Another Resource Impacted by Drought - Monday, 27 August 2012

Over the past few months we have all repeatedly heard about the effects that the drought has had on the maturing crops.  One other important resource is also being obviously impacted by the extreme and widespread lack of rain and that is the Mississippi River. Lakes and rivers can tend to run a bit lower than normal during certain years but this year the Mississippi River is experiencing dramatically low water levels.  Water levels near Memphis, TN are running 2.4 to 8.3 feet below normal and near Greenville, Mississippi; the river has been closed to barge traffic.  The Army Corps of Engineers has been dredging the river in this area to attempt to provide a single lane of barge traffic to pass through.  This is a significant transportation dilemma; approximately 60% of our grain exports, 22% of our domestic petroleum and 20% of coal used for electricity is moved through our inland waterways. 

The annual Pro Farmer Crop Tour concluded last week in Austin, MN, with yield estimates even lower than those of the USDA earlier this month.  The overall finding on corn found an average of 120.25 bu. / acre or 10.4 billion bushels compared to the USDA estimate of 123.5 bu. /acre.  Even though this might appear to be a bullish number for corn the trade was looking for a number closer to 115 bu. / acre and may explain some of the pressure the market is seeing today.  Soybeans yields were estimated lower as well with an overall average of 34.8 bu. / acre or 2.6 billion bushels compared to the 36.1 yield estimate given by the USDA.  They based the overall bushels on an assumption that 89.5% of planted acres will be harvested now compare that to the drought of 1988 when only 86% was actually harvested and you wonder… Another concern that has surfaced is the overall stalk quality in most areas; any wind will test the standability of these tender stalks and may lead to even further yield loss.

The long-range forecasts are coming out for the U.S. winter of 2012-2013 and as expected there are some discrepancies between various models.  The Old Farmer’s Almanac predicts a cold winter similar to those of the late 1970’s from the East Coast westward to a line from the Dakota’s to Texas.  While other models like the one shown below present a much different picture for this upcoming winter season.

Currently the long-range forecast for Brazil indicates the potential for a dry pattern into November during the planting season.  The Brazilian government also announced that they will provide additional funding this year to increase domestic corn production there.










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