*****2009/2010 Food Crisis*****

(This entry is obviously not finished yet (I published it because I hadn't done a blog entry in a while). I will add pictures and clean up this entry tomorrow in eight or so hours)

The August 2009 Soybean Crisis

Basically, the US ran out of soybeans at the end of August 2009.

(emphasis mine) [my comment]

US Cash Grain Review: US Cash Grain Stocks Increase
By Tom Sellen

KANSAS CITY (Dow Jones)--
Commercial inventories of U.S. cash soybeans dipped, but corn and wheat supplies grew, resulting in a net increase in grain stocks.

Grain stockpiles have now filled 57% of the nation's bins to capacity, up slightly from 56% last week, the U.S. Agriculture Department said Tuesday in its weekly Grain Stocks report.

Soybean stocks fell to 7.426 million bushels in the week to Tuesday, from 9.108 million the previous week. Corn stocks increased to 63.61 million bushels from 62.15 million, while stockpiles of wheat increased to 214.18 million bushels from 210.67 million last week.

The net increase in stocks coincides with the lack of grain movement in the country, as farmers remain tight-fisted with their corn and also with what few soybeans they have to sell, merchandisers and analysts said.

Interior soybean basis - the difference between the cash price and the nearby futures contract on the Chicago Board of Trade - appreciated an average of 2 3/4 cents a bushel as of Tuesday morning, while corn basis was flat. Hard red winter wheat basis edged down by 1/4 cent, soft red winter was down 1/2 cent and hard red spring basis strengthened by 1 3/4 cent a bushel.

Soybean basis continues to strengthen on worries over an early frost this year with crop maturity lagging the five-year average. [shortage fears cause hoarding] Strong Chinese demand has also buoyed the market. The soybean crop improved to 69% good to excellent, up 3 percentage points from last week.

Corn maturity also lags because of a wet spring and a cooler-than-normal summer, with just 57% in the dough stage of development compared with the 79% five-year average.

One Iowa-based merchandiser said there is very little grain movement, as farmers are mostly sold out of soybeans and are sitting on their corn stocks waiting for higher prices. "With the large corn and soybean crops in the fields, storage will be an issue this year," he said.

Jack Scoville, analyst and vice president at Price Futures Group, agreed
there aren't many soybeans left to sell, though the market needs the commodity.

"This market clearly wants soybeans but there just aren't many to sell," [This is called a shortage] he said. The need for soybeans is evident as soybean basis strengthens and corn remains nearly flat.

News.ino.com reports that Cash Grain Movement Remains At Trickle.

US Cash Grain Review: Movement Remains At Trickle

Cash grain movement has been reduced to a trickle as producers keep a tight hold on supplies in the event of a crop problem this fall, brokers and analysts said.

Marketings are nearly at a standstill, even as end-users raise prices in a scramble to lock down supplies, thus strengthening soybean basis levels across the nation.

"Cash sales have been extremely hard to come by," said one northeastern Illinois merchandiser.

Normally, producers would be selling more grain as the crops mature in the fields to make room for the upcoming harvest, but this year is different.

"Farmers are not selling on ideas the crop may not be as big as the government thinks," the merchandiser said.

In addition, a wet spring and cool summer has left corn and soybean maturity below five-year averages, putting the crops at risk for an early frost. Cooler-than-normal temperatures at this stage continue to pressure crop development.

Cash Soy Squeeze Pits US Crushers Against Exporters

there are end users right now paying prices as high as they paid at the very height of the bull market a year ago in 2008?

Processors in the heart of the Midwest soy belt have grown so desperate for soybeans to crush that they are paying to transport some of the early harvest from the Mississippi River Delta northward to Illinois -- a modern-day version of selling coal to Newcastle. The Illinois crop is still a few weeks from reaching maturity.

"I know for a fact that some of those Arkansas beans are being loaded on rail and going north. They are going up to Decatur (Illinois)," Klemme said.

Instead of paying up, some have opted to simply close their plants until harvest.

"Bean inventories are so tight that a lot of these crushers are talking about 'I have no meal,' or 'I'm just going to shut down for two weeks until new-crop beans are available,'"

The U.S. soybean marketing year ends on Aug. 31, with the opening of the traditional harvest month of September. On that date, U.S. soybean stocks-on-hand are expected to have fallen to a 32-year low — with more declines seen before harvest can replenish supplies for processors and exporters.

"The other problem you have exacerbating the situation is the new-crop maturity is delayed, so the harvest is going to be delayed. So it's not like you can all of a sudden turn on a lot of new-crop supplies — just because the old-crop marketing year ended," Cekander told Reuters TV on Friday.

Some Midwest brokers were quoting prices of up to $100 per ton above CBOT September futures for loaded railcars.


Before looking at the shortage's effect on soybean futures, there are two important aspects of the futures market I want to quickly run through.

Understanding the convenience yield

The price of any physical good (soybean, gold, dollar bills, etc) depends on two things. First is the supply and demand: the more there is of something the less it is worth and the more people want something the more it is worth. Second is the convenience yield (it is a terrible confusing name, but I am stuck with it until I figure out a better alternative).

Wise Geek reports that convenience yield.

What is a Convenience Yield?

The convenience yield associated with a given good has to do with the degree of benefit or premium that is derived from directly owning that particular [physical] good. The convenience yield does not address the benefits or advantages of holding a contract on the goods, or some sort of derivative product related to the good. From this perspective, this means that a convenience yield is based on actual possession, and not on owning a futures contract or some other arrangement.

Owning a good may or may not actually present the most advantageous situation for an investor. However, there are certainly situations that may occur where direct ownership provides a level of benefit that could not be derived from having an option of some sort [For example, in the event of a huge production disruption (early frost destroys crops, etc), owning futures is nice, but owning the physical is better. In shortages, the cash prices always increase the most.]. This can be especially true when it comes to commodities.

Owning goods such as basic food products can lead to a substantial convenience yield under certain circumstances. For example, owning actual bales of wheat or storehouses of corn could become highly profitable, in the event that a drought or some other natural disaster destroyed huge amounts of the commodity. This type of situation often leads to an increase in demand that drives up the prices that consumers are willing to pay for the limited commodity. When an investor owns actual product that can now be sold at market, there is an opportunity to realize a substantial return on the investment.

Calculating the convenience yield on a given product involves careful consideration of current market conditions. This will set the stage for choosing to make an investment in the commodity. At the same time, a number of factors will be addressed in the task of projecting future performance. If there are some indications that political or natural situations will lead to high demand with little supply within a reasonable time frame, direct ownership rather than futures options may be the right choice. When this proves to be the case, the investor will enjoy a high level of convenience yield on the initial investment and any expenses incurred to take possession and store the goods until the resale takes place.

The Convenience Yield is simpler to understand than it sounds. The Convenience Yield on the general perception of future availability and price of a physical asset. The eaiest way to think about it is in terms of two opposing fears:

1) Fear of shortages and higher prices

If someone is scared an asset (gold, soybeans, dollar bills, etc) is going to become either scarcer or more valuable (or both) than it is today, then the natural reaction is hoard that asset. The greater the fear of shortage and price rises the more urgent the need to acquired and hold the asset.

2) Fear of oversupply and collapsing prices

On the other end of the spectrum, if someone is scared an asset (gold, soybeans, dollar bills, etc) is going to become either more abundantly available or cheaper (or both) than it is today, then then the natural reaction is hoard that asset. The greater the fear of oversupply and collapsing prices the more urgent the need to sell and or avoid buying the asset.

Supply and demand together with the convenience yield (people's perception of future availability and price of assets) are to two biggest determinant in setting the price of virtually everything.

The convenience yield also explains why/how it is possible to impact prices by manipulating people's perceptions. For example, the article below is an example of an attempt to increase the value of soybeans through fear of shortages and price spikes.

Bloomberg reports that Soybeans May Surge to Record $20.

Soybeans May Surge to Record $20, StanChart's Reeve Forecasts
By Claire Leow and Susan Li

Aug. 24 (Bloomberg) --
Soybeans may rise to a record $20 a bushel, more than double today's price, amid low stockpiles in the U.S., a weaker dollar and increased demand as the global economy recovers, according to Standard Chartered Plc.

"Historically, August is the most volatile time for beans because that's the pod-setting period in the U.S.," John Reeve, the bank's director for agricultural commodities, said today, referring to the period that helps to determine final crop yields. "It's a late crop this year," [which means there is much higher chance of frost destroying crops] he said.

The U.S. grows more than a third of the world's soybeans and the country's inventories are at a five-year low [Low inventory numbers, of course, create fears of shortages], according to Department of Agriculture data. Prices may swing between $8 a bushel and $20, Reeve said. The crop, crushed to make animal feed and cooking oil, touched a record $16.3675 a bushel in 2008 [This gives an idea just how much soybeans could go up].

"I am little bit more bullish than bearish" on soybeans, Reeve said in an interview.
"An economic recovery, particularly in Asia which of course is the majority market for exported beans out of the Americas, [an economic recovery in the US's biggest export market is very bullish for soybeans], a lower dollar [which makes US soybeans cheaper for the rest of the world, driving up export demand], all that macro stuff, given the tight stocks of beans in the U.S." may boost prices.

Soybeans for December delivery, the most-active contract,
climbed as high as $9.975 a bushel today [emphasizing how much soybean prices are moving up helps reinforce fears of rising prices] on the Chicago Board of Trade. The contract is little changed this year, having risen about 1.4 percent.

Professional Farmers of America, an information company that produces crop estimates, said last week that the U.S. soybean harvest may be 3.15 billion bushels this year [Pro Farmer's estimates are much more creditable than USDA's numbers. Read more about Pro Farmer Midwest Crop Tour]. That compares with a government estimate of 3.199 billion bushels [A lower estimate suggests the USDA's numbers are overestimating production].

'Early Signs'

"There are some early signs that's not going very well," Reeve said, referring to the U.S. soybean crop [reinforcing the idea that the US soybean crop will be lower than expected]. The focus for supply then shifts to South America, he said.

Argentina, suffering from drought, and Brazil are the largest producers after the U.S. The South American crop is planted in the fourth quarter, after the U.S. crop is harvested.

"We could see higher corn prices" should demand pick up amid the economic recovery and a weaker dollar, Reeve said. Still, "at this stage, the crop is looking very healthy, I think there's a potential of lower corn prices."
[A completely one sided article sounds unbalance and untrustworthy. It is key to acknowledge points which contradict your argument and then refute them. Here Reeve acknowledge that the US corn crop is looking very healthy (which hurts the argument for higher prices), but suggest prices are going up anyway because of rising demand caused by economic recovery and a weaker dollar]

Corn prices in Chicago have dropped 19 percent this year and last traded at $3.29 a bushel. Pro Farmer forecast U.S. corn output at 12.807 billion bushels, more than the 12.761 billion estimated by the Department of Agriculture on Aug. 12.

"An interesting dynamic we've got at the moment is extremely high sugar prices and very low corn prices -- remember one of the substitutes for sugar is high-fructose corn syrup," Reeve said. Sugar may advance on the potential for increased purchases by the Indian government, he said.

