http://soberlook.com/2012/07/crop-damage-sending-agricultural.html?utm_source=BP_recent
What's even more troubling is that the weather is not cooperating. The National Weather Service forecast for the continental US over the next 1-2 weeks looks dreadful. The precipitation levels...
and.....
http://news.investors.com/article/619723/201207251831/a-drought-of-us-leadership.htm
http://www.dailyimpact.net/2012/07/26/from-american-drought-to-global-catastrophe/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed:+dailyimpact/GIfx+(The+Daily+Impact)
Near RecordEven after the USDA cut its prediction for domestic corn output, farmers in the world’s biggest agricultural exporter are still expected to raise production by 5 percent to 329.5 million tons, second only to the record in 2010. They started the season with the most acres since 1937. The department also anticipates bigger harvests in Argentina, Canada, China and Mexico.
Global food prices tracked by the UN would have to jump 18 percent to match the record set in February 2011 and wheat is still 36 percent below its all-time high of $13.495 reached in February 2008. Meat may retreat as higher feed costs spur farmers to slaughter more animals. Goldman Sachs Group Inc. cut its three and six-month estimates for cattle and hog prices by as much as 20 percent on July 16 and lean-hog futures tumbled 18 percent since July 2 in Chicago.
Southern Europe’s heat wave, heavier-than-normal rainfall in western Europe and the U.S. drought are linked through the Arctic jet stream, a fast-moving band of wind used by aircraft to shorten travel times, according to Gail Martell, the president of Martell Crop Projections in Whitefish Bay, Wisconsin, and Jim Dale, a senior risk meteorologist at British Weather Services.
Jet StreamThe jet stream moved north over the U.S. and Canada and south under Europe, pulling in warm air from Africa over southern Europe. With the hot weather in southern Europe and the U.S. mixing with cooler air, “you’re likely to see some fireworks in terms of tornadoes, huge deluges, that sort of thing,” High Wycombe, England-based Dale said.
Heat combined with drought during the flowering and pollination phases of corn growth can reduce yields by as much as 13 percent a day, according to the National Corn Handbook published by Purdue University. Europe probably lost 6 million to 8 million tons of output since June, Weber estimated. The EU predicted a total harvest of 66.8 million tons at the end of that month.
Italy’s WeatherIn Italy, the EU’s third-largest corn grower as well as its third-biggest importer, high temperatures and lack of rain caused flowering and leaf expansion to be “significantly below” average, according to the EU crop-monitoring unit.
Bulgaria reported its hottest day in a century on July 15. Romanian Agriculture Minister Daniel Constantin told a conference in Bucharest on July 20 that the country was facing a “profound drought” and “pretty big losses” are possible if rains fail to return. Temperatures may reach 39 degrees Celsius through July 27, the national weather agency estimates.
Neighboring Serbia has had heat waves throughout June and July, with temperatures 3.3 to 5 degrees Celsius higher than usual and below-normal rainfall, according to Republic Hydrometeorological Service of Serbia, the national weather service. The corn crop will be 3.5 million to 4 million tons, from an earlier estimate of 7 million tons, the national grain association forecast July 17.
Average temperatures in Ukraine have been 2 to 5 degrees Celsius above normal for three months, the worst in a decade, according to the country’s Hydrometeorology Center. Hot and dry weather has been “hammering” the country’s crop in the past three weeks and yields will probably be 23 percent lower than a year ago, Agritel, a Paris-based farm adviser with an office in Kiev, wrote in a report July 13.
MONDAY, JULY 30, 2012
Crop damage sending agricultural commodity prices to new highs
Crop conditions across the US are still deteriorating, with less than a quarter of the corn crop now in "good or excellent" conditions.
 |
| Percentage of corn crops in "good or excellent" conditions |
What's even more troubling is that the weather is not cooperating. The National Weather Service forecast for the continental US over the next 1-2 weeks looks dreadful. The precipitation levels...
 | ||||
| Precipitation 8-14 Day Outlook (source: NOAA/ National Weather Service) ... and the temperature are both expected to be significantly worse than historical averages. This is threatening to cause further crop damage.
