Poor Yields after Summer Drought and Extreme Weather

Revelations 18:23 ‘For the merchants were the great men of the earth; for by thy sorceries were all nations deceived.’

Important Takeaways:

  • The summer drought’s hefty toll on American crops
  • Drought conditions and extreme weather have wreaked havoc on many row crops, fruits and vegetables, with the American Farm Bureau Federation suggesting yields could be down by as much as a third compared with last year.
  • This year’s hard red winter wheat crop was the smallest since 1963, the bank’s analysts said. In Texas, cotton farmers have walked away from nearly 70 percent of their crop because the harvest is so paltry, according to the U.S. Department of Agriculture.
  • American corn is on track to produce its lowest yield since the drought of 2012
  • The California rice harvest is half what it would be in a normal year, an industry group said.

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Adding to the supply shortages: Kansas wheat crops are failing during drought

Rev 6:6 NAS “And I heard something like a voice in the center of the four living creatures saying, “A quart of wheat for a denarius, and three quarts of barley for a denarius; and do not damage the oil and the wine.”

Important Takeaways:

  • Western Kansas wheat crops are failing just when the world needs them most
  • Russia’s war in Ukraine has disrupted global food supplies, driving up demand and prices for wheat. But after months of drought, many western Kansas farmers won’t have a crop to sell.
  • Across western Kansas, many fields planted with wheat months ago now look like barren wastelands. The gaping spaces between rows of brown, shriveled plants reveal hardened dirt that’s scarred with deep cracks from baking in the sun.

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Wheat Shortage already beginning to affect regions in the Middle East

Rev 6:6 NAS “And I heard something like a voice in the center of the four living creatures saying, “A quart of wheat for a denarius, and three quarts of barley for a denarius; and do not damage the oil and the wine.”

Important Takeaways:

  • War in Ukraine Sparks Fears of Global Wheat Shortage
  • Wheat stored in silos near Odesa can’t make it to market because of Russia’s blockade of ports on the Black Sea.
  • In Lebanon, it’s estimated the country will be out of grain in less than two months.
  • In Egypt more than 80 percent of the 270,000,000 loaves of bread the country consumes each day are made with wheat from Russia and Ukraine. So here, people see big problems on the horizon.
  • In Cairo, people on a fixed income are already feeling the pinch of high prices.

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Expect Inflation to hit 10% analysts warn

Rev 6:6 NAS And I heard something like a voice in the center of the four living creatures saying, “A quart of wheat for a denarius, and three quarts of barley for a denarius; and do not damage the oil and the wine.”

Important Takeaways:

  • Russia’s Ukraine war threatens to blow US food prices sky-high
  • Inflation nearing a dangerous high, experts warn
  • It began with a rapid rise in gas prices. Now, with Russian oil banned in the United States and energy scarcity heightened globally, experts say shoppers can expect their grocery bills to rise in coming months
  • Russia and Ukraine produce 25% of the global wheat supply, according to the Observatory for Economic Complexity. While neither of these countries export wheat to the U.S. directly, their absence from the global market is expected to strain supply and push prices higher.
  • “It comes an absolutely horrible time for American consumers because we’re looking every day at inflation almost reaching 10%,” Dan Varroney

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The Mid-West Plains in Drought Conditions Adding to Inflation Woes

Rev 6:6 NAS And I heard something like a voice in the center of the four living creatures saying, “A quart of wheat for a denarius, and three quarts of barley for a denarius; and do not damage the oil and the wine.”

