Producer and director Aaron Woolf’s new film “King Corn” has provoked a rich debate among moviegoers about the wisdom of U.S. farm subsidies, but taking on big corn was so difficult  it has left him poor. 

The film profiles two recent East Coast college graduates, who after reading reports of the declining nutritional value of U.S. food,  move to Iowa to grow one acre of corn.

The neophyte farmers attempt to follow the corn they grow from the field to the plate and don’t always like what they see.  Family farmers tell them that U.S. subsidies and competition from big farms cause them to grow “the poorest quality corn the world’s ever seen.”  The two young men visit Colorado feed lots where scientists tell them that corn feed causes so many ulcers in cows that farmers have to pump them full of antibiotics. They go to Brooklyn, New York where doctors tell them that consumption of “liquid candy” soft drinks made with high fructose corn syrup have helped lead to high rates of diabetes in the city where one in eight people suffer from the disease.

Woolf said at a showing of the film at the Reuters Americas headquarters in New York this week that the film is $100,000 debt.  “This was a film that was really really hard to raise money for,” he said.  He said he could not afford to take on agricultural giants like Cargill and ADM in the film because, “It’s very hard to make a documentary in America and get corporate buy-in.”

Now Woolf has to moonlight in order to get back in the black, but he’s still concentrating on food — in a the next few weeks he will open an organic grocery store in Brooklyn.

With oil prices flirting with the $100-a-barrel mark, analysts are wondering how much the U.S. consumer can bear.  

A Reuters/Zogby poll released Wednesday shed some light on the question, showing that more than three-quarters of Americans will cut fuel use or slash spending on retail and entertainment if their energy bills keep on rising.

Do you think $100 crude will force Americans to conserve?

Potash is a hot commodity, what with exploding grain prices, limited world supplies, and soaring fertilizer company stocks. But potash also became very funny fodder for popular Canadian political satirist Rick Mercer, who traveled 3,000 feet underground in a Potash Corp mine on his television show. “It’s like Dr. Evil’s cave,” said Mercer, who confessed he knew nothing about potash before his trip to Allan, Saskatchewan.

The video is here - go to Episode 6, then click on the clip “Mercer: Rick mines potash”

NOTE: This post was changed because of a change in the video link.

Traditionally, trade during the week of the U.S. Thanksgiving holiday is slow — especially late in the week. But there’s nothing traditional about these markets, so it is anybody’s guess how much volume and volatility there will be.
 
The soy complex — soybeans at a 19-year high and soyoil at a 33-year top — will likely be the leaders again next week, whether it’s profit-taking or fresh speculative buying. If January soybeans break $10.99-1/2 — it will be the highest price for a spot contract since the summer of 1973 when it reached $11.05 a bushel. 
    
There’s been rumblings around the Chicago markets during the week ended Nov. 16, especially after Thursday’s broad-based sell-off in U.S. commodities, that the “funds” may be getting ready to liquidate some long positions before the holidays. 
 
Commodity funds added about 5,000 contracts to their net long soybean position during the week that ended on Nov. 13, based on Friday’s CFTC report. 
 
Other factors to watch: 
     
Australian and Argentine wheat harvest. Traders are waiting for Southern Hemisphere wheat supplies to move into marketing channels. They got a scare on Thursday when the heading wheat crop in Argentina was hit with a freeze, which sent the market higher, bucking a broader sell-off in commodities. 
 
South American planting weather for soybeans. Of most concern is Rio Grande do Sul and Parana, Brazil where it’s been too wet and slowing plantings. The areas saw up 2.0 inches over the weekend with another 1-2 inches forecast for this coming weekend.
 
U.S. winter wheat conditions. Crop condition have been declining due to dryness in the southwestern hard red winter wheat belt. USDA will issue its next crop update on Monday afternoon.
 
Export demand. There was floor talk late Friday that China may be covered for soybeans through January after this week’s buying spree.
 
And of course — and most influential — the movement in the crude oil market and the value of the dollar. 

rts cds

Members of the U.S. congress may face pressure from voters as they head home for the Thanksgiving break to pass new legislation to improve vehicle fuel efficiency as pump prices look to approach record levels once again.

Supporters of the legislation say that in addition to the environmental benefits, increasing efficiency levels will help push down prices by cutting U.S. demand.

Critics charge the bill could prove a drag on the U.S. economy. According to a study commissioned by the American Petroleum Institute from CRA International, the plans could cause a net loss of $1 trillion to U.S. economic output and reduce U.S. crude oil production by more than 6 percent by 2015.

