped to ease all commodities – we still see some significant strength in the crops futures. To add some speculation into the mix, China went to the open market and purchased another major order of soybeans and wheat from the open market. We know that weather conditions in several Asian