Important Takeaways:

  • Plains Drought to Curb U.S. Wheat Harvest, Adding to Global Supply Worries
  • A worsening drought in the southern U.S. Plains is threatening the region’s winter wheat crop just as the Russian invasion of Ukraine dents global supplies.
  • More than half of Kansas was classified as under severe drought or worse as of March 8, the driest conditions since 2018, according to the National Drought Mitigation Center.
  • Severe drought is also covering three-quarters of Oklahoma and more than two-thirds of Texas, both of which also are large wheat producers.
  • U.S. hard red winter wheat represents nearly half of the country’s overall wheat production and is milled mainly for bread flour. A reduced crop could further stoke food inflation that the U.N. Food and Agriculture Organization (FAO) said was the highest-ever in February

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JP Morgan Reports Wheat and Corn Prices to Rise

Rev 6:6 NAS And I heard something like a voice in the center of the four living creatures saying, “A quart of wheat for a denarius, and three quarts of barley for a denarius; and do not damage the oil and the wine.”

Important Takeaways:

  • Wheat prices soar to highest since 2008 on potential Russia supply hit
  • The grain traded “limit up” during the day, meaning to the highest amount the price of a commodity is allowed to increase in a single day.
  • Russia is the largest exporter of wheat and Ukraine is among the four biggest exporters of the commodity, according to JPMorgan.
  • Of the 207 million ton international wheat trade, 17% comes from Russia and 12% comes from Ukraine, according to Bank of America.
  • “Wheat and corn are the most exposed agricultural markets to any potential escalation in tensions”

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The Breadbasket of Europe Russia/Ukraine War Escalates Cost at the Store

Rev 6:6 NAS And I heard something like a voice in the center of the four living creatures saying, “A quart of wheat for a denarius, and three quarts of barley for a denarius; and do not damage the oil and the wine.”

Important Takeaways:

  • Russia’s invasion of Ukraine will likely ratchet American food prices even higher, experts say
  • Russia’s invasion of Ukraine could push U.S. food prices even higher, as the region is one of the world’s largest producers of wheat and some vegetable oils. And the disruptions could drag on for months or even years, as crop production in the area could be halted and take a long time to restart.
  • This week’s events “are proof that this will be a multiyear issue,” said Michael Swanson, Wells Fargo’s chief agricultural economist. “It’s my assumption that Ukrainian crops won’t get planted, or not anywhere near what they typically plant. And the Russian crops will be planted but will be embargoed in many markets. This is not something that will be resolved in weeks or months.”
  • “There will be a disruption; there is already a blockade on Black Sea ports,” she said. “In the near term this should have an impact on European Union wheat shipments, then it will have an impact on the U.S.”
  • Ukraine is the world’s fourth-largest exporter of both corn and wheat. It is also the world’s largest exporter of sunflower seed oil, an important component of the world’s vegetable oil supply. Together, Russia and Ukraine supply 29 percent of all wheat exports and 75 percent of global exports of sunflower oil, said Kelly Goughary, senior research analyst Gro-Intelligence, an agriculture data platform.

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Wheat Prices Going Up as Russia Invades Ukraine. 2 Countries Control More than 1/4 World’s Wheat

Rev 6:6 NAS And I heard something like a voice in the center of the four living creatures saying, “A quart of wheat for a denarius, and three quarts of barley for a denarius; and do not damage the oil and the wine.”

Important Takeaways:

  • World wheat prices begin to soar amid the war in Ukraine
  • Mideast governments must hike bread subsidies if they don’t want chaos in the streets, experts say.
  • As weeks of tension now turn to open warfare between Russia and Ukraine, the effects on the global economy are becoming clear. World trade in wheat is greater than for all other crops combined, and its price reached a nine-year high on Thursday, $9.32 per 60-pound bushel, as the escalating conflict led to expectations of disrupted supplies.
  • Russia is the third-largest producer of grain, after China and India, and Ukraine is the ninth-largest. Together, the two warring countries produce more than a quarter of the world’s wheat and nearly a third of global exports.

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Brawls in shops as Lebanon’s financial meltdown hits supply of food

By Maha El Dahan and Ellen Francis

BEIRUT (Reuters) – The collapse of Lebanon’s currency has forced many grocery shops to temporarily shut within the last 24 hours, raising fears that a country reliant on imports could soon face shortages of food.

Food shops around the country were locking their doors, halting online deliveries or restricting customers’ orders. Others stayed open, but could not say for how long.