On the back of these weather forecasts and crop damage estimates, agricultural commodity prices are hitting records again. Bloomberg: - Corn surged to a record, heading for the biggest monthly gain since 1988, as the worst drought in at least a generation lingered in the U.S., threatening yields in the world’s biggest grower and exporter. Soybeans and wheat also rallied. Corn futures for December delivery climbed 2.5 percent to $8.1275 a bushel on the Chicago Board of Trade, after touching an all-time high of $8.1725. The most-active contract has surged 28 percent in July.
And as discussed before, high food prices are already propagating through emerging markets economies. The Times of India: - It's not only the prices of staples, edible oils and vegetables that have been rising. Prices of eggs and chicken (protein food items) may also rise in the coming months. Scanty rainfall and higher global prices have led to a huge increase in average prices of poultry feed in the country, which is also an early indicator of the potential impact a drought may have on food inflation.This is a dangerous development for two reasons. We will see more civil unrest across emerging markets - particularly in the Middle East. Also the large emerging markets nations (and some developed nations as well) will be unable to stimulate their economies effectively because of inflationary concerns, resulting in a significant hit to global growth. |
and.....
http://news.investors.com/article/619723/201207251831/a-drought-of-us-leadership.htm
Leadership: As drought destroys the U.S. corn crop and drives prices skyward, the U.S. now buys corn from Brazil and faces the end of its prized role as the world's top food supplier. It's time to scrap the ethanol mandate.
There's a whiff of foreboding about an already-economically enfeebled U.S. now losing its crown as the nation whose corn harvest could feed the world.
The worst drought since 1956 has hit 88% of the U.S. corn crop and is driving corn prices sharply higher.
For the first time, U.S. agricultural companies are importing corn from Brazil — the equivalent of Saudi Arabia importing oil, as the Financial Times noted.
The Mayan calendar forecasts apocalypse in 2012. By creepy coincidence, the mighty Mayan empire itself fell due to a corn drought. But the drought affecting the U.S. is entirely due to market dynamics.
Droughts happen all the time. Under normal market conditions, crops from elsewhere pick up the slack.
There's nothing wrong with importing from Brazil, but it's a strange dynamic because our country is so big and has so much in reserve it shouldn't have to import.
The problem here is the man-made element that is exacerbating the U.S. drought. There should be plenty of corn from U.S. reserves after recent record harvests for exports — 61 million metric tons in 2008 — were it not for the 2007 law that forces U.S. corn producers to turn ever greater percentages of U.S. corn into ethanol.
"As biofuel production develops and expands, it will continue to put pressure on U.S. corn and other feed grain production, exports, livestock feeding, and other domestic uses," the Agriculture Department says.
Today, 40% of our corn is consumed by ethanol making — the filling of gas tanks instead of stomachs. And another 20% is being destroyed by drought this year.
The ethanol mandate comes under the dubious belief that ethanol is somehow "greener" — an idea easily discredited by the fact that it takes more energy to produce ethanol than that fuel supposedly saves.
The real problem is that it takes corn off the market, leaving the poor around the world hungrier because they can't afford U.S. corn, and reduces the U.S. role as No. 1 supplier with 60% of world corn exports.
Already, wealthier countries such as Japan, Korea and Taiwan are looking elsewhere for new suppliers because of skyrocketing prices and tight supply. America exports 50 million tons of corn — 15% of its crop — and Japan is America's top buyer, importing 14 million tons, followed by Mexico, Korea, Egypt and Taiwan.
Now, they all will have no choice but to turn to other corn producers such as Brazil, South Africa, China and Argentina to get their corn.
It's happened before. In the 1970s, then-Secretary of State Henry Kissinger, with prices rising in the U.S., cut Japanese access to U.S. soy. Furious, Japan financed Brazil's push into soybeans, and now that country competes with American farmers.
Today, the U.S. seems oblivious to the importance of exports. Instead, the ethanol mandate is its priority.
