Today I hope to first warm your hearts with a bullish crop price forecast, then bolster your confidence with a buildish crop market development initiative. (I’m saving bearish thoughts for tomorrow.)
Here’s the bullish crop market outlook, from Hussein Allidina of Morgan Stanley, the U.S. Investment bank:
“I think actually that there is a lot of upside potentially in wheat, particularly if you look at wheat balances. From a statistical perspective, they look good, but if you take out the countries where wheat being held – China, India, Iran – that are not going to export wheat, that picture is actually much tighter.”
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Allidina is generally bullish commodities because he believes rising prices are based on real world demand and not just speculation, so he sees strong underlying support for crop prices. But he is especially bullish on the number one U.S. cereal crop, which is the basis for all the cereals. Here’s what he said on Bloomberg radio yesterday:
TOM KEENE: “Where is the best profit opportunity in commodities right now?”
HUSSEIN ALLIDINA: “I think corn. Corn still has quite a bit of upside.”
There you have it: the commodities head of a major investment bank thinks corn is the number one bullish commodity on the planet. And wheat isn’t far behind. Kind of makes it easier to go out and seed with confidence, doesn’t it?
Here’s another positive thing, but it’s a market development initiative, not a forecast.
The Prairie Oat Growers Association has just launched a counter-attack on the myths killing off the once-reliable and big U.S. Horse feed market. They have just launched www.equineoats.org, and while new websites are a-dime-a-dozen these days, this one seems like a perfect use of the web.
The website will house a mountain of nutritional info about oats’ value as a horse feed, and that should help dispel some of the pernicious myths that have killed off most of the horse feed demand in recent years. I talked to oats market analyst Randy Strychar about this today, and he said when he was working on this project over the past couple of years, he was shocked to find how widely the view had spread that oats are harmful to horse health. That’s right: harmful. More than high prices, the notion that oats are bad for horses has been crippling demand.
The website will contain masses of nutritional research about oats as horse feed, from a wide range of sources, and the industry hopes this brings back a once-million tonne market. (Recently it’s been less than 300,000 tonnes.) With even vets believing that oats are bad – and saying that to their clients – getting more balanced information out into the public should help rebuild demand.
And if some of that demand does return, Strychar has a concern: oats stocks are at such a low level, there mightn’t be enough to go around, and prices could skyrocket.
Which is a very good problem for farmers to look forward to.
