SOUTHERN CALIFORNIA FEED LETTER

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Star Milling Co.

Phone: 951.657.3143 * Fax: 951.943.2400 * Email: bill_cramer@starmilling.com

 September 2, 2010

 As you can see from the chart below, Corn has been going up in value pretty much in a straight line through all of July and August.  If we estimate basis levels in California at +$1.00 per bushel we can see that cash Corn has gone from a low in July of around $160.00 per ton to the current level of about $190.00 per ton.  Even only a month ago this years harvest was projected to be one of the largest on record but there are several factors that have changed dramatically in the last several weeks.  One is that recent export volumes of Corn are some of the highest so far in years.  Another factor is the influence of that high price of wheat is having on grains with the news of the drought in Russia, typically a wheat exporting country.  But the primary price mover at this time is that an early harvest in the Midwest is now under way and Corn yields are coming in less than anticipated, maybe even less that last years averages.  This has the potential of creating some very volatile markets in the coming weeks especially if these higher prices don’t start rationing demand.

 

Daily Average Price of Corn cents/bu. – Chicago

 

The Soybean crop on the other hand is doing quite well.  Preliminary field surveys show that pod counts are high and a projected record crop is still anticipated.  With this in mind, if there is continued inflation in feed prices it will be from grains and not protein meal.

Daily Average Price of Soybean Meal $/ton – Chicago

Finally, a brief message about the recent recall of eggs from two Midwest egg producers due to contamination from Salmonella Enteritidis.  There have been reports that the same Salmonella sero- types found in the eggs have been found in the feed.  At this point in time however it is still unknown where the true source of contamination in these flocks began.  Here at Star we are very vigilant about our housekeeping and are certified by the American Feed Industry Association as a Safe Feed / Safe Food facility.

Bill Cramer

Star Milling Co.