Milling & Baking News - July 24, 2012 - 9

Nightmarish picture for ingredient buyers as row crops deteriorate

at $9.24 for the Kansas City September contract, up 8% for the week. The price was up 46% since the start of the crop year but remained beContinued from Page 1 Mr. Lerner said many meteorologi- neath the season’s high of $9.84 set on a successful winter wheat harvest, cal phenomena have unfolded as ex- in May 2011. Bakery flour prices have not climbed stable world wheat supply and de- pected this summer, but conditions for mand conditions, and good spring the drought have reached a point of as sharply, up just over 10% since the start of the crop season. The impact wheat and corn growing seasons. self perpetuation. “La Niña was supposed to end in of surging wheat futures on the flour While the first two preconditions have been achieved and the spring wheat the spring,” he said. “El Niño was market has been dulled by sharply lower cash wheat premiums crop outlook remains promisand sharply higher millfeed ing, the successful corn growprices, with the latter pulled ing season is no longer a posupward by soaring corn pricsibility. And because the corn/ es and the need for supplewheat price spread already mental feed as pastures dry was extremely tight going into up because of the drought. 2012-13, gains in corn futures The strength in wheat pricprices have had an especially es overwhelmingly has been direct bullish effect on the driven by advancing corn wheat market. prices, and further gains are Market analysts contacted likely if weather conditions by Milling & Baking News dedo not improve. scribed the corn situation as The continuing problems extremely serious but cauwith the corn crop were tioned that many questions spelled out in weekly data about the 2012 supply picture from the U.S. Department of remained unanswered at presAgriculture in its July 16 Crop ent. Progress report. The corn Certain facts are known, crop in the 18 major growing though. states was rated 31% good to “First and foremost, it is defexcellent as of July 15, down initely bad,” one veteran marfrom 40% a week earlier and ket analyst said. “If you look compared with 66% at the at crop conditions as a proxy same time last year, accordfor bad, it’s bad, or if you siming to the U.S.D.A. ply look at the weather and Soybean ratings fell, but not aridity — the combination of quite as precipitously. Soyheat and dryness. For corn, it beans in the 18 major states can be warm or hot if you get were rated 34% good to exrains to ‘heal the wounds.’ But cellent on July 15, down from this year we have the one-two 40% a week earlier and well combo. The worst of the worst. below 64% a year ago. The drought monitor map. The percentages of corn The way the southern Plains The 2012 corn crop was rated 30% poor to very poor as of looked last year is creeping July 15. In Illinois, one of the states hardest hit, the rating and soybean crops rated very to all the major growing areas on July 15 was 56% poor to very poor. Amid searing heat, poor to poor jumped sharply this year. conditions did not improve on the days afterward, including as of July 15. Corn in the 18 states rated poor to very poor “A problem now is the race at this Farmingdale, Ill., farm, photographed July 20. was 38%, up from 30% the to who will come out with week ended July 8 and well the lowest number. A couple weeks ago it was 157 bus per acre. supposed to come around late sum- above 11% last year. Soybeans rated Then it was around 154. Now it’s 137. mer. That evolution is under way. poor to very poor were 30% as of July The lowest I’ve seen so far is 117-130 That is occurring. It’s later than 15, up from 27% a week earlier and for a U.S. corn yield. I don’t think expected, and the (intensity of the) 10% a year earlier. Conditions were esheat was unexpected. And with tem- pecially bad in the eastern Corn Belt. we’re there yet.” Drew Lerner, president of World peratures so hot in June and dryness The Illinois crop was rated 56% poor Weather, Inc., said comparisons with so pronounced, it has created its own to very poor, and Indiana’s was 71% earlier drought years such as 1988 are entity. It’s feeding on itself. When the poor to very poor. Drought has been unrelenting in the ground gets dry, you lose the feedback less helpful than they may appear. “It’s a serious drought, but one moisture potential that supplies the at- Corn Belt for weeks, although growthing we don’t know is how well the mosphere and creates thunderstorms. ing conditions to the north and to the new hybrids are handling it,” he said. High pressure ridges will tend to per- west in the Midwest and in parts of “In the fields, the corn looks terrible, sist and become even more intense if the South have been more favorable, at but there is a lot of variation within conditions are favorable for it to stay.” least so far. Crops such as spring wheat, Wheat futures at mid-week closed oats and rice, for example, appear to be one part of a field to others.”
AP/WIDE WORLD PHOTOS

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Milling & Baking News - July 24, 2012

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