The devil is always in the details. This morning the United States Department of Agriculture said American farmers planted a little more than 87 million acres of corn this past spring. That was more than the 85 million acres analysts were expecting. Grain inventories were also better than expected.
That was great news to food processors and livestock producers who watched corn futures prices skid today. But they should probably hold off uncorking the champaign. Prices could bounce back to near $8 per bushel.
While USDA field representatives are being lauded for heading out to flooded farm fields last week to get up-to-date information from farmers, some analysts aren't sure their surveys will hold. First, only 1200 producers were polled and experts aren't sure their estimates will be accurate.
The second problem is where we are in the growing season. Keep in mind, this is the last day of June. Corn and even soybeans have another ten to twelve weeks to mature in the field. If flooding continues or if the weather turns hot and dry more acres could be lost. During the 1993 floods, rain continued to soak the Midwest into July. Most of the traders and analysts I've talked to lately say we may not get an accurate picture of this year's crop until it's harvested in the fall.
Mother Nature is fickle and so are the grain markets. That could mean Chicago corn traders will be riding wild price swings in the pits until perhaps Halloween.
Comments
Most of the reports I see try to blame rising and record high food prices on the also rising oil and fuel costs, and floods and droughts worldwide; these are certainly contributing factors, but I also think there are more fundamental causes that are rarely brought to light. This is of course due to the fact that the vast majority of the American population has no interest in the subject until something adversely impacts their pocketbooks; therefore, the media has no interest in reporting on things that people are not interested in. To follow, most Americans are not interested in being told that their ignorance, greed, gluttony, and wastefulness are probably the leading factors contributing to the problem.
Take meat production for example: An occasional report will come out pointing out the staggering cost of that business, in terms of productive land use and crops used for animal feed, energy cost, and environmental impact; however, the rare medical report encouraging us to eat less meat is easily lost amongst the massive promotional effort telling us to get into an automobile and drive to the burger stand or chicken bucket place and enjoy a king sized meal.
We certainly take farming for granted. In the last several years our stockpiles have dwindled, making a poor crop this year even more of a problem.
Hot and dry July will affect much of the late planted crop and be even worse for later replanted flooded crop. Even if all plants survive to a pre-frost harvest, the yields are going to suffer. No 150 bushels per acre this year. $10.00 corn anyone?