Late in the evening as I was preparing to write my column for the week, I was debating a number of different topics.
So much has been written about the catastrophe that is the corn crop and the follow-up wreck that could be soybeans that I was leaning toward a discussion as to why wheat and rice could be the key markets in 2012-2013. Then my phone rang.
DTN's customer service had a subscriber on the line who needed to talk to me. Note the wording of that last sentence -- needed, not wanted. I was connected to the caller and began a telling conversation.
The gentleman was from central Iowa. By his measure his corn crop might average 85 bushels per acre and his soybeans in the low 30 bpa area. After relating this to me, he paused, and then said simply, "I'm afraid."
That, to me, summarizes the feelings of many farmers across the Corn Belt as the drought of 2012 (an event so "important" it has its own hashtag on the social media site Twitter, #drought12) wears on.
The situation was initially compared to the historic drought of 1988, but has since been upgraded to the worst seen in over 50 years. As for 1988, according to some, it now looks like nothing more than a bothersome hot spell.
Southern Plains grain producers can sympathize with what their Corn Belt brethren are going through. The harsh 2011 drought in Kansas, Oklahoma and Texas was a precursor to what would be seen across the heart of the growing area in 2012.
The two-foot-deep cracks in the ground in Iowa (I've seen pictures) closely resemble the crevices in the Texas Panhandle last year that reportedly swallowed up cattle (everything's always bigger in Texas).
U.S. President Franklin Delano Roosevelt famously said in his first inaugural address, "The only thing we have to fear is fear itself." As I prepare to address a variety of groups this month, ranging from next week's ethanol industry outlook at the American Coalition for Ethanol conference in Omaha to crowds at the Farm Progress Show in Boone, Iowa, in late August, the reality that I'll be discussing is: "The only thing we have to fear is the end of the demand market in corn."
Talk of demand destruction has been rampant this summer, with the mere mention of it riling others on the aforementioned Twitter to the point of a derisive response, often bringing one's sanity and analytical abilities into question. But the inescapable truth is that demand is going to have to be removed, like ballast tossed from a boat that has sprung a leak.
I'm sure a hot topic at next week's ethanol conference will be the call for a waiver of the ethanol mandate. The battle lines have been clearly drawn with both sides -- the ethanol industry on one side, livestock groups on the other -- willing to take the scrum to the highest level necessary to win...
Source: Argentine Beef Packers S.A.
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