Unwanted piles of corn, wheat and soy rise as combined U.S. stockpiles are the biggest ever. Prices tumble.

[Axulus]

Piles of unwanted grain on farms near Doug Schmitz’s storage bins in southern Minnesota are a stark reminder of just how bearish the outlook is for U.S. crop prices.
After record yields during the harvest a few months ago, growers in the area still have 80 percent of their corn crop left to sell and 70 percent of soybeans, said Schmitz, who operates four grain elevators and markets to processors and exporters. Normally, half the supply would be unloaded by now, he said. While Schmitz Grain Inc. is under contract to collect 2 million bushels from local farmers, the outlook is so dim that most of that inventory hasn’t been priced yet, he said.

Money managers are holding their most-bearish bets on grain prices since the government started tracking the data in 2006. It’s easy to see why. Stockpiles of corn and soybeans in the U.S., the world’s largest grower, probably were the biggest ever on Dec. 1, and wheat inventories were the highest in five years, according to a Bloomberg survey of analysts. The government will issue its estimate Tuesday.
“It’s the slowest sales pace in the 25 years I’ve been in the grain business,” said Schmitz, who’s based in Currie, Minnesota. “It’s amazing how well farmers were able to put away those bushels and wait for a recovery in prices that has failed to come.”

Full Bins
Hedge funds held a combined net-short position of 337,678 futures and options in corn, soybeans and wheat as of Jan. 5, 19 percent more than the previous week and more than twice what it was a month ago, according to Commodity Futures Trading Commission data released three days later. The bearish holdings were twice the short hedges held by commercial end-users, signaling farmers may be withholding crops that elevators would normally have already bought and hedged. All three commodities posted a third straight year of losses on the Chicago Board of Trade in 2015.

Domestic stockpiles have been swelling as U.S. exports falter, fueled by a strong dollar and rising production by other suppliers. Schmitz said he has yet to load a single rail car this season with corn or soybeans destined for West Coast export terminals. A year earlier, he shipped 1 million bushels.
The U.S. Department of Agriculture forecasts wheat exports in the current season will be the lowest in four decades. Corn and soybeans sold for delivery by Aug. 31 are down a combined 17 percent as of Dec. 31, surpassing the USDA’s estimates for a 6.6 percent annual decline. At the same time, corn shipments from Brazil were the highest ever in each of the past four months. Argentina’s exports have become more profitable after new president Mauricio Macri eliminated most crop taxes and lifted four years of currency controls.

“It is a nearly unprecedented retention of crop inventory this year,” said Roger Fray, executive vice president for Ralston, Iowa-based West Central Cooperative, which can store about 78 million bushels of grain. “The producer has shoved corn and soybeans into places he has never used. It is very possible there will be some forced sales of grain this spring, when farmers need cash to plant crops.”

http://www.bloomberg.com/news/artic...-corn-soy-spur-most-bearish-crop-outlook-ever

 

[repoman]

Why are hedge funds allowed to be in this business?

 

[Jimmy Higgins]

The strength of the US dollar is Obama's fault! If he just let the economy crumble like he allegedly did, our dollar would be lower and we'd be more competitive in trading.

- - - Updated - - -

Why are hedge funds allowed to be in this business?

You don't want to know. It is also the same reason why you don't want to look into who bought out so much property during the Great Recession.

 

[dismal]

Why are hedge funds allowed to be in this business?

Yeah, only Jesus is supposed to create massive amounts of cheap food, right? The bastards.

 

[Sarpedon]

We should cut food stamps! That will help increase demand!

 

[Nice Squirrel]

The strength of the US dollar is Obama's fault! If he just let the economy crumble like he allegedly did, our dollar would be lower and we'd be more competitive in trading.

- - - Updated - - -

Why are hedge funds allowed to be in this business?

You don't want to know. It is also the same reason why you don't want to look into who bought out so much property during the Great Recession.

Yes, don't look too deeply into this especially if you have a heart condition.

 

[ksen]

Why is there so much food just rotting in silos when there are millions of hungry people?