When will this government stop trying to pick winners and losers? Sadly, with this ethanol mandate, the U.S. has become the biggest loser of all.
http://www.dailyimpact.net/2012/07/26/from-american-drought-to-global-catastrophe/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed:+dailyimpact/GIfx+(The+Daily+Impact)
From American Drought to “Global Catastrophe”
Podcast: Play in new window | Download
Food riots erupted across North Africa in 2011 — this one in Algeria in January — after prices spiked. It’s about to happen again. (Photo by Magharebia/Flickr)
Some poet invented the name “Arab Spring” as a label for the tsunami of public desperation that last year took down the governments of Tunisia, Egypt and Libya. Poets and Pollyannas saw the events as an upwelling of love for democracy. Realistsrelated them to the spike in world food prices that threatened the survival of whole populations and made them desperate for change — any change. Now, thanks in large part to events unfolding in the American heartland, get ready for another, worse, spike.
We are running out of superlatives with which to describe the Mid- and Southwestern drought and its effect on this year’s corn and soybean crops. According to this week’s USDA crop update the situation during the previous seven days went from “critical” to, um, worse than that. The drought is the worst in half a century. Of the largest US acreage ever planted in corn (industrial agriculture was crowing about that just a couple of months ago), only one-quarter is still in good condition. (Modest rainfall in drought-stricken areas early this week provided mostly emotional relief; the drought is forecast to continue unabated through October.)
One guesstimate about how this is going to play out, from some financial analysts in Australia, is that the US corn harvest will be about 60 million metric tons short of expectations. For perspective, consider; Argentina, the number two corn-producing country in the world, puts about 25 million tonnes in the crib. In addition, a heat wave across southern Europe into Ukraine is wilting the corn crop that typically provides 16 per cent of world supplies.
The notion that the shortfalls in the harvest are driving the price increases misses a critical point. Commodity prices, followed quickly by food prices, are heading skyward now, months before the crop is harvested and measured. How can that be? For the same reason that crude oil price increases produce instant gas-pump price increases, months before the crude gets to the pump. Speculation.
According to researchers from the New England Complex Systems Institute, commodity speculation — bets placed by hedge funds and investment banks — wildly amplify clues and predictions about the future state of the markets. Using models that include the effects of speculation — whose very existence is strenuously denied by financiers and industrial ag tycoons — the Institute sees the threat of “global catastrophe driven by a speculator amplified food price bubble.”
Stories that have appeared thus far in the popular American media are pointing out such effects of the drought as an increase, sometime next year, of perhaps 15 cents in the price of a loaf of bread. In a country where the average consumer spends well under 10 per cent of her income on food, this is hardly an alarm bell. For hundreds of thousands of people around the world, however, another spike in food prices is a death sentence. And the notion that only their end of the boat is sinking is bogus.
The more unstable the world, the more failed states and refugees, the more wars for resources, the more dangerous life becomes for us all. Consider, for example, what would happen if the American Fall should do what the Arab Spring failed to do — ignite the population of Saudi Arabia. Good luck rowing your end of the boat away from that one.
[See also: Hunger Games in the Heartland; UN, Oxfam Reports: Brace for Impact; From American Spring to American Fall]
and consider what's happening in europe also...
Europe Heat Wave Wilting Corn Adds to U.S. Drought
(Bloomberg) Heat waves in southern Europe are withering the corn crop and reducing yields in a region that accounts for 16 percent of global exports at a time when U.S. drought already drove prices to a record.
Temperatures in a band running from eastern Italy across the Black Sea region into Ukraine reached 35 degrees Celsius (95 degrees Fahrenheit) or more this month, about 5 degrees above normal, U.S. government data show. Corn, now in the pollination phase that creates kernels, risks damage above 32 degrees, said Cedric Weber, the head of market analysis at Bourges, France- based Offre et Demande Agricole, which advises farmers on sales.
The heat wave in Europe is adding to concern about global food supplies as U.S. farmers face the worst drought since 1956, India delays sowing because of a late monsoon and Australian crops endure below-average rainfall. Soybeans and corn rose to all-time highs yesterday and wheat surged 42 percent since June 1. The United Nations says food prices will probably rebound after falling the most in three years in the second quarter.
“Everyone is looking to the U.S., but clearly in Europe we’ll need to import a lot of wheat and corn,” said Weber, whose company advises about 5,000 farmers. “That’s just adding to the problems we’ve got everywhere.”
