USDA Acreage Report

LITTLE ROCK-(Commodity Risk Management)--Extensive rains and flooding during June caused producers in several Midwestern States to change their harvesting intentions for crops already planted, modify planting decisions for the small percentage of acres not yet planted, and consider replanting options.

NASS collected most of the data for the annual acreage report before the majority of the flooding occurred. In an effort to more accurately determine how many acres producers still intend to harvest for grain, NASS re-interviewed approximately 1,200 farmers June 23-25 in the flood-affected areas.

It was determined that U.S. farmers intend to harvest 90.4 percent of their planted acres of corn for grain. This is a change from 92.4 percent as measured during the first 2 weeks of June. U.S. farmers intend to harvest 96.8 percent of their planted acres of soybeans.

Without this additional survey data, historical averages would have indicated 98.7 percent of soybean acres to be harvested. NASS will conduct a more extensive acreage update survey during July. Findings from this study will be incorporated in the August Crop Production report.

CONTACT JIM DAVEN 501-505-8000


7:50 A.M.

USDA Numbers
June 30, 2008

June 1, 2007
Grains & Soybean Stocks Estimates (Billion Bushels)

Today's USDA Estimate Average Trade Analyst Estimate Range of Trade Analysts Estimates 2008 March 1 USDA Stocks 2007 June 1 USDA Stocks Informa Estimates:

• Wheat: 0.306 0.275 0.247-0.461 0.710 0.456 0.272

• Corn: 4.028 3.894 3.550-4.000 6.859 3.533 4.032

• Soybeans: 0.676 0.663 0.615-0.720 1.428 1.092 0.686

U.S. Planted Area Estimates (Million Acres)

Today's USDA Estimate Average of Trade Analyst Estimates Range of Trade Analysts Estimates USDA March 30 Estimate USDA 2007 Planted Acres Final Informa Estimates:

• Corn: 87.327 85.661 83.500-87.399 86.014 93.600 87.40

• Soybean: 74.533 74.257 72.000-76.000 74.793 63.631 73.27

• All-Wheat: 63.457 63.785 63.530-64.000 63.803 60.433
  

• Spring Wheat: 14.197 14.306 14.000-14.500 14.333 13.297 14.08

• Durum: 2.655 2.628 2.505-2.700 2.630 2.149 2.50

• All-Cotton 9.246 8.890 8.45-9.21 9.380 10.380 8.94

Grain, Weather Forecast

LITTLE ROCK, Ark.-(Jim Daven of Commodity Risk Mgt.)--

1-5 Day Forecast:

The latest Global Forecast System (GFS) has some minor adjustments to the rainfall outlay during the next 3 days, basically concentrating the heaviest rains in the vicinity of I-80 and areas slightly north. But it did not make major changes to the overall thinking of .35-1” to fall over about 70-75% of the region, with areas of 1”+ also occurring and a northerly bias to those heavier totals. Otherwise there were no major changes.

The Midwest will see the rains with this next system then taper off by later in the weekend, with mainly dry weather for early next week.

The Hard Red Winter Wheat (HRWW) belt will see a few isolated showers and storms occur in the north and east by later tomorrow and into Friday. Totals in most cases will be under .50”, with coverage of around 40%, favoring the north and east. Dry weather then looks to occur for the weekend and early next week.

The Spring wheat areas will see some showers and storms occur in the next 24-36 hours, with totals generally under .50”, with a few isolated heavier amounts and coverage of around 65%. Dry weather then looks to occur by the weekend and early next week.

6-10 Day Forecast:

The latest GFS still seems reluctant to be as aggressive with the energy working into the Midwest by the second half of next week. It still indicates some energy with rains to occur at the end of next week, but is not as aggressive with the energy. Thus, rainfall potential as other models were in their latest thinking.

Corn Prices Keep Rising; Analysts Call for $10 a Bushel

SAN FRANCISCO-(MarketWatch)--Corn futures gained for a ninth straight day Monday, rising to a new high above $7.50 a bushel, as floods in Iowa and other Corn Belt states threatened next season's production.