'Sky is Limit'
[translation: prices could go up a lot]

"Back in the last spike of the 70s, we had sugar at 66 cents a pound," Reeve said. "Adjusted for inflation, that's $1.70 a pound. Today, we're in the low 20s, so the sky is the limit" for sugar, he said.

Sugar futures have jumped 85 percent this year, reaching a 28-year high of 23.33 cents a pound on Aug. 12 on speculation that adverse weather was reducing output in India and Brazil, the largest producers. The contract traded today at 21.84 cents.

India had its driest June in 83 years and parts of Brazil, the sugar largest grower, were hit by rainfall four times more than normal, hurting harvests. India is the biggest sugar user.

Three types of sellers in a futures market

Under normal circumstances, it really doesn't matter who is on the other side of a futures contract since CBOT guarantees the trade and will absorb the loss. However, under the right circumstances, the type of seller backing a futures contract does matter. It is what I call the massive price spike scenario, where the price of the underlying asset to a futures contract more than doubles within a short period of time. Take for example the possibility of a drastic shortage of an agricultural commodity which coincides with a freefall in the dollar's value. In this situation, knowing which of the three types of sellers is backing open interest on the futures market becomes extraordinarily important.

1) Cash and carry traders

Cash and carry is a form of arbitrage in which commodities/securities are bought in the cash market and a short is sold in a forward contract. Basically, this type of futures seller has possession of the underlying asset

In a massive price spike scenario: Cash and carry traders are the least risky sellers of futures contracts. There is basically zero risk of default from cash and carry traders. For example, If a cash and carry trader is holding 10 shipping certificates for 50,000 bushels of wheat and sells 10 wheat CBOT futures contracts, he will able to make good on delivery no matter what happens in the wheat market: no matter how high wheat prices go or how bad the wheat shortage gets, he will be able to deliver because he already possesses the wheat.

2) Producers hedging their production

In a massive price spike scenario: Under normal circumstances, futures sold as a result of producers hedging are just as safe as those sold by cash and carry traders. In a massive price spike scenario, this changes. If prices rise fast enough and a producer are forced to delivery significant quantities of commodities at far below their production costs, then it is likely that the producer in question will go bankrupt before being able to make good on all his obligations. For a producers to go bankrupt as a result of a rise in the commodity they produce may sound stupid (it is stupid), but it does happen. Consider, for example, the fate of gold producers Ashanti and Cambior after the Washington Agreement in 1999.

On September 26, 1999, 15 European central banks, led by the ECB, announce that they will limit their total combined gold sales over the next five years to 2000 tonnes, not to exceed 400 tonnes in any one year, and will not increase their gold lending or other gold derivatives activities. Besides the ECB and the 11 members of the EMU, Britain, Switzerland and Sweden are parties. The 2000 tonnes include the remaining 365 tonnes of British sales and 1300 tonnes of previously proposed Swiss sales, leaving only 335 tonnes of possible new sales. The announcement, made in Washington following the IMF/World Bank annual meeting, is ironically christened the "Washington Agreement" although the government in Washington played no role. However, the BIS, IMF, U.S. and Japan are all expected to abide by it, and the BIS is expected to monitor it.

The effect in the gold market is quick and dramatic. Within days, as some gold shorts rush to cover, the gold price jumps from around $265 to almost $330 and gold lease rates spike to over 9%. By late October gold retreats back under $300, and a month later lease rates are almost back to normal levels. But the hugely over-extended net short position in the gold market is clearly revealed and far from being resolved. Two heavily hedged gold mining companies, Ashanti and Cambior, are virtually bankrupt and in negotiations with their bullion bankers. Indeed, soon the entire rationale of hedging is under comprehensive review throughout the gold mining industry as shareholders rebel at practices that take away the upside of their gold investments.

As long as they weren't as reckless as Ashanti and Cambior, most producers should be able to make good on their futures obligations. However, this does not change the fact that sellers hedging production are not as safe as cash and carry sellers.

3) Speculators

Anyone selling futures contract with neither possession of the underlying asset nor the means to produce it. Speculators if forced to make physical delivery he must go out and purchase underlying asset on the cash market.

In a massive price spike scenario: Default by speculators is virtually guaranteed if prices of any commodity more than doubles with a short period of time.

If significant amount of speculators and producers default on their futures contracts (don't have enough money to meet margin calls or buy the underlying assets) at the same time, it is likely to overwhelm the CBOT's ability manage the situation, resulting in a shutdown of the futures in question and possibly the entire futures market.

Two key points about the August 2009 soybean backwardation

1) There was nothing backing September soybean futures on August 31

A) Whenever a futures market goes into backwardation like the soybean market in August, cash and carry traders quickly exist the market. Consider the trader who is holding 10 shipping certificates for 50,000 bushels of soybean and is short 10 CBOT soybean September futures contracts. He can sell his 10 shipping certificates for the cash price $517.31 per ton, and then buy back the September futures contract he sold for $417.31 per ton, thereby making a $100 per ton profit ($136,080 total). Cash and carry traders start doing this process (selling cash soybeans and buying back futures) whenever cash prices start moving higher than the nearest futures, and, as long as there are cash and carry traders traders ready to sell physical/buy back futures, cash prices can't go to far above future prices. Conversely, when cash prices start trading at a huge premium to the nearest futures (like with soybeans above), it means that all the cash and carry traders are out of the market.

B) No soybean producers sell September futures to hedge production because September contracts expire before the end of the soybean harvest.

2) September soybean futures were about to get hit with a flood of delivery requests

Taking delivery of futures contracts is a hassle, so it isn't worth it if cash prices are a little higher than the nearest futures. However, when cash prices are trading at a huge premium to the nearest futures contract more than the nearest futures then it definitely becomes worth the effort for end users to take delivery and save money. So if soybean cash prices were still trading at $100 per ton premium to September contracts when August ended, end users would have started buying contracts to take delivery.

Soybean shortage causes intense backwardation

The soybean crisis at the end of August sent soybean futures going into intense backwardation (backwardation is when cash prices are higher than future prices). Desperate Midwest crushers were bidding over $12 a bushel to acquire scares soybean supplies, which was $2 to $2.45 a bushel over the value of the CBOT November futures contracts. Some processors in the heart of the Midwest soy belt grew so desperate for soybeans to crush that they payed to transport some of the early harvest from the Mississippi River Delta northward to Illinois.

The chart below shows the backwardation of soybean futures on August 31. Notice the huge price gap between promises to deliver soybeans in September and promises to deliver soybeans in November. Notice the even larger gap between cash prices and September futures.

The threat posed by soybean backwardation

Futures markets are dependent on confidence in the same way as banks. Futures markets offer promises to deliver commodities on specific dates (commodity IOUs) and Bank offer deposits, which promises to deliver cash on demand (dollar IOUs). Futures markets and banks issue far more IOUs then they have cash and commodities on hand to make good on these promises. For both futures markets and banks, a loss of faith in the ability to make good on these IOUs is fatal: no bank can survive a run on its deposits and no futures markets can survive a flood of delivery requests on its futures contracts.

Intense backwardation like seen in the soybean futures on August 31 is equivalent to a run on the bank for a futures market, and a run on the bank which is allowed to continue for any length of time will lead to default.

Default on soybean contracts would have triggered panic and hoarding of not only soybeans but other agricultural commodities. The price of food staples would have jumped across the board, with severe negative ramification, the first of which would be:

1) The failure of major Wall Street banks

As I have written about numerous times before, when Goldman Sach and other option market makers sell call and put options, they are collecting insurance premiums against sharp market swings. These call and put options create an option sweet spot, where most contracts expire worthless. The further prices are from this sweet spot at option expiration, the more Wall Street option market makers have to pay up. As agricultural securities were already trading above their respective September 2009 sweet spots, the likes of Goldman Sach would have experienced catastrophic losses if the soybean price spike had been allowed to grow and spread to other agricultural commodities

See for your self. Below is a site which will calculate the option sweet spot for you (sweet spot = strike peg).


And here are the symbols for a bunch of agricultural securities:









With the exception of Monsanto (MON) (which is trading 0.875% below its sweet spot because it just announced plans cut of 8% in work force), all of them are trading above their option sweet spot. If soybean prices had been allowed to spike out of control, prices of agricultural securities would have moved even higher, causing losses to rise exponentially for option market makers. Wall Street firms are not strong enough to absorb such massive losses.

2) Inflation panic in bond market

A lot of investors are convinced the US won't see inflation for years because of deflation. A sharp rise in food staples would come as a complete surprise to these investors, who would dump bonds (including treasuries) in a confused panic. The treasury is already having difficulty selling all the debt necessary to fund the US's massive fiscal deficit. An investor exodus driven by inflation fears is the last thing it needs.

3) A Dollar freefall

In response to soaring food staples, central banks around the world would sell off their dollar reserves to appreciate their currencies and keep domestic prices down. China, for example, absolutely can't afford food prices to double, which stop its economic growth (now fueled by Chinese consumer spending) dead in its track and cause widespread social unrest (nothing makes populations more angry than doubling/tripling food prices). A spike in food staples that last any length of time would cause China to drop its dollar peg in a heartbeat. Needless to say, if foreign central bank stop funding the US's trade deficit and instead start selling their reserves, the dollar will enter a freefall.


Manipulating The Soybean Convenience Yield

First bearish development came on Friday, August 28, even as cash soybean prices are soaring. Nogger reports that IGC Raise Global Wheat Production Estimates.

Friday, 28 August 2009
IGC Raise Global Wheat Production Estimates

The International Grains Council say that
the world will produce 8 MMT more wheat in 2009/10 than they had previously estimated. [8 MMT magically appear out of nowhere! This kind of thing creates the fear of oversupply and lower prices]

Global wheat production will now come in at 662MT they say, still 8.7% or 25 MMT down on last season's record output of 687 MMT.

The extra production comes from increases in Ukraine, the EU, the US and China, it says.

Consumption is left unchanged at 642 MMT.

Their production estimate is almost 3 MMT higher than the USDA's
[higher production numbers suggests that the USDA is underestimating production] whilst their consumption figure is more than 3 MMT lower [lower consumption figures suggests that the USDA is overestimating demand]. All these adjustments, strangely, now mean that 2009/10 ending stocks are now exactly the same the USDA's estimate at 183 MMT.

[This article was written by Nogger who, like me, has a certain lack of respect for official production estimates, especially those coming from the USDA. While the IGC Raising global wheat production estimates is a bearish development for wheat (and soybeans), both Nogger and I believe the IGC's numbers are a joke. In the second half of this article, Nogger rightfully ridicules those estimates.]

given that India's summer rice acreage is down 20% [if there is less rice in India, rice prices will be higher and Indians will consume more wheat], and India have a population approaching 1.2 billion, maybe an increase in consumption there is on the cards for 2009/10? [That would defeat the whole purpose of raising production estimates to create fear of a price collapse]

China is the other interesting area for discussion here.
I find it all very strange that a country in the grip of a terrible drought in the middle of the growing season should ultimately bring in a record crop [Really? Me too!]. A quick search on the blog throws up that on Feb 7, Henan province had its first rainfall for 110 days - and that was just 6 mm [I wrote about that too: see *****Northern China hit by worst drought in 50 years*****]. So newly planted wheat in Henan had no rain at all for the first three months of it's life, yet China brings in a record crop. Maintaining this nice steady upwards growth, no matter what, for the seventh year in succession. Now I ask you, how likely was that? [not very?]

