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Roy
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Posted: Fri Jan 12th, 2007 07:48 pm |
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CNBC reported on this:
Corn Futures Soar on Crop Report, Also Boosting Wheat
Another insightful article into what is happening as corn becomes a fuel and not just a food: old story from the Chicago Tribune. Just saw it on CNBC. Prices of corn up and wheat is going up as farmers stop growing wheat and turn to growing corn.
Heat of ethanol production has price of corn popping
The change in the corn price is due to a reduction of 65% in existing corn stores! Our exports have gone up 6X.
So, as I said after I read that article in Stock, Futures, Options Magazine, ethanol is going to make food more expensive and make farners rich.
Consumers are going to be doing a lot of planting of their own veggies. 
Last edited on Fri Jan 12th, 2007 07:53 pm by Roy
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*Phil*
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Posted: Sat Jan 13th, 2007 01:14 am |
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Monday the prices are going to the moon. I read this on a market commentary site
Several market analysts have commented on the fact that when grain prices were compared to the commodity sector as a whole, they were actually quite cheap in historical terms.
Today the USDA issued a report which sent shockwaves through the entirety of the grain complex but especially the corn market. The report on crop output and usage estimated that old crop corn ending supplies in August of this year will be roughly the equivalent of three weeks of corn usage. That is simply staggering! Corn immediately responded by opening at limit bid and as of the close today, there remains an estimated 90,000 or better bids to buy at the limit price. That suggests corn will open limit up this coming Tuesday barring any unforeseen developments over the weekend.
The reason I mention this to our readers is that the rally in the grain complex is the market attempting to adjust to the new source of additional demand for corn in ethanol production – something which is not a flash in the pan kind of demand that comes and goes but rather a wholesale change in the supply/demand structure of the corn market. There is a spillover effect that has caused both soybean and wheat prices to rally as well.
The implications for this are enormous on the food chain here in the US. Corn is the primary feed source for the broiler and the livestock sector. Along with feed wheat and soymeal, the increase in price has a significant effect on the profitability of chicken, hog and cattle producers. Simply put, those guys are in direct competition with ethanol plants for available corn. The rising cost of corn has taken a huge toll on their profit margins and threatens the livestock and broiler industries. The only way they are going to be able to maintain current levels of production is to receive higher prices for their finished product since the cost of the grains to feed them is at a new higher level which looks to be here for some time. That in turn is going to require the packers being able to get higher prices for meat and chicken at the wholesale level so that they can offer more money to the producers. Of course, it goes without saying that prices must rise at the retail level to keep grocer margins profitable as well. In other word, brace yourself for higher meat and chicken prices in the months ahead.
Additionally, cereal makers, bread makers and anyone else that uses grain to make a baked or finished product of some sort faces the same predicament. They are going to have to charge higher prices to compensate for the increase in their input costs.
All of this is going to feed through into the food sector and translate into higher prices at grocery stores and restaurants. Consumers are going to see higher food bills – Period! The pencil pushers at the Commerce Department can massage and manipulate the data used to concoct the worthless CPI and will attempt to hide it, but real world experience is going to impact directly on the pocketbooks and wallets of Americans visiting the grocery store.
Not long ago the London Metals Exchange discovered that there wasn't enough nickle to settle all the trades! Ha! The short sellers needed to buy to cover and there wasn't enough nickle to cover all the contracts. Freaking unreal! So guess what? The "Legal tender for all debts public and private" was used to settle the trades. Wow as if $$$ can substitue for getting real nickle to your factories. You open your $ paper wrapped package of nickel or corn to discover... it is empty! Waaa!
The amazing thing is we've talked about ethanol production gobbling up corn and sugar for over a year. Yet Goldman Sachs can fjuck with the markets by adjusting their commodity indexes causing the world to dump this or that commodity driving the price waaaaay down with computers and speculators piling on hurting a lot of people. The news of course reports "excess supplies" or "negative sentiment" some such nonsense. Then suddendly the unreal bias snaps back to reality.
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Roy
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Posted: Sat Jan 13th, 2007 04:51 am |
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People are going to be growing their own veggies in their gardens and losing weight.
Food is going to get real expensive. Land will go up in value. Mabye the balance of trade problem will diminish somewhat.
Maybe we will figure out that the time to build the nuke reactors is here.
Interesting about the nickel.
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*Phil*
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Posted: Sat Jan 13th, 2007 09:08 pm |
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Roy wrote: People are going to be growing their own veggies in their gardens and losing weight.
