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Grain Supply Update: Aug. 16, 1996



Grain Supply Update, August 16, 1996		
                          © Geri Guidetti, 1996

In response to many of your mailed and Emailed notes…no, you did not 
overlook last week’s grain update; there was none.  Apparently, many of 
you who regularly follow these reports missed  posted news group 
announcements that I would be taking a brief vacation to California.  
Break, I did, and did not look at a single field of corn or wheat 
(except from the plane),  nor did I read a single commodities, weather 
or agriculture data report for five hectic days of family visits and 
not-so-hectic wave watching.  In fact, I left the computer in the office 
so I would not be tempted to violate my self-imposed ban on work and 
electronic communication.  As a result, I am now refreshed, renewed 
(well, almost), and happy to be back to the keyboard and food gardens. 
Thank you, all, for your expressed concerns for my well-being and for 
your continued interest in this work.

As regular readers of these reports are aware, I have been skeptical of 
grain market analysts’, traders’ and even the USDA’s optimistic 
predictions for bumper wheat and corn crops this season.  Unusual and 
extreme weather patterns resulting in late plantings, floods, droughts 
and fires, and contributing to a bumper crop of insects and disease, 
continue to argue against a rosy outlook.   On Monday of this week (Aug. 
12), the USDA  released a lower than expected estimate for production of 
corn this season:  8.69 billion bushels, down 400 million bushels from 
earlier estimates.  It also downgraded estimates for production of 
cotton, other grains and soybeans.  Commodities futures had already 
begun to rise sharply last week, and the USDA’s lowered harvest 
expectations raised December corn futures again, to $3.49/bu.  As of 
August 10, the growing corn crop was in mostly good to fair condition, 
with 88 percent in the silking stage or beyond. Though this represents a 
16 percent improvement over last week for the 16 major corn producing 
states, it is still 3 points behind the average.  In Ohio, corn progress 
is 21 points behind average.  In Indiana, it is 14 days behind normal 
for this date and, in Michigan,  it is 16 points behind.  Interestingly, 
because Michigan’s corn is so behind, the European corn borers that 
would usually attack corn at a later stage in development, are attacking 
other food crops instead.  An unexpected domino effect?  These "days 
behind" are very important, as farmers are beginning to worry seriously 
about the possibility of an early frost.  The continued volatility of 
weather in these growing areas is no comfort.

You may remember an earlier report in which I suggested we watch 
soybeans for both their late planting implications , for the impact of 
recent inclement weather on the beans that had emerged,  and for the 
probability, in my view, that the price of soy oil would rise in tandem 
with corn oil as demand for the latter outstripped supply.  Yesterday’s 
Wall Street Journal reported: "Forecasts for continued dry weather in 
the Midwest fueled concerns about the health of the new soybean crop and 
pushed soybean futures higher …Soybean crops in southeastern Indiana, 
Illinois and Ohio, in particular, are very much in need of rain, but 
little precipitation is forecast."  Soybeans are becoming increasingly 
difficult to find, pushing prices higher. Farmers are holding on to 
their inventories.  Dale Durchholtz, commodities analyst for AgriVisor 
Services in Illinois was quoted, "Right now, the new crop doesn’t look 
good enough to make them willing to part with their beans."  China is 
rumored to be in the market after purchasing between 50,000 to 75,000 
metric tons in South America Tuesday night, according to the Journal.  
It pays for farmers to hold limited inventories from the market until a 
good, new crop materializes.  Prices are already high and will become 
more so if this year’s harvest is less than hoped for.  Watch this 
story, because the trickle down will affect animal feeds, soy oil, all 
foods containing soy products, printer’s inks, cosmetics, etc. 

Wheat harvested for the 19 major wheat producing states was 92 percent 
complete.  A particularly bright spot was in Montana where the harvest 
is 21 points ahead of the 5-year average.  Spring wheat condition was 
still only good to fair for the most part, with 12 percent of planted 
acreage harvested.  That is 4 points behind the average condition at 
this date.

A quick note on just how abnormal recent weather patterns have been:  A 
cool spell in the West set nearly three dozen daily-record lows.  On the 
West Coast, nearly a dozen daily-record lows were set at week’s end.  
Drought continued to spread across the Northern Rockies and Northern 
high plains, despite abnormally cool weather.  In Burns, Oregon, Tuesday 
of last week brought a daily-record low of 30 F.  On Wednesday, the same 
town reported a daily-record high of 100 F.
The National Weather Service’s outlook for Aug. 18-22 predicts more of 
the same abnormality:
below normal temperatures over most of Washington, extreme N. Idaho and 
NW Montana, much of the South and South Central states and the extreme 
Southern California coast.  Continued, above normal temperatures are 
expected for much of the West as well as much of Ohio, NE Indiana, SE 
Michigan, northern New York and New England.  Little or no precipitation 
is seen for states west of the Continental Divide with a few exceptions. 
 Above normal precipitation is expected in the Southern Great Plains, 
Southern Rockies, much of the Midwest, New York, Pennsylvania and the 
South Central and South Eastern U.S.   

A "nutshell summary"?  Keep fingers and toes crossed for U.S. harvests 
across the board.  Too many things have already gone wrong, and there’s 
no guarantee that it’s over.  It’s too close to call for this year’s 
food supplies, hence prices.  Then there’s old Murphy’s Law to worry 
about…
Geri Guidetti, The Ark Institute
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Build Your Ark!  How to Prepare for Self-Reliance in Uncertain Times:
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Grain Supply Updates:    http://www.lis.ab.ca/walton/geri1.html
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