I didn't go to China to see how bad, or otherwise, things were at harvest time, and I don't suppose you did either? But
come on. Planted area for the 2009 wheat crop incidentally was just 1.25% higher than in 2008, just in case you were wondering.

Lying Bastards

The next bearish development.

Reuters reports that US soy and gold spooked by China's derivative stance.

US soy, gold spooked by China's derivative stance
08.31.09, 1:29 PM ET

United States -
By Sam Nelson

CHICAGO (Reuters) -
U.S. soybean and gold markets fell Monday, due in part to a report that China's state-owned companies may default on commodity derivative contracts with six foreign banks providing over-the-counter hedging services. [Very clever! By highlighting the fact China's state-owned companies will probably default on commodity derivative contracts (they were conned by Goldman Sach into buy options on oil right before prices collapsed) and then linking it to the falling soybean market, it makes it seem as though China is considering defaulting on US soybean derivatives. Wow
Relentless Chinese buying is the biggest factor creating fear of shortages and higher prices.

Traders in other commodities markets were cautious after the report in Caijing magazine quoting an unnamed industry source in an article published Saturday.

Chicago Board of Trade (CBOT) soybean futures for September delivery were down 3 percent, or 34-3/4 cents per bushel, at $11.01 at 10:55 a.m. CDT.

December gold fell $6.20 to $952.60 an ounce at the New York Mercantile Exchange's COMEX division.

A tumbling of the Chinese stock market Monday [creating fear that Chinese growth is stalling, and the robust Chinese demand that is the number one driver of soybean prices right now might disappear] and a higher dollar also weighed on commodities markets. [a higher dollar (which makes soybean exports less attractive) just when needed to help depress soybean price]

"A Chinese agency said they reserve the right to walk away from bad derivatives contracts and that stirred up a lot of worry not only about the stock market but soybeans as well," said Paul Haugens, vice president at Newedge USA.


Bill O'Neill, managing partner at New Jersey-based LOGIC Advisors, said that he was not surprised about the news because
China had backed off commodities deals, particularly with copper, over the past 15 years. [Suggesting that China might backed off its soybean deals]

"Historically, it is not so unusual for China to either renegotiate or abandon some deals that have been made. Some traders who have been around for a while are certainly aware of that possibility," O'Neill said.

There were concerns that China might cancel orders for U.S. soybeans and the news cast fears about the fate of future buying of U.S. soy by China.
[Awe, they got tired of hinted at it sutblely and came right out to say it:
1) China might cancel its orders of soybean new crop, which would flood the US market with soybeans crushing prices
2) If China is thinking of cancelling its orders for US soybeans, then it must not be interested in buying any new US soybeans.

BE AFRAID! Soybean prices will collapse.

not buy any

"China is the dominant buyer of U.S. soy exports so any financial problems or questions about the Chinese economy leads to questions about future demand for U.S. soy and also worries about contracts on previous sales," a CBOT grains trader said.

China had already bought nearly 8.4 million tonnes of new-crop U.S. soybeans through Thursday, Aug. 20, twice the sales booked by the same point last year, according to the U.S. Department of Agriculture.

"I'm told it won't affect soybean contracts because ever since China canceled bean contracts in 2004, a bond has been required," said Rich Feltes, director of research for MF Global. "It is spooking the market today, but as people start to realize this, I think the market will settle down."

China National Cereals, Oils and Foodstuffs Corp (COFCO) is the oilseeds giant in China and two weeks ago said it was building a soy crushing plant in southern China, according to the China Daily.

"What I've heard is COFCO has denied there would be any defaults on soybean contracts .. this is mainly affecting energy and metals," Feltes said. (Additional reporting by Frank Tang in New York and Karl Plume in Chicago; Editing by Christian Wiessner)

Insane estimates Soybean Estimates

Scare farmers into selling below their cost of production

Bloomberg reports that FCStone predicts record US soybean crop and more corn.

FCStone Predicts Record U.S. Soybean Crop, More Corn (Update1)
By Jeff Wilson

Sept. 1 (Bloomberg) --
Corn and soybean output in the U.S., the largest grower and exporter, will top government forecasts because cool, wet weather in August increased yields, said FCStone Group Inc., a commodity research and brokerage company.

Production of corn, the nation's largest crop, will total 13.02 billion bushels,
said David Smoldt, a vice president at West Des Moines, Iowa-based FCStone. Last month, the U.S. Department of Agriculture predicted 12.761 billion. Farmers harvested 12.101 billion bushels last year and a record 13.1 billion bushels in 2007, government data show. Last month, FCStone forecast 12.814 billion bushels for 2009.

The soybean harvest will reach a record 3.266 billion bushels, or 2.1 percent more than the 3.199 billion forecast by the USDA, and up from the 3.247 billion forecast by the company in August, Smoldt said. Last year's crop was 2.959 billion bushels, down from a record 3.197 billion in 2006, according to USDA data.

"We were picking up higher corn yields in the eastern Midwest with small improvement in parts of the western corn belt" for both crops, Smodlt said in a telephone interview.
"We are definitely going to have some storage problems this fall, especially in the western Midwest." [Yes, do you see the beauty of this? Not only is the US going to have a (allegedly) have a huge harvest, it is going to have a harvest so huge that IT CAN'T BE STORED AND MUST BE SOLD RIGHT AWAY AT FIRESALE PRICES! If this, in ANY way at all, was true, it would have amazingly bearish implications,]

Cash Soy Squeeze Pits US Crushers Against Exporters

Wednesday September 02, 2009 09:13:22 PM GMT


Despite the strength of the current market,
observers said prices could easily plunge as the Midwest soybean harvest finally gets rolling in late September or early October.

Barring an early freeze that could cut yields, U.S. farmers are expected to bring in a bumper crop. The U.S. Department of Agriculture has projected U.S. soybean production at 3.199 billion bushels, an all-time high.
[An all-time high soybean harvest right after the US completely ran out of soybeans. How convenient]

Export buyers and crushers may find themselves awash in soybeans, triggering a collapse in the cash market. [This is PURE FEARMONGERING. With 2 to 3 months of pent up demand from crushers and exporters, why in the world would soybean prices collapse?]

"When it breaks," the eastern soymeal broker said, "it's going to be swift and violent." [Non-sense. Prices may fall 10 to 20 percent after harvest, then, within a month or two, soybean prices will hit new hit as global shortage grows far worse]

Agrimoney reports that huge US crop estimates from Informa Economics send prices tumbling.

18:23 GMT, Thursday, 3rd September 2009, by Agrimoney.com
Huge US crop estimates send prices tumbling

Soybeans slumped 4.0% to their lowest since April, sending wheat to a fresh two-year low, after Informa Economics estimated the US was on course for huge autumn harvests.

The US analysis group estimated the US soybean crop at 3.37bn bushels, at a yield of 44.1 bushels per acre. [WOW. Seems big was big wasn't big enough]

The estimates, besides being a record on both counts [Now soybean owners have to fear not only a potentially big 2009 crop, but a record breaking 2009 crop], beat the current US Department of Agriculture production forecast by 170m bushels (11.4m tonnes) and yield guess by 2.4 bushels per acre.

For corn, Informa pegged production at 13.3bn bushels, with a yield of 168 bushels per acre.

Again, both figures were way ahead of USDA estimates [suggesting again that USDA estimates were low], by 540m bushels (33.9m tonnes) for output — equivalent to Mexican and South African production combined - and 9.5m bushels for yield.

'Floor-wide losses'

Informa's estimates were even bigger than the FCStone numbers released earlier this week [Yes, insanely so], and come as traders are preparing for the latest USDA forecasts on September 11. [With estimate like that flying around, it might make someone dread the USDA's September 11 forecasts]

"These are, of course, bearish numbers and are contributing to the floor-wide losses, still led by beans," Vic Lespinasse, GrainAnalyst.com analyst, said.

Chicago's soon-to-expire September soybean contract sank to $9.69 a bushel, its lowest for five months [proof that the onslaught of burish news was working to bring the soybean market under control], before recovering some ground to stand at $9.77 ¾ a bushel at 16:15 GMT, down 3.1% on the day.

Now this one is below, from September 3, is REALLY good. If you aren't paying attention, you might be fooled into thinking he was someone who had farmer's best interest at heart. Agweb asks producers if they are you upside down on selling?

Are You Upside Down on Selling?
[The author of this piece is Bob Utterback (the original article didn't give him the credit he is due anywhere)]

I just got back from the Farm Journal Corn College event and speaking at the Farm Progress show. In both cases I observed producers who are more worried about the crop being out there than the trade [in other words, farmers don't want to sell a 2009 crop that they might not have (because frost kills it). If they did sell their crop and their harvest for some reason failed, they would be screwed. Finally, Worring about "The trade" means worrying about the best time to sell. Bob is suggesting farmers should worry more about when to sell their harvest than whether they will have a harvest]. Many were wondering why the market was not going up on concern about frost and the lateness of the crop [Answer, because the USDA and guys like Bob are flooding the world with as much (fictitious) bearish information as possible]. After talking with them a little more you found out why—they have sold very little of this 2009 crop. [He sounds very convincing when he says "they have sold very little of this 2009 crop," doesn't he? It's complete, absolute BS. See below article.]

While it's not a scientific study, I get the strong impression that producers are really upside down on this year's crop. They have high cost above current cash values even with the bigger potential yields [Doesn't it sound like he pities them sympathizes with these farmers' plight? Funny thing considering his aim is to screw them over]. They did little selling in the 2008 highs for 2009 and have been waiting for a weather event all year to bail them out. Now that we are down at these low levels, they are going to put the crop in the bin and hope for a 2007 or 2008 demand event to bail out of the unsold storage decision.

In the 28 years I've been in the market, I don't quite remember when producers were so uniformly on one side of the boat coming into the fall [When everyone is "uniformly on one side of the boat" it is called a bubble. Bob is suggesting that soybeans are a bubble. Pathetic. When asset is already trading at rock bottom prices (ie: below the cost of production) only an idiot would try to suggest that asset is an overvalued bubble]. They don't have enough storage space for the crop, they are not sold and the crops not going to be a crop that stores well for a long time. [LOVE this. He is saying that
1) They don't have enough storage space for the crop.

2) They are not sold.

3) The crops not going to be a crop that stores well for a long time.

Now, if this was true, boy would it be bearish.

What's this all mean? [You haven't got a clue to the answer of this question] Eventually, producers are going to have to bite the bullet and price the crop. I believe they are going to wait as long as possible [Those who wait longest will be rewarded]. I would suggest this is a mistake [It isn't. Anyone holding the commodity five months from now will not be regretting it]. I would be actively looking for opportunities to sell inventory on any price bounce in the December 2009 corn back to $3.30. The only way this is going to happen is if we do get a frost scare in the month of September and beans take off [or if the USDA's numbers are revealed as fictitious].