“There’s a big possibility we will close if it stays like this. I don’t know where will we get supplies, and no one is helping us,” said Beirut grocer Mohieldin Fayed, who has kept his shop open.

The pound tumbled to 15,000 to the dollar on Tuesday, losing a third of its value in the last two weeks. It has now sunk by 90% since late 2019.

“If this persists, things will start to disappear, traders will prioritize what to get,” said Hani Bohsali, head of the foodstuffs importers syndicate. “We’ll have to buy less, in variety and quantity, because we can’t find the money.”

He estimated the country has roughly two months of supplies, while it was getting more and more difficult for importers to obtain the dollars they need to keep buying.

The economy’s collapse has pushed much of the population into poverty and poses the biggest threat to stability since the 1975-1990 civil war.

Social media users have been sharing videos of supermarket brawls, such as a fight between a man and a woman trying to buy powdered milk. Prices of many consumer goods such as diapers or cereals have nearly tripled during the crisis.

Nabil Fahed, head of the syndicate of supermarket owners, said some of the shops that had shut on Tuesday reopened on Wednesday after replenishing stocks. But he said permanent closures would happen if no exchange stability was reached.

“What we’re afraid of is that these eventually turn from temporary closures … that it becomes final because it is a dire situation, their capital is being eroded and they don’t have money to pay for goods.”

The vice president of Lebanon’s bakeries’ syndicate said bakeries were supplying the country with bread for now, but could not do so indefinitely without a solution. Lebanon imports almost all of its wheat.

“If we continue at this pace, in the end we will reach a forced closure until the exchange rate stabilizes,” Ali Ibrahim, who tried to resign from his position two weeks ago because of the dire situation, said in a statement.

LOOMING SUBSIDY REMOVAL

Many shops in Lebanon were already shut because of the coronavirus pandemic, and streets have also been closed by roadblocks during anti-government demonstrations. But until this week, groceries had mostly stayed open. Many have been offering deliveries online.

On Tuesday, a number of online grocery shops disappeared from apps. Others refused to accept orders.

Lebanon’s central bank has drawn on already critical foreign reserves to subsidize three key commodities – wheat, fuel and medicine – and a basket of other basic goods, as dollars inflows dried up. It has provided hard currency to importers at the old peg of 1,500 Lebanese pounds to the dollar.

But the state, fast running out of cash, has signaled multiple times that the subsidies would soon be lifted, although it has yet to give a timeline or announce a plan.

Supermarket syndicate head Fahed said the central bank was often slow to release dollars to food importers, causing shortages which in turn provoke consumers to hoard goods. In one example, he said a supermarket had sold a typical month’s stock of 5,000 gallons of subsidized cooking oil in only five hours.

The looming removal of subsidies has triggered fears of shortages, said Nasser Saidi, an economist and former cabinet minister.

“As soon as you announce that subsidies might be lifted or reduced…automatically consumers hoard goods,” he said.

(Reporting By Maha El Dahan, Ellen Francis, Imad Creidi and Alaa Kanaan; Writing by Maha El Dahan; Editing by Peter Graff)

Cotton makes a comeback in U.S. Plains as farmers sour on wheat

A cotton plant that was left unharvested is seen in a field near Wakita, Oklahoma, U.S., May 11, 2018. REUTERS/Nick Oxford

By Michael Hirtzer

ANTHONY, Kan. (Reuters) – Farmers in Kansas and Oklahoma are planting more land with cotton than they have for decades as they ditch wheat, attracted by relatively high cotton prices and the crop’s ability to withstand drought.

A 20-percent increase from last year marks a sharp turnaround for the crop that once dominated the Mississippi Delta into Texas. Just three years ago, low prices led to U.S. farmers planting the fewest acres with cotton in over 30 years.

The switch to cotton in the southern plains of the United States could be long term as farmers move away from a global wheat market that is increasingly dominated by fast-growing supply from top exporter Russia. U.S. farmers have struggled to make a profit on wheat due to a global glut.

