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Maybe the Fed could persuade the LBMA to get into corn storage ...
... or General Foods to make a breakfast cereal called Derivatives Flakes.
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Farmers Looks to Earn Their Corn with New Storage Bins
By Greg Meyer
Financial Times, London
Wednesday, April 6, 2011
http://www.ft.com/cms/s/0/53ff8bc8-6070-11e0-9fcb-00144feab49a.html
NEW YORK -- Soaring corn prices have sparked a rush by US farmers to build storage bins across the Midwest, with many hoping to profit from an expected shortage by hanging on to grain supplies.
The rapid pace at which bins are being erected has made the glint of galvanised steel a more common sight in rural parts of the US, their growing presence a sign that farmers expect to fetch higher prices for their corn as the country’s stocks fall to critically low levels.
"Storage has had an incredible boom," said Michael Swanson, agricultural economist at Wells Fargo. "Farmers have built more on-farm grain storage in the last three to four years than they've built in the previous 30."
Government economists believe that US corn inventories will fall sharply before combine harvesters start rolling in the autumn, to 675 million bushels by August. Corn futures prices have doubled in a year to surpass $7.70 per bushel, breaking records set in the commodity price spike of 2008.
... Dispatch continues below ...
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But farmers selling to merchants often fetch far less than Chicago futures prices, a discount known as "basis." Holding back grain allows them to bet that discount will shrink, or futures rise, as supplies dwindle.
The US Department of Agriculture counts 12.5 billion bushels of capacity on US farms, 900 million more than four years ago.
"We've had our best years the last couple of years," said Charles Sukup, president of Sukup Manufacturing, an Iowa bin maker. "It makes farmers pretty sick when they say, 'Gee, if I only had a bin I could have stored this grain for a few months longer, and paid for the bin in one year.'"
Brock Grain Systems, a unit of Warren Buffett's Berkshire Hathaway, says on its website that storage "allows farmers to market their grain when they are ready." The Indiana-based company did not return calls.
Grain merchants such as Archer Daniels Midland, Bunge, and Cargill are also adding millions of bushels of commercial silo capacity across the US, the world's top exporter of corn, soyabeans, and wheat.
Many farmers are already cashing in. Between December and March the amount of corn stored on farms plunged 46 per cent to 3.4 billion bushels, as corn was sold to grain elevators and ethanol plants. The price of corn sold for imminent delivery currently exceeds future delivery dates.
Higher-yielding harvests can sometimes overwhelm silos, driving down the basis for farmers. This has also made storing grain on the farm more attractive.
James Layton of the Chicago commodity consultants Laymac sees dozens of metal storage units bins rising as he travels the Midwest. "You can spot them because the new bins shine so much," he said.
Ethanol refiners, operating at record rates, are especially appealing to farmers because they need to run constantly and have little on-site storage of their own. They could bid up the price of stored corn until harvests begin in September.
"The guys who can carry the corn the longest are going to have some big-time opportunities in the fall," said Mr Layton.
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Prophecy Resource Spins Off Platinum/Palladium Venture:
World-Class PGM Deposit in Yukon
Company Press Release, January 18, 2011
VANCOUVER, British Columbia -- Prophecy Resource Corp. (TSX-V:PCY)and Pacific Coast Nickel Corp. announce that they have agreed that PCNC will acquire Prophecy's Nickel PGM projects by issuing common shares to Prophecy.
PCNC will acquire the Wellgreen PGM Ni-Cu and Lynn Lake nickel projects in the Yukon Territory and Manitoba respectively by issuing up to 550 million common shares of PCNC to Prophecy. PCNC has 55.7 million shares outstanding.
Following the transaction:
-- Prophecy will own approximately 90 percent of PCNC.
-- PCNC will consolidate its share capital on a 10 old for one new basis.
-- Prophecy will change its name to Prophecy Coal Corp. and PCNC will be renamed Prophecy Platinum Corp.
-- Prophecy intends to distribute half of its PCNC shares to shareholders pro-rata in accordance with their holdings.
Based on the closing price of the common shares of PCNC on January 17, $0.195 per share, the gross value of the transaction is $107,250,000.
For the complete announcement, please visit:
http://prophecyresource.com/news_2011_jan18.php