About Bob's "they have sold very little of this 2009 crop", below is the new crop sales for soybeans as of August 20 for 2008 and 2009.

New crop sales as of August 20, 2008


million bushels

New crop sales as of August 20, 2009


million bushels

If farmers aren't selling anything, then why were new crop sales as of August 20, 2009 nearly twice what they were in 2008? 477 million bushels of soybeans is a huge quantity to have already sold, it's about 15% of the USDA's fictitious 2009 soybean production estimate.

Reuters reports about the soy and corn slump.

Soy, corn slump; thin trade before holiday
09.04.09, 3:35 PM ET

United States -

* Soybeans, corn at multi-month low on huge crop forecasts
* RJ/CRB index down 4 pct on week
* Energy, metals up slightly
* Trade light on mixed jobs report and before long weekend

By Barani Krishnan

NEW YORK (Reuters) -
Soybean and corn prices hit multi-month lows Friday as selling in agricultural markets accelerated amid good crop weather in the United States and forecasts for record harvests this year. [more about this accelerating "selling in agricultural markets"below]

Energy and metals prices were up slightly but activity on the two fronts was minimal after a mixed government report on U.S. payrolls added to
uncertainties about economic recovery. [uncertainties about economic recovery equals uncertainties about US soybean demand which is yet another bearish factor for investors to consider]

Analysts said investors also appeared hesitant to commit to major positions ahead of the long holiday weekend. U.S. markets would reopen only Tuesday after Monday's Labor Day holiday.

The 19-commodity Reuters-Jefferies CRB index showed a loss of 4 percent on the week, the bulk of it coming from weak oil and soybean prices.

Even sugar, which rallied to near 30-year highs at the start of the week on harvest shortages in India, saw prices unwinding over the last three sessions.

"The market has run out of momentum given that there is no news feeding into higher prices," said Luke Chandler, a sugar analyst at Rabobank.

Soybean prices lost a whopping 14 percent on the week as private grains houses estimated a bumper crop from friendly weather and other planting conditions.

"You're seeing all these private estimates coming out and they're pretty big and the weather is good too," [Yes, since three (four if you count the International Grains Council's number) insanely bullish production estimate came out within the span of three days when it was VERY convenient of them to do so, then these estimates must be true.] said Mario Balletto, grains analyst at Citigroup.

Research and advisory firm Allendale Inc has forecast this year's soybean crop at a record 3.309 billion bushels, above the previous record of 3.197 billion produced three years ago. [Another insane production estimate. I think it losses some of its affect after the third time]

As the story above suggests, soybean prices weren't just hit with negative news stories, they were hit by heavy selling on the futures market. The table below shows the change in open interest between August 28 and September 8.




Change in




in OpInt






















Total new






crop sold






between Aug-28






and Sept-8






























































Who sold 104.5 million bushels of soybean futures between August 28 and September 8? I can tell you who is wasn't:

1) It wasn't cash and carry traders. Anyone who had physical supplies would have sold their beans on the cash market where prices were higher.

2) It wasn't producers who, on August 8, could be certain if they had a crop or not yet.

There you have it. These 104.5 million bushels of 100% unbacked soybean contracts which were sold at the beginning of September help reinforce the idea that soybean prices were headed for collapse.

Agweb reports that the corn crop is out there.

I feel the corn crop is out there!
[Another article from Bob Utterback]

Corn: I've been on the road for the last 30 days. I've seen a lot of the corn country and have spoken to several producers. My overall impression is the corn crop is out there but it may be a little wet at harvest. You need to get your propane locked up and in position. My biggest concern is I sense there is still a lot of old crop corn still to be priced. As for the upcoming crop,
I get the strong impression that a large percentage of the crop is still unsold [Yes, according to Bob, there is an (imaginary) supply of old/new crop that is perpetually on the verge of flooding the market and depressing prices]. Producers are making plans to store which implies there is a big potential for a secondary harvest low out there in February or March [Translation: This horrible (imaginary) supply of old/new crop will always be there. Don't think you can outwait it.]. One should be preparing for less than expected basis narrowing and deferred contracts potentially falling to the nearby contracts.

In summary this is going to be a dangerous year to hold inventory in the bin unpriced and hope for better prices
[Translation: "Sell it all NOW! Right NOW! Sell it to me!"]. I really believe the odds are better than 60/40 that corn will be put in the bin at harvest and will pulled out of the bin next July cheaper than when it was put in when all cost are included [See? Prices are going to be down in the future (according the Bob's "feeling") so hoarding/storing your 2009 crop is useless. US farmers have no rational choice (according to Bob) but to turn your crop Bob and his friends (they will choose the price)]. This strongly implies that all hedges are going to be maintained and rolled rather than liquidated and holding grain in the bin unpriced.

Soybeans: I have to tell you I did not see anything that made me really bearish. Granted, I'm no expert on bean production but
I know we have a lot of disease coming back into the beans [Notice this. If someone like Bob is admitting that disease is a problem, it must be a problem so widespread and serious that Bob can't help but acknowledge it]. The overall height seems to be average and a lot of beans are still really green for this time of year. Overall, I see no reason for the USDA's last estimate to be exceeding and a lot of reason why it could drop a bit. So overall I'm supply neutral. So what about demand? The big bull (China) has already suggested they are not going to buy as much as they did last year [??? China (like you Bob) is a buyer of US soybeans. It is in China's interest to

1) tell the whole world they will not be buying as much in 2010
2) wait for prices to fall (in part thanks to helpful guy like Bob)
3) Buy much more than in 2009.

Simply, China will go along with any US attempt to scare farmers into selling at RIDICULOUS prices, but DON'T EXPECT THEM TO BUY LESS BEANS.]
. They have accomplished their objective of building domestic stocks. Second, they are keeping their prices high domestically to motivate producers to increase production [a government working to keep prices high? To HELP farmers? Definitely not America].

Finally, all signs indicate that the South American producers are eager to regain the market share they lost to the U.S. last year [South American producers want to have a crop that doesn't die on them. Not sure they will get their wish]. Overall, the supply engine is gearing up and the demand engine is going on idle [Based on what? So the record amount of new crop sales represents "idle demand"? Also Bob, you DO know you writing articles for an agricultural website, right? Saying things "the supply engine is gearing up and the demand engine is going on idle" in a lighthearted and happy manner is something only someone NOT in the agricultural world could do]. This would suggest it's only a short time before world stocks build and prices to the producer come under pressure [The world is going to experience the worst food crisis in hundreds of years next years. How in the world would world stocks build?]. In fact as an advisor [advisors give advise. You give something else] I'm more worried about getting some pricing done on the November 2010 contract than the 2009 contract [And you aren't worried, not at all, that perhaps the dollar might fall between now and November 2010? Because if it does, anyone selling November 2010 futures contracts today will suffer catastrophic losses].

Result of wild news stories

reuters reports that big US soy harvest in the wings.

September 7th, 2009
Big U.S. corn, soy harvest in the wings
Posted by: Christine Stebbins

Confidence in an approaching record harvest for both U.S. corn and soybeans and the sudden drop in the cash soybean market late last week will cast a bearish cloud over grain prices in coming days.
Given the latest weather and crop conditions, most analysts have upgraded their forecasts to record highs ahead of the government's next U.S. crop production update on Friday.

"It's kind of a bearish time period,"
[No kidding?] said Bill Nelson, an economist at Doane Advisory Services, an agricultural consultant. "Short of a big surprise on Friday that would reverse the trend, there's more downside risk than upside ["more downside risk than upside"? The downside risk to soybeans is nothing, prices can't go much lower. The upside risk is infinity, as the dollar looses all value. If Bill Nelson things nothing is "more" than infinity, then he needs someone to teach him math]."

After weeks of nervousness about tight soy supplies before harvest and the chances for an early frost to cut final yields, traders last week seemed to come to a general view that the danger is over and the bigger crops are now "made." [traders didn't "come to a general view that the danger is over". Traders were hit my every trick in the book in a desperate attempt to stop the backwardation in soybeans] An old saying on LaSalle Street — home to CBOT markets — is that "big crops get bigger." [I found this quote in articles again and again and again. It sounds like a talking point] That reality hit last week. So the markets began transitioning to supplies and away from demand, a normal psychology at harvest.

Traders will still try to out-guess each other on crop size and keep a sidelong glance every day at any sudden changes in the weather outlook for the Corn Belt, where most of the 165 million or so acres of U.S. corn and soybean are planted. But as of Friday, traders were expecting the U.S. Department of Agriculture to raise its corn output next Friday above the record 13.074 billion bushels U.S. farmers harvested in 2007.

"Everyone I talk to is pushing this big increase in plant populations" for corn, said Roy Huckabay, an analyst with The Linn Group. "If NASS follows through, you're talking about six bushels per acre just from plant populations above August."

NASS — the National Agricultural Statistics Service — is the USDA's official crop counter for its monthly reports. Last month, USDA forecast corn yields at 159.5 bpa while the market is currently trading a minimum 163 bpa yield, traders said. For soybeans, based on a jump in plantings, USDA has all season been projecting a record harvest, now pegged at 3.199 billion bushels. But after a cool July, good August rains and steady-to- better crop ratings last month, the grain trade sentiment is that USDA will come out with an even bigger number.


Soybeans on the Chicago Board of Trade last week fell to a five-month low on those prospects, losing 15 percent on the week to end at $9.61 a bushel in the September futures contract. September corn closed at a contract low of $3.00-1/2, its lowest in eight months and a key chart support point to watch when the CBOT reopens on Monday night after the long Labor Day holiday weekend. If corn slides, wheat will tag along given ample U.S. and world stocks and reports of strong hard red spring wheat yields now coming out of the Northern Plains.

Soybeans were already trickling into grain terminals and processors in Nebraska, southern Illinois and some areas of Iowa last week as farmers took advantage of historically high cash prices [were tricked into selling their stocks by phony phony production estimates and fear mongering]. That pressured cash soybean bids, even where harvest pressure on supplies had not yet shown itself.

Exporters at New Orleans, the leading gateway for U.S. grain exports, backed off their spot soybean bids as much as $1.15 per bushel over CBOT November and were bidding 95 cents over November on Friday. At Decatur, Illinois, home to the leading processor Archer Daniels Midland as well as other crushers, the spot bid for soybeans on Wednesday night had been $2.00 a bushel over CBOT November futures. On Friday night, it had sunk to $1.20 over.

As more soybeans moved into the hands of processors and exporters late in the week, front-month futures spreads deflated on profit-taking.
Traders said, barring a frost scare, that trend looks likely to continue through at least expiration of September soybean futures on Sept. 14.
[how convenient for Goldman Sach]

Reuters reports that USDA lifts crop forecasts.

GRAINS-US soy, corn slide after USDA lifts crop forecasts
09.11.09, 1:26 PM ET
By Julie Ingwersen

CHICAGO (Reuters) -
U.S. soybean futures fell nearly 3 percent Friday after the U.S. Department of Agriculture raised its forecast for an already record U.S. soybean crop and favorable weather hinted at additional increases.

"Big crops typically get bigger," said Don Roose of U.S. Commodities in West Des Moines, Iowa.