Food is going to get real expensive. Land will go up in value. Mabye the balance of trade problem will diminish somewhat.
Maybe we will figure out that the time to build the nuke reactors is here.
Interesting about the nickel.
It is expensive and risky to buy property in NYC or Boston but some kinds of land will go up in value, that is productive farm land. My favorite Austrian School economist Dr. Marc Faber said in an interview a few days ago he is advising his clients that buying a productive farm is an excellent way protect oneself against economic turmoil and profit at the same time.
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*Phil*
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Posted: Wed Jan 24th, 2007 04:32 pm |
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This just in from The Angriest Guy in Economics:
http://www.kitco.com/ind/Daughty/jan242007.html
To give you a taste of "terrified government resorting to stupidity when lying about inflation is no longer enough", and perhaps get a look into our own future, from Yahoo.com we learn that "President Felipe Calderon signed an accord with businesses on Thursday to curb soaring tortilla prices", as the corn tortilla is "the basic staple of the Mexican diet and is especially crucial for the poor."
Why was he doing this, you ask? He says he wants to stop tortilla prices from rising, to "protect Mexico's poor from speculative sellers and a surge in the cost of corn driven by the U.S. ethanol industry."
How did he achieve this miracle? By mandating prices! Hahaha!
The specifics are "The accord limits tortilla prices to 8.50 pesos ($0.78) per kilogram and threatens to use existing laws to achieve prison sentences of up to 10 years for company officials found hoarding corn." Ten years in prison! In the French Revolution, also caused by rising taco prices (although this interesting fact is suppressed by the snotty French), the government did the same thing! And you know how well that turned out!
The article goes on to say "Tortilla prices rose by 14 percent in 2006, more than three times the inflation rate, and they have continued to surge in the first weeks of 2007." Hahaha!
Why is this so important? As always, the important lesson is that poor are always the first victims of the price inflation that necessarily follows a monetary inflation, and the more important lesson is that the poor are many while the rich (including all their little political friends) are few, and that makes the rich and the governments very nervous.
The article explains to us that "The rise is partly due to U.S. ethanol plants gobbling corn supplies and pushing prices as high as $3.40 a bushel, the highest in more than a decade."
What the article did NOT go on to say, to their everlasting shame, is that ethanol plants would not be "gobbling corn supplies" and pushing up prices if it weren't primarily for the damned American banks firstly creating the monetary inflation by creating excess money and credit (which was then followed by the damned Mexican central bank and all the central banks doing the same thing) all these years, that depreciated both currencies so much that it resulted in the terrifying inflation in tortilla prices. THAT'S why tortilla prices are high!
A lot of this could have been avoided if they had listened to Les H., who notes that "We now divert 14% of the corn crop to the ethanol scam", which he terms "The most odious, loathsome scam foisted on this nation since the Creature From Jekyll Island came to life in 1913" which proves he knows his Federal Reserve, at least!
He extrapolates "If all planned ethanol plants are completed by 2009, they will consume 90% of the corn crop. Clearly this will make all food prices soar to the moon." And while he did not mention crunchy, tasty tacos or their delicious tortilla shells specifically, you know what he meant.
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Roy
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Posted: Wed Jan 24th, 2007 04:48 pm |
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Great post and all of this will be causing more Mexicans to be poor and more poor Mexicans to trapse north to the US.
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"In a time of universal deceit, telling the truth is a revolutionary act." — George Orwell
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*Phil*
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Posted: Wed Jan 24th, 2007 10:15 pm |
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Roy wrote: Great post and all of this will be causing more Mexicans to be poor and more poor Mexicans to trapse north to the US.
No cheap tacos here either 
WASHINGTON, Jan 24 (Reuters) - U.S. Senate Republicans on Wednesday blocked a Democratic bill to increase the federal minimum wage for the first time in a decade, demanding it first include small-business tax relief.
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Roy
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Posted: Sat Jan 27th, 2007 06:44 pm |
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A Culinary and Cultural Staple in Crisis
Good article that details the steep (double and triple) price rises.
In Jungian terms, I see something more. What you have in the tortilla is t/he panis we share, from which we get the term companion.
Company is obviously the same. Consecrated, it is the Body of Christ.
My prediction based on the esoteric side of things is that there has to be major upheaval in Mexico. It was implied, but not stated, in the book, Global Class Conflict by Faux.
We don't put up no "stinking wall" so that Mexico can ship its poor and so on to the US where Bush, Clinton and the Wall Steeters can put them to work, sell them stuff, and get them to bail out our Social Security system with minimal changes.
