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Cutting Back

March 13, 2009

The Wall Street Journal has a good article on the current uncertainty in agriculture. Commodity prices are falling, so farmers are cutting back and leaving fields fallow. Personally I’ve left 30% of my cropland sit out this season. But even with cheaper grains, food prices haven’t come down much, and the ethanol folks are still campaigning for more mandates. Combine that with a bad economy, the War on Business, and the possible collapse of oil producing Mexico, is there yet another storm brewing?

Supplies of crops such as corn and soybeans are relatively tight. Wheat farmers across the Southern Plains, in states such as Texas and Oklahoma, who planted their crop in the fall, are now beset by a drought. According to the USDA, two-thirds of the wheat crop in Texas is in very poor to poor condition.

At the same time, the consumption of corn and soybeans from some quarters is continuing to grow despite the global economic slowdown. China, stung by high food prices last year, has bought 600 million bushels of U.S. soybeans since September, about one-fifth of the entire U.S. harvest, according to Dan Basse, president of Chicago commodity-forecasting concern AgResource Co.

Although hamstrung by overbuilding and bad hedging decisions by its executives, the U.S. ethanol industry will consume about 3.7 billion bushels of corn, or 30% of the fall corn harvest. Federal mandates for alternative fuels will help increase the ethanol industry’s appetite to 4.1 billion bushels of corn next year, USDA economists figure. On top of this, ethanol executives are lobbying federal regulators to allow more ethanol in gasoline.

WSJ

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From → Food Supply

One Comment
  1. Matthew permalink

    Corn based ethanol is to the modern environmental movement what wind was in the 70s. 😡

    Cellulose Ethanol is the only future ethanol has. Well… if Iowa and Congress would GTFO.

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