Friday, June 10, 2011

Corn Crop at Risk

The USDA, and everybody else, has downgraded the U.S. corn crop.

Inventories were already in horrible shape. In the past, I made the assertion that since so much of the corn crop - and corn is the basis for the poultry, egg, dairy, and meat supply in the U.S. as the system is presently constructed - goes for ethanol that there was little or no chance of a sudden onset food shortage. Perhaps. Then again, perhaps not.

Corn cannot be manufactured. Either it is there at the end of the harvest, or it is not. Yes, we could cut back on ethanol production and divert that material to food production... but the fact is that most of these "brewer's grains" (the material left over after fermenting corn into ethanol) DO MAKE IT back to the feed market... it is not simply "fuel or feed", although the energy in the distilled ethanol certainly came from those grains and is not available in the remaining feedstuffs. Ergo, the supposed "slack" I envisioned isn't there to the magnitude I had suggested. The fact is is that consumption has outstripped production for most of the years in the past decade... it is factual and accurate to say that the U.S. population is at the mercy of the weather for each individual crop from now on, and the weather is simply not cooperating of late.

I would have no idea how to how to assign risk or probability to the issue, but it would seem that the risk is much higher than my previous assessment.

A partial solution will possibly be in the unwinding of the geographical concentration of meat, egg, and milk production... in short, localization would seem to offer some measure of solution, much as it is done in much of the world, even industrialized nations.

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Given the media's fascination with our political leader's lack of self-control... I found this article fascinating.  I love empirical data. One thing none of the studies appeared to have measured was the other side of the equation: How would the subjects respond if the total volume of tempting input was lowered? Is it relative deprivation? Or total?

Since "I've been rich and I've been poor"... I can confidently say that the stress associated with being poor is, to my mind, accurately recounted in the article.
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Oil in much of the world is near $120 per barrel. Libya's supply as been missing for 6 months. Shouldn't that spare capacity everybody speaks of have shown up by now? If it does, Oil prices will fall. If it does not... look for prices to trade from $100 to $150 for Brent, and $90 to $135 for WTI. With Nat Gas futures out on the curve firming, things are looking nothing but good for the Oil patch.

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While I DESPISE the politics of Anthony Weiner, and I don't think much of his decision making, I DO THINK that whether or not he remains seated in the House of Representatives is up to his constituents - not the Democratic Party Establishment, the Media, The Feminists, the Religious Right, etc... America has MANY, MANY cultures... I was born and raised in Metro New York City... people there might just feel differently about just how serious Weiner's transgressions were than people from rural Tennessee.

But look ahead, folks... pretty soon, the media is going to corner some politician over his sex life... and the Pol is going to respond: "Yea? So?"

Hopefully that will be the end of this B.S.

5 comments:

Donal said...

Not just the US crop. Britain and much of northern Europe is having a 100 year drought. China has had major crop failures and is talking of big imports.

Be interesting to see what happens to bioethanol as food prices rise - EROI is already almost zero and its only subsidies keeping it going (presumably on the basis of national fuel security). At what point does it get too expensive to subsidise?

On the other hand, Bordeaux wine producers say it'll be a great year!

Anonymous said...

Wildfires in Russia are looking bad again this year. They say there are 65 small fires going on right now-

"Wildfires raging across Russia since the start of the year have destroyed almost triple the amount of forests and crops as attributed to last year’s deadly wildfires during the same time period, and conditions show the situation is likely to get worse.

“We’re burning, burning badly, said Alexey Yaroshenko, a forestry expert with Greenpeace, the AP reports. “This year’s situation is already much worse than last year’s.”

Read more: http://www.digitaljournal.com/article/307793#ixzz1OtjEgN7S

It's a good thing we have Rush Limbaugh and Glenn Beck and the GOP to shield us from all that leftwing propaganda about global warming. I might have thought that these extreme events could possibly have some connection to climate change!

Best
Marshall

Anonymous said...

The local cropping even in industrial nations is spot on. Get on google maps and look around Germany. With the exception of the northern industrial cities, they have thousands and thousands of contiguous acres of farmland with a densely packed town in the center every so often...looks kind of like a wagon wheel with the towns at the center of each region. We've gone the easy route with large scale real estate development and paved over a lot of highly productive farmland (case in point -- San Joaquin Valley in California). Go up and down the I-5 corridor and you'll see town after town that has what looks like former farmlands with square-grid subdivisions in them growing outwards.

Greg T. Jeffers said...

Actually, I was speaking of meat, egg, and dairy production on a local basis... if the corn crop suffers, and people still want to eat this stuff.... well, there will be solutions.

And it won't be hard to do... but zoning regulations and USDA rules will have to accommodate that environment.

dennis said...

Yesterday at the feed store I saw corn at $12.00 a bag. Last year it was %7.00. Same with wheat. I should probably stock up at those high prices, before it gets any worse. The guy down the road harvested his first cutting of hay then killed it all so he could plant corn. I guess local hay prices will double to. Forget gold bars, I'm hoarding grain!