Drought 2012: No ‘Heat Of The Moment’ Decisions

No matter what way you look at it, the now-officially christened Drought of 2012 has been a marketplace shaker. For many grower-customers, their corn crop will end up being a total loss. Already there are reports of growers in states such of Indiana and Southern Illinois simply giving up, plowing their dead stalks into the ground while applying for crop insurance. In all, analysts expect the nation’s corn harvest this fall to be off 10 million to 15 million bushels. Meanwhile, crop insurance pay-outs to growers could top $20 billion – almost double from the 2011 total and, coincidentally, virtually the same amount ag retailers in the CropLife 100 earned during calendar year 2011.

As a result of these kinds of numbers, particularly anything that relates to crops has skyrocketed in price. Commodity prices for corn are at all-time highs, with some market watchers predicting $9 and $10 bushel corn will be the norm come late fall. Naturally, feed and food prices are poised to jump as well, with various government agencies expecting 7% to 8% jumps for most items, with meat prices increasing in the 10% to 15% range.

On the flipside, ag retailers are concerned this lack of crops in the field will translate into fewer input and application sales once the fall season gets into full swing.

Of course, when things are this bad across the board, fear isn’t the most prevalent emotion making the rounds. Anger also runs high, which inevitably leads to the need to blame something tangible for such an intangible factor as Mother Nature. And has been the case for the past few years, it seems as if ethanol will be this crisis’ scapegoat of choice.

It seems like one million years ago now that America’s desire to find alternative fuel sources to power the energy needs of the future gave rise to corn-based ethanol’s growth. As recently as 2007, demand for corn to use in ethanol’s production was heralded as a good thing for U.S. agriculture – keeping crop demand (and the prices paid to growers) high and opening up plenty of new market opportunities for those who support this marketplace, i.e., the ag retailers. For a time, everyone was happy with this arrangement.

Then, however, came the fertilizer demand crash of mid-2008. Suddenly, ethanol was the bad guy, leading to out-of-control prices that ultimately kept grower-customers from applying ANY fertilizer during the fall of 2008. For many, the debate regarding food vs. fuel never went away after that.

Now, in 2012, there are very loud cries among those hurt by the Drought of 2012 to virtually destroy the corn-based ethanol market. Ranchers and poultry producers, looking for some relief on grain supplies, have called on the U.S. government to suspend or repeal its ethanol blame mandate. They have been joined in this effort by 30 U.S. Senators and Representatives and the United Nations, which fears corn diverted to ethanol production will lead to massive food shortages in certain parts of the globe.

But will killing ethanol’s use of corn really make that much of difference? Many remain unconvinced. “This year’s weather has been more than challenging for farmers and ranchers across the country,” says Renewable Fuels Association President and CEO Bob Dinneen. “However, waiving the RFS will not make it rain in Indiana, bring pastures to life in the Plains, or meaningfully lower corn prices.”

I tend to agree with this argument. In my mind, turning back the alternative energy quest clock 15 years for some maybe temporary relief seems very short-sighted. If the Drought of 2012 stretches into 2013 or 2014, then it might be time to re-visit this effort. But that time is not just yet.

Topics:

