Commodity Corner

Views on commodities and energy

Weather Trumps All


img_1570.jpg“Weather trumps everything else this time of year,” said grain analyst Vic Lespinasse after the Chicago Board of Trade markets closed Friday afternoon.
    Especially this spring. Planting is behind. Corn and soybean emergence is behind. Winter wheat is slow to head which will mean a late harvest — all because of an unseasonably cool, wet spring in the heart of the U.S. crop belt.
    The good news this week was the western Midwest was able to shake out of the pattern. Surely farmers took advantage of the break, spending long hours behind the wheel of a tractor.
    But farmers east of the Mississippi River were not as lucky. The eastern Midwest picked up more rains and it was cool.
    USDA will tell the world Monday afternoon farmers’ planting progress.
    The general consensus among Chicago grain traders late Friday was for USDA to report corn planting near 75 percent done vs. the seasonal average of 90 percent and soybean seeding 25 percent complete, below the usual pace of 54 percent.
    It’s especially important this spring and summer that the weather cooperates so U.S. farmers produce a bin-busting crop given the global demand for food and spiraling inflation.
    “The focus of the trade is turning from the rain to the temperatures as the coolness is impacting emergence,” one CBOT floor broker said.
    There’s also some concern that if the slow pace of wheat development continues due to cool temperatures, it will limit the number of double-cropped soybean acres planted after the southern Midwest wheat harvest.
    The soft red winter wheat crop is coming along strong but in the top SRW states of Ohio, Indiana, Illinois and Missouri only 16 percent of the crop had headed as of last week, below 43 percent a year ago.

Photo: Soft red winter wheat field near Hopkinsville, Kentucky, taken the second week of May.

from Environment Forum:

Bicycling in New York, room for improvement

A recent trip to bicyle-peppered cities Copenhagen and Amsterdam got me thinking about the pedal possibilities in U.S. cities. Alas, New York, the country's biggest city, has long way to go make biking easier, and that seems true in many other cities in the world's largest motor fuel consumer.

As gasolinecope.jpg nears $4.00 a gallon throughout the country one might think that U.S. commuters would be jumping on their bikes. Evidently the prices aren't high enough yet.

from Global Investing:

Cost of expensive gasoline measured in SUV sales drop



Are high gas prices killing Americans' love affair with gas-guzzling SUVs? Looks that way.

In April, SUVs and light trucks took their smallest share of total U.S. vehicle sales in nearly nine years, and dealers sold more new cars than trucks for the second month running -- the first time that's happened since 2001. While many factors have teamed up to torpedo sales of high-ticket vehicles like SUVs -- tighter credit, a tough job market, slumping real estate values and a generally soft economy -- the fact that pump prices have soared to a record aren't helping, as the chart shows.

from DealZone:

Oil and gas deals benefit from rising commodity prices

oil.jpgA study from research and consulting firm Wood Mackenzie found that mergers in the energy industry have generated value, due largely in part to surging oil and gas prices.

In a review of 195 deals by 38 companies between 2001 and 2006, the study found that $204 billion in value was created, with an additional $34 billion of value generated through access to discovered resource opportunities.

from Global Investing:

The magic of seasonal adjustments: You’re paying less for gas


Been paying more at the pump lately? Not to worry. It's just a figment of your imagination, new government data shows.

The U.S. Department of Labor's Bureau of Labor Statistics tells us that gasoline prices fell last month by 2 percent. This was the very same month when crude oil prices surged 11.7 percent and there was NO pass through at the pump? Hmmmm.

A backlash against the ethanol backlash


home_graph_2.jpgIs it fair to scapegoat ethanol and biodiesel for record grain prices and the knock-on surge in food prices? It’s a key question for policy makers as the pressure builds to wriggle out of U.S. rules to blend 36 billion gallons of renewable fuels into the nation’s gasoline supply by 2022.

There are a slew of reasons for high food prices. China requires more calories and Chinese are eating more meat. The weak dollar, weather disruptions, government intervention and speculation in commodities have been a perfect storm for food inflation. (Food price spikes are tracked in Food and Argiculture Organization graphic on the left).

Rain, Rain Go Away Come Back Another Day When Corn is Planted


img_1537.JPGFor the first time this spring I saw farmers doing field work in northern Illinois, not far from the Wisconsin border as I was coming home from work Friday night. They are easily two to three weeks behind normal as the Midwest just can’t seem to shake this cold, wet weather pattern. Saturday was cool but clear. Rains returned on Sunday. Forecasters are calling for more rain this week but the amounts look to be lighter than previously thought. 

Northern Illinois farmers are not the only ones behind due extremely wet field conditions. Crop scouts traveling May 8-10 through central and southern Illinois as well eastern and central Iowa — the top two U.S. corn and soy states — saw standing pools of water in fields that would normally be planted to corn by now.
The initial concern is a yield drag of roughly 1.5 bushels per acre per day everyday a corn field is planted after May 15. But one has to wonder now if a lot of those fields will be switched to soybeans.

from Environment Forum:

Home brewing for your car

the-microfueler-unveiled-in-new-york.jpgA California company called E-Fuel  wants you to ferment home brew  -- for your car.  It sells a $10,000 portable "MicroFueler" that plugs into home power and water supplies to ferment sugar into 100 percent ethanol at a rate of 35 gallons ( 132 liters) per week.  

For families that drive at least a combined 34,500 miles (55,520 km)  in cars that get average fuel efficiency, the MicroFueler will pay for itself in less than two years if gasoline prices stay near record levels, says Tom Quinn, the company's CEO and financial backer.

Diesel making gasoline look cheap


Drivers are feeling the pinch from record high gasoline prices in the United States, but they should be happy they’re not buying diesel.

The price of diesel has shot up nearly 50 percent since a year ago to $4.27 a gallon, touching off a rash of minor protests by U.S. long-haul truckers in recent weeks.

U.S. Wheat Farmers Not Counting Bushels Yet; Eyes on Weather


For farmer Dennis Shields, the fate of his new wheat crop is largely out of his control. In this first week of May – some 45-60 days from harvest – whether or not Shields makes a tidy profit or suffers a painful loss this summer is all up to the weather.

“It all depends on June,” said the 67-year-old Shields, who has been farming near Lindsborg, Kansas, more than 40 years.