Monday, January 14, 2013

The corn belt drought grinds on

As someone who hates to shovel snow, this extra-dry winter should make glad my heart.  Unfortunately, this winter's drought is threatening the global food supply.  The immediate problem is the winter wheat crop.  But as this thing grinds on, more and more farmers will be facing a real economic crunch.  So far, high commodity prices and crop insurance have kept most of the grain growers afloat.  But high grain prices are killers for the folks who feed livestock and crop insurance is not a bottomless well either.

USDA declares drought disaster in much of Wheat Belt

Reuters | 01/10/2013

The government declared much of the central and southern U.S. Wheat Belt a natural disaster area this week due to persistent drought that imperils this year's winter wheat harvest.

In its first disaster declaration of the new year, the Agriculture Department made growers in large portions of four major wheat-growing states - Kansas, Colorado, Oklahoma and Texas - eligible for low-interest emergency loans.

The four states grew one-third of the U.S. wheat crop last year. Kansas was the No. 1 state at 382 million bushels.

In all, USDA listed 597 counties in 14 states as natural disaster areas. They suffered from at least severe to in some instances extraordinary drought for eight weeks in a row to qualify for the designation.

More than half of them, 351 counties, were in the Wheat Belt, running through the Plains from Texas to North Dakota. All but one of Oklahoma's 77 counties were termed disaster areas along with 88 of Kansas' 108 counties, 30 of Colorado's 64 counties and 157 of Texas' 254 counties.

Crop Indemnities Near Record

Growers are certain to collect record insurance payments for losses on their 2012 crops, hit by the worst drought in half a century. Indemnities totaled $10.7 billion at the start of this week, up $670 million from the preceding week and just shy of the record $10.8 billion paid on 2011 losses.

Some analysts expect the final payout to reach $20 billion to $25 billion to create the first money-losing year for insurers in a decade. The 15 crop insurers range from privately held companies to subsidiaries of large corporations, such as Deere & Co, Archer Daniels Midland Co, Wells Fargo & Co, Ace Ltd and QBE Insurance Group Ltd .

Crop insurance is the major strand in the U.S. farm safety net. Some 280 million acres of U.S. crops were insured in 2012, the lion's share of plantings.

Crop condition ratings for winter wheat were the worst on record in early December, the most recent figures available. Some experts said up to a quarter of the crop will be abandoned because of poor development.  more
Several discussions of the long-term implications of a continuing drought.

Corn Belt crop experts: Pray for snow

Reuters | 01/07/2013

The U.S. Corn Belt - the world's top grain region - is seeing another dry winter after the worst summer drought in half a century, reducing prospects for a bumper summer harvest that would help ease global food prices, crop and climate experts said.

"We are still concerned about getting the leftovers out of the way from the drought of 2012. At this time we would not anticipate a national corn yield above the trend," said Iowa State University climatologist Elwynn Taylor, who has studied crop production for decades. "Rather, we would expect a fourth consecutive year of below-trend crop, not as far below as in 2012 but still not up to par."

The 2012 drought locked two-thirds of the U.S. continental land mass in severe drought last summer, cutting production of the biggest crop, corn, by 27 percent from early season estimates.

The U.S. supplies more than half of world exports of corn, which is the top livestock feed for meat and dairy animals, the main feedstock for ethanol production, and the leading ingredient in dozens of food and industrial products from vegetable oil to sweeteners, paints and plastics. As such, its price is a key for food inflation and its supply outlook is closely watched by Federal Reserve policymakers, bankers, farm suppliers and food processors.

On Thursday, the government's weekly U.S. Drought Monitor said that 42.05 percent of the continental United States remained in severe to exceptional drought, down from 42.45 percent the previous week. Parts of the Corn Belt east of the Mississippi River and parts of the central Plains received snow over the last week, providing some much-needed moisture. But the snow did not offer much drought relief, with little improvement expected over the winter, according to the report.

Taylor and other crop specialists said continued lack of snow and rain was the biggest threat in the western Corn Belt - Minnesota and South Dakota south to Iowa, Nebraska, Missouri and Kansas. Those states produce about half the U.S. crop.

Taylor said in December it would take about 16 inches of precipitation by April 1 to recharge moisture in Corn Belt soils, up from the usual 12 inches that farmers look for over the winter.

The moisture is vital to spur adequate corn, soybean and spring wheat plant roots, which extend several feet down to tap into subsoil moisture. Persistent drought over more than a year in many areas meant plant roots drove down 8 or 9 feet last year in search of moisture, compared with the usual 5 feet.

"Most agricultural soils hold about 2 inches of water available to crops per foot of soil," Taylor said. "With most of the moisture gone that means it will take 16 inches of water soaking into the soil and in some places 18 to fully replenish it."

A Long Shot

Jim Angel, state climatologist in Illinois, said the state's conditions had improved slightly but have a long way to go before spring. Some areas of Illinois would need up to 21 inches of precipitation to catch up.

"The 2012 drought is not over yet. There are several areas of the state that are 8 to 12 inches below normal in rainfall, some places even more. You don't have to totally erase the deficits to be out of the drought but you have to come pretty close," Angel said. "In wintertime it's tough because we don't get that much precipitation. It's a long shot at this point."

