Monday, April 23, 2012

Climate Change May Create Price Volatility in Corn Market

AgFax.Com - Your Online Ag News Source


By the time today’s elementary schoolers graduate from college, the U.S. corn belt could be forced to move to the Canadian border to escape devastating heat waves brought on by rising global temperatures.

If farmers don’t move their corn north, the more frequent heat waves could lead to bigger swings in corn prices – “price volatility” – which cause spikes in food prices, farmers’ incomes and the price livestock farmers and ethanol producers pay for corn.

A study published April 22 in the journal Nature Climate Change shows for the first time climate change’s outsized influence on year-to-year swings in corn prices.

Researchers from Stanford and Purdue universities found that climate change’s impact on corn price volatility could far outweigh the volatility caused by changing oil prices or government energy policies mandating biofuels production from corn and other crops.

“Frankly, I was surprised that climate had the largest effect of these three influences,” said Noah Diffenbaugh, an assistant professor of environmental Earth system science at Stanford’s School of Earth Sciences and a fellow at the Stanford Woods Institute for the Environment. “These are substantial changes in price volatility that come from relatively moderate global warming.”

The study, based on economic, climatic and agricultural data and computational models, finds that even if climate change stays within the internationally recognized target limit of 3.6 degrees Fahrenheit above pre-industrial levels, the temperature changes could still make damaging heat waves much more common over the U.S. corn belt.

“Severe heat is the big hammer,” Diffenbaugh said. “Even one or two degrees of global warming is likely to substantially increase heat waves that lead to low-yield years and more price volatility.”

 

The researchers calculate that when climate change’s effects are coupled with federal mandates for biofuel production, corn price volatility could increase sharply over the period from 2020 to 2040. Increasing heat waves will lead to low-yield years, and government-mandated corn sales to ethanol producers limit the market’s ability to buffer against low-yield years.

“By limiting the ability of commodity markets to adjust to yield fluctuations, biofuels mandates work in exactly the wrong direction,” said Thomas Hertel, a professor of agricultural economics at Purdue University who participated in the study.

“Our results suggest that energy policy decisions are likely to interact with climate change to affect corn price volatility, and that the market effect of a binding biofuel mandate is likely to intensify as the climate warms,” Diffenbaugh said.

Diffenbaugh and Hertel also explored the potential of farmers to adapt to the changing climate. They found that, unless corn farmers increase their crops’ heat tolerance by as much as 6 degrees Fahrenheit, the areas of high corn production would have to move northward from the current U.S. corn belt to near the Canadian border in order to avoid excessive heat extremes.

“Our goal was to explore the interacting influences of climate, energy markets and energy policy,” said Diffenbaugh. “It is clear from our results that those policy decisions could strongly affect the impacts that climate change has on people. And, importantly, we also identify potential opportunities for reducing those impacts through adaptation.”

Tags: ,


Leave a Reply

Name and Email Address are required fields. Your email will not be published or shared with third parties.

Sunbelt Ag News

    Doane Cotton Close: Another Choppy Week Ends Slightly Ahead12-19

    Arkansas: State Plant Board Approves Enlist Duo, Dicamba Weed Control Systems12-19

    Mississippi Crop Values to Top $7B for 3rd Straight Year12-19

    AFB Grain-Soybean Close: Wheat, Soybeans Drop, Corn Mixed12-19

    AFB Cotton Close: Mixed as Futures Continue to Consolidate12-19

    AFB Rice Close: Strong Gains to End the Week12-19

    Texas Pecans: Moderate Deliveries, Good Demand12-19

    Oklahoma Pecans: Moderate Early Deliveries Taper Off12-19

    Cleveland on Cotton: India Stirs the Bears; China Releases Reliable Stock Estimates12-19

    Western Region Pecans: Buying Interest Good, Moderate Deliveries12-19

    Georgia Pecans: Increased Deliveries, Smaller Lots12-19

    Alfalfa: Dupont Pioneer Sells Alfalfa Seed Biz To S&W12-19

    Texas Ag Benefits from Normalized U.S.-Cuba Relations, Says Expert12-19

    Brazil Livestock: Small Scale Ranchers Account for Most Deforestation – DTN12-19

    DTN Cotton Close: Narrowly Mixed on Light Volume12-19

    USDA: Peanut Price Highlights12-19

    AgFax Peanut Review: Spray Fungicides at Night; New Peanut Butter and Chocolate Ice Cream12-19

    DTN Grain Close: Wheat Pulls Back As Ruble, Oil Rally12-19

    Mississippi Soybeans: Record Yield Valued at $1.17B12-19

    DTN Livestock Midday: Feeder Cattle Post Strong Gains12-19

    DTN Grain Midday: All 3 Markets Trading Lower12-19

    Weekly Cotton Market Review12-19

    Mississippi Outdoors: Feeding Wildlife in Winter Can Cause Problems12-19

    DTN Cotton Open: Ticks Quietly Just Below Unchanged12-19

    AgFax Wildlife Review: Oklahoma Man Faces Felonies Over Wild Hogs12-19

    DTN Livestock Open: Futures to Begin Solidly Higher12-19

    DTN Grain Open: Wheat Futures Plummet12-19

    Keith Good: New Cuba Policy Could Open Huge Market for U.S. Wheat12-19

    DTN Livestock Close: Cattle Futures Pull Out of Price Collapse12-18

    Nitrogen Fertilizer: Oversupply, Geopolitical Risk Overshadow Strong Global Demand – DTN12-18

