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Food Price Spike Dead Ahead: US Cuts Corn Crop Forecast By 12% As 56% Of America Is Under Drought Conditions

Tyler Durden's picture




 

Who knew the next black swan would be deep fried? The biggest piece of imminent food inflation news over the past months, coupled with what is shaping up to be another record hot summer (for the best tracking of real-time electricity consumption primarily for cooling news we recommend the following PJM RT tracker of power load), has been the collapse in the corn harvest due to the worst drought since 1988 as 56% of America is in drought conditions. Today, the US just added some burning oil to the popcorn by cutting the corn-crop forecast by 12% to 13 billion bushels on expectations of a 13.5 billion harvest. Then again, who needs corn, when you can have cake?

Bloomberg explains:

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Wed, 07/11/2012 - 09:27 | 2605609 Snakeeyes
Snakeeyes's picture

Food price spikes is right! They are already rising.

Wed, 07/11/2012 - 09:54 | 2605735 DosZap
DosZap's picture

Food price spikes is right! They are already rising.

They have been rising over three years..............its just going to get worse.

My food purchases have risen over 25%+/- in two years,this will exacerbate the problem exponentially.

And we are damned fools to use FOOD for fuel.

Wed, 07/11/2012 - 10:22 | 2605845 adr
adr's picture

We are damned fools for letting futures traders at Goldman Sachs have power over the price of what we eat.

Wed, 07/11/2012 - 09:27 | 2605612 yabyum
yabyum's picture

Corn now, Soy beans  next, wheat ,cattle and pigs all set to go higher. Keep a eye on the sky, you migh want to "stack" some victuals.

Wed, 07/11/2012 - 09:46 | 2605696 juangrande
juangrande's picture

That corn, and everything made from it, just makes you fat and stupid! In my opinion, this is good news for merika!

Wed, 07/11/2012 - 09:28 | 2605613 overmedicatedun...
overmedicatedundersexed's picture

so I'll eat rice 2 billion chinese can't be wong.

Wed, 07/11/2012 - 10:22 | 2605851 TrainWreck1
Wed, 07/11/2012 - 12:23 | 2606407 KK Tipton
KK Tipton's picture

US grown rice? Where is it?

Rice comes from over the seas......

 

Another point of failure. Better have a backup plan set.

 

Wed, 07/11/2012 - 12:52 | 2606521 object_orient
object_orient's picture

Lots of rice grown in California. Calrice.org

Wed, 07/11/2012 - 13:06 | 2606571 FeralSerf
FeralSerf's picture

Rice is grown in the Mississippi River basin and California.  The US is a major exporter of rice.  Rice is used to bew your Budweiser beer.

Wed, 07/11/2012 - 09:27 | 2605614 Cast Iron Skillet
Cast Iron Skillet's picture

least we got meat ... ummm ...

Wed, 07/11/2012 - 09:28 | 2605617 Quinvarius
Quinvarius's picture

Food shortage, plus wall street cornering food markets, plus SNAP subsidies for food buyers...bad times ahead.

Wed, 07/11/2012 - 09:29 | 2605620 midgetrannyporn
midgetrannyporn's picture

Commodity traders need chumps to unload their corn contracts upon at a profit ahead of the harvest (with help from bloomie et al).

Wed, 07/11/2012 - 09:31 | 2605629 Quinvarius
Quinvarius's picture

You will know the truth of that when the margin raises come in after they sell.

Wed, 07/11/2012 - 10:00 | 2605715 midgetrannyporn
midgetrannyporn's picture

Farmers can still get one more crop in. All traders do is jack prices to make a quick buck without having to work for it. And yes, the cftc will help the big boys skin the sheep.

Wed, 07/11/2012 - 09:29 | 2605622 Peter Pan
Peter Pan's picture

Can't Bernanke print some corn? They seem to be able to print paper gold, so why not some paper corn?

Let's see how the fiat paper mafia profits from this at the expense of empty stomachs.