USDA in a monthly report projected the soybean harvest at 3.245 billion bushels, up 1 percent from its August report. If realized, it would be the largest U.S. soy crop on record.

USDA pegged the average yield at 42.3 bushels per acre, and at the Chicago Board of Trade, grain traders noted that the final yield could be closer to 44 bushels.

The only potential obstacle to a bumper soy harvest would be a cold snap halting growth of the crop, which is maturing later than normal after a cool summer.
[There ARE actually a few other major obstacles bumper soy harvest. I will get to them later.]

But weather forecasts looked mild.

"The threat of any damaging cold weather continues to be pushed further and further away
[Funny. From that I am reading, there are is the Cool Blast coming on September 23 — 25 (Sept 23-25 Plains/MW/GL/OV Cool Blast)]. It looks less and less likely for any damaging freeze in September [with the exception of that late September Cool Blast]," said Mike Palmerino, an agricultural meteorologist with DTN Meteorlogix.

Soybeans faced additional pressure from a slowdown in demand from China [What slowdown?], the top buyer of U.S. soybeans. China's soybean imports in August were down 29 percent from the previous month, Chinese customs data showed [Well, OF COURSE, China's August imports down, with US struggling to locate any soybeans for export. But as the US's record 477 million bushels of new crop sale show, this wasn't due to lack of Chinese demand, it was due to a lack of US supply. Chinese were forced to buy US new crop because there wasn't any old crop left.].

Sharp contrast between Russian and US crop estimates

With all the horribly bearish estimates that the USDA has been directly and indirectly inflicting on US farmers, I wanted to point out that not all governments try to exaggerate production to depress prices. In some countries where there are no futures markets and financial institutions haven't built up insane short positions in major commodities, there is a different attitude. Below is entry from Nogger's blog about Russia's crop estimates.

Thursday, 3 September 2009
Thursday Morning Snippets: I've Just Googled Yelena Skrynnik

Russian Agriculture Minister Yelena Skrynnik (I've just Googled her, she looks a bit like Anne Diamond at the end of a pie-eating contest - probably a pork pie-eating contest I'd wager) is standing by her forecast of a grain crop of only 85 MMT this year, down 21.4% on last season. She also raised her estimate of grain losses due to drought from 11 MMT to 13 MMT, saying that 4.5 million hectares have been destroyed. Ms Skrynnik is a female politician, you can make your own mind up from those two bits of information alone.

Monday, 7 September 2009
EU Wheat Pounded Lower

Generally better yields than expected across most of Europe, were backed up by news that even
the normally cagey Russian agriculture Ministry had finally admitted that grain production there would come in higher than their previous estimate of 85 MMT.

This season's wheat crop is now expected to come in around 60 MMT, down slightly from last year's 63.7 MMT, but much better than early season estimates of 55 MMT.

Russian Harvest Latest

The Russian Ministry say that the 2009 grain harvest stood at 70.8 MMT as of Sept 8th off 28 million hectares, averaging 2.53 MT/ha.

The wheat harvest as of Sept 8th stood at 45 MMT and the barley harvest at 15 MMT, they say. Progress is around 10-14 days behind last year.

So far so good, now it starts to get confusing....

There's still around 19 million hectares left to harvest they say, if that yields 2.5 MT/ha then we have another 47.5 MMT still standing in the fields,
making for a total crop of 118 MMT, 10 MMT more than last year. [Russia may be the few place in the world to see a production increase in 2009, though it is still too early to tell]

The ministry's official estimate is still only 85 MMT, although they did concede a few days ago that production might come in 9-14% higher than this. A 14% increase would give us 97 MMT.

It will be remembered that
the ministry consistently under-estimated the size of last years crop by some significant magnitude.

SovEcon say that this season's grain crop will be 94-98 MMT, and that
wheat will make up 60 MMT of that.

By downplaying production, Russia is raising shortage fears and helping prop up domestic grain prices. Russia's support for its domestic farmers contrasts STARKLY with the US, where the interest of the USDA are CLEARLY not aligned with American farmers.

The Truth about the 2009 soybean harvest

DTN The Progressive Farmer reports that Lanworth See Smaller Crops Than USDA.

Lanworth See Smaller Crops Than USDA
Lanworth Estimates Final Production Slightly Larger Than Previous Year
Pat Hill DTN Markets Editor
Wed Sep 9, 2009 07:30 AM CDT

OMAHA (DTN) -- U.S. corn and soybean crops will be only slightly larger than last year -- but smaller than USDA and many private analysts are forecasting, according to revised estimates from private analytical firm Lanworth, Inc.

In a report released September 4 to its clients, Lanworth pegged U.S. corn production at 12.237 billion bushels on an average yield of 153.8 bushels per acre and 79.57 million harvested acres.
Soybean production is expected to total 3.021 billion bushels, on an average 39.9 bushels per acre and 75.77 million harvested acres. Spring wheat production is expected to total 495 million bushels, with yields of 37.4 bpa and 13.22 million harvested acres.

The corn estimate is up 1 percent from the company's August forecast but remains 4 percent below USDA's August 12 estimate. Lanworth's soybean estimate is also up 1 percent from August, but is 6 percent below USDA's August estimate.

It's important to note that Lanworth is forecasting the final production totals, not what USDA may report September 11.[Key point. ]

Lanworth said it continues to expect 2009 corn and soybean yields to be generally comparable to last year's.

"Neither resource availability nor the time that corn and soy have to capture resources and allocate them to yield has increased in 2009. Furthermore, solar radiation levels in 2009 have fallen to record and near record lows, dropping roughly 10 percent across most of the Corn Belt and Upper Midwest relative to 2008.

"By early October solar radiation levels in the Corn Belt and Upper Midwest generally fall to levels 40 to 50 percent below those in July. Thus,
even with relatively late crop maturation uninterrupted by frost, reduced radiation inputs greatly limit the crops' ability to regain the potential seed filling lost in July due to delayed flowering," the company said.

Conditions are particularly adverse in Minnesota, North and South Dakota, which typically account for 15 percent of potential corn and soy production. An extended period of dryness in Ohio, northern Indiana, northern Wisconsin, Wisconsin and eastern North Dakota has slowed rate of seed filling in those areas.

High yields are expected in southern and western states (Colorado, Kansas, Missouri and Nebraska), which make up 20 percent of potential corn and soy production, and "gains there may be sufficient to offset some of the potential yield losses in northern production areas but cannot drive record-breaking national yields," the company stated.

As DTN reported last week, Lanworth is a relatively new ag analytical firm that combines the use of satellite imagery, ground verification, knowledge of historic crop rotation and yield patterns and computer-based simulations to project planted and harvested acreage and yield for corn, soybeans and wheat in the U.S. and South America. [Not sure how others calculate their estimates.]

This month's revisions centered on harvested acres and yields, said Nick Kouchoukos, Lanworth vice president of resource intelligence.

"Harvested acres is one of the most difficult parameters to get our heads around," Kouchoukos told DTN. He said Lanworth uses its models to get insight into the regions where USDA will eventually make adjustments.

USDA's August 12 report indicated the percent of harvested acres was higher, leading Lanworth to increase its percent harvested, Kouchoukos said, but Lanworth remains below USDA in its planted area estimates.

"A big part of that is the crop overall is fairly healthy, which is separate from how yields will be -- so a greater percent than normal will be harvested," Kouchoukos told DTN.

For yield, Lanworth updates its models to incorporate the latest weather information, and its numbers "are converging as actual weather is ingested by the models," said Lanworth lead agronomist Corey Cherr.

Lanworth does not advise clients about price implications of its estimates, but it did say that its current production forecasts
, coupled with USDA's demand estimates, imply the lowest ending stocks and stocks-to-use ratios in recent history for both corn and soybeans, while wheat stocks will be highest in recent history, excepting last year.


Lanworth's corn and soybean projections seem to be more in line with what the futures spreads are indicating about 2009-2010 supply and demand than some other private estimates, according to DTN Senior Analyst Darin Newsom.

"In corn, December through September 2009-2010 spreads are showing solid carry, roughly 70 percent of full commercial carry, indicating a bearish supply and demand situation -- but not, however, strong enough to reflect the 13 billion bushels that is showing up in other pre-report estimates. If the commercial side of the market were that bearish, the percent of full commercial carry in the futures spreads would likely be greater than 80 percent."

Newsom said the current spreads don't seem to be indicating ending stocks will be as small as Lanworth is projecting. "Demand numbers could back off a bit, particularly domestic feed demand. Nevertheless, Lanworth's corn production number would be more in line with DTN analysis than the other pre-report estimates," Newsom said.

"As for soybeans, the 3.021 billion bushels of production is 178 million bushels less than USDA's August estimate of 3.199 bb. If realized, this would create a situation where U.S. ending stocks are challenging the 100 mb level once again if projected record demand (particularly export demand of 1.265 bb) is realized. This estimate seems much more in step with what the commercial side of the market is indicating in the weak carry/inverted futures spreads though the 2009-2010 marketing year. Other private pre-report estimates of a 3.3 bb crop taking ending stocks above 300 mb do not seem to be reflecting the views of the commercial side of the market despite the recent downturn in price."

AgWeb's September Crop Comments

9/11 - Mississippi County, Southeast Missouri: Lots of bean spraying going on here! Armyworms, stinkbugs and grasshoppers have invaded and are mainly targeting the latest beans but are present everywhere. Early June planted beans are trying to turn pale slightly while most double crop beans in the area are just setting pods, lots of July plantings in this area. Really dry here although the occasional scattered pop-up storms have been hitting certain parts but mainly the same ones hit every time it seems. Corn harvest is trying to be full swing but just can't get it to dry down below 18 in the field and all the morning fog is not helping. Hoping the later planted corn will yield better than the early that had to pollinate in 100 degree temps in June as it has been a little disappointing to this point, the later planting had a much better life as it pollinated in a cool spell of 75 to 80 degree weather. Everyone be safe!

9/11 - Washington County, Pa.: Our soybeans started dropping leaves earlier this week. Most of the beans are between mid-thigh and waist high, which before this year we'd never had beans more than knee high. We planted fewer seeds per acre (to 160,000 for 30" rows) as recommended by a Farm Journal article published earlier this year and that seems to have made a big difference. Unfortunately in some spots the beans are only mid-shin high from the deer feasting on them. All of the corn has been dented for a couple weeks. The earliest planted corn had to deal with a light frost after emerging, its a little on the short side but most of those stalks have two ears. All of the corn is a little shorter than its been recent years from the lack of GDD's this summer but yields should still be good. 3rd cutting of alfalfa is coming on strong. It would be nice if it could have a couple more weeks but that would mean hoping for warm weather at the end of September. This year that just seems unlikely.

-- Washington County, Pa.

9/11 - Clay County, northwest Iowa: We've become very dry. I've had 1" of rain since August 1- most of that came in .1-.2" increments, so didn't do much good. Crops on the lighter soils have just flat died over the last few days, heavier soils seem to be still holding up, but some of the corn has tipped back, and the 2nd ear which really looked good earlier has now aborted most, if not all kernels. 80-90% chance of rain tomorrow afternoon and night, but will believe it when I see it as 50% earlier this week didn't give us a drop. It'll be too late anyway for some. Some beans on light soils may be combined next week.