 

[Horatio Parker]

I wondered about that too. How do equities effect the price of corn and soybeans?

 

[Nice Squirrel]

Why is there so much food just rotting in silos when there are millions of hungry people?

Some of it is transportation capacity.

Some of it is in procession.

A lot of it is due to high yields and crop payments.

 

[Axulus]

Why are hedge funds allowed to be in this business?

Why not? The burden is upon you why such a freedom for people to make agreements with each other should be stopped in this situation, requiring government intervention.

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Why is there so much food just rotting in silos when there are millions of hungry people?

It's not rotting yet. It will be sold so long as the price that can be obtained is greater than any of the associated selling costs. The price has not reached that point and is unlikely to do so.

 

[Nice Squirrel]

Why not? The burden is upon you why such a freedom for people to make agreements with each other should be stopped in this situation, requiring government intervention.

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Why is there so much food just rotting in silos when there are millions of hungry people?

It's not rotting yet. It will be sold so long as the price that can be obtained is greater than any of the associated selling costs. The price has not reached that point and is unlikely to do so.

It is also about -15 F right now so little decomposition can take place here on Hoth.

 

[Jimmy Higgins]

Why is there so much food just rotting in silos when there are millions of hungry people?

In the US? Good question. Globally, harder to get food to those that need it. Besides, surpluses like this aren't the norm. You don't want to tease poor people that they can have a full belly every year, do you?

 

[Nice Squirrel]

Why is there so much food just rotting in silos when there are millions of hungry people?

In the US? Good question. Globally, harder to get food to those that need it. Besides, surpluses like this aren't the norm. You don't want to tease poor people cattle at the high-density feed lot that they can have a full belly every year, do you?

Let's also not forget the ethanol producers.

 

[ZiprHead]

Why is there so much food just rotting in silos when there are millions of hungry people?

Because there's not enough profit involved to get the grain to the starving.

 

[Nice Squirrel]

And before it goes to the starving people it needs to be refined into a natural sweetener beloved by all.

For more information:
http://corn.org/

 

[bilby]

Why is there so much food just rotting in silos when there are millions of hungry people?

Because back in the good old days when there was NOT so much food just rotting in silos, there were hundreds of millions of hungry people. Millions is a BIG improvement. (And the total deaths from famine worldwide have fallen from 17 million odd in the 1950s to about 250,000 today - so deaths from famine are now less than 'millions', even if there are still millions who would like to be hungry less often).

In the 1930s, there were 343 deaths from famine for every 100,000 people. In the 1940s, the number increased to 409; and in the 1950s it increased again to 578 per 100,000 - more half a percent of the people alive in the 1950s died due to famine.

Then came the agricultural revolution. Despite a rapidly growing world population, the 1970s saw only 95 deaths from famine per 100,000 people. The 1980s, when Bob Geldof felt moved to sing about the Ethiopian famine, saw 29 deaths per 100,000; and the 2000s saw just 3 (source).

Today, three times as many people die due to obesity as the number who die from starvation.

I would rather see a few silos full of rotting food and 3 per 100,000 deaths from famine than see empty silos and 600 per 100,000 dying. But perhaps that's just me.

The 'waste' is the natural consequence of there being enough food to go around. Of course, it would be even better if the food that is wasted could be distributed to those millions who are still hungry; but so far we haven't worked out how to do that economically. Only having solved around 99% of the problem as it stood fifty years ago shows that there is more to be done; but it's not a bad result, really, is it? Particularly as world population has gone from 3 billion to nearly 8 billion in that time.

We have gone from feeding 2.9 billion while 17 million starve, to feeding 7.8 billion while around a quarter of a million starve. That's a solid result, and not one that should be derided.

The fact that there is waste does not imply that there is a problem; Empty silos would indicate imminent starvation not just in the third world, but widespread across the USA too. Full silos with nobody who wants to buy, even at the lowest practical price, is a strong indication that things are going very well indeed. They are a cause for celebration, not a cause for sadness. Unless you are a farmer who was planning to get a high price for his crop this year; or a futures trader who bet big that supplies would be scarce and prices high.