Corn futures for July delivery gained more than 2% to a new high of $7.6175 a bushel in electronic trading in early morning trading. It eased to close up slightly at $7.324 a bushel on the Chicago Board of Trade. Corn has been rising since June 3, when it closed at $6.08 a bushel, 20% lower than the current levels.

The Midwest will finally have a break from storms as severe weather shifts into the Northeast, Accuweather.com said. But the floods that have inundated major corn-producing states won't go away easily, and they will keep damaging corn fields, according to corn analysts.

"It won't be too hard to tag $10 [a bushel for corn futures]," said Elaine Kub, a grains analyst at commodities-information provider DTN. "We are looking at more of a time issue than a price issue."

The market has to evaluate how much crop has been lost, which could take weeks, and it has to evaluate how much demand will fall as prices rise, she said. "Livestock producers in particular are going to stop feeding so much corn."

The U.S. Department of Agriculture will release a new report on crop acreage on June 30, which could show reduced corn acres.

In its June monthly report released last week, the USDA left its outlook of planted area unchanged at 86 million acres for the next crop season. The acre data were from the USDA's Prospective Plantings report released on March 31. The data didn't reflect the damage caused by recent rain, Kub said.

Also on the CBOT Monday, July wheat fell 4 cents to close at $8.78 a bushel. July soybeans dropped 28 cents to $15.32 a bushel.

CME Group Chairman to Testify Before Congress

CHICAGO-(PRNewswire)--CME Group, the world's largest and most diverse derivatives exchange, announced that CME Group Executive Chairman Terry Duffy will discuss with U.S. Senators on Tuesday agriculture commodity markets to explain facts and share data on CME Group's agriculture futures contracts.

"CME Group is happy to work with legislators to explain how our markets operate, the critical need they serve in providing benchmark agriculture prices for the world, the fundamental factors that are impacting the marketplace and data on who trades our products," Duffy said. "CME Group congratulates Congress on taking such a timely interest in these markets that affect all of our lives. In the last week alone rains have deluged acres of recently planted corn fields, drowning crops and making it difficult to plant new ones so late in the planting season. As a result, prices in corn have hit all-time highs."

The hearing is scheduled for 10:30 a.m. Tuesday in the Dirksen Senate Office Building. The Senate Appropriations Subcommittee on Financial Services and General Government and the Senate Committee on Agriculture, Nutrition and Forestry are jointly hosting the session.

CME Group is the world's largest and most diverse derivatives exchange. Formed by the 2007 merger of the Chicago Mercantile Exchange (CME) and the Chicago Board of Trade (CBOT), CME Group serves the risk management needs of customers around the globe. As an international marketplace, CME Group brings buyers and sellers together on the CME Globex electronic trading platform and on its trading floors. CME Group offers the widest range of benchmark products available across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, agricultural commodities, and alternative investment products such as weather and real estate. CME Group is traded on the New York Stock Exchange and NASDAQ under the symbol "CME".

The Globe logo, CME, Chicago Mercantile Exchange, CME Group, Globex and E-mini, are trademarks of Chicago Mercantile Exchange Inc. CBOT and Chicago Board of Trade are trademarks of the Board of Trade of the City of Chicago. All other trademarks are the property of their respective owners. Further information about CME Group and its products can be found here.

Corn Rises for Seventh Day as Rain Continues

SAN FRANCISCO-(MarketWatch) -- Corn futures rose for a seventh straight day Thursday to a new record, as rain in the Midwest raised concerns that the grain's production will be reduced. Futures have jumped nearly 20% since June 3.

Soybean futures also rose to their highest level in more than three months, on concerns over the rain's impact on those crops.

Corn futures for July delivery gained 5.75 cents, or 0.8%, to end at $7.09 a bushel on the Chicago Board of Trade. It rose to a new intraday record high of $7.25 a bushel earlier, 19% higher than the closing price on June 3.