With a wall, a Hugo Chavez will emerge in Mexico, and with good reason. What a poke in the eye for WTO, GATT, New World Order and the like! So the Bushel and the Repubes and the Demonios don't want that wall.
The poor are being "manufactured" by free trade. By the absence of Sacred Kings.
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"In a time of universal deceit, telling the truth is a revolutionary act." — George Orwell
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*Phil*
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Posted: Sun Jan 28th, 2007 12:01 am |
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| Our meddlesome government needs to stop subsidizing ethanol production and stop mandating ethanol gasoline additives. This whole problem is caused by our government. People have a gross distortion of reality to think burning food is a good. There is no good substitute for petrol. This is a hard fact. We need to use what we have with greater efficiency and frugality. Like the tortilla makers being accused of price gouging, the american politicians love to accuse oil companies of obsene profiting as an excuse to further rape us through taxes the result eventually being we will have no gasoline at any price, nor will the mexicans be able to find tortillas. Our government needs the moral discipline to stand back, hands off, no fairy-tales of greedy oil baron capitalists, and let the price of oil realistically increase so Americans will feel the pain of being wrong and learn gross consumption is costly. Mexico will need a Strong Man to stand up to America's rediculously screwed-up system of consumer socialism.
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Roy
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Posted: Sun Jan 28th, 2007 12:20 am |
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Good points, Phil. How much is that doggy in the window of ethanol subsidy? How much would ethanol cost without the subsidy?
I think I get it. I remember Bush signing the great farm subsidy bill which underwrote the production of that fructose-based corn syrup as sweetener. So he subsidized corn and from that the production of corn-based fuels.
I am not as convinced as you are that the subsidy is a bad thing. 'Splain it to me, please.
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"The force and degree of a man's inner benevolence evokes in others a proportionate degree of ill-will" - Gurdjieff
"In a time of universal deceit, telling the truth is a revolutionary act." — George Orwell
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*Phil*
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Posted: Sun Jan 28th, 2007 01:11 am |
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Roy wrote: Good points, Phil. How much is that doggy in the window of ethanol subsidy? How much would ethanol cost without the subsidy?
I think I get it. I remember Bush signing the great farm subsidy bill which underwrote the production of that fructose-based corn syrup as sweetener. So he subsidized corn and from that the production of corn-based fuels.
I am not as convinced as you are that the subsidy is a bad thing. 'Splain it to me, please.
The producers get 10 cents per gallon of ethanol tax credit and the folks who mix it with gasoline for sale get 51 cents per gallon tax credit. This is just on the production and delivery side. Since corn is the cheapest ingredient to ferment eveyone is jumping on the bandwagon. There isn't enough corn in the world to meet projected US ethanol demand so why is the government spending money encouraging its use? The US is just getting started and already people are seeing the price of this food go sharply up as a consequence. This just seems to me more feel-good left-wing smily faces hiding corrupt government pork-barrels. There is no reason to burn food for fuel other than corruption in high places.
If the government insists on spending money on alternative fuels they should drop corn and be in the area of cellulose fermination research. Cellulose from hay, tree bark, corn stalks, etc. At the moment cellulose fermentaion is slow and costly to scale up to the industrial strength need for a nation.
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Corvus
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Posted: Sun Jan 28th, 2007 02:06 am |
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and let the price of oil realistically increase so Americans will feel the pain of being wrong and learn gross consumption is costly. -Phil
Americans will not learn . . . the whole system would shut down before "we" would use less fuel or admit to being "wrong".
But I suspect that is your underlying plan . . . hence your scheme to investment in gold, and my thoughts of stock piling ammunitions. 
Everyone has an angle, and we can spout off all the "hey that makes sense" we want, but the truth of the matter is the machine will cure any weakness before it grinds to a halt.
There is some real elitism spewing about from you Phil . . . the assumption that American's need to "feel the pain" says a lot about your position. I am not quite as skewed to the right, the last thing some of the low income people, myself included, need is the inability to pay our heating and electric costs. But I suppose that's my problem, right ? Shall all of the Northern US move into your back yard, where we don't have to worry about winter . . . Yes lets just let oil prices sore . . . so I can start shooting people!
Last edited on Sun Jan 28th, 2007 02:13 am by Corvus
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*Phil*
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Posted: Sun Jan 28th, 2007 02:31 am |
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I see Corvus is making this personal.
Corvus says to hell with the poor hardworking mexicans and their food! Corvus is poorer than mexican peasants! GIVE ME A FREAKING BREAK.
