Wall Street PR

The bear consumes the American corn – VLO

Boston, MA 04/03/2013 (wallstreetpr) – Market changes can never be isolated cases and more often than not, there will be a chain reaction. Corn has been a major crop for the U.S but there was a slump in its demand just as the demand for wheat and soybeans had dipped. U.S farmers are all set to up the output of all these three crops. In March the U.S Department of Agriculture said that that the corn inventories are much higher than those that had been projected and that farmers are also going to be cultivating the largest number of acres of the crop since 1936.

Radiating effects
U.S is the largest grower of corn in the world and right now, exports of the crop stand at an all-time low of 41%.The hike in grain costs had compelled a large number of beef producers such as Cargill Inc to shut down their plants and Valero Energy Corporation (NYSE:VLO) (Current: $40.63, Down by 4.20%) the ethanol maker had to close down their distilleries. The United Nations has been tracking global food prices which have seen a drop for five consecutive months right through February. Food prices and crop-growing trends and market demands are tracked by various groups and economists.

Most crops hit
John Nalivka who is the president of an agricultural economic research and advisory company Sterling Marketing Inc, in Vale, Oregon said that irrespective of whether the current market is demand-driven or supply-driven, nine months ago, food prices had been projected to be high and that is not changing in any way in the current scenario. Most of the major American crops have been bearish and the July peak has slid down by 21 percent. This included a 29 percent dip in wheat, soybean had dipped 21 percent and sugar and coffee had followed close on its heels.

Market change
Corn is harvested only in September the though the USDA has projected that the there would be a surge of 35 percent in corn production and it would touch a record 14.53 billion bushels, the concern is that inventories would dip drastically in the meantime. Its interesting to note how the corn landscape has progressed from the shortage fear to the worry about excess supply said the Chicago based Linn Group executive vice-president, Roy Huckabay. One of the major contributing factors to this excess has been that hog, cattle, dairy and poultry herds in most probability have cut down their use of corn-feed by 30 percent in the last quarter.

Two out of every 5 bushels of corn are consumed by livestock. This still does not mean that there will be any moderation of food prices because though the crop has stepped down from the peaks that it had reached, its price is still on the higher side

Published by Lisa Ray

Lisa has a Bachelor of Arts in journalism from Purdue University and 3 years of experience in the publishing field.