AccuWeather.com forecast a new round of storms on Thursday across the Midwest. The storms will bring more rain to flood-ravaged Corn Belt states such as Iowa, Wisconsin and Indiana.

"There is no question that the rains in the last couple of weeks have taken a toll on the crop," said Dale Mohler, senior meteorologist at AccuWeather. "The corn probably has been washed out of the fields or is simply under water and just rotting."

Elsewhere on the CBOT, July soybeans futures gained 20 cents, or 1.3%, to $15.365 a bushel, the highest since March 5. Analysts said some soybeans fields could be damaged by the floods and this year's soybean acres could be reduced. See full story.

July wheat futures slid 17 cents to $8.51 a bushel.

Rice futures for July delivery gained 12 cents to $20.05 per 100 pounds. Rice is now more than $4 lower than its historic high of $24.46 hit in April.

The Philippines, the world's largest rice importer, will release its rice stockpiles to curb higher rice prices, according to media reports. The country is also in talks with China to import rice from the world's largest rice producer and consumer.

Falling production

The U.S. Department of Agriculture Tuesday lowered its estimate for corn production in the next season as heavy rain in the past month slowed planting and crop development.

The USDA also said on Monday that as of June 8, 89% of corn seeds had emerged in the top 18 producing states, compared with 98% a year ago.

Corn production in the 2009 crop season is expected to be 390 million bushels, or 3%, lower than the USDA had expected in May, according to the department's June monthly report World Supply and Demand Estimates.

Falling production will push the 2009 crop season's year-end stock level to the lowest in 13 years. The USDA also turned up next year's average corn price by 30 cents to the range of $5.30 to $6.30 a bushel. See full story.

Philippines releases rice stocks

In the Philippines, between 300,000 and 400,000 metric tons of rice stockpiles will be released each month from June to September, Bloomberg reported. Total stockpiles put into the market will reach 1.2 million metric tons.

In comparison, the country is expected to import 2.1 million metric tons of rice in 2008, according to the USDA.

To increase rice supplies in the Philippines, the country is also in talks with China and Pakistan, trying to expand its foreign suppliers beyond Thailand and Japan, Philippine Daily Inquirer reported Thursday.

The USDA projected on Tuesday that rice prices in the next crop season will average $16.50 to $17.50 per 100 pounds, down $2 from a month ago. The decline in the price forecast reflects the easing of some global export restrictions, the USDA said.

Vietnam, the world's second-largest rice exporter, said it may lift restrictions on rice exports in July. Cambodia, one of the world's top 10 rice exporters, said in May it will lift restrictions on exports. See full story.

Meanwhile, the USDA said rice production in Burma is expected to fall by 600,000 metric tons in the next season. The decline resulted both from a reduction in area and a drop in yield due to the damage from Cyclone Nargis hit the country in early May.

U.S. Forms Task Force to Probe High Commodity Prices

WASHINGTON-(Reuters)--The Commodity Futures Trading Commission said it has formed an interagency task force to assess commodity markets due to the "significant strain" that high prices are placing on U.S. households.

The task force includes representatives from the CFTC, the Federal Reserve, the Department of the Treasury, the Securities and Exchange Commission, the Department of Energy and the Department of Agriculture.

It will examine investor practices, fundamental supply and demand factors, and will study the role of speculators and index traders in the commodity markets, the CFTC said in a statement.

High prices for farm commodities such as wheat, corn, and rice, along with high oil prices, have roiled U.S. and world markets in recent months.

The U.S. Department of Agriculture is forecasting sharp increases this year in U.S. food prices, expected to rise by 5 percent in the largest increase since 1990.

Some onlookers point to increased speculation on commodity markets as one culprit for the record prices and remarkable volatility.

Short Term Grain Outlook

SHORT TERM GRAIN OUTLOOK - 6/10/2008

By Jim Daven, Senior Market Analyst

The response of the market has been disappointing for the bulls with corn unable to score new highs while soy futures plunged to sharp losses.