    China Holds Grain Import Quotas Steady, Revises Application Process – DTN12-18

    Doane Cotton Close: Choppy Sideways Action Continues12-18

    Chumrau on Wheat: USDA Raises World Estimates, No Comment on Russian Rumors12-18

    Georgia: 2015 Ag Forecast Meetings in Mid-January12-18

    John Deere Sells Crop Insurance Arm To Farmers Mutual Hail12-18

    Japan Elections Won’t Soften Trade Issues — DTN12-18

    U.S. Grain Transportation: Rail Shipments Make Big Jump12-18

    DuPont Pioneer Rolls Out New Soybean And Corn Selections For 201512-18

    Updated ARC-CO and PLC Payment Indicator for 2014 Crop Year12-18

    Livestock: Sharp Cattle Declines as Inscrutable as the Grinch – DTN12-18

    U.S. Drought Outlook: Improvement Expected Across California12-18

    Ag Trade Should Benefit from Thaw in U.S.-Cuba Relations12-18

    U.S. Energy: Heating Oil Expenditures Expected to Drop This Winter12-18

    Gasoline Prices: Decline in All Regions12-18

    Propane Stocks: Decrease by 0.8M Barrels12-18

    Diesel Prices: Average Drops 12 Cents12-18

    Virginia Govt. Joins USDA, EPA in Fighting Nutrient Runoff – DTN12-17

    Louisiana Pecans: Deliveries Very Light, Few Improved Varieties12-17

    Tennessee: TAPA Winter Agronomic Workshop and Cotton Focus, Jackson, Feb. 11-1212-17

    Crop Insurance: Supplemental Coverage Option Unavailable When Choosing ARC Programs12-17

    Crop Insurance: Choosing Between Base Acre Allocation Alternatives12-17

    Senate Passes Tax Extenders Bill with Key Provisions for Ag — DTN12-17

    Brazil: Amazon Deforestation Issues Concern Ag Communities – DTN12-16

    DTN Fertilizer Outlook: Global Phosphorous Demand to Increase12-16

    USDA: Weekly National Peanut Prices12-16

    Buying Local Not Without Risks, Study Finds12-16

    U.S. Ag in Strong Position with High Avian Flu Risks Elsewhere in ’1512-16

    Grain Markets: 50-Day Moving Average Never Out of Style — DTN12-16

    Kentucky Wheat: Winter Workshop Slated Jan. 6 in Hopkinsville12-16

    Sunbelt Ag Events

     

    About Us

    AgFax.Com covers agricultural trends and production topics, with an emphasis on news about cotton, rice, peanuts, corn, soybeans, wheat and tree crops, including almonds, pecans, walnuts and pistachios.

      

    This site also serves as the on-line presence of electronic crop and pest reports published by AgFax Media LLC (formerly Looking South Communications).

        

    Click here to subscribe to our free reports.

      

    We provide early warnings and confirmations about pests, diseases and other factors that influence yield. Our goal is to quickly provide farmers and crop advisors with information needed to make better and more profitable decisions.

         

    Our free weekly crop and pest advisories include:

    • AgFax Midsouth Cotton, covering cotton production and news in Alabama, Arkansas, Louisiana, Mississippi, Tennessee and Missouri.

    • AgFax Southeast Cotton, covering cotton production and news in Alabama, Florida, Georgia, North Carolina, South Carolina and Virginia.

    • AgFax Southwest Cotton (new for 2013!), covering cotton production and news in Texas, Oklahoma, Kansas and New Mexico.

    • AgFax West (formerly MiteFax: SJV Cotton), covering California cotton, alfalfa, tomatoes and other non-permanent crops in California's Central Valley.

    • AgFax Rice covering rice production and news in Arkansas, Louisiana, Mississippi, Missouri and Texas.

    • AgFax Peanuts, covering peanut production in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Texas and Virginia.

    • AgFax Southern Grain: covering soybeans, corn, milo and small grains in Southern states.

    • AgFax Almonds, covering almonds, pistachios, walnuts and other tree crops in California's Central Valley.

    • AgCom 101, providing guidance to ag professionals involved in social media.

    Our newsletters are sponsored by the following companies: FMC Corporation Chemtura Dow AgroSciences.

          

    Mission statement:

    Make it as easy as possible for our community of readers to find and/or receive needed information.

              

    Contact Information:

    AgFax Media. LLC

    142 Westlake Drive Brandon, MS 39047

    601-992-9488 Office 601-992-3503 Fax

    Owen Taylor Debra L. Ferguson Laurie Courtney

          

    Circulation Questions?

    Contact Laurie Courtney