Wed, 07/11/2012 - 09:29 | 2605623 bozzor
bozzor's picture

Serious question: is there a proper term for a situation where the price of consumables needed for survival (oil/energy, foodstuffs, soaps and some services) experiences inflation, but the price of capital goods and investments (shares, machinery, property etc) deflates? Stagflation is close, but it focuses more on economic growth remaining low rather than capital goods prices falling...

Wed, 07/11/2012 - 09:34 | 2605638 overmedicatedun...
overmedicatedundersexed's picture

bozzor: how about QE.

Wed, 07/11/2012 - 09:36 | 2605650 CrimsonAvenger
CrimsonAvenger's picture

'Biflation' works.

Wed, 07/11/2012 - 10:20 | 2605834 Broomer
Broomer's picture

"Clusterfuck" is the word you are looking for.

Wed, 07/11/2012 - 10:52 | 2606005 serog
serog's picture

Fubar comes to mind.

Wed, 07/11/2012 - 12:23 | 2606412 KK Tipton
KK Tipton's picture

Stand and Deliver?

Wed, 07/11/2012 - 12:48 | 2606503 Tijuana Donkey Show
Tijuana Donkey Show's picture

Central "planning"

Wed, 07/11/2012 - 09:30 | 2605625 sudzee
sudzee's picture

Going to be a lot of "naked farmers " out there who thought they bought " protection ". Farmland should be cheap this fall.

Wed, 07/11/2012 - 09:33 | 2605635 Quinvarius
Quinvarius's picture

Isn't PFG based in Iowa?  I think the corn farmers already got cornholed. 

Wed, 07/11/2012 - 09:31 | 2605630 101 years and c...
101 years and counting's picture

another strike against QE. LOVING it! FUCK YOU, BEN!!!

Wed, 07/11/2012 - 09:35 | 2605641 kito
kito's picture

1930s in the 21st century..........

Wed, 07/11/2012 - 09:35 | 2605644 j0nx
j0nx's picture

Just more hits to Oblamebush just in time for the election. Who am I kidding though, the people will reelect him I'm sure. If there's one thing I have learned in spades in the past 6 years it's NEVER underestimate the stupidity of the American people and their love for rewarding the same old sociopaths who continually lie and financially, socially and ethically rape them. You gotta respect a woman who knows how to take a beating and keeps asking for more...

Wed, 07/11/2012 - 09:46 | 2605697 knightowl77
knightowl77's picture

..."You gotta respect a woman who knows how to take a beating and keeps asking for more"

 

Love yes...........Respect NO

Wed, 07/11/2012 - 10:04 | 2605774 fnordfnordfnord
fnordfnordfnord's picture

Yeah, why can't these sheeple recognize that Mittens is kind, loving,  sincere, cares about the middle class, and completely the opposite of Ohbummer. Fools they are!

Wed, 07/11/2012 - 09:37 | 2605652 LMAOLORI
LMAOLORI's picture

 

Stock up!

Midwest drought may spark food inflation

http://www.miamiherald.com/2012/07/10/2890172/midwest-drought-may-spark-food.html

Wed, 07/11/2012 - 09:39 | 2605665 Quinvarius
Quinvarius's picture

Will this be the spark that sets off the inflationary tinder/lumberyard/gasoline storage facility?  The whole system is just waiting for that kick over the edge.

Wed, 07/11/2012 - 09:44 | 2605687 Sudden Debt
Sudden Debt's picture

Food is still a to low factor of the total buget. If it reaches 30% of the total spending budget, that's when things start to heat up.

 

Wed, 07/11/2012 - 09:42 | 2605677 Sudden Debt
Sudden Debt's picture

EAT MORE PUSSY!!!!!

Wed, 07/11/2012 - 09:44 | 2605688 azzhatter
azzhatter's picture

tastes great but you can't live on it

Wed, 07/11/2012 - 09:52 | 2605725 LULZBank
LULZBank's picture

Barter?

Wed, 07/11/2012 - 09:52 | 2605728 Sudden Debt
Sudden Debt's picture

and in the end it will cost you all of your gold...

but it's fun :)

TASTES LIKE CHICKEN, SMELLS LIKE FISH!!!

http://www.youtube.com/watch?v=3aKpOhWD414&sns=em

 

Wed, 07/11/2012 - 10:23 | 2605852 Dick Gazinia
Dick Gazinia's picture

Only two things in the world smell like tuna...and one of them is tuna.

