2012 Agricultural Commodity Price Targets and Ranges.

[MoeAgostino]

Hi Everyone,
We have put together some analysis on what the commodity researchers are predicting and the level of volatility on the major ag commodities.

What do you think of the targets and ranges on Spring Wheat, Canola and other grains? There is alot of market uncertainty again this year.

Moe Agostino
Senior Commodity Strategist
Farms.com Risk Management
moe.agostino@farms.com

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[TOM4CWB]

Dear Moe,

Being as 40 percent of the US Corn crop is an ethanol feedstock... I see the price of oil has risen and corn has dropped.

Since the cash subsidy has stopped Jan 1 2012... have we already made the adjustment for the cash subsidy change for 2012?

$100 /barrel oil will keep exploration and oil sands plants/infrastructure in full development mode.

If no major slowdown... Oil remains unlikely to drop much... is this the logic to your narrow range of expected prices?

I saw at a recent conference a huge pickup in the risk of volatility... especially in black oil, yet few are actually including that risk in the numbers or projections!

If black oil remains stable... leading to a trade range for corn that is unlikey to change much... why all the volitility in barley/corn numbers for instance?

Cheers!

[mbratrud]

Seems optimistic Moe I hope they are right.

[MLamirandeRM]

Hi TOM4CWB,

First I would like to reiterate that these price projections are not ours, but a compilation of those issued by several different North American expert sources.

In regards to your question about the volatility in the barley/corn market...Corn historically 'follows' crude oil. However, due to the current nature of economic instability in the US and European Union and the implications that high crude oil prices would have on demand and stability, we have seen a shift away from the pattern of 'following' in the past year and watched as corn traded more based on fundamentals, demand, and weather concerns. Therefore, the reason that price projections for crude oil are relatively tight ranged and those for corn/barley are quite wide and volatile, is because where corn prices (for example)go this year depends more on the supply/demand picture and less on the pattern of crude. For example, if global economic growth surprises to the upside, leading to greater than expected demand, and if there are any weather issues, corn prices could reach the higher end of the projected range. However, if there are no growing issues, supply is plentiful, and demand continues at it's current pace or less, ending stocks will be at a very comfortable level and therefore prices will fall to the lower end of the range.

I hope this answers your question.

Michelle Lamirande, Farms.com Risk Management

[wilagro]

Optimistic??? Most grains show a downward trend except corn and western barley.

Oil up and grains down...not good.