Posted on 02/25/2008 5:08:27 AM PST by TigerLikesRooster
America's grain stocks running short
By Robert Pore robert.pore@theindependent.com
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Global demand for grain and oilseeds is at record levels, causing the nation's grain stocks to reach critically low levels, according to Purdue University agricultural economist Chris Hurt.
With a weak U.S. dollar and global demand so high, foreign buyers are outbidding domestic buyers for American grain, Hurt said.
"Food consumers worldwide are going to have to pay more," Hurt said. "We ended 2007 with our monthly inflation rate on food nearly 5 percent higher. I think we'll see times in 2008 where the food inflation rate might be as much as 6 percent."
Increasing food costs will ignite the debate on food security this year, Hurt said.
"We'll have discussions about whether we should allow the foreign sector to buy our food," he said. "Is food a strategic item that we need to keep in our country?"
The USDA recently released a revised forecast for agricultural exports, predicting a record of $101 billion for fiscal year 2008.
According to the U.S. Grains Council, a significant increase in feed grain exports buoyed the forecasts. Specifically, the forecast for coarse grain exports is raised to 70 million tons, up 2 million tons since November. Corn and sorghum exports are up $2.4 billion from November. Coarse grain exports are forecast at $14.1 billion, $4.3 billion above last year's level.
Hurt said the 2007 U.S. wheat crop is virtually sold out, while domestic soybean stocks soon will fall below a 20-day supply. Corn inventories are stronger, but with demand from export markets, the livestock industry and ethanol plants, supplies also could be just as scarce for the 2008 crop.
More than 70 percent of Nebraska corn crop this year could go to ethanol production.
But what concerns Hurt the most is weather. Adverse weather could trim crop yields this year and cause crop prices to skyrocket even further.
Last year, Nebraska had a record corn crop of nearly 1.5 billion bushels. But rainfall was exceptional last year, especially during the growing season, which helped increase crop yields.
He said recent cash prices for wheat, soybeans and corn are up dramatically from two years ago. Wheat prices have been near $10 a bushel, more than $6 a bushel higher. Cash prices for soybeans are about $13 a bushel, up more than $7 a bushel. Corn is pricing at almost $5 a bushel, an increase of greater than $3 a bushel.
The "ag lobby" has no duty to put the American consumer first. Their "duty" is to turn on profit on the capital investment in land, equipment and supplies to their investors. The final consumer of their product is not a consideration.
Buy oil stocks or grain futures!
Real Nice! The Revolution Will Not Be Televised.
The corn market in Idaho has spoken. The animal feeding operations were willing to pay more for the corn to make food (feed livestock) than the market price of ethanol would support. Two ethanol plants have been idled because they aren't economically viable.
I have an objective outlook unlike corn farmers who are knee deep in government mandates and subsidies. There is a growing (no pun intended) conflict between fuel and food. We have never had fuel mandates, especially the huge size of these mandates. The impact of the fuel mandates is difficult to determine. In the short run, ethanol mandates along with other factors (global demand, oil prices, and weak dollar) are leading to strong inflationary pressure.
The increase in future corn production is heavily driven by ethanol mandates and subsidies. Making corn more attractive to produce than other crops has already had many negative side effects. You could apply your argument to any good or service. Simply have government provide huge mandates and subsidies to shift demand. Government mandates and subsidies of the ethanol size will have many negative long-term impacts on any good or service.
I find the ethanol mandates and subsidies ironic. I have never read anything that indicates corn-based ethanol will ever be a viable alternative to petroleum. Somehow the ethanol mandates have been justified on the basis of some future biofuel source that will be economically viable. Bottom line: corn-based ethanol is a fraud with huge negative economic repurcussions in the short-term and long-term.
It’s a good thing food isn’t part of the core inflation calculations, isn’t it?
No. We don't.
The light up ahead is a train. ....as in train wreck.
Wow. Where to begin?
Are you seriously suggesting that the world will be a better place if there is NO FOOD, than if abundant food is expensive?
Starving people never revolt, or go to war for resources in your happy little world, do they?
Which, of course increases the supply, lowering the unit price, but raising the farmer's income because of shear volume.
Everyone eats, and the farmers get paid.
No one is gouging. Crop prices respond quickly to the laws of supply and demand. Witness the plummet in corn futures back in march/April of this year when the anticipated plantings report came out.
Farmers indicated that they were going to plant for the largest corn crop in the entire history of the earth. Futures plunged on the report 25 -30% as I recall (someone please correct me if I'm wrong). The farmers came through with their plans. they harvested the largest corn crop ever, about 13 billion bushels.
What this year is bringing is a situation where the old "Farm Programs", more properly should be named "Cheap Food for Consumers Programs", are no longer a restraint on farmers.
This year, it looks like farmers will plant in response to a free market instead of a government calculated plan.
They are understandably very nervous, no one has done that for over 50 years. Imagine that, 50 years! Is it going to result in financial ruin, financial success, or what? It will be exceiting either way. I wish them well.
In any event, for the next few years at minimum, the USDA's Cheap Food for Consumers program is not working.
We are going to be forced to buy food at unsubsidized market prices.
Rush has said that the most expensive commodity traded in the United States is ignorance. It's certainly true of the farm programs. Everyone thought food would get cheaper without those programs, and wanted them gone. They now have their wish, they're gone, and understandably the same folks aren't happy.
Revelation 6:6
Then I heard what sounded like a voice among the four living creatures, saying, "A quart of wheat for a day's wages, and three quarts of barley for a day's wages, and do not damage the oil and the wine!"
And we are being MANDATED to burn food at record levels while we leave crude [which has very little nutritional value] sitting in the ground.
wait til we have a major dry year nationwide, and are forced by congress to eat or produce billions of gallons of ethanol... LFOD...
HINT: It’s not actually in our national interest to have the government pass a program like has been suggested. How about citizens do for themselves what they should do and the government do the things its explicitly charged to do? People can and do buy their own food you know.
...do not damage the oil and the wine!"
I'm no Bible expert, but, removing feedstocks from the biodiesel/ethanol loop would quite literally damage the "oil" and "wine"...
Thank you. Well said. Populism is really ugly, isn’t it.
The cost of my dog food- cheap brand- not a yuppie brand- has risen 62.5 % in the past 3 years.
Mine went up 20% in the past week, so I know exactly what you mean. Cat food is the same.
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