9/11 - Hardin County, Iowa: Crop conditions are changing extremely fast in the last week for us. 102 day corn that one week ago looked like it would be two to three weeks from maturity is now starting to black layer, it is probably developing a little too fast for optimum test wt. It is starting to look like we may harvest some early corn before beans and a week ago, I would not have thought, that possible.

9/11 - Southwest Ohio: Just finished a 7,500 mile crop tour and didn't find anything better than we have overall. There are great crops west but they are behind ours maturity wise. Too many ankle biter beans, they will be disappointing but overall that crop is good. Corn is real good across the nation, bar none.

9/11 - Fulton/Miami counties, North Central Indiana: Local Pioneer dealer and I did a walk through some corn last weekend (9-5-09). 106 day corn planted on May 10 had not "black layered" yet. It was very close. 111 day corn planted May 17 was in full dent and appeared to be only 4-5 days behind the 106 day corn. Leaves and stocks showing disease pressure. Some corn bore and shank worm damage. Pollination was excellent. Many ears with no tip back at all. Many ears look like they were perfect with grain out to the very tip. (Needed higher population.) Some late group II soybeans planted on May 11 are yellow and loosing leaves. Very little disease or insect pressure. Some white mold beginning to show in later planted soybeans. Overall we look very good, just 1 to 2 weeks behind.

9/11- Minnesota: Where is all the left over old crop corn at? Nobody I know has any. The grain buyers don't appear to know where it is either. I was just wondering. [Interesting question]


9/10 - Sargent County, N.D.: Wheat harvest is completed. Big yields but very low-protein content. Lots of white mold in the soybeans, weather in 2004 and 1993 was similar to 2009 and both those years had poor soybean yields. Corn looks great but needs 3-4 weeks of frost/freeze weather, most is just beginning to dent.

9/10 - Shelby County, Iowa: Early beans turning, group 3 beans need at least 2 weeks yet. Late season diseases showing up in both corn and beans. Corn needs 2 to 3 weeks to maturity.

9/10 - West Central Kansas: The fall crops are beginning to show fall is coming. My sunflowers look like they are 3 weeks or so from harvest. I normally plant wheat around Sept. 15 and everything is ready and in pretty good shape. I can verify the grasshopper problem. A neighbor has already planted wheat and the hoppers are certainly working on the field edges pretty hard. I haven't see hoppers that are 3" long, but the numbers of them is high.

-- West Central Kansas


9/9 - Grenville County, Eastern ON, Canada: Crops look good but we need to be frost free until at least the end of Sept. Spring wheat harvest is mostly complete and we have had good yields but lots of problems with fusarium again this year. Approx. 50% of the spring wheat has gone feed grade and I suspect that spring wheat acres will be down again next year. Soys and corn look good but we are probably a week behind normal as far as heat goes. My prediction is yields will be average or better but our local prices are not so good. Corn is currently at $3.40-$3.45 Cdn and beans are $9.55 Cdn for 2009 crop. This past spring corn could have been contracted for $5.00 Cdn and beans were $10.80 Cdn at that time. I'm not sure if many growers took advantage of those prices but they probably should have.

9/9 - Fayette County, South Central Illinois: Soybeans look ok until you raise the leaves and see the hundreds of aphids under each leaf. Having all the soybeans sprayed on Wednesday the 9th. We have never ever had to spray beans for bugs that I can remember in the last 50 years. Corn looks ok except where the nitrogen leached out. Crops should be close to normal if not slightly below normal as long as the frost stays away until the end of October. (Trick or Treat?)

9/9 - Lincoln County, S.D.: We have been blessed with 18 inches of rain since June 7. Crop looks the best I have ever seen, but we are two weeks behind normal. Will cut corn silage shortly after labor day, looks like a lot of 200+ bushel corn. Soybeans are starting to have a tint of yellow in the leaves. Pod counts are very high with many 3 and 4 beans to a pod. We had an excellent summer for feeding cattle. No dust, since lots were somewhat muddy all summer and only 1 maybe 2 days that consumption slipped due to heat. [Someone is actually having a problem-free bumper crop (if no frost). This comment seems out of place]

9/9 - Cavalier County, Northeast North Dakota: Had 2" of rain last night, not what we need. Everyone was just starting harvest and now here we sit. Just checked the extended forecast and it doesn't look great. Hopefully this weather pattern turns around.

9/9 - St. Clair/Madison Counties, Southwest Illinois: Another fairly general 1-1.5 inches of rain on Saturday has started our September off on the right foot. We would up with about 3.5 inches in August out of two significant rain events. Temps this week are predicted to be in the mid 80's which is desperately what we need.
Corn looks good, though leaf diseases are really running wild. Between grey leaf spot and southern rust those race horse hybrids are taking a toll. The fields sprayed with fungicide are starting to really stick out now. All the seed reps are still doing their yield checks but I think everyone is of the opinion we will have a real good corn crop. Not sure if we can top 08, but I guess it's possible. Some of the real poorly drained fields will take a hit and maybe some of those make 140 or so, but I think most will be in the 160-210 range. The big issue is this crop is still a ways from harvest. Some of the early varieties are starting to black layer, but much of the crop is just good silage corn at best. Dry corn out of the field may be unheard of.

Beans are a mixed bag.
I think the early June plantings (which are far and few between) will be pretty good and potentially be average or maybe a bit above. The late June plantings were helped with this last rain will be decent but I think most of those will fall in the mid to upper 30's to maybe low 40s. They have finally gotten some size, but they just don't have that many pods. The July plantings and double crops will be less, and in some cases much less. Some double crops will surely be sub 20 bushel beans.

In general I think we have corn crop that will fall 10-20% above the average and a bean crop that will be 10-30% below average.

9/9 - Bulloch County, Ga.: Hope to plant peanuts this year beans did not do as good as I would had hoped for. Waiting to find out the price for peanuts for 2009 before I make my decision.

9/9 - Bremer County, Iowa: I too have seen mold killing the beans. I assume due to good rain fall, and high dew amounts from overnight. Even in the afternoon, it is still rather damp. Corn looks good, and is dented, but no moisture line yet. It will be the end of Sept before combines will roll on beans.


9/8 - Coles County, East Central Illinois: Walked thru several soybean fields and they are done blooming and done setting pods. I found some white mold killing areas in the fields. Beans where shorter than normal and less pods and looks like the beans are going to be small. Cool cloudy weather has really hurt yields from what I can see. Normally you can not walk thru 15 inch rows by the end of August because of the tall beans closing the rows and tangling together. This year it was no problem, I even drove thru some with my four-wheel ATV with no problem. A few corn fields that where planted in April are starting to turn brown but most of the corn around is still green. Corn prices are around $2.80 and soybeans $ 9.00 so it looks like modest yields and low prices with high input costs = huge losses.

9/8 - Holdingford, Minn.: Corn is almost 1/2 milk line. That warm sunny days have really helped moved this crop along. Soybeans turning yellow. Everything should be safe from frost by September 25 or so.

9/8 - North Central Wisconsin: Our alfalfa crop is excellent this year, good tonnage and protein. The corn is at least 3 weeks behind, our 85 day corn is just starting to turn from white to yellow kernels, and nothing in our area is even close to denting. We had a hard frost here on August 31, many low fields are dead. We had 26 degrees, but our corn and beans do not show any damage. The beans actually look good, as we had ample rain in August, but we need 3 weeks of warmth yet to mature them. I have run combines for 35 years, and have never seen barley like this year, down to 11 percent moisture, but you could NOT get the beards off. We have John Deere, Massey, and IH combines. It made no difference; I could grind the kernels through the machines, the beards stayed on. Oats yields were very good here, color was rather bland though.

9/8 - Colorado: Here is just one of the MILLIONS of grasshoppers that have been eating our corn here in Colorado for the last two weeks. We are afraid to plant our wheat because we are afraid they will eat the seed. We believe these grasshoppers are heading to the Corn Belt and beyond. The grasshoppers are three full inches in length.

-- Colorado

9/8 - Spink County, S.D.: Well it warmed up. Would have been nice to have some rain to go with the heat, because the stalks are getting brown and the ears and are not dented. We will not need a frost to make light corn, because lack of moisture might take care of that issue before the frost hits. Lots of corn and beans that do not look very good.

9/8 - Logan Union County, west central Ohio: As the old saying goes; (It's not over til it's over) We had a great bean crop coming & this week end I'm seeing White Mold literally exploding in fields around my area. With more rain & warm temperatures today, I'm wondering what will be left at harvest.

9/8 - Sibley County, Minn.: Crops have a long way to go. Beans are starting to turn and corn is early dent.


9/5 - West Central Minnesota: If you do the kernel, row, and ear counts, the yield is respectable and possibly quite large, but one also has to look at the time needed to finish. A normal frost date will have some limiting factor on yields. Frost-free through the middle of October and you have your record. Cubic volume of grain means less than total weight. If the test weight is less than desirable, average yields at best. Soybeans, pod count seem low and they have a long way to go to finish filling. Lots of white mold that could have quite an impact. Don't know if I would be putting this one in the record yield category just yet.

9/5 - Iowa: [Response to Clay County, Minn., below] And who would be around to buy your 2011 crop?

9/5 - Eastern Oklahoma: We have received over 3" the last three days . . . perfect on the late beans. I just got back from the Farm Progress Show. All I can say is, it better not frost before October 15 up there. That is our normal frost date here. I saw a lot of corn going down in spots. And it is a long way from done . . . I saw corn still in the blister stage.

9/4 - Clay County, Minn.: Before everyone orders their corn and bean seed and applies fertilizer this fall, just think if we took that money and bought July 10 corn and bean futures and went on strike and didn't plant a crop for 2010. By taking one year of production out and no fertilizer, we could literally name our price for what we produce for years to come. Oh, by the way, those futures contracts would be worth big $$$, with no input cost for 2010, no problem paying rent or making payments. Sound interesting??

9/4 - Hardeman County, Texas: It is very dry here. Dryland cotton is burned up [photo 1]. Irrigated cotton looks pretty good [photo 2]. Need a good six weeks of warm weather to finish it up. Need quite a bit of moisture before we can think about seeding winter wheat. Have a good harvest, everyone.

Hardeman County, Texas

9/4 - Lancaster, Pa.: Corn silage harvest just starting. The crop is at least 10-14 days behind last year due to the cooler summer and wet cloudy August. Had nearly 8" of rain. Corn and beans look great if we can get weather to get it in. Alfalfa and pasture look good as well. Milk price is in the toilet, but what else is new.

9/4 - Fulton County, northwest Ohio: Scouted a lot of our crops Thursday. Have some 105 and 107 day corn that's not even dented yet. We are way behind and have had 43 degree nights. It's jest not good.

