Flooding will U.S. Delay Grain Harvests, Further Stoking Supply Fears Amid Dwindling Stockpiles of Corn and Soybeans

http://www.advancedmarkettiming.com/

Floodwaters were covering crops near Yazoo City, Miss., on Thursday.

As reported by Wall Street Journal’s Andrew Johnson Jr.:

Widespread flooding along the Mississippi River will delay early grain harvests in the U.S., further stoking supply fears amid dwindling stockpiles of corn and soybeans.

Many farmers in states such as Missouri and Mississippi will have to replant crops after the floods washed away seeds and sprouting plants, as well as nutrients in the soil.

Farms in the southern Midwest and Mississippi Delta are typically the first in the U.S. to harvest corn and soybeans, making fresh supplies available to ethanol producers, animal-feed processors and exporters.

The timing of the fall harvest is particularly critical this year as corn inventories are forecast to slip to a 15-year low by the end of August. The U.S. is the world’s largest grower and exporter of corn.

As the damage wreaked by the flooding has become apparent, grain prices have surged. Corn futures are up 12% over the past week and ended Friday near one-month highs, up 1.5% on the day at $7.595 a bushel. Wheat and soybean prices have also posted big gains this week on the Chicago Board of Trade.

On top of the impact to the local economies, the flooding is likely to pressure food costs higher both at home and abroad.

The high water levels “challenge the availability of early harvested supplies,” leaving big corn buyers in the lurch until the Midwest crop comes in, said Dan Basse, president of AgResource Co. in Chicago.

Floodwaters have swallowed up corn, cotton, rice and soybean fields across areas along the Mississippi River, a side effect of efforts to divert water from populated areas.

More than 1,500 square miles of farmland in Arkansas have been flooded over the past few weeks. In Missouri, where a levee was intentionally blown open to ease the threat to the town of Cairo, Ill., more than 200 square miles of croplands were submerged, and more than 2,100 square miles were estimated under water in Mississippi.

Agronomists say that, in some place, it could take many weeks before farmers can return to fields once water levels go down.

But there are signs that water along the river is receding. Commercial traffic has reopened on parts of the Mississippi River that were closed by the Coast Guard earlier in the week.

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