Get used to low prices

[fjlip]

Top Food Commodities Trader Olam Sees Low Grain Prices Into 2017 - Olam International Ltd., one of the world’s largest food commodities traders, forecasts that grain prices will remain low into 2017 as oversupply and softening Chinese demand weigh on crops. "Prices will stay low for the next six months," Olam’s chief executive officer, Sunny Verghese, said in an interview in Singapore last week. "We have very burdensome balance-sheets across the entire grain complex.” Wheat prices have fallen to their lowest in 10 years, while corn is at levels last seen during the global financial crisis, as farmers in key growing regions, including the U.S. and Russia, harvest bumper crops. Low grain prices have been a boon for consumers and companies such as Nestle SA and Kellogg Co. but are hurting farmers and agribusiness including Deere & Co., the world’s largest manufacturer of tractors and combines. "We see a significant increase in exportable surpluses and stocks build-ups in most growing countries; the weather has been very benign," he said. "On the demand side, there is some softening in China.” The views of Olam and its larger rivals, including Archer-Daniels-Midland Co., Bunge Ltd., Cargill Inc., Louis Dreyfus Co. and Glencore Plc, are closely followed by commodity investors because their trading relationships give them insight into global supply, demand and inventories trends. Verghese downplayed the risk that the potential emergence of the La Nina weather phenomenon could boost prices, saying Olam in-house meteorologists have nearly ruled out its arrival. "We see a very low prospect of La Nina event," he said. "We have proprietary research, and all the leading indicators show that we are unlikely to see one." La Nina is an on-and-off weather phenomenon that could make parts of the U.S. colder, Brazil drier and Australia wetter, boosting prices for commodities including natural gas, soybeans and coal. While Japan’s weather bureau last week said the pattern has already set in, other meteorological agencies, including the U.S. Climate Prediction Center, have recently lowered the chances of the phenomenon emerging this year or in early 2017. Verghese painted a particularly bearish outlook for corn, saying that the trading house largely agreed with U.S. Department of Agriculture projecting a record corn yield this year. Olam, however, sees a yield of 169-170 bushels per acre, below the 175.1 bushels projected by the USDA. "Even at 169, it doesn’t really matter. We are going to have a big crop." He said. The USDA is scheduled to update its forecast on Monday. Front-month corn prices in Chicago fell as low as $3.1475 a bushel in late August, the lowest since September 2009 and less than half the record high set in 2012 of $8.49 a bushel. Near-month wheat prices in Chicago fell last month to a 10-year low of $3.8675 a bushel, down more than 70 percent from the 2008 all-time high. Despite large crops and bumper stocks, Verghese said the world isn’t entering into a sustained period of ultra-low grain prices. "It’s a cyclical phenomenon. It’s not a structural one," he said.

[Hopalong]

Sort of puts the lie, at least in the shorter term, to climate change and global warming which some predict will cause crop failures and production short falls.

[samhill]

I don't smoke, but this guy is into some good stuff.
Ask South America how wonderful big was their crop. Ask S. Africa, ask China how the flood was a big boost, ask France/Germany how the crop was this year, ask Ontario, heck, ask western Canada.

[SASKFARMER]

The Boom in Ag peaked two summers ago!
Welcome to the hand to mouth we can survive cycle!
Throw in a low Production crop in 2017 for western canada and still won't increase the price we get!
Wake up every one we are getting paid 1934 prices in 2016 and our costs keep going up every day!
Bayer did it on seed and agrium joining potash do you think it's done to help us farmers.

World is out of food I have now seen happen twice in my life time both filled by farmers changing and producing more!

Here we go again.

And they say history doesn't repeat it self!

[farmaholic]

My biggest.concern is if grain commodity prices get too high people will simply stop eating!

[fjlip]

Everyone in the chain can make money paying DOUBLE current prices...farmer share is SFA of final product, any commodity is NOT valued only the processing/ transport/ selling, all mark up 100% and pass on.
Yes diet change by billions of people and we are screwed. Also if word is Canada's crop is POOR quality, NOBODY will want to buy at any price, will shop elsewhere due to MASSIVE supply!

[Partners]

Low prices should be $8.00 wheat and $12.00 canola.Not this ridiculous shit.

[farmaholic]

Sadly, the more we get paid the more our suppliers of goods and sevices will take. It almost has to be luck...before the Industry has time to react to the increase in our prices.

[blackpowder]

Reviewed some sale prices from 11, & 12. $14 peas and canola. $9 wheat.
Still say highest for an entire lifetime.

[malleefarmer]

Despite large crops and bumper stocks, Verghese said the world isn’t entering into a sustained period of ultra-low grain prices. "It’s a cyclical phenomenon. It’s not a structural one," he said.

Until there is a major reduction in supplies or a shift in what farmers world wide plant prices will be on low side of average or worse.
My counterparts in Germany Sweden and Denmark all tell they will continue to grow wheat barley and canola there "program" makes cereal farming profitable whatever the price meaning subsidies presume france is no different.