9/4 - Milam County, Texas: Corn was planted first of March. Sorghum was planted mid-March, early April. Everything had good moisture and was looking good, then a late frost cleared a few fields in the county. The corn that made it through the frost looked good until after the tassel came out. That's when we quit getting moisture. Same for sorghum -- once the plant headed out, the moisture just wasn't there. I've heard reports on corn anywhere from 15 bu. to over 90. On sorghum, I've heard reports of fields being so bad they were baled for insurance and some made 4,000 lb. sorghum. I hear a lot about people up north complaining about the rain. At least they're getting . . . send some our way.


9/3 - Northeast Arkansas:
Corn harvest getting started, yields range from 150-260. Rice farmers report very good yields. IV soybeans will be ready in couple weeks. Cotton still lagging, should be ready to harvest in 30 days. Frost usually doesn't come till early November. Hope everyone has a safe harvest.

9/3 - Mitchell County, Iowa: I agree with the fellow from Fayette County, this is October weather -- 40s at night and don't get into the 70s till afternoon, does not give the corn the heat units needed to move along very fast. Each and every week moves our needed frost date further and further toward November, and we all know that don't happen here. Corn planted April 15 only has half the kernels dented.

9/3 - LaSalle County, Ill.: Crops here in general look good, but late and poor spots within each field. I've read a couple of market people comment that if we make it three weeks, and another said end of September, we'll be safe from frost. Are they guessing or actually doing the math? Our agronomist has figured the numbers. If we have normal weather from here on out, midseason corn planted mid-May will black layer the end of October. Full season corn is mid to late November! And most of our corn was planted late in May. Going to be tough to mature prior to frost this year. Not looking forward to a late, wet corn harvest.

9/3 - Lane County, Kan.: Sorghum and corn in our area of western Kansas look pretty good provided we get the right weather to finish the crop. I am anxious to hear crop comments from growers in Texas concerning the status of corn and sorghum in their area.


9/2 - Cavalier County, Northeast North Dakota:
Crop is at least 3 weeks behind normal. Winter wheat harvest is in full swing with yield reports ranging from 40-50 bu/a. Some pre-harvest roundup being sprayed on spring wheat, might see some of that being taken off by the end of the week. Swathing of canola is also in full swing, harvesting probably at least a week away for that. We've had a good week of nice weather finally but we need it to stick around for at least another month without a frost otherwise the soybeans and pinto beans will be in trouble.

9/2 - Fayette County, Northeast Iowa: Mowing a few waterways for the last time before fall. 2.3 and 2.5 beans are still growing and actually look very nice but these beans were planted May 15 and show no signs of turning. I don't know how all those crops in Illinois and North Dakota that were planted at the end of June are going to make it with the cool summer we've had. It's 46 degrees right now and will take until 2 this afternoon to make 70 and then head the other way at 6. Corn and beans planted normally are going to have to hustle, let alone those planted in June.

9/2 - Walsh County, North Dakota: Sept. 1, and we finally got a combine into the field. Took off about 30 acres of peas, the rest are still too green. This evening we walked into about 600 acres of wheat fields and found 200 acres that we could start swathing tomorrow. All our other wheat is still a couple weeks away. We figure swathing will get us to combining quicker than doing the preharvest Roundup. Barley is still a few days away from cutting. No spring wheat has come into the local elevators yet. Edible beans are filling the lower pods, and still flowering on top. I'm afraid the soybeans around here (there aren't too many) will be a big green manure crop to plow down. This is the latest, slowest crop to ripen in many years, maybe ever. Canola is getting cut....looks to be an excellent crop. We are praying for a very late and delayed frost.....November 1 would be about right.

9/2 - Bond County, Southern Illinois: It was 46 degrees this morning when I left for work at 6 a.m. There had to be some frost up north?


9/1 - Crop Reports from Corn College: Listen to these farmers, who attended Farm Journal's one-day Corn College, describe crops in their area.

Rick Devoe, Monroe, Wis., says harvest on his farm wont start until the middle of October.

Jason Troike, a farmer from Girard, Kan., says the best word to describe this years growing season is: trying.

9/1 - Faribault County, Minn.: Just finished looking at some soybeans and the white mold is really taking a toll. We've always had some other years, but not whole fields. This is as serious as I have ever seen it. There is really no objective way to put a number on how bad it is, but I tried to guess that a 97-acre field had at least 60 acres with dead plants in it. I think we are nearly 15 to 20 days behind on corn maturity. 2007 took out 160 acres of 94 day on the 13-15 of September at 19% moisture. This year same field, same hybrid planted April 17 is just getting dented, and it's cold every day.

9/1 - Eastern Van Wert County, Ohio: For the most part we missed all the rain here again. Maybe 3 or 4 tenths, just to give you an idea of how dry it is. I have a photo of one of the cricks. Also have only had to mow the lawn twice since July 1st.

Eastern Van Wert County, Ohio

9/1 - Williams County, Ohio: Outside rows of fields look good, inside rows' ears half the size. Corn hurt early by too much rain. Below-average yield at best. Moisture will be very wet. Beans have chance if there is a late frost not till Oct. 10-15. Average yield with late frost.

9/1 - Seneca, Neamaha County, Kan.: Triple stack corn planted on April 8 on northeast Kansas hill ground falling over at the lowest node with stock rot. Crop has looked excellent until here in last 10 days and is getting worse every day. If harvested today, yield expectations would be near 160 bu./acre. In the last 20 days we have had over 3" of rain and cool weather accelerating the problem. The reality has set in that this is not going to be good. I will not plant any corn next year; invested risk is too high.

160 bu. x $2.82 (local cash bids) = $451. I will have near $430 an acre invested, including harvesting. I would be happy to just break even at this point on the corn crop.

On a positive note, pulled random a couple of soybean plants from 30" row planted at 160,000 populations. One plant had 137 pods, the other 126

[If you think that the amount of negative comments above is normal, then check out last AgWeb's Crop Comments from September 2008. The positive comments outnumber the negative comments]

Worst grasshopper infestation in 20 years

The Associated Press reports that grasshopper infestations are forcing livestock sales.

Grasshopper infestation forces livestock sales
By CARSON WALKER (AP) — Aug 21, 2009

WASTA, S.D. — Grasshoppers are eating grass and other forage grown for livestock in such proportions that some U.S. ranchers are selling cattle because they won't have feed for the animals this winter.

Mark Tubbs, who ranches in southwest South Dakota and inside the Wyoming border, plans to sell about a third of his cows this fall after putting up a sixth of the hay he usually does.
He had been expecting a decent cutting — until the grasshoppers started chomping.

"This year we had a good start but they just took it," said Tubbs, 57. "The grasshoppers have taken it down to the dirt. They've eaten everything but the cactus."

Much of Nebraska, South Dakota, Wyoming, Montana and Idaho have the worst infestations of grasshoppers this year, but large populations also have been found in North Dakota, Kansas, Oklahoma, Texas, Colorado, Utah, Washington, Oregon, California and Arizona, according to the U.S. Department of Agriculture.

"It's just off the charts,"
said Bruce Helbig, state plant health director with the USDA's Animal and Plant Health Inspection Service (APHIS) in Pierre. In far southwest South Dakota, there are more than 60 grasshoppers per square yard.

Still, ranchers' hopper-instigated sell-offs are unlikely to increase consumer meat prices, said Adele Harty, Haakon County Extension educator. "In the past when we've had droughts we haven't seen that result," she said. [This time will be different.]

That's little comfort to David Kane, a rancher near Sheridan, Wyo., who said the grasshoppers on his ranch are the worst they've been in more than 20 years. Kane already sold off part of his herd because the pests ate his cows' food.

"They're devastating," Kane said. "They were so bad here on the ranch that we sprayed our meadows because the second-cutting of alfalfa wouldn't green up because they were eating it as fast as it was trying to grow."

"We've had one good year in the last 10 years, and that was in 2005," he said. "That's the problem we're having with the grasshoppers. It's just taking the will and the heart out of us."

Associated Press Writer Matt Joyce contributed to this story from Cheyenne, Wyo.

Newsok reports that grasshopper infestation forces livestock sales in 15 states, including oklahoma.

Grasshopper infestation forces livestock sales in 15 states, including Oklahoma
CARSON WALKER, Associated Press Writer
Published: August 21, 2009

WASTA, S.D. — Grasshoppers are eating grass and other forage grown for livestock in such proportions that some U.S. ranchers are selling cattle because they won't have feed for the animals this winter.

Mark Tubbs, who ranches in southwest South Dakota and inside the Wyoming border, plans to sell about a third of his cows this fall after putting up a sixth of the hay he usually does. He had been expecting a decent cutting - until the grasshoppers started chomping.

"This year we had a good start but they just took it," said Tubbs, 57. "The grasshoppers have taken it down to the dirt. They've eaten everything but the cactus."

Much of Nebraska, South Dakota, Wyoming, Montana and Idaho have the worst infestations of grasshoppers this year, but large populations also have been found in North Dakota, Kansas, Oklahoma, Texas, Colorado, Utah, Washington, Oregon, California and Arizona, according to the U.S. Department of Agriculture.

"It's just off the charts," said Bruce Helbig, state plant health director with the USDA's Animal and Plant Health Inspection Service (APHIS) in Pierre. In far southwest South Dakota, there are more than 60 grasshoppers per square yard.

Still, ranchers' hopper-instigated sell-offs are unlikely to increase consumer meat prices, said Adele Harty, Haakon County Extension educator. "In the past when we've had droughts we haven't seen that result," she said.

That's little comfort to David Kane, a rancher near Sheridan, Wyo., who said the grasshoppers on his ranch are the worst they've been in more than 20 years. Kane already sold off part of his herd because the pests ate his cows' food.

"They're devastating," Kane said. "They were so bad here on the ranch that we sprayed our meadows because the second-cutting of alfalfa wouldn't green up because they were eating it as fast as it was trying to grow."

Helbig said his agency has a program set up to protect forage in 17 western states. The federal government covers the cost of spraying federal land, pays 50 percent of the cost on state land and pays a third on private land, he said.

To cut ranchers' costs and stretch available dollars, researchers also are studying whether a method called alternate or skip swathing works as well as spraying an entire field, Helbig said. Skip swathing entails spraying every other 100-foot-wide strip by airplane. Grasshoppers move a lot and eventually will end up in one of the sprayed areas, he said.

Bruce Shambaugh, state plant health director with APHIS in Cheyenne, Wyo., said the grasshopper infestation is a natural cycle. The number of grasshoppers, like many other insects, ebb and flow based on moisture, drought and other factors, he said.

"It's a combination of several different things, of which I don't think anybody has got a firm handle on exactly what it is," Shambaugh said.

He also said the problem is expected to be worse next year - more bad news for Tubbs, who said the infestation is just the latest challenge in a disheartening decade of drought.

"We've had one good year in the last 10 years, and that was in 2005," he said. "That's the problem we're having with the grasshoppers. It's just taking the will and the heart out of us."

The Associated Press also reports that grasshopper infestations lead South Dakota counties to seek federal aid.

Associated Press
Grasshopper problem leads SD counties to seek aid
By CHET BROKAW , 09.02.09, 07:59 AM EDT

PIERRE, S.D. -- At least seven southwestern South Dakota counties are seeking disaster declarations to help deal with hordes of grasshoppers that are devouring hay fields, grass and other livestock forage.

