grain prices

MAK is aiming to deliver a new Rock Phosphate mine next year (in 12 months time). This open cut mine in the NT provides the starting material for phosphate fertilizer which is required for modern intensive farming of things such as wheat and other grains. Increasing the amount of fertilizer applied to the soil can increase the amount of crop produced by the same amount of land.

As the prices of grains increase, the price of fertilizer will increase in tandem. Farmers will invest more in things that will increase profitability such as fertilizer as the grain prices increase. As fertilizer prices increase, the underlying Rock Phosphate will tend to increase also.

If you believe that the grains prices will continue to rise then invest in fertilizer and associated companies as these will become more profitable with increasing prices

Here is the key quote from the article below

"new crop corn at $4.31, price levels not seen since November 2008."

"Grain prices reach eight-month highs on rallies

The Wauneta Breeze

With soybeans leading the way, grains have posted significant pricing gains in recent weeks, rebounding to highs not seen since the country’s economic meltdown last fall.
On Monday cash soybeans in Palisade climbed to $11.50 after posting a 42 cent gain during the height of Monday’s rally on the Chicago Board of Trade.
Wheat prices made strong gains too, jumping well past $6 this week to post a high for cash wheat at Frenchman Valley Co-op in Wauneta at $6.47 on Monday.
Corn made gains also, but not near the double digit surge of wheat and beans.
On Monday corn gained 9 cents and showed follow-through strength on Tuesday while both wheat and beans saw prices corrections. By the close of trade on Tuesday, cash corn in Wauneta was priced at $4.04, with new crop corn at $4.31, price levels not seen since November 2008."


Key quote from the Bloomberg article below is

"Syngenta AG, the world’s biggest maker of agricultural chemicals, said prices for the main grains will remain above their long-term average as supply fails to meet expanding demand." Obviously an Ag chem company will be bullish but they are out there indicating grain prices will remain high. Especially after reading the supply drop off and demand increase that is forecast

"Grain Prices Will Be Buoyed by Supply Shortfalls, Syngenta Says
By Maria Kolesnikova

June 7 (Bloomberg) -- Syngenta AG, the world’s biggest maker of agricultural chemicals, said prices for the main grains will remain above their long-term average as supply fails to meet expanding demand.

World cereal production will fall 3 percent in the next marketing year, while demand will expand by 1.3 percent, the United Nations’ Food and Agriculture Organization said June 4.

“Commodity prices will stay above their long-term average, where they are now,” John Atkin, chief operating officer of Syngenta’s crop protection division, said in an interview in St. Petersburg, Russia, yesterday. “The environment for firm commodity prices is there.”

Prices of wheat, rice and corn rose to records last year, sparking riots from Haiti to Ivory Coast. The number of hungry people in the world will increase to a record 1 billion this year, the FAO said last month. Its index of 55 foods rose for a third consecutive month in May.

Inventories of wheat, corn and soy “are going to be a bit under pressure” at the end of the first half of the year after adverse weather curbed output in Argentina, plantings in Europe shrank and Chinese demand for soybeans remained “strong,” Atkin said.

Demand for grains and oilseeds has been affected by the global recession, “but these declines are likely to be short- lived,” Christopher Mahoney, director of Glencore Grain BV, told a grains conference in St. Petersburg today."


China is also seeing an increase in the price of grains also with month on month increases now apparent.

"Grain, service prices may push up CPI

11:30, June 10, 2009

China's consumer price index (CPI), the main gauge of inflation, fell 1.4 percent year on year in May; the fourth monthly drop in a row since February. However, the rise of grain prices is likely to affect the prospect of CPI in the period to follow, said the National Bureau of Statistics.

Grain prices have increased by 0.2 percent, 1.0 percent, 1.5 percent, 0.4 percent, and 0.8 percent month by month from January to May.

As grain is used in many food products, the rise in grain prices may have impact on the future development of CPI. However, whether that is the case is yet to be observed.

According to the National Bureau of Statistics on June 10, food prices were down by 0.6 percent year on year in May, with pork prices plummeting 32 percent.


By People's Daily Online"