You present yourself as a typical average selfish consumer american. Waaa Waaa crybaby demands cheap energy. Even it means making others suffer and pay the real cost! Burn all the corn if it means Corvus can live in a cheap energy fantasy. I made stupid choices so please government don't make me pay for my mistakes - eh? What a bourgeoisie! Me me me me!
Lets get real Corvus. The world hates us because of selfish attitudes like yours:
The US needs to start developing things like
1. Rail
2. Conservation.
3. Nuclear.
4. Smaller cars.
5. Alternate fuels - and not from food.
None of these things needs nanny government. In fact if our fat economic disaster bureaucratic govenrment stood out of the way these things would already be a reality.
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Corvus
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Posted: Sun Jan 28th, 2007 03:08 am |
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LOL, I am not going to even justify such trite with a response.
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*Phil*
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Posted: Sun Jan 28th, 2007 03:11 am |
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Believe whatever you like. It is your world to make. 
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Corvus
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Posted: Sun Jan 28th, 2007 03:16 am |
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There were a lot of people who were mislead into thinking alternative fuels such as corn pellets and wood pellets would be the answer to high oil prices. Magazines such as Mother Earth News and their counterparts have numerous aids tauting alternative fuels, but then in the last months issue start to mention how corn prices are going up. I warned my father against putting in a corn burning furnace, stating that demand and starting costs would make it a unwise decision. People try to take responsibility, but end up getting screwed. I know of a person here at work who has had numerous problem with her hybrid car, costing her more than it has ever "saved".
Phil's the answer man . . .
BTW, Phil there is a nice piece of real estate 1/8 of a mile away from a nuclear power plant here is Wisconsin . . . right on Lake Michigan. Shall I let them know of your interest ?
Last edited on Sun Jan 28th, 2007 06:06 am by Corvus
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Roy
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Posted: Sun Jan 28th, 2007 03:58 pm |
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That nuke plant probably will never do you any more harm than your cellphone. Build that nuke plant. Run your hybrid car more on straight battery power and less on gasoline.
If your house was built as it could be built, or retro-fitted to conserve energy, you would need very little heat in that house of yours, Corvus.
Look, let's make this less personal and get the info on whatever the technical stuff we need to know is.
Corvus, for my money Phil is just protecting his family by investing in something that will retain worth.
When I lived in Italy, I lost one third of my savings because the lira dropped. I am talking about thousands of dollars. I knew it was going to happen but did nothing. All I had to do was invest in dollars, maintaining the value of my money while making a "profit" in lira.
Having lived throught that, I am keen on the idea of learning what I can about all of this.
You have to take responsibility, Corvus, for our being traders and take responsibility for the juice of the sytem, money.
You are right, in my opinion, to cast a skeptical eye about money in terms of money madness, but there is a difference between greed possessing you and the legitimate attempt to avoid poverty.
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"In a time of universal deceit, telling the truth is a revolutionary act." — George Orwell
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Roy
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Posted: Sun Jan 28th, 2007 04:18 pm |
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Energy Independence?A Serious Plan Requires Taxes, ANWR and Nuke
Is there anything more depressing than yet another promise of energy independence in yet another State of the Union address? By my count, 24 of the 34 State of the Union addresses since the oil embargo of 1973 have proposed solutions to our energy problem.
The result? In 1973 we imported 34.8 percent of our oil. Today we import 60.3 percent.
And what does this president propose? Another great technological fix. For Jimmy Carter, it was the magic of synfuels. For George Bush, it's the wonders of ethanol. Our fuel will grow on trees. Well, stalks, with even fancier higher-tech variants to come from cellulose and other (literal) rubbish.
It is very American to believe that chemists are going to discover the cure for geopolitical weakness. It is even more American to imagine that it can be done painlessly. Ethanol for everyone. Farmers get a huge cash crop. Consumers get more supply. And the country ends up more secure.
This is nonsense. As my colleague Robert J. Samuelson demonstrated this week, biofuels will barely keep up with the increase in gasoline demand over time. They are a huge government bet with goals and mandates and subsidies that will not cure our oil dependence or even make a significant dent in it.
Even worse, the happy talk displaces any discussion about here-and-now measures that would have a rapid and revolutionary effect on oil consumption and dependence. No one talks about them because they have unhidden costs. Politicians hate unhidden costs.
There are three serious things we can do now: Tax gas. Drill in the Arctic. Go nuclear.
