Economists are saying that the drought in the Midwest is the worst drought since 1956. The result has been a showing shortfall of corn.and soybeans. There will be shortfall of supply relative to usage for the first time since 1974 which is when we had the Great Grain Russian Deal. A shortfall of supply relative to demand has occurred only twice since 1960 for corn and five times for soybeans. Those event were likely to have a greater impact because there was no South American supply. The current North American harvest will be the lowest since 2007. Domestic feed, food, and fuel production will represent 89 of total corn usage, the most in 40 years. Corn exports will be the lowest since 1975. World stocks to usage will the lowest since 1974.
This is a problem that will not go away and will hang over the corn and soybean market even when focus switches to South America. Hording will occur as farmers hand onto supply under the expectations of higher prices. demand will have to be rationed. Volatility will stay high and the price range should stay above last year's levels.
No comments:
Post a Comment