Illinois saw its second hottest year on record in 2012, averaging 55.5 degrees, or 3.3 degrees above normal, and the 10th driest. The state's subsoil moisture is still rated 67 percent short to very short, according to the Illinois crop update issued this week.

Nebraska, the third largest corn producing state, has 77 percent of the state remaining in exceptional drought, according to the latest Drought Monitor.

"The concern is we just went through a 14-15 month stretch of incredibly dry weather in most locations in the state, excluding the southeast corner. For the vast majority of locations outside that area we were looking at 40 to 50 percent of annual precipitation that fell in 2012, and that does not include the exceptionally dry fall of 2011," said Al Dutcher, state climatologist for Nebraska.

To eliminate the soil moisture deficits over the next three months, Dutcher said central Nebraska needs 300 percent of normal precipitation while northeast and western Nebraska need 500 to 700 percent of normal precipitation this winter.

"One key issue for us since we are not getting a massive amount of moisture is to keep a protective snow layer across the northern and central Plains so we don't break dormancy as early as it did last year," Dutcher said. "Last year we were putting leaves on trees in early March, typically that doesn't happen until early April. That additional month of water use compounded the problem with the drought as we got into mid-summer." more

Drought-damaged states face poor outlook as dry weather persists

Obama administration declares large areas of mid-west a natural disaster area due to long-lasting drought conditions
Suzanne Goldenberg, US environment correspondent, 10 January 2013

A persistent drought held its grip on America's bread basket on Thursday, with no sign of relief for the four main wheat-growing states.

The poor outlook for winter wheat, which accounts for about 70% of the US crop, has raised fears about further food prices shocks, after widespread failure of last year's corn and soybean crops.

Conditions in Kansas, Colorado, Oklahoma, and Texas, which produce about a third of the country's wheat crop, remained unchanged – virtually the worst on record, according to the US Drought Monitor.

The Obama administration declared large areas of all four states a natural disaster area on Wednesday, because of the persistent drought.

In Kansas, the biggest wheat producer, the entire state is in severe drought. Oklahoma, over the last 60 days, has seen only a small fraction of its typical rainfall.

"Oklahoma has really been just bone dry," said David Simeral, a scientist at the Western Regional Climate Center who wrote this week's drought report.

Last year's temperatures smashed through 118 years of temperature records, registering a full degree Fahrenheit hotter than the previous record.

By mid-July about 62% of the country was stuck in a dry spell, which devastated the corn and soybean crop and threatened to bring shipping on the Mississippi, the country's busiest waterway, to a halt.

Prices for corn, soybean and wheat rose to record levels.

Six months later, nearly 61% of the country remains stuck in that dry spell.

Government climate scientists, in a conference call with reporters this week, warned the drought was expected to continue, especially across the mid-west and high plains states that produce much of America's grain, because of climate change.  more

Climate change set to make America hotter, drier and more disaster-prone

Draft report from NCA makes clear link between climate change and extreme weather as groups urge Obama to take action
Suzanne Goldenberg, US environment correspondent, 11 January 2013 

The report says steps taken by Obama to reduce emissions are 'not close to sufficient' to prevent the most severe consequences of climate change. 

Future generations of Americans can expect to spend 25 days a year sweltering in temperatures above 100F (38C), with climate change on course to turn the country into a hotter, drier, and more disaster-prone place.

The National Climate Assessment, released in draft form on Friday , provided the fullest picture to date of the real-time effects of climate change on US life, and the most likely consequences for the future.

The 1,000-page report, the work of the more than 300 government scientists and outside experts, was unequivocal on the human causes of climate change, and on the links between climate change and extreme weather.

"Climate change is already affecting the American people," the draft report said. "Certain types of weather events have become more frequent and/or intense including heat waves, heavy downpours and in some regions floods and drought. Sea level is rising, oceans are becoming more acidic, and glaciers and Arctic sea ice are melting."

The report, which is not due for adoption until 2014, was produced to guide federal, state and city governments in America in making long-term plans.

By the end of the 21st century, climate change is expected to result in increased risk of asthma and other public health emergencies, widespread power blackouts, and mass transit shutdowns, and possibly shortages of food.

"Proactively preparing for climate change can reduce impacts, while also facilitating a more rapid and efficient response to changes as they happen," said Katharine Jacobs, the director of the National Climate Assessment.  more
In a world where at least half of the population is just barely feeding itself, prices are rising simply on price reports.

Wheat And Corn Pricing Are Surging After One Of The Most Critical Crop Reports Of The Year

Matthew Boesler | Jan. 11, 2013

Futures contracts for wheat and corn are both trading up big this afternoon since 12 PM ET when the U.S. Department of Agriculture released its monthly World Agricultural Supply and Demand Estimates report.

The report is one of the most critical WASDE releases of the year, according to commodity broker John Payne, because it provides the final statistics for the 2012 crop.

Sure enough, supplies of wheat were lower than previously expected, and demand is projected to be higher than before.

Corn supplies came in slightly stronger than previously expected, but demand is also projected to increase more than previously thought.

Wheat futures are up 2.2 percent, though they are starting to give back gains: more

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