U.S. Crop Report Boosts Ag Prices
ThinkstockToday the U.S. Department of Agriculture (USDA) inaugurated its new practice of releasing the monthly crop reports at noon ET. January saw a decline in the forecast for the Florida orange crop, down 2.7% from the December forecast as a…
Today the U.S. Department of Agriculture (USDA) inaugurated its new practice of releasing the monthly crop reports at noon ET. January saw a decline in the forecast for the Florida orange crop, down 2.7% from the December forecast as a plant disease affects both the quantity and size of the fruit.
Perhaps the bigger news was the 17% drop in corn stockpiles. Stocks were at their lowest point in nine years as a result of the drought in corn-producing parts of the country. Corn consumption is forecast to rise through the end of the 2012-2013 crop year on demand for the grain to use as cattle feed. Corn exports are not expected to rise this year.
Cash corn prices are expected to average $7.40 a bushel in the current year, the same level as last month’s report, but up more than $1 a bushel compared with a year ago.
Higher costs will hit food producers like cereal makers General Mills Inc. (NYSE: GIS), poultry and hog producers like Smithfield Foods Inc. (NYSE: SFD) and Sanderson Farms Inc. (NASDAQ: SAFM), and ethanol producers like Archer Daniels Midland Co. (NYSE: ADM).
Corn prices spiked to nearly $7.10 a bushel after the report was released.
Contact [email protected] for any questions or corrections.
Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.