‘Crop tourists’ predict record corn and soyabean harvests
Every August, travellers with a high tolerance for monotony flock to the two-lane highways of the rural US Midwest.
Tracing 1,000-mile routes across corn and soyabean fields, these participants in annual “crop tours” stop to measure ears, count bean pods and interview the locals. Their aim is to predict crop sizes in the world’s largest grain exporter.
As these travellers return to their desks, they are almost unanimous: the US is on the doorstep of a cornucopian harvest. The haul will put pressure on grain prices for months or years to come.
The US crop will be critical to restocking global agricultural markets shocked by repeated shortfalls in recent years. The world is not facing a glut, but stocks are getting closer to levels that make life calm for food policy officials and dull for traders.
Nearly perfect weather in the US grain belt has been echoed across much of the northern hemisphere. Across most of Europe, “conditions for summer crops are good to excellent,” the European Commission says. Even as political crisis engulfs Ukraine, farmers in the top-three corn exporter are forecast to reap a hefty crop.
In China – the second-largest corn producer – the government has been struggling to manage surplus inventories as its farmers also eye a record harvest. Joseph Glauber, chief economist at the US Department of Agriculture, says: “Right now it looks like the world is going to have great crops.”
According to a grain market adage, “big crops get bigger”. In other words, when USDA’s initial August yield estimate is high, as it was this year, subsequent monthly revisions tend to go upwards. This would be bearish for grain prices.
Source: FT
