Looking this year like we could be down in production of food by up to 12% globally (my estimate). Buffers are still good so I don't expect prices to skyrocket, that being said anything can happen, hell they could easily go down. I doubt the "official" numbers will be anywhere close to this, I would be surprised if it was listed at 6% decrease. That big volcano goes off in iceland with any force things can change.

USA sounding like a good crop, lots of people talking about fantastic looking corn and beans out there. barring any major weather issues the USA will likely win the awesome crop award this year.

Canada is the opposite, it will not stop raining up here, expecting worst crop results in 20 years. Needing a late frost or the grade is cooked as well. This may cause some issues with those who have leveraged themselves right to the nutsack.

Large tracts of russia are a complete disaster, looks like 4bu/ac in the pictures and video I saw. The Urals could still get a crop but many other areas are looking sickly. They are talking about cutting much of this for greenfeed so the cows don't starve to death. The local prices for cattle are reportedly in the crapper due to no one having anything or anywhere to feed them therefore sending them to the auction barns. will be good sales at the grocery on extra extra lean ground beef.

Reading lots about too much moisture in the Ukraine, especially the Crimea region. Sounds pretty common over large tracts of eastern europe. Lots of reductions in fruit yields (up to 50%) due to excess moisture reported there as well. Combining is underway in between rains, have not heard any stories about general yields yet.

Quite a bit of western Europe is reportedly dry and hot with concern about feed for dairy cattle in some spots. There is reportedly quite a variation to the yields, harvest numbers in France are expected to be coming in soon so will have a somewhat better idea.

China is reporting another record yield in their crops, especially corn, but this happens every year. No one really knows so I am assuming that with the dry(ish) weather they have been having in corn areas the crop will be average. The south end of china's drought has "lifted" giving them the last two years of rain all in the last month or so. Rice paddies need water but six feet of it on your field is not the correct amount.

Thailand is still in it's drought. Early crops were going in but have stopped due to lack of moisture. Early crops are 25% of the year's harvest on average so if it starts to rain they may get their later crop which is the larger one. If it does not rain there is trouble.

Middle east had some fungus issues this year, down at least 15% in yields on the major growing areas (Turkey etc) and will not help the grade in the fields that were affected.

Africa is Africa, they are going the wrong direction in their production numbers. It would help if they stopped killing all the farmers.

Australia, sounding good boys, getting some moisture down there, hopefully recharge some of the storage!

South America is not going to have the crops they have had for the last couple of years but there are no large scale disasters that I am aware of, sounds like average this year. fungus expansion is a bit of a concern for next year I would think.

That is the readers digest version of what I am seeing right now. Lots more but I doubt most hear want more than the short version.

Thanks for posting goodlander.

I hope this post doesn't mean that your gig is up.....

I've always enjoyed reading your thoughts.

PE

Goodlander: I probably don't thank you enough for this. It's REALLY appreciated.

Goodlander, thanks for me as well. I was wondering if you might have a comment on the Asia Soybean rust in Arkansas and South Carolina?

disclosure. long plenty of wheat and some corn. Not much interest in beans this season yet because they are lagging price wise.

I have learned so much about the broader markets on this site from the three of you and so many others that I feel a bit like a parasite most of the time, just trying to earn my keep here. So thanks go out to you three and many others.

Quite a bit to the reasoning that I am back posting here. them getting behind in their payments is a big one and waiting for some "regulatory things" to blow over.

any questions that you don't want public just inbox me, I will try to answer them, usually pretty quiet down in this distant realm of the forum.

Well, I don't trade soft commodities, but I've got a very strong interest in eating. Therefore your posts are of great interest to me.

Don't underestimate the good you do here.

The soybean rust is something that I think that we are going to be fighting more and more all the time, not just on soybeans. From what I have gathered the recommended sprays are working on it however it is a gigantic pain in the ass and costs $ to do. This is not the first year for this stuff, it will likely get worse as time (years) go on. As the areas infected expand there are more and more sites where the spores will successfully overwinter. The end result will likely be spraying schedules similar to what potato's have now. This will probably work for a while however as I have said before we are selecting for fast adapters and have been for some time now. Eventually the sprays will lose effectiveness, when this will happen I do not know.

The fact that it is identified and there are efforts to control it is a good thing for the producers. I am sure there are a few fields that got it early that are roached however the larger area can likely be looked after. Effects this year: likely some however I have doubts that this will be enough to really take a big chunk out of the total yields for the USA. As the days tick by and the crop matures the yield losses from the fungus this year will decrease. Economically it will not make sense at some point to spray the fungicide. The flip side to this is that now you have a pile more spores present in your field ready to hop on board the soybeans next year.

Basically this thing is like herpes, you can treat it but it is never going away. Breeding resistance in is about the only solution however this does not happen overnight (obviously or it would have already happened).

I heard stories from the old timers about the rust's that occurred in the 50's. They said that there would be a big wind from the south for 3-4 days then the crop that had previously looked fantastic just died

Where I live (north of Albany, NY) the corn is coming up fast and abundant.

that matches what the cropping reports say boz, good to hear it from someone who actually sees it. If you were out fertilizing it with this: http://tickerforum.org/akcs-www?singlepo.... I can see how the crops would either be huge or dead.

A bit off topic however looking at this year's crops around the world I am stocking up on pasta right now. I am not really concerned with the price however I have my doubts that the quality will be able to be held where it is right now. I can see lots of lower protein grains going into it as a substitution for the good stuff that is in short supply.

IIRC soymeal has some significant backwardation for past few weeks.

I've been sniffing around BG; if it breaks to the upside, could be a nice long.


N/not investment advice

Thanks GL.
I-80 across Nebraska last week looked great for corns and beans. A few soggy fields looked sad.

My corn is thriving (southwestern Ontario) and will probably start harvesting next week. Agree with you, Goodlander, about hoarding pasta; been doing it (along with my JJG) for the last 2-3 months. Walmart has 900gm (still not comfortable with all this metric stuff up here; that is about 2lbs I think) packages of Italpasta this week for $1 so will load up some more.

Except for a few fields with small ponds from the June flooding, the corn crop here (Iowa) is going to be spectacular this year. It was well above eye-high by the 4th of July.

Hearing reports that the big funds have been bailing out of the grains and general commodities for the last while. "underweight in commodities" seems to be thrown around a lot. From the COT it is looking like the traders, both small and large, appear to be generally net short wheat with the only ones long being the commercial hedgers. If this gets some legs underneath it there could be some good earnings coming out of some grain companies if they played this one well and the prices keep going. Looking like some short covering going on to help push wheat up too. If the hot money starts to chase this and the funds decide to grab their mitt and get back in the game on the long side we could have another serious run up. I don't think the fundamentals are there for it just yet but you never know. The corn crop in the USA should keep a bit of a lid on things if it comes off as well as it sounds like it will. As far as what everyone (funds etc) are actually going to do I have no answer, they could just as easily close all their positions and play elsewhere.

If the prices begin to run now there will be a bit of a difference from 07 due to timing. When the prices took off in 07 it was after the early march snowstorm in China. This allowed the farms to throw everything but the kitchen sink on their fields in that crop year. We are now at a point where most of the major exporters can not do anything to improve their yields this year, what is done is done. I have been thinking that the prices would not likely take off until next year at this time, thinking they would rattle around inside a range for quite a while. I would expect the next thing to happen would be for the governments to start upping their cropping estimates.

Things are too shaky in consumer world to have their food getting expensive at this time. It is better for GDP, consumer discretionary spending, and ultimately VM to have groceries at low prices. a $5.00 loaf of bread employs the same number of people to produce it as a $1.00 loaf does however it puts people at bestbuy, GM, cheescake factory etc out of work. Multiply this by the reduction in consumer credit and you can quickly see why a "cheap food policy" is important to a government.

If someone is looking for a reason for the es to hit 1 or 2 hundred think of the economic carnage a $5.00 loaf of bread would cause. Not saying it will happen and barring some cataclysm certainly not this year however the possibility is for sure there.

Forgot to mention that some of my 12% decline in food produced will come in the form of decreased quality which increases usage volume. Quality counts as well as quantity. I also think that the tonnage estimates will be off in lots of areas as well, all truckloads of grain do not weigh the same, lower quality equals lower bushel weight.

Here is some random ag news I get from one of my sources:

The ongoing drought in Russia is reported to have "killed 52.3 percent of grain seedlings in the Ulyanovsk region," according to a news report by news agency TASS. The harvest has started early as farmers in the region attempt to salvage what little they can. The average grain yield in the region this year will be "below 1,170 kilograms per hectare, which is almost two times smaller than the target," the report adds. The last time Russia has hit by drought was 2006/07 and they only produced 45mt of wheat that year, blocking exports entirely. Informa Economics meanwhile slashed their wheat production estimate for Kazakhstan to just 11mt.

North American cocoa grindings in the second quarter jumped 12.07 percent from 2009, to 117,657 tonnes, data from the National Confectioners Association (NCA) showed on Thursday. The results were well above the range of estimates that pegged the grind would climb 4 to 8 percent.

Between January and June of this year Brazilian beef exports rose to US$ 2,352 billion, an increase of 23 per cent on the same period last year. The increase was achieved even though volumes fell by 177,000 tonnes or two per cent mainly because of the suspension of exports of manufacturing beef to the US. Otávio Cançado, director-executive of Abiec, said that the results show that beef prices are recovering in the international market. The average price went up by US$ 3.986 per ton carcase weight in June, 24 per cent more than in the same month in 2009.

One of the pieces of this puzzle that needs to be taken into account is the changing dynamics of large scale farming and it's utilization of increasing amounts of credit. With inputs and debt levels where they are right now a really bad crop can easily lead to a "below potential" crop the next year as well. When you have not paid your operating loan off from the previous year, have payments on shiny equipment you are behind on, and a refi on your crop land and you go to see the banker the next year the first words out of his mouth are "you want to borrow how much? what about the money you still owe from last year? Here is half what you asked for." Probably not going to be happening much in the USA however many countries are not putting quite as much grain in the bin this year.

I would be quite surprised right now if we get another run up like 07/08 however looking at the bond yields it looks like there are some big boys looking for a place to park cash. Like I said before there is no way to know if they are going to go to the grains or not.

My guess is a flow from gold to food. It's been discussed as gold rallied, but for me the confluence is there now.

disclosure, still long wheat and corn and short gold (from the middle of the 7/1 break).

so take it with a huge grain of salt.

Goodlander,
Thanks for your posts.

In the NE we have gotten enough rain for good crop and hay production.

Anecdotally the walnut and oak trees have produced huge amounts of nuts in volumes I don't ever remember seeing.

I think this might translate into good apple and fruit crop production

From the Friday Gartman letter:

We found it interesting therefore to hear of one of the
better proprietary grain trading houses in Chicago…
TENCO, Inc…. taking a truly huge position in far outof-
the-money calls yesterday. When Tom Neal takes a
position such as this only the most foolhardy among us
takes the other side of that trade. TENCO bought
10,000 September $5.20 corn calls yesterday. We
cannot imagine that Mr. Neal expects corn to trade to
$5.20 by September, but clearly he is betting bullishly
rather than bearishly.

I always read your posts, and threads with interest, goodlander.

Thanks for posting.

regards

That is interesting Nanna, thanks. If Katla goes off with some force in the next few weeks that may be the trade of the century. Other than the volcano I have no idea how corn will get to that price and you would not think that an investment house would be betting big in a close month options contract on a volcano going off?

Corn and soybeans around here (PA and northern DE) look absolutely terrific. Unless there's some freaky weather ahead, the harvest here should be very good.

The United Nations' food agency has trimmed its forecast for global rice production this year by 6 million tonnes to 704.4 million tonnes because of drought in the greater Mekong region, it said on Saturday. The Food and Agriculture Organisation (FAO) said the biggest downward revisions were in Cambodia, mainland China, the Philippines, Myanmar and Thailand. In its statement, the agency added that output expectations for Indonesia, the United States and Vietnam were raised. Even allowing for the decrease in forecasts since its April report, global paddy production in 2010 would still be 3.5 percent above 2009's estimate and a record, FAO said. The extra output is likely to come mainly from a 3 percent rise in the area sown to paddy while yields should stay relatively stable, FAO said.

I took a quick peek through that as well Ali. Their crop estimates are assuming everything goes well from here on in and looking for the Indian sub-continent to pull off a good crop. The monsoon season in India needs to pick up a bit, rainfall is 15% or so off average this year. Last year's monsoons were below average as well. A long time to go, the rains could increase, 15% is not catastrophic however I am reading that after last year they are still going to be short in some reservoirs and needing good rains this year. India uses more water per acre of agriculture than any other major growing area in the world.

Very early reports from europe has the quality of the grain coming off (protein) down which should have been expected. edit: lower quality means that volumes consumed will increase.