Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Besides the Weather, What Will Drive Corn Prices in 2013?


Plus: Today the Teucrium Corn ETF is up.


Editor's Note: This content was originally published on by Tim Parker.

Dennis Gartman, editor of The Gartman Letter, told CNBC's Fast Money last week that agricultural commodity prices will hinge largely on rainfall in 2013.

Blackstone Advisory Partners Vice Chairman Byron Wien also believes corn prices will be linked to climate; Wien predicted that climate change would contribute to widespread crop failures and send prices significantly higher to $8 per bushel.

However, factors other than the weather also play a role in commodity prices. Current high corn prices are leading farmers in South America and the Ukraine to plant more acres. This could affect prices worldwide, notes.

According to Informa Economics, US farmers will plant 99 million acres of corn in 2013. This is the highest acreage since the 1930s and a 12% increase over 2010. North Dakota farmers alone will plant 1 million acres more than last year's estimates. However, a lack of adequate seed may lower these planting estimates.

China may play a larger role in corn demand this year. Richard Probasco, Vice President of Sales for D&E Equipment in Wilmington, Ohio, a supplier of grain handling and storage equipment, adds, "China is a huge consumer of US grains. If their needs change based on weather, politics, or changes in consumer spending, it could easily impact the price of corn."

Probasco pointed to a January 10 report by the US Grains Council that, for the first time in history, showed China will produce more corn than rough rice.

This change, first hinted in an earlier US Department of Agriculture's World Agricultural Supply and Demand Estimate, is a result of the growing affluence of the Chinese middle class and a resulting desire for a protein-rich diet.

The Grains Council report says the USDA's upward revision of Chinese corn production projections by 300 million bushels illustrates how the economic trends of the world's most populous country could create opportunities for well-positioned corn producers, according to the National Corn Growers Association.

Sal Gilbertie, Teucrium Funds analyst, reacting to Friday's USDA Crop Production and Grain Stocks Reports, said that the report confirms global consumption of all grains last crop year will exceed production by nearly 31 million tons, solidifying the notion that demand for grains even in the higher priced environment of the past year is strong.

"Global corn use is projected higher primarily due to higher feed numbers in the US. Global corn stocks are also projected to decline, led by the US corn carry-out at especially low levels," Gilbertie said.

End users of corn will be hoping for a repeat of last year's early planting season to ease concerns of mid and late-summer supply shortages, he said.

March corn futures are up sharply this morning on the back of Friday's reports. The Teucrium Corn ETF (NYSEARCA:CORN) is also up more than 0.6% in early trading.

Below, find some more great ETF and market content from Benzinga:

Confidence Returns to the Eurozone

Five Things BlackBerry 10 Needs to Beat Apple's iPhone

Breaking Down Baidu's Technicals

Twitter: @Benzinga

Benzinga Pro covers this and all market news in real time. Get your free trial here.

< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos