COMMODITIES

Search Farmer Goes to Market

Search Site
Monday December 11, 2017

When Ophelia grew to official hurricane status the second week of October, it tied a record set more than a century ago for the most number of such storms in the Atlantic for a season. Orphelia adds insult to injury for a hurricane season that's seen the first Category 4 hurricane to hit the Texas coast—Harvey—in more than a half century, dumping anywhere from 10- to 40-inch rainfall totals along the Texas and southwestern Louisiana Gulf coasts. Meanwhile, Hurricane Irma battered Florida with similar winds and rain.

Which commodities stand to suffer most with this season's weather? The industry will be a long time in counting the final tab, but here's what we know to date:

Citrus. In Florida, Hurricane Irma in September hit a direct blow on citrus groves, removing half the developing oranges from their trees across the state, according to the University of Florida Institute of Food and Agricultural Sciences. On the upside, however, USDA estimates Brazil’s total output of orange juice will rise by more than 50 percent this year from last year, and as a result, its exports will also rise by nearly 30 percent. Couple that supply increase with an overall demand decline for orange juice—Americans today drink just half the orange juice they did 10 years ago—and supplies should remain sufficient.

Corn, soybeans and wheat. The U.S. food-system's three staples are actually in better shape this year, hurricanes notwithstanding, according to USDA. USDA's current estimate for the fall harvest puts the corn yield at 171.8 bushels per acre, up from last month’s 169.9. Expected record yields in areas outside the major producing states are helping contribute to the size of the overall harvest. USDA meanwhile lowered its expected soybean yield to 49.5, compared to 49.9 last month. However, because the expected number of acres that will be harvested is expected to be higher this fall, USDA believes the total production view for the oilseed will stay steady. Both projected corn and wheat ending stocks are higher than expected. All indicators point to a staple crop market largely shrugging off weather concerns.

Sugar. The 2017 hurricane season has come into play for all sugarcane-producing regions in the United States. Hurricane Harvey’s storm path took it dangerously close to both Texas and Louisiana sugarcane regions, although it ultimately left sugarcane production in Texas relatively unaffected by its wind and rain. Sugar production in Texas in 2017/18 is projected to be 160,000 short tons, raw value, a 10,000-STRV increase from the August projection, as USDA raised its prediction of sugarcane yields in the region from 34.0 to 39.5 tons per acre. Hurricane Harvey produced additional precipitation in Louisiana in an already-wet growing season, but ultimately, the storm’s impact on the state’s sugar production for 2017/18 is expected to be minimal; similar to 2016/17, when the State also experienced extreme precipitation in August but was still able to harvest and process a successful crop.

USDA's September World Agricultural Supply and Demand Estimates lowered projected domestic sugar production in 2017/18 by 41,000 short tons, raw value, from the previous month’s report. Hurricane Irma made landfall in Florida in early-September, but the impact on Florida’s sugar production for 2017/18 can't yet be foretold. Estimated imports from Mexico in 2016/17 are lowered, while projected imports are raised in 2017/18 due to an increase in Mexico’s available supplies. The hurricanes are expected to impact sugar refineries’ operations and supply chains in the Southeast. As a result, estimated U.S. domestic deliveries are reduced 100,000 STRV for 2016/17. Projected deliveries for 2017/18 are raised 100,000 STRV, however, as the interruptions are expected to be resolved by early 2017/18.

Rice. USDA reports that although parts of the Rice Belt endured massive flooding in late August from Harvey, most of the rice crop had already been harvested by the Aug. 26 landfall and will therefore be unaffected. Any impact on the "ratoon" crop—the second rice harvest that regrows from the previously harvested crop, which is not typically harvested until October and early November—is unknown. Southwest Louisiana received heavy rains from Harvey as well, with the bulk of the crop already harvested. Many growers in Southwest Louisiana also harvest a ratoon crop later in the fall.

The overall U.S. rice crop for this year had already declined 702,000 acres from 2016/17, with area smaller in all six major rice-growing states. USDA had lowered its rice crop forecast by 670 million pounds to just under 18 billion pounds in September, 20 percent below a year earlier, making the overall U.S. supply at an estimated 25 billion pounds. USDA also lowered its predictions for total domestic and residual use by 250 million pounds, and exports by 300 million pounds. These supply and use revisions resulted in a 110-million pound drop in ending stocks forecast, a 37 percent decline from last year. Worldwide, this year's production forecasts were raised for India, Burma, and Peru, but lowered for China and Bangladesh, along with the United States. Overall, global production is expected to exceed consumption, leaving global ending stocks projected to increase 3 percent year-to-year to 123.5 million tons, up 0.6 million tons from the previous forecast and the highest since 2001/02.

 {jcomments on}

Talk of a "new" wheat disease striking High Plains farmers had many worrying about possibilities of a wheat shortage this winter. Are the concerns justified?

USDA estimates that so far in 2017, wheat viral diseases—most importantly, the Wheat Streak Mosaic virus—caused an estimated $76.8 million in direct losses to the nation's wheat farmers. WSM virus, along with High Plains Mosaic virus, Triticum Mosaic virus and Barley Yellow Dwarf virus, altogether caused a production drop of up to 19.2 million bushels of wheat this season, or almost 6 percent of the crop.

The wheat virus threat comes atop drought in the U.S. Great Plains this season, as well. All gave markets nerves that supply may be down significantly, and drove futures markets for spring wheat to their highest level in more than four years. Although futures prices have settled, they're still about 25 percent up over last year, indicating buyers may still be concerned about acquiring sufficient supply.

With the harvest more than 60 percent complete, the U.S. Department of Agriculture said just over one-third of the current wheat crop is in good or excellent condition, versus 66 percent at this time last year. Spring wheat—grown mostly in the Dakotas, Minnesota, Idaho, and Montana—is in particularly poor condition in Montana and South Dakota, where the USDA says 65 percent to 75 percent of the crop is in poor or very poor condition.

But USDA statistics suggest that if supply shortages exists, they likely won't last long. Strong wheat production in recent years has left the country with ample stockpiles, which should be sufficient to offset any current shortages.

Old crop wheat stored as of June 1, 2017, totaled 1.18 billion bushels, up 21 percent from a year ago, USDA reported in late August. On-farm stocks are estimated at 192 million bushels, down 3 percent from last year, while off-farm stocks, at 993 million bushels, are up 28 percent from a year ago. Old crop Durum wheat stocks on June 1, 2017, totaled 36.3 million bushels, up 31 percent from a year ago. On-farm stocks, at 18.4 million bushels, are up 51 percent from June 1, 2016. Off-farm stocks totaled 17.9 million bushels, up 15 percent from a year ago.

USDA also recently increased estimates of world stockpiles of wheat based on reports of higher production in Russia, Ukraine and Kazakhstan. Global supplies should remain sufficient that, should the worst occur, imports could fill any domestic supply gaps.

{jcomments on}

Retailers are rolling out initiatives to drive back-to-school sales, including efforts to recruit parents to feed their kids healthier lunches. But how much of the advice is food fitness, and how much is food fashion? Here are some surprising answers.

Click to start

The reality, according to medical research, is that even though managing a child's diet is central to controlling diet-related health issues like type 1 diabetes, what we know about managing blood sugar through diet is still surprisingly contradictory. But one area where science is pretty certain: High-fiber, low-sugar carbs. In practical terms, that means whole grains. And contrary to conventional wisdom, shoppers don't have to pay more to eat healthy grains.

Full-fat milk?

For decades school lunch programs followed government health advisors' recommendations to cut whole milk from their offerings in favor of skim, often flavored with added sugars to increase palatability and lure kids back to drinking it. Several recent studies now call that advice into question, showing that drinking whole milk could actually lower the risk of diabetes and improve attempts to manage weight.

Gluten-free?

Gluten-free is not only unnecessary to an estimated 99 percent of the population, nutritionists are now beginning to caution that the craze stands to actually hurt more than it helps. Why? Gluten-free and whole-grain are contradictory. Gluten-free products typically require refined grains, which are relatively lower in fiber and nutrients.

No-salt?

In the face of years of consensus science on the danger of salt, several new reports are questioning the necessity of banishing salt from kids' diets. It appears the balance between the minerals sodium and phosphorus may be more important than the absolute amount of each, and it's important to remember that the least nutritious meal of all is the one a kid throws away because it tastes bad. Some are therefore calling for a cautious return to some salt.

Deli meats?

For years, "we've known" that processed meats--ham, bacon, hotdogs--are the real villains of the meat counter, responsible for higher risks of cancer, heart disease and diabetes. But work reported in 2015 that re-analyzed the data from nine large dietary studies questions how strong the conclusions are. Eating processed meat has shown an association with those diseases, the researchers granted, but so many possible causes still confound the research that it's impossible to say whether processed meats really cause an increase in any of those diseases. Balanced, judicious inclusion of them in the diet is still OK.

Wild-caught fish?

We know fish is a great source of not only protein, but also the beneficial highly unsaturated fatty acids. But must they be caught from the wild to be fit? In short: No. Wild stocks of fish around the world are flat-lining, and the only alternative to maintain affordably fish supplies is fish farming. Research shows no important nutritional differences in fish quality between wild and farmed. Objections over aquaculture appear to be related to the same differences in vision about concentration and industrialization of livestock farming.

Anbitiotic-free?

The highly publicized danger that using antibiotics in food production causes human drugs to fail is purely theoretical. One team of independent scholars, for instance, spent more than two years reviewing over 250 scientific papers on the subject, publishing their results in the Journal of Antimicrobial Chemotherapy. They concluded that if you review only the facts — absent the passion of politics — little to no risk exists.

Organic?

Consumer studies have shown again and again that parents buy organic products first and foremost because they believe they’re getting safer, more nutritious food for their kids. And many retailers, looking for that sales advantage, have done nothing to dissuade them of that notion—some have even openly advocated the message. The problem is no science meaningfully supports that claim, a fact of life USDA recognizes when it cautions that organic is merely a name for a process of growing plants and animals—it says nothing about the quality or safety of the food.

S5 Box