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"The force and degree of a man's inner benevolence evokes in others a proportionate degree of ill-will" - Gurdjieff
"In a time of universal deceit, telling the truth is a revolutionary act." — George Orwell
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*Phil*
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Posted: Sun Jan 28th, 2007 07:40 pm |
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Roy wrote: Energy Independence?A Serious Plan Requires Taxes, ANWR and Nuke
Is there anything more depressing than yet another promise of energy independence in yet another State of the Union address? By my count, 24 of the 34 State of the Union addresses since the oil embargo of 1973 have proposed solutions to our energy problem.
The result? In 1973 we imported 34.8 percent of our oil. Today we import 60.3 percent.
And what does this president propose? Another great technological fix. For Jimmy Carter, it was the magic of synfuels. For George Bush, it's the wonders of ethanol. Our fuel will grow on trees. Well, stalks, with even fancier higher-tech variants to come from cellulose and other (literal) rubbish.
It is very American to believe that chemists are going to discover the cure for geopolitical weakness. It is even more American to imagine that it can be done painlessly. Ethanol for everyone. Farmers get a huge cash crop. Consumers get more supply. And the country ends up more secure.
This is nonsense. As my colleague Robert J. Samuelson demonstrated this week, biofuels will barely keep up with the increase in gasoline demand over time. They are a huge government bet with goals and mandates and subsidies that will not cure our oil dependence or even make a significant dent in it.
Even worse, the happy talk displaces any discussion about here-and-now measures that would have a rapid and revolutionary effect on oil consumption and dependence. No one talks about them because they have unhidden costs. Politicians hate unhidden costs.
There are three serious things we can do now: Tax gas. Drill in the Arctic. Go nuclear.
I don't think a gas tax is needed because if the next four years is like the past four then the price of gasoline will naturally be $5-6/gallon (plus existing fed and state taxes). Certainly when total global production begins its estimated %2-5 annual decline we will see gasoline prices in the $10-20/gallon range. Additional gasoline tax will not be helpful. Definitly nuclear electrification is a major component of the long term solution. I think an advertizing campain to extolling the virtues, and the kewlness, of small cars like we see in europe would be helpful. The young Americans are still open minded enough to get it. Americans need to see things differently. I noticed both the United States and China announced they are doubling their strategic petroleum reserves. I suspect, besides National Security, the intent is to use these reserves to manipulate the oil markets so the prices are tightly controlled and rise as slowly as they can manage. To smooth the huge price spikes that alarm the masses and roil the markets so much.
When a major oil field peaks and goes into decline it declines rapidly at 10-20% per year. World production will decisively, undeniably, begin total decline within a few years. Prices will increase far beyond what we've seen the past several years. Almost everything we use in day to day life depends on oil. For example plastics, aspirin, fabric, nitrogen fertilizer for food crops all need oil - not for energy - but as an input ingredient. This goes way beyond energy independence, we must secure oil supplies for all the things oil is necessary. Things of every sort will get more expensive and no amount of government subisdy will change that. I know people wish for the good old days of oil cheaper than bottled water and demand our government do something to restore cheap oil but it is physically impossible so any government action to "make" oil cheaper to consumers may get votes but it will also make the real situation deteriorate worse and faster.
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Corvus
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Posted: Mon Jan 29th, 2007 04:54 am |
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Only a disposable society depends on oil . . . I disagree with you Phil.
Once we became an industrialized nation, we solidified the machines dependence on us and our dependence on the machine. I tell you . . . once the machine begins to fear the people or bleeds them to the point of revolt, it will solve the oil problem . . . because all the technologies are in place to do so. The last little bit of money will be sucked from our pockets, we will have a major depression . . . and then BANG . . . the machine will "Retro-fit" (using Roy's term) itself to depend on a new source of energy . . . it started with fire, then oil, next electricity and combustion . . . Jesus can't you see we will move beyond this when the time is right . . .
We have plenty of CRP land out there, which the machine will use if necessary . . .
If we all of a sudden become a non-oil dependent nation . . . profits would be lost.
Paper or Plastic . . . kill a tree or burn some oil, either way you are still a slave and always will be . . . Scientists only make our position more ambiguous and comfortable . . . but the Sodomy continues.
Once again . . .
Life's but a walking shadow, a poor player, that struts and frets his hour upon the stage, and then is heard no more; it is a tale told by an idiot, full of sound and fury, signifying nothing.
Last edited on Mon Jan 29th, 2007 05:25 am by Corvus
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"In a person (not Corvus) who is open to experience each stimulus is freely relayed through the nervous system, without being distorted by any process of defensiveness." -C. Rogers
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