Wed, 07/11/2012 - 12:20 | 2606389 ZeroAvatar
ZeroAvatar's picture

Is the other one parsley?

Wed, 07/11/2012 - 12:49 | 2606511 Tijuana Donkey Show
Tijuana Donkey Show's picture

Live with it. I fixed that for you.

Wed, 07/11/2012 - 09:43 | 2605681 francis_sawyer
francis_sawyer's picture

How can we eat our peas if we can't grow any?

Wed, 07/11/2012 - 09:43 | 2605686 azzhatter
azzhatter's picture

I'm in the great midwest and I can attest is scary dry this year. We haven't had any rain for 2 months and very little since January. A lot of nervous farmers who have expanded operations the past few years(with debt) and now facing a disaster crop. Brother in law has 1200 acres and he's ready to plow it under by the end of next week if no rain.

Wed, 07/11/2012 - 09:47 | 2605704 Quinvarius
Quinvarius's picture

I felt so bad for my lawn guy I had him trim my tree and bushes.

Wed, 07/11/2012 - 09:48 | 2605711 quasimodo
quasimodo's picture

Hopefully your BIL didn't pay 20k per acre like some of the dumb fucks around me. TIMBERRRRRRRRRRRRRR

Wed, 07/11/2012 - 09:44 | 2605689 Bold Eagle
Bold Eagle's picture

No worries, iPad prices are coming down and we have plenty of them.

Wed, 07/11/2012 - 09:47 | 2605699 quasimodo
quasimodo's picture

Corn looks like SHIT here in IA in my area. The leaves are withering and curled up, very stressed. Those four legged creatures in the feedlots are getting more dollar signs branded to them by the day. I give it another week to two, if no rain then lookout below. It WILL be a chain reaction with the local implement dealers, car lots, etc. This area is VERY dependent on the good yields these guys are so accustomed to. Might this be the big one for the Midwest? Methinks it very well may be.

Wed, 07/11/2012 - 10:05 | 2605707 battlestargalactica
battlestargalactica's picture

DESCENT INTO THE DEPTHS (1930):

Great Depression: The Collapse of Agriculture

http://www.futurecasts.com/Depression_descent-end-'30.html

On September 15, 1930, the N.Y. Times editorialized:

"Everyone recognizes now that this is not a new economic era, in the sense that old-fashioned principles and penalties of economic law have been abolished. The new inventions in the way of manufacturing credit are seen to have been merely a novel way of repeating the very old practices of abuse of credit."

Unbelievable parallels... Only this time, we have no industrial base and our ag has been co-opted by corporations.

Wed, 07/11/2012 - 13:22 | 2606649 viahj
viahj's picture

and we have 45m on the gov't teat already with SNAP. 

Wed, 07/11/2012 - 09:52 | 2605724 Harriet Wanger
Harriet Wanger's picture

Ah, shades of Enron planting news stories that drought was going to raise the price of power because the Columbia River dams weren't going to produce as much electricity. I'm a chickenhead, I'll buy it.

Fire-in-the-theater forecasts are just plausible excuses for the predetermined reaming of consumers.

Wed, 07/11/2012 - 10:09 | 2605779 GeneMarchbanks
GeneMarchbanks's picture

+1

Americans will take any old 'explanation'. Droughts did it?!

Fire-in-the-theater forecasts are just plausible excuses for the predetermined reaming of consumers.

Well, yeah. Here's more bad news: most 'Merikans still fall for it.

The psychological explanation: to extract something familiar from something unknown relieves, comforts, and satisfies us, besides giving us a feeling of power.     With the unknown, one is confronted with danger, discomfort, and care; the first instinct is to abolish these painful states.  First principle: any explanation is better than none. --Nietszche

Hooray Apathy!!!

ps I don't think 'chickenhead' means what you think it means but what do I know I left the States years ago.

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