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Fertilizer, Food, Machinery Shares Down on WASDE Report

14 September 2011

GLOBAL - The World Agricultural Supply and Demand Estimates were released today with the season average farm price for all wheat to be forecasted at $7.35 to $8.35 per bushel, up from $7.00 to $8.20 from the previous month.

Due to larger beginning stocks in Canada and increased production for Canada, the EU-27, and the Ukraine; global wheat supplies for 2011/2012 are forecasted to be 7.6 million ton higher.

According to StreetInsider.com, corn production for 2011/2012 is estimated to be 417 million bushels lower than last month with yields expected to be down across a majority of the Corn Belt. Total corn supplies for 2011/2012 are lowered 442 million bushels with a 20 million bushel reduction in carryin and a 5 million bushel reduction in import expectations. Suppliers for 2011/2012 are estimated to be the lowest since 2006/2007.

Total corn use for 2011/2012 is projected to be 400 bushels fewer than last month. The season average farm price of corn per bushel is estimated to be $0.30 higher on both ends of the range to a record $6.50 to $7.50 per bushel.

Rice beginning stocks for 2011/2012 are reduced 2.7 million cwt from last month to 48.4 million.

Soybean and product prices are forecasted to be up in 2011/2012. The season average price is estimate to be $12.65 to $14.65 per bushel, a $0.15 increase on both ends of the range.

To reflect lower U.S. supplies and fewer China imports, cotton exports expectations are reduced by 300 thousand bales to 12 million, while ending stocks are raised 100 thousand bales to 3.4 million. The marketing year average price received by producers is anticipated to remain the same as last month between $0.85-$1.05 per pound.

With production and consumption estimates down across a majority of the agricultural sector, a majority of the companies in the fertilizer sector, such as Agrium (NYSE: AGU) and CF Industries (NYSE: CF), are trading down in the open hour. Companies in the farming equipment sector, such as Caterpillar (NYSE: CAT) and Deere (NYSE: DE) are also trading down in the opening hour.

Shares of wholesale food companies, for example Smithfield Foods (NYSE: SFD) and Tyson (NYSE: TSN), are also trading down on the news as prices look to rise on fewer supplies.

TheCropSite News Desk



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