Wheat has traded both sides of unchanged, but following Monday’s sharp break, the market has been trying to stabilize.

Volume has been moderate to active with 60,000 contracts of July corn and 49,000 contracts of July soybeans trading.

Index funds will be rolling out of net long July positions - into more distant months at the close. This could pressure the market going home. Also hedge fund managers are taking some profits in commodities as Fed Chairman Bernanke talks tough against inflation which is bullying the U.S. dollar.

If there is a concerted effort to rally the U.S. greenback, it could have a short term bearish implication on commodities into the end of the quarter.

Corn Rises to Record Price with Midwest Beset by Rain

SAN FRANCISCO-(MarketWatch)--Corn futures extended their gains into a third session Friday, reaching a record as weather forecasts called for rains in the Midwest, which have already delayed crop development, to continue. Prices of soybeans and wheat also moved up.

"Probably the biggest contributor to the rising prices is the scope of heavy rains that have fallen in the past couple of weeks," said Dale Mohler, senior meteorologist at AccuWeather. Rainfalls have left crop fields saturated, halting the planting of soybeans and delaying corn seeds' development, he said.

Weather reports predicted that excessive Midwestern rain will continue, likely pushing corn and soybeans prices higher. The National Weather Service forecasts above-normal precipitation in the region over the following ten days.

Corn futures for July delivery rose to $6.6325 a bushel in Friday's trading on the Chicago Board of Trade, a new record for the grain's front-month futures contract. It closed up 7.4 cents at $6.506 a bushel.

July soybeans added 5.4 cents to end at $14.574 a bushel.

Government data illustrated how planning and development of crops have been delayed by the recent rains. The Department of Agriculture reported as of June 1, 74% of corn seeds had emerged in the top 18 producing states, compared with 92% a year ago.

Soybeans were 69% planted, compared with 86% a year ago, the USDA said. And only 32% of seeds had emerged, compared with 64% a year ago.

Destructive thunderstorms that swept across the Midwest on Thursday also threatened crop production.

The strong thunderstorms could produce some tornadoes and will continue into Friday evening, AccuWeather said. Kansas, the largest U.S. producer of winter wheat, is in the path of the destructive storms.

In futures trading, July wheat jumped 25.4 cents to $8.11 a bushel.

Futures prices were also rising as the dollar continued its fall after a disappointing U.S. jobs report.

Dollar-denominated futures prices tend to move higher when the greenback falls, as those futures become less expensive to buyers holding other currencies, who then tend to increase their positions.

Weaker Commodity Prices?

By: Jim Daven, Wed. A.M. - 6/04/2008

We are fearful that even "ag" prices may come under pressure following Dr. Bernanke's dollar support yesterday, and especially in light of what we hear the government - via the CFTC - is about to do.

We are convinced that the CFTC is about to change the definition of what a hedger is, intent upon denying hedge status for position limits taken by those hedging "swaps" done for the long-only funds.

With that said , it may be wise to consider booking more crop or covering your downside risk.

U.S. to Toughen Regulation of Commodity Markets

Looks like there may be an effort afoot to help rein in the synthetic market factors created by index and hedge funds (large-scale speculators) that are making price discovery difficult for actual hedgers, i.e. ag producers, grain merchants, etc. It'll be interesting to see what affect - if any - this will have on the cash market and the prices farmers actually receive for the crops.

Check out this story and see what you think.

U.S. to Toughen Regulation of Commodity Markets

CHICAGO-(Reuters)--Regulators of U.S. commodity markets were expected to announced Tuesday that they would demand more information about investors to determine whether they were evading market limits on speculation and artificially driving up world food prices.

The commodity futures markets play a key role in establishing worldwide prices for wheat, corn, soybeans and other foodstuffs, as well as energy products like crude oil and natural gas.

Click HERE for the full story.