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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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