“Wheat crops in the U.S. Great Plains are showing signs that production may plunge even more than the government forecast last week as hot weather and a lack of rain erode plant quality and force farmers to harvest early.
As of May 15, U.S. winter-wheat was in the worst condition since 1996, with 44 percent of fields rated poor or very poor by the government. The National Weather Service estimates rainfall in the past two months was less than half of normal in much of Texas, Oklahoma and Kansas, where insurance adjuster David Reed said he’s had 300 farmer claims for drought damage in his area this season, already 10 times more than last year.
“I went out to look at fields, and it looked like the tips of the heads were burnt” after temperatures last week topped 100 degrees Fahrenheit (38 degrees Celsius), said Reed, an area claims supervisor in Stockton, Kansas, for Rural Community Insurance Services, a unit of Wells Fargo & Co. “It’s kind of scary. I would think that the abandonment numbers probably are going to be fairly high.”
After a Russian drought led to a drop in global output in 2010, the prospect of smaller crops in the U.S., the world’s largest exporter, has sent wheat futures up 56 percent in the past year. Goldman Sachs Group Inc. on May 11 raised its price forecast, citing “persistent adverse weather” in many growing areas. Dry spells in Europe and excessive rain in the northern U.S. and Canada also fueled prices, boosting costs for food makers including General Mills Inc. (GIS)and Panera Bread Co.
yes sir. food will be in the forefront of concern for many.having sustained unmitigated loses in equities, i just may now turn to the food supply chain to make up the losses. and will be waiting patiently for riots.
hopefully the riots will not materialize…at least not here.
So will you play futures to make up losses or buy an ETF ?
I spoke with a business associate who cash crops about 2,400 acres south and west of Columbus Ohio last week. He related that they have less than 50% of their soybean and corn planted due to weather conditions. They usually have nearly 100% of their crops in by this time of the month. They have fields that will not be workable for another 2 weeks and at that point, they will not be able to plant what they normally do in those fields. He anticipated their harvest will be down around 10% this fall due to the planting problems.