County commissions have passed disaster declarations in Bennett, Custer, Fall River, Meade, Mellette and Jackson counties, said Nathan Sanderson, deputy director of policy for the state Agriculture Department. Butte County officials also report they have passed such a resolution.

To qualify for a federal disaster declaration, a county must show a 30 percent loss compared to normal production of a particular crop, such as hay, Sanderson said. State officials will work with Gov. Mike Rounds to send disaster requests to U.S. Agriculture Secretary Tom Vilsack, who would decide whether to approve the counties' applications.

Butte County, which borders Wyoming just north of the Black Hills, is an area that's been hit hard, said Steve Smeenk, a farmer and rancher who is a member of the county commission.

"Grasshoppers are just about as bad as most people around here have ever seen them," said Smeenk, 61. "There's tremendous numbers. The ground moves when you walk."

If a disaster declaration is issued, it could at least help farmers and ranchers deal with the problem next year, Smeenk said. The last time the area was hit with a comparable grasshopper infestation was about three decades ago, when the second year was worse than the first, he said.

"I think we're going to have to be ready for them next year because I think next year could be worse than this year," Smeenk said. "Hopefully, we've kind of laid some groundwork to get some programs going early enough next year to help quite a bit."

Smeenk said he sprayed this year but didn't do enough early in the growing season.

"All of a sudden, they just exploded," Smeenk said. "I've killed millions and millions of them, but I haven't killed enough to make a dent. There's billions and billions of them out there."

Smeenk said the grasshoppers have stripped the grass on his grazing land, reduced the yield in corn on some irrigated land and damaged the third cutting of hay.

"They keep the hay from starting again, so you don't get as much. They eat it off. There's nothing growing there," he said.

White mold outbreak damaging soybean fields

The Powell Tribune reports that White Mold outbreak in Wyoming.

Bean crop fights weather, diseases
Written by Judy Killen
Thursday, 10 September 2009

The Big Horn Basin dry bean harvest is beginning, but cool, rainy weather and diseases have taken tolls on yield.

Mike Moore, manager of the University of Wyoming Seed Certification Service, said his agency is just starting windrow inspections, and
some fields are not doing well.

"There are still a lot of fields out there that the pods haven't started to fill yet," he said. Some fields are nearly ready to harvest, he said, mainly the Othello variety, which matures earlier than other varieties.

his inspectors are finding both white mold and bacterial bean blight in fields across the Big Horn Basin [The Bighorn Basin is a plateau region/basin approximately 100 miles wide in north-central Wyoming], he said. The early-finishing Othello fields may escape some of those problems, he said.

"It's sort of tough out there right now," he said.
The only area that seems less affected by disease is the far southern end of the Big Horn Basin, Moore said. His inspectors have found blight and mold around Powell, Byron, Emblem and Burlington.

"It doesn't look like location is going to allow you to escape it," he said.

White mold is less of a concern to the seed industry but does affect yield, Moore said. But a field with bacterial bean blight is not eligible for seed production. Fungicides are available to prevent white mold but few growers apply them, Moore said.
The fungicides won't treat white mold after it appears. It thrives in fields where humidity is high and recent heavy dews have kept those levels up.

"At this point the cards are dealt," Moore said. "We just have to figure out which fields have problems and which don't."

Ironically, Moore said, fields that were planted at the right time and have done well all summer are now developing white mold because the leafy plants cover the rows, holding in the humidity.

"Bacterial bean blight has people anxious," Moore said.
"We're hoping it's not widespread, but it's pointing that direction."

Moore also predicts lower yields.

"Overall, we'll be below average is my estimation at this point," Moore said. "There are some excellent fields out there, but they're the exception."

Both Easum and Moore hope for continued warm weather.

"Frost is probably the biggest nemesis at this point," Moore said.

The white mold problem isn't limited to the Big Horn Basin in Wyoming. Many other states are suffering too.

A) Rainy weather and cool temperatures have lead Ohio soybean fields to experience the first major white mold outbreak in nearly a decade.

B) Several days of rain and cooler temperatures in August allowed white mold, which is rarely seen in Illinois, to set up in some soybean fields.

C) Sudden death syndrome (SDS) and white mold is damaging soybean fields around the state of Indiana.

D) August wet spell brought on white mold affect soybean crops in Wisconsin.

E) From the Crop Comments above, white mold is ruining crops in at least three other states (Iowa, North Dakota, and especially Minnesota).

Other obstacles

What insects aren't in my soybeans?
Posted in Kyle Jensen
August 12th, 2008

This is more or less the question that I have been receiving in the past few weeks.
There is an array of insects that can be found out in the soybeans now. Grasshoppers, soybean aphids, bean leaf beetles, grape colapsis, and Japanese beetles are just a few.

The insect receiving most of the attention in my area is the soybean aphid. Soybean aphid populations have just exploded in the past week. Fields that were only in the 20-100 aphid range just went right on by the threshold (250/plant) and haven't stopped yet. Most fields in the western half of my territory have already been treated with an insecticide. Products used and application methods have varied greatly. Airplanes and ground applicators have been spraying nonstop for the past week. I have scouted quite a few fields today that were sprayed early last week.

I know many people have questions about coverage when using aerial application. From what I have seen the fields sprayed aerially look just like the fields that were sprayed with a ground applicator. The only differences I can find are along power lines or tree lines where the pilot can't get close enough to for safety reasons.

The other half of this question is, "how much yield damage will I suffer if I spray with a ground applicator?" There are several studies that address this question. Purdue University published a study and found with 60' booms on average there was 2.5% yield reduction, with 90' booms there was only 1.9% yield reduction. Remember, beans can compensate when run over in the vegetative stages, regardless of stand once beans reach R3 they cannot compensate and yield reductions should be expected from wheel tracks.

Soybeans in SW Iowa have had the first generation bean leaf beetle feeding on the foliage. Soybeans can withstand many holes in their leaves and should be fine as long as defoliation does not reach 20%. I have to use Marlin Rice's defoliation charts otherwise I tend to think the feeding is worse than it actually is. Below is a picture of the defoliation chart in 5% increments. Right now most of the bean leaf beetles have laid eggs in the soil and the second generation bean leaf beetles will emerge later in August. This generation of bean leaf beetles can be very destructive because they may feed on the pods. Pods can be clipped or fed on, creating an entrance for other insects and/or diseases. Just because its August, don't quit scouting.

Soybean Sudden Death Syndrome widespread
Posted in Jim Fawcett-EC agronomist
August 24th, 2009

Sudden death syndrome (SDS) is much more widespread this year than last. You can find some SDS in most soybean fields now if you look for it, and you don't have to look for it to see it in many fields. 2007 was the last time we had SDS this widespread in the area. It is common along field edges where there has been extra soil compaction and in areas that were wet this spring.

Soybean aphids are at or above the 250 aphid/plant threshold in many fields now, but many fields are also at or beyond R5.5, when spraying an insecticide is less likely to pay off. It's always a difficult decision this time of year whether to spray or not, but hopefully the aphids will be gone soon.

Corn, soybeans hit by hail
Posted in Mark Licht-WC agronomist
August 12th, 2009

Sunday morning a thunderstorm producing damaging hail started near Schleswig moving east, in the corridor between hwy 175 and hwy 20, to Eldora and Wellsburg. Severe damage occurred in a 2 to 3 mile wide stretch and lesser damage 6 to 8 miles wide. In my area the worse hit places were near Wall Lake, near Yetter and near Somer/Calendar. It is easy to see that there will be some fields, both corn and soybean, that will result in 100% yield loss. Click here for more hail information.

Calls have been coming in strong since Monday morning. Most are asking about using fungicides and salvaging the corn for silage.

Fall is upon us
Posted in Mark Licht-WC agronomist
September 8th, 2009

As I mentioned in my last blog, we missed the dog days of summer. I now seems fall is upon us. The cooler weather the last couple of weeks has been good, right? For humans yes, for crop not so much. The corn is the best I've seen. I've been in fields where the primary ear has less than a half inch of tip back, girth is 18 around, and length is approximately 40. Doing the math, that makes for 250+ bushels per acre. I'm not saying that all fields are going to top 250+ bushels per acre, but there are definitely going to be good yields out there.

I'm not so optimistic about soybean yields. Soybeans did get tall and lanky, but the height of the plant does not make yield. I'm not a pod counter, but by looking at the number of bean per pod I think yields will be pushing to get to trend line this year. I hope I'm wrong and soybean yields hit record highs, but I just don't think this year was perfect for growing soybeans.

Now a report on how things look in hail country [Iowa] … it still don't look good. The white combine did some damage for sure. Some of the worst hit corn has been and is being salvaged for silage. It has dried down considerably faster than I had expected. This hail damaged corn is also fast approaching black layer; in fact I've heard reports in the Yetter area that some fields have already black layered. Molds and stalk rots are a reality. As the plant matured the stalk cannibalized itself to fill grain and damage to both the ear and stalk caused enough stress for disease pathogens to set in. Harvest in this area may be starting soon, but regardless of when harvest starts it will be ugly.


Date Created 9/11/2009 9:03:54 AM


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Middle East
















North Africa























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9 Responses to *****2009/2010 Food Crisis*****

  1. Kyoung Choe says:

    Hello, Eric,
    I appreciate your insightful articles. I really learn a lot.

    I have questions about DBA.
    You are expecting a failure in the future market. If it happens, is DBA safe? How can an individual investor can hedge the food price surge in the stock market?

    Thanks in advance!

  2. Willy2 says:

    A number of illustrations in this article seem to be missing. Or is something wrong with my browser ?

  3. Robert says:

    @Kyoung, buy extra non-perishable foods next time you go shopping. You'll use it eventually and it's only going to get more expensive.

  4. James K. says:

    In this article there's talk of chinese economic growth. But this growth is induced because of chinese government spending/stimulus. The chinese government therefore increases their deficits.

    But that would increase the need for the chinese government to sell government bonds abroad and could force them to start selling US T-bonds as well.

    I wouldn't be surprised to see the US to take advantage of this situation. Ratchet up tensions across entire China (Tibet, Xinkiang) and try to destabilize the situation in China. (keywords: food riots). And I agree that the chinese could(/will ??) retaliate by dumping US T-bonds. And drive up interest rates in the US.

    I always wondered what would trigger such a massive sell-off but this is a perfect trigger.

  5. Saoirse says:

    I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.



  6. Robert says:

    @James K, China has a massive export surplus with the rest of the world. Hoarding dollars while printing yuan is an internal accounting issue and it's not comparable to a normal situation where a government is printing money without producing any goods to back it.

    The US is already trying to destabilize china - see
    Washington is Playing a Deeper Game with China
    . It didn't work when they tried it in Iran (green revolution) and China's government has a great deal more control. Still they should not be complacent.

  7. Anonymous says:

    This is just insane gold closes at 1019.30...

    I wonder how long this will last...

  8. Donna says:

    Your blogs seems make me worried regarding the coming food crisis does it really happen i guest there still other way for the improvement.
    Chinese ATV Parts

  9. ????? says:

    this is very dangerous sings for up coming 10 years ????? ?????????

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