Dustbowl redux?

pmbug · Jul 26, 2012

Well, maybe not literally another dust bowl, but the severe drought in the middle of America is wreaking havoc on corn farming and as Trader Dan warns:

I mentioned in my morning piece today that some of the pressure in the corn market was tied to news that Smithfield, the largest US pork producer, was sourcing corn from Brazil instead of domestically here in the US. That is big news as it indicates how tight current supplies are and how the rise in price is already beginning to do its job of rationing demand.

According to a consultant at Brazil's Safra & Mercado, reported by Dow JOnes which has been all over this story, corn at Brazilian ports is currently fetching $290/ton compared to US corn at the Gulf of Mexico which is closer to $345. It costs anywhere from $30 - $40 ton to ship the grain to the US.

There is no doubt that the meteoric rise in the grains this summer on account of the severe drought is going to impact all of us at the grocery store in the near future. My concern in all this is what might happen should the Fed foolishly choose to go forward with another round of QE. Keep in mind that the rise in the grains has been fundamentally driven. In other words, there are legitimate supply/demand fears pushing the price higher.

If the Fed does indeed begin another round of bond buying in order to prop up the US equity markets, a huge amount of hedge fund speculative money is going to flow directly into the commodity sector in a very crude fashion. Think of it as a shotgun instead of a sniper's rifle. They will blast everything in sight higher.

In the grains this will have the immediate effect of pushing prices even higher further exacerbating the impact of the drought. The problem will occur because the money flows can be so huge that even deep-pocketed commercial sellers will have difficulty standing in front of such a torrent of buying. I shudder to think what might happen if their computers drive the price of corn to $9.00!
...

More: http://traderdannorcini.blogspot.com/2012/07/smithfield-importing-brazilian-corn.html

QE# could drive a lot of farms in the heart of the country to bankruptcy. Anyone want to invest in Brawndo?

ancona · Jul 26, 2012

The middle of America has historically been a very dry place. We have had unusually wet conditions for quite some time, leading farmers and agriculture "experts" to call this dry spell "unusual" instead of what it really is, a return to normal. We have stripped the Ogallala Aquifer nearly dry of water over the last 80 years, and unless they build a massive [15 - 20' diameter] pipeline from the Great Lakes to make up for the absence of water, or turn to more economic watering methods like drip irrigation and no-till planting, we will almost certainly see another Great Dust Bowl. Humans are so fucking arrogant it constantly maazes me we're still multiplying on the planet.

In Europe, they are having incredibly cool seasonal temperatures while we bake over here. My daughter just returned for a summer abroad, and complained that she planned her trip for summer weather, yet was greeted with rainy, misty days with temperatures in the low sixties to high fifties in the day, and mid forties at night. Granted, this was in Northern Europe, but you get the idea. Russia is having the opposite problem with historic floods and massive crop failure due to drowning in some areas and zero rain in others.

Folks, I have said it before and I'll say it again, we're one bad harvest away from world war three and or total anarchy. When the food stops flowing, the people will rise up and demand the government "do something".

The USA long ago got rid of our strategic grain reserves, thinking arrogantly that since we're the breadbasket for the world, we'll always have grains in surplus, so it makes no sense to have a huge reserve. Look where that's gotten us. Now, we have no way to smooth out production variances by releasing a few million tons of grain here, and a few million tons of soy there. Now, the speculators are in complete control.

DoChenRollingBearing · Jul 26, 2012

Great thread Bug. Great comment ancona.

Now we have food issues... I am not too worried, short term, about food supply here in the USA. Overseas is a different matter. China, India, and the poorer Middle East & South Asian countries will get hit.

And we STILL have the ethanol debacle. Our policies on many fronts are failing us and leading to disaster.

Hey! .gov! GTF out of our lives!

Penn · Jul 26, 2012

-- they wont let you take water from lake MI- it could drop. that is why only some suburbs can take the water- it has been like that for many years.

drAGonfly47 · Jul 27, 2012

We, planet Earth are nearing the apex of our 26,000 year, complete cycle wobble.

Theoretically caused by asteroidal impact which brought forth our moon.

So.. December 2012 is the month of in which the northern hemisphere will be the closest to the sun for the next.. 26,000 years

Occurring will be reversal.

Apply physics the the reversal to a spinning, thinly skinned, magma stuffed planet.

Then research proximity in time to mass extinctions, global disaster, evolutionary leaps, etc. by dividing geological estimate by 13,000 or 26,000.

Additional factor for the equation; Earth and our solar system in its galaxy rotation passes above and below the galactic plane. We, Earth are dropping "below" the galactic plane as well.

Results are and will be seen. Attributes will be denied as "man" still living in the Ice Ages, mentally speaking. Will refuse to see what is recorded as, and is, inevitable.

Just wait to see ocean to rise "80 ft in the next 80 yrs" inside info from USGS fellow classmate. That is just the tip of the iceberg. But, but... but there will not be any.

All will not happen overnight. Humans lives, foresight, and hindsight are just to damn short.

Buy a great telescope for the show.

rblong2us · Jul 28, 2012

drAGonfly47 said:
We, planet Earth are nearing the apex of our 26,000 year, complete cycle wobble.

Theoretically caused by asteroidal impact which brought forth our moon.

So.. December 2012 is the month of in which the northern hemisphere will be the closest to the sun for the next.. 26,000 years

damn those pesky asteroids eh ?

ive had to break out the shorts because the temp here in the uk reached 25c

And ive got to say theres a whole industrys worth of doomers predicting bad things gonna happen this christmas

gonna be some interesting 'told you so' parties

the only predictions that i feel comfortable with, are patterns of human behaviour that seem to repeat, or perhaps nasa predicting an asteroid earth impact being a 100% certainty.

A 26k year pattern is simply outside my ability to factor ......

Dustbowl redux?

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