Agricultural Commodities
Corn rose 51 percent to $7.775 a bushel on the Chicago Board of Trade since mid-June, and traded yesterday at an all- time high of $8. Goldman Sachs Group Inc. is predicting a record $9 a bushel within three months. Wheat was at $9.4725 a bushel yesterday, the most since August 2008. Soybeans advanced 29 percent to $15.57 a bushel since the start of the year, reaching an all-time high of $16.915 yesterday.
Agricultural commodities are this year’s four best performers in the Standard & Poor’s GSCI gauge of 24 raw materials, which dropped 2.7 percent. The MSCI All-Country World Index (MXWD) of equities gained 1.1 percent and Treasuries returned 3 percent, a Bank of America Corp. index shows.
Corn yields in the European Union are forecast to slide 12 percent from last year to an average 6.73 tons per hectare (2.47 acres), down 8.8 percent from a June outlook after hot weather hurt crops in Italy, Romania and Hungary, the bloc’s crop- monitoring unit wrote in a report published yesterday. The yield would be the lowest since 2007, based on USDA data.
IGC ReportDamage from Europe’s heat wave has yet to be reflected in forecasts by the International Grains Council, which next reports July 26. The London-based group raised its global corn harvest estimate by 4 million metric tons to 917 million tons July 2. While the U.S. Department of Agriculture cut its U.S. output figure by 12 percent July 11, it raised the forecast for the European Union by 2.1 percent and left predictions for Serbia and Ukraine unchanged. It reports again on Aug. 10.
While yields may be falling across southern Europe, crops in France and Germany are doing better. French farmers will produce 5.8 percent more soft wheat this season, the government forecast July 9. German farm group Deutscher Raiffeisenverband e.V. raised its output estimate by 3 percent on July 17. France was the second-biggest wheat exporter after the U.S. last year, and Germany ranked seventh, World Trade Organization data show. “Both in France and Germany, the situation has been very good,” said Abdolreza Abbassian, an economist at the United Nations’ Food & Agriculture Organization in Rome. “It’s the only place where things are reasonably predictable right now.”
Temperatures in a band running from eastern Italy across the Black Sea region into Ukraine reached 35 degrees Celsius (95 degrees Fahrenheit) or more this month, about 5 degrees above normal, U.S. government data show. Corn, now in the pollination phase that creates kernels, risks damage above 32 degrees, said Cedric Weber, the head of market analysis at Bourges, France- based Offre et Demande Agricole, which advises farmers on sales.
The heat wave in Europe is adding to concern about global food supplies as U.S. farmers face the worst drought since 1956, India delays sowing because of a late monsoon and Australian crops endure below-average rainfall. Soybeans and corn rose to all-time highs yesterday and wheat surged 42 percent since June 1. The United Nations says food prices will probably rebound after falling the most in three years in the second quarter.
“Everyone is looking to the U.S., but clearly in Europe we’ll need to import a lot of wheat and corn,” said Weber, whose company advises about 5,000 farmers. “That’s just adding to the problems we’ve got everywhere.”
Agricultural Commodities
Corn rose 51 percent to $7.775 a bushel on the Chicago Board of Trade since mid-June, and traded yesterday at an all- time high of $8. Goldman Sachs Group Inc. is predicting a record $9 a bushel within three months. Wheat was at $9.4725 a bushel yesterday, the most since August 2008. Soybeans advanced 29 percent to $15.57 a bushel since the start of the year, reaching an all-time high of $16.915 yesterday.
Agricultural commodities are this year’s four best performers in the Standard & Poor’s GSCI gauge of 24 raw materials, which dropped 2.7 percent. The MSCI All-Country World Index (MXWD) of equities gained 1.1 percent and Treasuries returned 3 percent, a Bank of America Corp. index shows.
Corn yields in the European Union are forecast to slide 12 percent from last year to an average 6.73 tons per hectare (2.47 acres), down 8.8 percent from a June outlook after hot weather hurt crops in Italy, Romania and Hungary, the bloc’s crop- monitoring unit wrote in a report published yesterday. The yield would be the lowest since 2007, based on USDA data.
