Emiko Terazono reported yesterday at The Financial Times Online that, “Will he really arrive? There has been a change in tone over the development of El Niño – ‘little boy’ – from some of the world’s leading meteorologists. And the shift matters for commodities prices.
“In its closely watched latest bulletin the Australian Bureau of Meteorology has maintained the strong likelihood of El Niño, a warming of parts of the Pacific Ocean, developing this year. But it also noted that ‘in the absence of the necessary atmospheric response, warming has levelled off in recent weeks.’
“The bureau added that the areas of warm water in the Pacific were counter to typical patterns for the weather phenomenon.”
And the AP reported yesterday that, “The price of corn dropped as weather conditions remain favorable for the crop.
“Corn for July delivery dropped 1.5 cents, or 0.3 percent, to $4.43 a bushel.
“The price of the grain has plunged in the last two months as rains in the corn growing regions of the U.S. have been light and temperatures remained moderate. The U.S. Department of Agriculture is forecasting a record crop this year.”
The House Ag Subcommittee on Livestock, Rural Development, and Credit will hold a hearing this morning titled: “A review of credit availability in rural America.”
In other news, Hannah Kuchler reported yesterday at The Financial Times Online that, “By the end of walking round and round his fields in Illinois seven times, hunting for pests, fungi and sickly plants, Aaron Sheller wanted to give himself the sack.
“Instead, he turned to drones. The farmer teamed up with a drone hobbyist about three years ago to see if the small unmanned aircraft could scout the crops more easily and efficiently, saving farmers money.”
The FT article stated that, “Big technology companies such as Amazon, Facebook and Google may have made headlines for their recent forays into drones – with the ecommerce company working on delivery by drone and the latter two looking at how to beam internet from the sky.
“But drones are already being used in agriculture, construction and mapping. These industries are likely to be able to expand their use of unmanned aircraft the fastest, because it mainly involves flying over unpopulated areas, while regulation, particularly in the US, is focused on restricting flight in more built-up locations. This enables farmers to use drones on their own land.”
In trade related developments, Nirmala Menon reported yesterday at The Wall Street Journal Online that, “Chief negotiators from the dozen countries aiming to create a free-trade zone spanning the Pacific Ocean will gather in Ottawa early next month in a bid to advance the talks toward a deal.
“Officials from the U.S.-led Trans-Pacific Partnership are meeting in the Canadian capital from July 3 to July 12, according to a person familiar with the plan. No other details were immediately available.”
University of Illinois agricultural economist Gary Schnitkey indicated yesterday at the farmdocDaily blog (“Prospects for Grain Farm Incomes in 2014“) that, “Average grain farm incomes in 2014 likely will be much lower than 2013 incomes. Corn prices near $4.20 per bushel combined with above average yields could result in average incomes on grain farms in Illinois around $45,000 per farm, slightly below the average for the years from 1996 through 2005. A scenario that would result in average incomes near $134,000 per farm, the 2013 level of average income, would be above average yields combined with corn prices near $4.80 per bushel. This is a large range ($45,000 to $134,000), and it represents the likely range of average grain farm incomes over the next several years, with lower incomes possible if low commodity prices occur [related graph].”
Yesterday’s update noted that, “While grain prices and yields are far from certain, most current projections of prices and yields result in much lower incomes for 2014.”
In conclusion, yesterday’s farmdoc update indicated that, “Corn prices in the low $4.00 range likely will result in incomes below $50,000. Corn prices in the high $4.00 range will result in average incomes above $100,000. If corn prices average around $4.50 over the next several years, average incomes likely will be in the above range for the next several years. Lower incomes are possible with corn prices below $4.00 per bushel.”
An update yesterday from Kansas State University Extension noted that, “Kansas farmers took a one-two punch with drought and lower grain prices in 2013 and the result was a drop in average net income to its lowest level since 2009, according to data from the Kansas Farm Management Association’s annual PROFITLINK Analysis.”
The Kansas State item noted that, “The average price of U.S. corn in 2013 was $4.50 a bushel, down from $6.89 in 2012, according to the U.S. Department of Agriculture. The average price of soybeans last year was $12.70 per bushel, down from $14.40 a bushel in 2012… . Last year’s lower grain prices meant trouble for grain growers, but gave livestock producers a boost.”
ClimateJacob Bunge reported yesterday at The Wall Street Journal Online that, “Agricultural conglomerate Cargill Inc. is banking on its global footprint to give it a leg up in blunting the impact of climate change.
“Technology and expertise Cargill uses to raise livestock and track crop production in places like Southeast Asia can apply to regions of the U.S. that may grow hotter over coming decades, said Cargill Executive Chairman Gregory Page, who helped advise on a new report weighing climate change’s potential impact on U.S. business.”
The Journal article pointed out that, “‘Risky Business,’ as the report released Tuesday by a bipartisan group of former U.S. cabinet officers, lawmakers and corporate leaders is called, estimates that higher average temperatures, rising sea levels and harsher weather events could cost U.S. companies tens of billions of dollars as storms deal harsher damage to coastal areas and hotter weather strains electrical grids.
“For agriculture, where hospitable growing conditions and investments in infrastructure have made the U.S. a global leader, the effects could be severe if businesses don’t respond, according to the report. A 10% drop in crop yields over the next five to 25 years is possible due to floods and droughts, according to the report, while the research showed that livestock production eventually could drop by 3% to 5% due to shifting weather, Mr. Page said.”