Leave a Reply

Eric Sfiligoj Stories

Trimble TMX-2050 In-Cab Display
Eric SfiligojThe Precision Ag Revolution Continues
May 24, 2016
It’s funny how much “the first time” tends to mean to someone as they get older. I sometimes can’t recall Read More
Eric SfiligojPity The Monsanto Haters
May 23, 2016
An old saying goes thus: “Be careful what you wish for. You just might get it.” Given current events, there Read More
Eric SfiligojReasons For Hope In Commodity Prices
May 2, 2016
For many months now, the doomsayers have ruled the day in agriculture. Too much supply with too little demand would Read More
Eric SfiligojMissing The Family Ties In Agriculture
April 25, 2016
By its nature, the agriculture market is cyclical. Up and down cycles come and go with a regular pattern. For Read More
Trending Articles
Eric SfiligojPity The Monsanto Haters
May 23, 2016
An old saying goes thus: “Be careful what you wish for. You just might get it.” Given current events, there Read More
Monsanto Luling Plant
Crop InputsReport: Bayer Eyeing Monsanto For Possible Mega-Merger
May 16, 2016
Bayer AG is exploring a potential bid for U.S. competitor Monsanto Co. in a deal that would create the world’s Read More
Aerial Drone
Precision AgA Deeper Dive Into The Future Of Precision Ag
May 9, 2016
For about two decades now, through the good and the bad times, the ups and the downs inherent in agriculture, Read More
Palmer amaranth in soybean stubble
HerbicidesWSSA: Billions In Potential Economic Losses From Uncontrolled Weeds
May 4, 2016
What losses would corn and soybean growers experience if they were forced to eliminate herbicides and other control techniques from Read More
Eric SfiligojReasons For Hope In Commodity Prices
May 2, 2016
For many months now, the doomsayers have ruled the day in agriculture. Too much supply with too little demand would Read More
Eric SfiligojMissing The Family Ties In Agriculture
April 25, 2016
By its nature, the agriculture market is cyclical. Up and down cycles come and go with a regular pattern. For Read More
Latest News
ManagementWashington Visit and Bayer/Monsanto Deal Update
May 26, 2016
Editors Paul Schrimpf and Eric Sfiligoj discusses a recent trip to DC and the latest news on the proposed pairing Read More
Fertilizer closeup in hand
Industry NewsVerdesian: Striking A Balance Between Yield & ROI
May 26, 2016
Finely tuned nutrient management plans are helping farmers throughout the U.S. improve nutrient use efficiency, increase return on investment (ROI) Read More
Crop InputsLand O’Lakes Announces Minnesota Water Quality Pa…
May 25, 2016
Governor Mark Dayton and Land O’Lakes, Inc. President and CEO Chris Policinski today announced a new public-private partnership to protect Read More
Soybean Plant closeup
Industry NewsMonsanto Rejects Bayer Bid; Open To More Talks
May 25, 2016
Monsanto Co, the world’s largest seed company, turned down Bayer AG’s $62 billion acquisition bid as “incomplete and financially inadequate” Read More
Corn close up
Crop InputsArysta LifeScience Establishes Global Headquarters In R…
May 25, 2016
Arysta LifeScience has announced plans to relocate its global headquarters from West Palm Beach, FL, to Cary, NC, over the Read More
fertilizer blending and storage, Top 100
BlendersCHS Dakota Expansion Features AGCO’s GSI InterSys…
May 25, 2016
The continued growth of precision agriculture has increased farmer use of customized fertilizer blends best-suited for their soil conditions. Several Read More
ManagementAgriculture 3.5: A Bumpy Road Ahead
May 24, 2016
You may have read my article a few years ago on Agriculture 3.0, which is a term I coined to Read More
Topcon’s X30 display with CropSpec sensors
EquipmentGPS Autosteer Systems: Product Updates From Precision A…
May 24, 2016
Throughout 2015 GPS Steering solutions continued to evolve from what was once an after-market add on, to today’s cab where Read More
Trimble TMX-2050 In-Cab Display
Eric SfiligojThe Precision Ag Revolution Continues
May 24, 2016
It’s funny how much “the first time” tends to mean to someone as they get older. I sometimes can’t recall Read More
Eric Wintemute, AMVAC
Precision AgAMVAC Ups The Ante With New Precision Ag Technology
May 24, 2016
A potentially industry-changing at-plant soil treatment system from American Vanguard Corp., or AMVAC, is coming soon to large growers in Read More
Dry and Liquid Plant
CropLife 100CropLife 100 Map
May 24, 2016
The new CropLife 100 map shows the locations of each of the headquarters of the 2015 CropLife 100 retailers. The interactive Read More
Southern States Cooperative
Corn Field
Industry NewsTiger-Sul Names Veteran Account Manager To Lead Central…
May 23, 2016
With the continuing growth of the sulphur bentonite and precision crop nutrient industry, global agriculture firm H.J. Baker has announced that Read More
Bayer sign
Industry NewsReuters: Bayer Defies Critics With $62 Billion Monsanto…
May 23, 2016
German drugs and crop chemicals group Bayer has offered to buy U.S. seeds company Monsanto for $62 billion in cash, Read More
Eric SfiligojPity The Monsanto Haters
May 23, 2016
An old saying goes thus: “Be careful what you wish for. You just might get it.” Given current events, there Read More
Industry NewsCompass Minerals Hires Industry Veteran To Lead Plant N…
May 19, 2016
Compass Minerals has hired plant nutrition industry veteran Vatren Jurin to steer the company’s portfolio expansion into specialty liquid micronutrient Read More
ASMARK Retailers LIVE! Tour 2016 Group shot The Andersons
CropLife 100The Andersons Rejects Unsolicited Proposal From HC2
May 19, 2016
The Andersons, Inc. has announced that its Board of Directors has rejected two non-binding, highly conditional, unsolicited proposals from HC2 Read More
glyphosate
Crop InputsWHO: Glyphosate ‘Unlikely’ To Cause Cancer
May 16, 2016
Via Reuters.com reporter Kate Kelland: The weed-killing pesticide glyphosate, made by Monsanto and widely used in agriculture and by gardeners, Read More