Cotton is a safer bet than wheat because it can be grown with less water, at a time when drought has hit some areas of the U.S. farm belt.

“I have switched out of grain pretty much completely,” said southern Kansas farmer Darrin Eck. “It’s rough to raise beans or corn. But, if we get a little bit of rain, the cotton works.”

Eck said he will plant 3,000 of his 4,000 acres with cotton, up from 1,700 last year. He also spent around $500,000 to purchase a used John Deere cotton harvester.

Even with expectations for more planted acres, cotton futures are hovering above 80 cents per pound, near the highest levels in about four years. Wheat futures have recovered from 2016’s decade-low of $3.60, fetching about $5.43 per bushel on Friday.

The other that crop farmers typically turn to during periods of drought or low rainfall is the animal feed sorghum. Both cotton and sorghum need less water than soybeans, corn or wheat.

But China in April targeted sorghum for punitive import tariffs in a tit-for-tat trade dispute with the United States, a move that sent prices plunging and made cotton the clear winner for many farmers this year. China has since removed the sorghum tariffs, but by then, most farmers had made their planting choice.

Growing more cotton is still a gamble. China had threatened to impose tariffs on U.S. cotton imports, before tensions eased last week between the world’s two largest economies.

In Kansas, farmers planned to sow 130,000 acres of cotton, the most ever, according to the U.S. Department of Agriculture. Oklahoma cotton plantings were forecast at 680,000 acres, the largest since 1980.

Across the country, farmers will likely plant 13.469 million cotton acres, the most since 14.735 million in 2011, after total acres of wheat planted last winter fell to 32.7 million, smallest in about a century.

SEEDS AND GINS

Seed firms are already seeing the benefits. U.S. sales of Monsanto cotton seeds and traits in the first half of fiscal-year 2018 were $243 million, up from $224 million during the same period in 2017, according to a company spokeswoman.

With both Monsanto and rival DowDuPont offering cotton seed with traits that help boost yields, the crop will likely be an option for many farmers for years, said Kansas farmer Eck.

“Cotton will be here to stay until the grains get better,” he said.

Some peanut farmers in states such as Georgia are also turning to cotton. USDA projected peanut plantings will drop 18 percent. Peanut production reached a record last year, but high cotton prices are luring farmers who need to rotate crops.

“Because cotton prices are attractive… it gives peanut farmers a chance to get their rotation back in order,” said Bob Parker, president and chief executive of the National Peanut Board, an industry group.

Demand for cotton harvesters, which strip cotton from the plants and make bales, is “off the charts,” said Greg Peterson, founder of the Machinery Pete website which hosts auctions for farm equipment.

The Southern Kansas Cotton Growers in Anthony, Kansas, plans to double its capacity to separate cotton fibers from seed this year.

The machine that does that, the gin, has already run at record capacity after a big harvest last year, said Gary Feist, president of the Kansas Cotton Association that operates the gin.

HEAVY EQUIPMENT

At Hurst Farm Supply in Lorenzo, Texas, there are roughly five farmers interested in each Deere  CS690 cotton harvester they have to sell, said Randy Sparks, a sales manager. The store collected names from farmers interested in the equipment and pulls a name out of a hat when a harvester becomes available, to ensure they are fair to their local customers.

“These guys out of Oklahoma and Kansas, there’s no local machinery for them to purchase so they have to come where it’s at,” Sparks said.

The machinery demand is a bright spot for Deere, which has been battling tepid demand in North America due to four years of declining U.S. farm income.

Equipment sales suggest the turn to cotton may be longer-term, said CoBank analyst Ben Laine.

“When you see producers making that type of investment, it gives confidence… You are going to see more acres switching,” Laine said.

(Additional reporting by Tom Polansek in Chicago, Chris Prentice in New York and Arpan Varghese in Bengaluru; Editing by Simon Webb and Cynthia Osterman)