IGC ReportDamage from Europe’s heat wave has yet to be reflected in forecasts by the International Grains Council, which next reports July 26. The London-based group raised its global corn harvest estimate by 4 million metric tons to 917 million tons July 2. While the U.S. Department of Agriculture cut its U.S. output figure by 12 percent July 11, it raised the forecast for the European Union by 2.1 percent and left predictions for Serbia and Ukraine unchanged. It reports again on Aug. 10.
While yields may be falling across southern Europe, crops in France and Germany are doing better. French farmers will produce 5.8 percent more soft wheat this season, the government forecast July 9. German farm group Deutscher Raiffeisenverband e.V. raised its output estimate by 3 percent on July 17. France was the second-biggest wheat exporter after the U.S. last year, and Germany ranked seventh, World Trade Organization data show. “Both in France and Germany, the situation has been very good,” said Abdolreza Abbassian, an economist at the United Nations’ Food & Agriculture Organization in Rome. “It’s the only place where things are reasonably predictable right now.”
Near RecordEven after the USDA cut its prediction for domestic corn output, farmers in the world’s biggest agricultural exporter are still expected to raise production by 5 percent to 329.5 million tons, second only to the record in 2010. They started the season with the most acres since 1937. The department also anticipates bigger harvests in Argentina, Canada, China and Mexico.
Global food prices tracked by the UN would have to jump 18 percent to match the record set in February 2011 and wheat is still 36 percent below its all-time high of $13.495 reached in February 2008. Meat may retreat as higher feed costs spur farmers to slaughter more animals. Goldman Sachs Group Inc. cut its three and six-month estimates for cattle and hog prices by as much as 20 percent on July 16 and lean-hog futures tumbled 18 percent since July 2 in Chicago.
Southern Europe’s heat wave, heavier-than-normal rainfall in western Europe and the U.S. drought are linked through the Arctic jet stream, a fast-moving band of wind used by aircraft to shorten travel times, according to Gail Martell, the president of Martell Crop Projections in Whitefish Bay, Wisconsin, and Jim Dale, a senior risk meteorologist at British Weather Services.
Jet StreamThe jet stream moved north over the U.S. and Canada and south under Europe, pulling in warm air from Africa over southern Europe. With the hot weather in southern Europe and the U.S. mixing with cooler air, “you’re likely to see some fireworks in terms of tornadoes, huge deluges, that sort of thing,” High Wycombe, England-based Dale said.
Heat combined with drought during the flowering and pollination phases of corn growth can reduce yields by as much as 13 percent a day, according to the National Corn Handbook published by Purdue University. Europe probably lost 6 million to 8 million tons of output since June, Weber estimated. The EU predicted a total harvest of 66.8 million tons at the end of that month.
Italy’s WeatherIn Italy, the EU’s third-largest corn grower as well as its third-biggest importer, high temperatures and lack of rain caused flowering and leaf expansion to be “significantly below” average, according to the EU crop-monitoring unit.
Bulgaria reported its hottest day in a century on July 15. Romanian Agriculture Minister Daniel Constantin told a conference in Bucharest on July 20 that the country was facing a “profound drought” and “pretty big losses” are possible if rains fail to return. Temperatures may reach 39 degrees Celsius through July 27, the national weather agency estimates.
Neighboring Serbia has had heat waves throughout June and July, with temperatures 3.3 to 5 degrees Celsius higher than usual and below-normal rainfall, according to Republic Hydrometeorological Service of Serbia, the national weather service. The corn crop will be 3.5 million to 4 million tons, from an earlier estimate of 7 million tons, the national grain association forecast July 17.
Average temperatures in Ukraine have been 2 to 5 degrees Celsius above normal for three months, the worst in a decade, according to the country’s Hydrometeorology Center. Hot and dry weather has been “hammering” the country’s crop in the past three weeks and yields will probably be 23 percent lower than a year ago, Agritel, a Paris-based farm adviser with an office in Kiev, wrote in a report July 13.
Ukraine Production
Ukraine will produce 20.3 million tons of corn this year, according to Agritel. Ukraine was Europe’s largest corn grower last season and together with Romania, Hungary, Serbia and Bulgaria exported 16.3 million tons in 2011, or about 16 percent of global shipments, according to the WTO and UN.
