Monday, December 13, 2010

Feeding the world

Earlier this fall, I had a post on the nearly miraculous conditions of Minnesota agriculture 2010.  A bin-busting harvest combined with near-record prices for agricultural commodities, had put a smile on the faces of upper midwest farmers for the first time in years.

It turns out that the same conditions that made 2010 so good here in Minnesota is exposing severe strains in the way the planet feeds itself.

U.S. May Have 'Problem' Meeting Surging Wheat Demand, FAO's Abbassian Says
By Luzi Ann Javier - Dec 9, 2010 1:29 AM CT
The U.S., the world’s largest wheat shipper, may not have the logistical capacity to meet rising global demand after rains cut the quality of the harvest in Canada and Australia, the United Nations said.
As much as 8 million metric tons of Australia’s wheat harvest may be downgraded because of excessive rains and Canada’s output suffered from wet weather, pushing importers to seek alternative suppliers, said Abdolreza Abbassian, an economist at the UN Food & Agriculture Organization, citing government estimates.
“Right now, the only country that would have such supply to compensate for the downgrade of Australia and also Canada would be the U.S.,” Abbassian said in an interview. “The problem is that the capacity in the U.S. for terminals to absorb enough milling wheat for shipment, it’s just not there.”
Increased demand from the U.S. may lead to supply bottlenecks, delaying deliveries and intensifying competition among importers, said Park Yang Jin, business manager at Seoul- based Daehan Flour Mills Co., South Korea’s largest milling wheat importer. This would help sustain a rally in Chicago futures, he said. The U.S. accounts for 27 percent of global wheat trade.
Tight Supply
Futures jumped about 64 percent since June 30, surging to a two-year high of $8.68 a bushel in August, after the worst drought in at least half a century in Russia, the world’s third- biggest grower last year. The March-delivery contract traded at $7.88 a bushel, up 0.5 percent at 3:21 p.m. Singapore time. more

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