If the U.S. economy were to slow down a bit, U.S. grain consumption would not. “Grain supplies are thin … very thin. Worldwide supplies of all cereal grains combined have dropped to 25-year lows. Wheat stockpiles are especially lean. Global stockpiles of wheat have plunged to 30-year lows, while U.S. stockpiles have plummeted to 60-year lows.”
“Not surprisingly, grain prices have been rallying sharply for the last year or so. But recently, grain prices have been slipping a bit.”
“… Grain supplies only spring from the ground when farmers plant and fertilize them, and when weather conditions permit. Lately, the weather conditions have not been permitting as much corn-growing as they usually do. In fact, our resident agricultural commodity expert, Kevin Kerr, reported yesterday:
“More bad news. I am hearing about 10% losses here and there in each major state for corn. Add it up and it is very significant. Let me explain why.”
“Here’s my version of Corn Crop 101,” Kevin wrote. “It’s still wet and ugly all over the Midwest … It’s June 4th … Bad news if this rain keeps up and then the searing July heat sets in … You can forget about this crop if the corn isn’t tasseling and silking before them.”
“So how far along is the corn, not very far at all. A very rough estimate can be made by counting the leaves developed or by measuring plant height, which I did last year. However, the first solid indicator of crop progress is the average silking date.”
“Begin looking for silks soon after the tassels appear. Under normal conditions, 20% to 25% of the plants in a field will silk each day. When approximately 75% of the plants show silks, we record that date as the silking date. In a typical year, the average silking date for Iowa, for example, falls between July 20 – 25. … Not this year, not a chance … “
“So that means late harvests and a greater risk of damage from frost… Frost is a factor because harvest will be later this year and an early hard freeze can be the final nail in an already fairly well sealed coffin for corn yield.”
“In case I lost you at tasseling, it’s when you start seeing the stringy stuff coming out of the corn husk. Late silking is associated with lower yields and wet grain … Since farmers planted (and are still planting) late, the problems are magnified when a killing frost comes early. I think the story is growing even worse for soybeans.”