Corn, Feed Grain Supplies Flood a Saturated Market

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Oct. 1 (Bloomberg) -- Bloomberg's Scarlet Fu and Bloomberg News’ Jeff Wilson put futures in focus with a look at the overabundance of feed grains flooding the market in "On The Markets." They speak on Bloomberg Television's "In The Loop."

With the government shutdown and more with supplies of the crop.

That is correct.

The world is awash in the grains, mainly corn, and the south americans are getting ready to plant record soybean acreage.

Last year we had record highs for corn and soybean and that is usually the best fertilizer to bring down prices later on because farmers are the best economic citizens we have.

Yesterday, usda said inventories (the 2012 crop were 25% higher than what they said earlier in september, and that set the price down to a three-year low.

Basically what has happened is we have these high prices and usda estimates demand probably fell the most it has ever fallen since 1975, so high prices not only encourage farmers to plant more this year but also encourages livestock producers and other female lecturers to find ways to stretch the corn supply and that means they substituted cheaper supplies of wheat and other feed grains.

Tell us more about soybean and grain supplies.

Soybean supplies were also raised yesterday by the u.s. department of agriculture by 11% , compared to what they were expecting last month.

That means we have more supply coming into this year's crop.

The situation we are looking at now is we have some more rain that came due in september and now traders are beginning to think this years crop will be even bigger than what usda said last month.

Even if they could, down after heavy rains earlier this year.

Not only do we have more supplies coming into the new season but we also have a bigger crop that farmers may harvest.

The shutdown going on with the government right now could affect the ability of the u.s. department of agriculture to release its report.

That could be important for the grain industry because they want a new reading on how big the corn and soybean crops are this year.

So in addition to the debt ceiling being resolved, we have to look ahead to october 11 as well.

Thank you for joining us.

That is our futures in focus.

We are back on the markets in 30 minutes.

In the meantime, "market makers" starts right now.

This text has been automatically generated. It may not be 100% accurate.

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