The 27-nation EU will probably need to import 7.5 million tons of corn this season, from 6 million tons a year earlier, Weber said. That would be the second-highest amount according to USDA data going back 12 years. Record temperatures were set in 21 places last month in Spain, already the world’s third-biggest corn importer.
Kazakhstan has an “alarming” drought in grain-growing areas, Agriculture Minister Muslim Umiryayev was cited by the Kaztag news agency as saying last week.
Russia’s GrainsHeat and dry weather that may harm crops was reported by Russia’s Federal Hydrometeorological Center on July 20 in parts of the Volga, Urals and Western Siberian regions. The government estimated total grain output of as little as 80 million tons this season on July 17, having initially predicted 94 million tons. The country barred all cereal exports in August 2010 for almost a year as drought seared fields. Ukraine introduced quotas on shipments in the same year because of drought.
The weakest monsoon rainfall in three years is delaying sowing of rice, oilseeds and lentils in several parts of India, Agriculture Secretary Ashish Bahuguna told reporters July 21. Most of Western Australia, the biggest wheat-growing region, had below-average rainfall from April to June and was exceptionally dry in July, said David Jones, the Melbourne-based head of climate monitoring and prediction at the Bureau of Meteorology.
“With this changing landscape, the pressure is up,” said Jaime Miralles, a Dublin-based commodity-risk manager at FCStone Commodity Services (Europe) Ltd., a unit of a company that handled $75 billion of physical commodities trade last year. “Focus is very much shifting to the overall balance sheet for grains. If we continue to see production disappearing, you’re going to see an additional knock-on effect on prices.”
Ukraine will produce 20.3 million tons of corn this year, according to Agritel. Ukraine was Europe’s largest corn grower last season and together with Romania, Hungary, Serbia and Bulgaria exported 16.3 million tons in 2011, or about 16 percent of global shipments, according to the WTO and UN.
The 27-nation EU will probably need to import 7.5 million tons of corn this season, from 6 million tons a year earlier, Weber said. That would be the second-highest amount according to USDA data going back 12 years. Record temperatures were set in 21 places last month in Spain, already the world’s third-biggest corn importer.
Kazakhstan has an “alarming” drought in grain-growing areas, Agriculture Minister Muslim Umiryayev was cited by the Kaztag news agency as saying last week.
Russia’s GrainsHeat and dry weather that may harm crops was reported by Russia’s Federal Hydrometeorological Center on July 20 in parts of the Volga, Urals and Western Siberian regions. The government estimated total grain output of as little as 80 million tons this season on July 17, having initially predicted 94 million tons. The country barred all cereal exports in August 2010 for almost a year as drought seared fields. Ukraine introduced quotas on shipments in the same year because of drought.
The weakest monsoon rainfall in three years is delaying sowing of rice, oilseeds and lentils in several parts of India, Agriculture Secretary Ashish Bahuguna told reporters July 21. Most of Western Australia, the biggest wheat-growing region, had below-average rainfall from April to June and was exceptionally dry in July, said David Jones, the Melbourne-based head of climate monitoring and prediction at the Bureau of Meteorology.
“With this changing landscape, the pressure is up,” said Jaime Miralles, a Dublin-based commodity-risk manager at FCStone Commodity Services (Europe) Ltd., a unit of a company that handled $75 billion of physical commodities trade last year. “Focus is very much shifting to the overall balance sheet for grains. If we continue to see production disappearing, you’re going to see an additional knock-on effect on prices.”
and perspective on the drought and prior droughts ......2012 is approaching 1934....
Picture of the Week: Historical Droughts
The image below depicts June drought progressions in three different time periods in U.S. history. The orange areas illustrate moderate to extreme drought conditions. The 1930's drought brought the dust bowls, and the last drought of this magnitude was in the late 1980's. In the month of June, 2012, more than half of the U.S. was in moderate to extreme drought condition. To see drought progressions from 1899 to present, click the link below.
http://www.nytimes.com/interactive/2012/07/20/us/drought-footprint.html?ref=earth
http://www.nytimes.com/interactive/2012/07/20/us/drought-footprint.html?ref=earth
No comments:
Post a Comment