Find his lamina comments interesting we are currently in and has been statistically proven one of our strongest laninas ever.

Weather forecasts for aust are wet and good finish and if you believe 2017 forecast another average year.

[fjlip]

USDA, another NAIL in farmer income, Corn ending stock projected to increase 39% a year from now.
Soybeans increase 87% , Wheat only 3%. Canola takes a crap immediately, a**hole traders...So ....next year wheat will be best crop?
Bring on world wide crop loss, even 10% would help us all.

Next great crops in Australia...Australia Seen Harvesting Second-Biggest Wheat Crop After Rain - Australian farmers are set to harvest the second-biggest wheat crop on record after winter rain boosted plant
development. Production may total 28.1 million metric tons in 2016-17, the Australian Bureau of Agricultural & Resource Economics & Sciences said in a report. That compares with
the agency’s June estimate of 25.4 million tons and 24.2 million tons a year earlier. Farmers typically begin harvesting wheat starting next month. A bigger Australian crop will add to
global stockpiles already forecast at a record and further pressure benchmark Chicago prices that are heading for a fourth annual loss. Australia had its second-wettest winter on
record after the end of El Nino conditions, according the Bureau of Meteorology. The country’s total winter crop production, including wheat and barley, is set to climb to a record 46.1
million tons in 2016-17, Abares said. “Seasonal conditions in most cropping regions during winter were very favorable, and crops are generally in very good condition at the beginning
of spring,” the report said. “In the eastern states, including South Australia, winter rainfall was average to above-average. In Western Australia, winter rainfall was more variable but
timely and the season opening was generally very favorable.” Western Australia’s wheat crop, the country’s biggest, may total 10.5 million tons from 9.3 million tons forecast in June,
Abares said. Production in New South Wales, the second-biggest grower, is set to total 7.95 million tons from 7.5 million tons estimated in June, it said. Australia’s barley output will
reach 9.5 million tons, the second-biggest on record and up from June’s estimate of 9 million tons. Canola production will probably be 3.6 million tons from 3.2 million tons predicted
in June. Cotton output may total about 875,000 tons in 2016-17, up from 579,000 tons a year earlier. (BLOOMBERG)
Australian officials, citing "very favourable" growing conditions, lifted their forecasts for domestic barley, canola and wheat crops – setting the scene for what one analyst
termed a "gruesome" export battle. Abares, the official Australian commodities bureau, hiked by 2.7m tonnes to 28.1m tonnes its forecast for the forthcoming wheat harvest, upgrading
it to the second highest on record, albeit keeping it below some estimates of 30m tonnes or more which have been suggested. For barley, the production estimate was lifted by
370,000 tonnes to 9.50m tonnes, putting Australia on track for its second biggest crop of this grain too, while the canola output forecast was lifted by just under 400,000 tonnes to
3.63m tonnes. The upgrades reflected what Abares termed "very favourable… seasonal conditions in most cropping regions during winter", with the bureau adding that crops were
"generally in very good condition at the beginning of spring". However, the bureau cautioned that bumper crops – Australia's winter crop harvest overall was pegged at a record
46.1m tonnes, a rise of 16% year on year – was not in the bag yet, and will "only be achieved if spring rainfall is sufficient and timely. This was true "especially in regions of Western
Australia", the top wheat growing state, "that had average-to-below-average winter rainfall". Abares added that "crops in some regions of Australia have developed relatively shallow
root systems - which will not readily access stores of lower layer soil moisture", making them vulnerable to drier spells. "Rain makes grain - but after all this high rainfall in the southern
hemisphere spring, conditions in the eastern states are presenting a threat to average protein levels there," said Mr Fell, a former wheat analyst at Abares, who co-ordinated the
Australian Crop Report briefings prior to 2013. "If harvest is wet, quality could also suffer," with damp encouraging kernels to sprout, cutting values of all-important wheat proteins. At
Commonwealth Bank of Australia, Tobin Gorey said that the "trade is – and will remain for some time yet – worried about the supply of milling grade grain in eastern Australia".

[malleefarmer]

re south Africa and Europe all my farming friends is only 6 in total crop yields 25% above average quality down. One german down south east near black forest averaged nearly 8t ha





the other thing farmers worldwide we are all getting better at what we do growing more grain on whatever our given amount of rain with new varieties and better farming practices and untapped areas of Russia and Ukraine once they get there agronomy up to rest of world and there infrastructure at ports and up country storage look out, its really third world.

[SASKFARMER]

Low volume high price!

Less trucking less shipping less freight!

One big world wide piss poor production is what's needed! Till people starve the market won't react.

[malleefarmer]

Farmaholic is correct the world will not let people starve always capping price.
Often ponder in 10 years from now how much govt intervention there will be in grain pricing

[MBgrower]

The trade talks of the large stockpiles and potentially large ending stocks, yet i cant recall ever reading stories of grain being thrown away, seems the world always consumes it all. We are always one big crop wreck away from becoming tight on supply. 1 or 2% 'overproduction' and prices fall 50%.