In the words of the head of Brazil’s largest coffee coop Cooxupe, Joaquim Libanio, “Any attempt to put a number on the new crop (now) is just a crap shoot.”

Unlike many coffee producing countries, Brazil’s coffee belt goes through a peak and trough of production every other year in what’s called its biennial cycle. The current season that ended a 32 million bag harvest in July was a low output year as trees recovered from the bumper crop of 42.5 million bags in the previous year, by official estimates. If we crudely take the 27.6 percent upward swing between the 2005/06 crop of 33.3 million bags and the 42.5 million bag crop of 2006/07 and apply it to the current crop looking forward to the new crop we get the number 40.8 million bags.

As most in the coffee world know, Brazil’s spring monsoon rains came late, but with some regularity, in October. The coffee industry in the world’s top producer and exporter is now trying to map out how uniform the rains have been and how the trees are responding to new moisture after several months of drought-stress.

I had planned a trip to document the coffee flowering after the first rains but was surprised to find out when I called cooperatives and producers to arrange the trip into south Minas Gerais, still in the first week of rains, that flowers were already falling off. Coffee blooms form, open and fall off within a week of the first rains. More cycles of blooms follow but they are normally not as intense as the first round.

Photos posted on blogs by local agromists seem to provide evidence that not all is well with the coffee trees in south Minas and Sao Paulo, despite the now regular rainfall. Many of the trees lack sufficient foliage to provide the necessary photosynthetic support for the profuse flowering and the eventual fruit that will be formed by the blooms. As a result the trees have a natural culling mechanism that aborts flowers when leaf coverage is inadequate.

The above graph shows open interest for calls and puts for crude oil contracts on the New York Mercantile Exchange, with a mass of open interest in calls that won’t make money unless oil rises over $110 a barrel by December 13.

The influence of options positions in oil markets is growing but the financial fundamentals that drove this month’s rally to near $100 a barrel are unlikely to repeat soon.

Non-traditional investors such as pension funds have been surging into the market in recent years as a means of diversifying their portfolios, increasing the sway of financial flows in oil markets.

The rise in liquidity in the commodities sector has in turn spilled over in the traditionally less liquid options market, making it a more viable way to trade oil.

The International Energy Agency said Tuesday that high oil prices were starting to cut into global energy demand growth, a factor that fed into oil’s dramatic sell-off of about $8 from last week’s all-time high.

Have you found ways of cutting your energy use, either by cutting road travel, opting for a smaller car, or turning down your thermostat?

Traders, hedge funds and Commodity Trading Advisors, who speculate in the volatile commodity markets, devour information on how much of a particular commodity is held in storage for sale in the future. For those who trade on fundamentals, it’s part of the discipline to keep track of inventories, such as the daily changes of stocks at warehouses used by exchanges to back delivery against futures contracts. Now Gary Gorton, a professor of finance at the Wharton School, Fumio Hayashi at the University of Tokyo and K. Geert Rouwenhourst of Yale have produced a paper on inventories and trading performance. Read more about it here. The research establishes a theory of storage, showing how a strategy using low inventory commodities would produce better returns than trading commodities with higher-than-normal inventories. It’s pretty interesting and if you need proof that it pays to watch inventories, give it a read.
 
Of course, most traders already know that. Given unprecented global demand for crude oil, grains and metals in recent years, a commodity that appears to be in short supply is likely to rise in price. But inventories are part of a mix of market influences, and in the short term a trader ignores other factors like global demand, geopolitics, technicals, sentiment, market positioning, and investment in infrastructure at their peril.

The skyrocketing price of U.S. heating oil– at an average of $3.11 per gallon– has caught many Americans unprepared for the winter.  It’s the first time ever that U.S. consumers are paying more than $3 per gallon for both heating oil and gasoline.  

“We’ve never seen a year like this…people are scared,” said Susan Kooperstien of the Action for Boston Community Development, a nonprofit that helps low-income families get fuel assistance.  So far, ABCD estimates 16,000 families have inquired about the assistance.

Although the federal and state governments do provide assistance to low-income families, those funds cover only a portion of heating costs, and many who need it don’t meet the income qualifications, experts say.

Free heating oil, courtesy of Citgo (the Venezuelan national oil company of Hugo Chavez),  has been a popular alternative.  For example, last year, low-income cooperatives in New York City received about $800,000 in heating oil from the program, according to the Urban Homesteading Assistance Board.

Are you worried about keeping your home warm for the winter? How do you plan to cover costs?