Increasing Prices Likely

9/7/2019

Extreme Corn and Wheat Losses

Introduction

Production continue to be plagued by difficulties due to extreme weather events across the globe. Australia has become a net importer rather than an exporter of grains due to extreme weather and drought (Sullivan, 2019, para.6). China has been experiencing agricultural difficulties (Gu & Woo, 2019, paras.7-8), requiring it to invest in agriculture infrastructure in South America, Southeast Asia, and Africa (Filipova, 2018, para.3). Cool weather in the east has delayed or will result in lowered numbers for produce later next month.

Setting the stage.

U.S. wheat has experienced the worst harvests in a century going the last two years (Kennedy, 2019, paras.7). Though we have focused on wheat, corn is beginning to see negative numbers due to conditions during the winter and into spring.

Conditions over the winter produced extreme cold conditions decimating winter wheat and incurring a large snow load. Spring with a heavy snow and rain load resulted in flooding which delayed wheat and corn plantings in one of the key growing bread baskets of North America.

The floods in the Midwest resulted in the destruction of agriculture infrastructure, adulteration of carry over stocks, equipment loss, and delayed planting (Fatka, 2019, para.4). The USDA chose not to survey the losses and this led to confusion about projected figures from the current August WASDE (Nelson, 2019, para.9).

Close to home.

Taber is known as the Corn Capital of Canada and has a yearly festival called Cornfest. Previous to the storms, planting was delayed due to cold extreme weather and early offerings of corn was in doubt (Opinko, 2019, para.4).

August 6, the area around Taber experienced losses due to golf ball sized hail and 145km/hr winds. Losses are still being assessed but Johnson Fresh Farms suffered a 90% loss and Molnar Farm a total loss (Opinko & Goulet, 2019, para.8). Other farms in the area have reported losses which has resulted in almost no Taber corn this season (Burr, 2019, para.8). Local media is reporting this storm has resulted in an early end to the corn season (Bala, 2019, para.1).

Johnson Taber Corn & Potatoes, Facebook

Conclusion

Wheat and corn losses are adding up, which began earlier this year with the harvest in the Southern Hemisphere and continuing into the coming harvest in the Northern Hemisphere. Food producers are seeking to fill their storage ahead the report and offering premium prices for available corn reported among conversations online.

After the release of the August 12 WADSE, the impact of the flooding was not factored in and as a result the markets reacted. One result is pig farmers are feeding their stocks with alternative sources of food like pastries not fit for human consumption (Polansek, 2019, para.1).

Crop Loss Map, Ice Age Farmer August 2019.

Wheat and corn losses are adding up, which began earlier this year with the harvest in the Southern Hemisphere and continuing into the coming harvest in the Northern Hemisphere. The U.S. harvest numbers will show continuing losses and recent Statistics Canada numbers are also predicting falling numbers (Turner, 2019,StatsCan August Production Survey Results, paras.1-3).

Corn is: used for feed which means meat is going to become more expensive, for fuel with ethanol meaning higher costs for transportation, and is used in virtually all processed foods. With this in mind, it is likely that food categories outside of produce will rise in price soon. Increases will soon be felt and observed in the food price index soon and we will expect this trend.

References

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